Are You Scared of the Elephant Graveyard?
If you haven’t ever heard of an Elephant Graveyard, it is a mythical place where elephants go when it’s time to die. As many of our clients age, we have had more than one reference it with gloom.
Aging is by far, in our opinion, the hardest life stage. Other than childhood, when you didn’t know better and your mind wasn’t fully formed, you have probably spent most of your life with a body that has done most everything you needed it to and a mind that worked well for you. As you hit old age, things change. To make matters worse, it’s not the same process for everyone. It’s the opposite of adolescence – at 16 you get your driver’s license, at 18 you graduate from high school, etc. You won’t know what is going to hit and when, and that alone makes it hard to plan.
Housing is one of the most expensive and difficult decisions seniors make these days. It is not as easy as it used to be when the process of aging was shorter. Nowadays, in retirement, a person can easily end up with 3 or 4 housing situations, due to the duration, their financial situation, and their mental and physical needs. Here are some of the options we have seen:
Stay at Home. This is everyone’s first favorite. It’s by far the easiest to imagine, because you’re already living there. If you own your home (even with a mortgage), it may be the cheaper situation in the short term. You likely have friends nearby, and family knows where you are. You know how to get to your grocery store and Target. It’s decorated exactly the way you want it to be. The downside is that the older you get, the more secluded you become. As it’s harder to get out of bed, it can become much harder to get out of the house, if not impossible. Once you lose your driver’s license, you are completely dependent upon others. As you get secluded, people sometimes come by less, not more. Later, if care is necessary, it can be much, much more-costly in your home and you may or may not have someone looking over your caregiver’s shoulder.
Live with Family. This used to be the norm, and in many cultures, it still is. It happens less frequently here for many reasons- most of which involve the desires for independence for all involved. For those who do choose this route the positives can be wonderful. Multi-generations coming in and out of the home can keep you engaged and involved with lots of activities and ideas. It can be much less expensive than living alone or in a retirement community. Options for “mother in law” suites and separate spaces are also making it a little easier. However, families can feel the burden of care-taking and you may feel like the multi-generations coming in and out are loud and invasive of your space and the way you want to do things. It’s easier to get separated from your peers, and having peers during the aging process is just as powerful as it was when you were a teenager and needed them to figure out how to sneak you out of your bedroom at night.
Maintenance Provided Communities. This is like staying at home, but with less maintenance and sometimes more cost. These housing options allow for peer contact at a lower price than a traditional retirement community. Neighborhood activities and amenities are often provided. Home care can still be brought in when needed, although at a higher price than a retirement community. You can still get secluded, but there is probably a smaller chance as your neighbors will mostly be seniors who have common interests. The older you get, and the more help you need, however, the more this option looks like staying home- just a different home.
Retirement Communities with Care. There are at least two different types of graduated care living choices. The first allows independent people who have reached a certain age to move in and live independently. However, they provide additional services that are graduated (you can have more and more as you age and need more). These are not your traditional nursing homes by any means. They look more like communal living with individual condo-like units. They provide lots of opportunities for socializing, but a separate condo so you have complete autonomy when you want it. People think they are cost prohibitive, but for many of our clients, we have found they may be equal to living at home and possibly cheaper. It takes a lot of pressure off the person living there, as well as their families, who may worry about a future health or mental decline. Moving into these types of facilities before any major issues arise gives a person a chance to build a community of friends and support within it.
Assisted Living Communities. Like Retirement Communities with Care, these facilities provide more care as the client needs it. The cost is fixed at the higher rate for those care services when you move in. It will most likely have some sort of inflationary increase over time, but they assume you are paying for that care immediately, whether you need it or not. In some ways, it can level out the cost of care over time. Similar to Retirement Communities with care, these types of facilities are very selective about who comes in because they want to ensure that you can afford to pay as long as you are there. Having a Long-Term Care Policy helps with approval quite a bit. The average age of residents tends to be older in these facilities. They often focus on the long-term care and nursing services they can provide later in life as opposed to just quality of life in the earlier stages of retirement.
Living with the Pool Boy. This is a nice option for the very rich, lucky and sexy. You can buy a very nice home, complete with a pool. While you may have various people coming to take care of you, you also invite the Pool Boy to move in and enjoy that experience to the fullest. As more Baby Boomer Women claim their hard-earned fortunes, we expect this option to come into its own.
The Elephant Graveyard location is not what scares you- it’s the possibility that life as a beautiful, majestic creature may be coming to a close. Choose the location that will provide the most support so you can have the most dignity for the end of your mighty years.
Approximately 5% of Seniors live in retirement communities. (CNBC)
Debunking the Costs of Retirement Communities
By Kelly Hokanson, CFP®
We have seen many people rule out retirement communities because they believe the costs are just far too great. This is not what we have seen in Kansas City. The costs for most of the communities we have toured have their costs broken down into three types. The first is a “buy in” which pays for your unit. In most cases, this buy in can be refunded to you (usually a percentage of it, at least) should you decide to move out, and goes to your heirs upon death. Unlike a house, it doesn’t appreciate, but unlike a house, you don’t have to pay for upkeep. The second is a monthly fee. This fee usually pays for utilities, maintenance, etc. and also includes a meal plan of some sort with various services and activities provided for the residents at no further direct charge. The third are ancillary fees that are usually optional. These fees can include anything from parking, to hair salons, to discounted group tickets to a local performance.
The big mistake we see when clients start thinking about where they want to live in retirement is that they make judgments based on hearsay instead of actual information. Get the facts and do some investigating. You may be pleasantly surprised by your options. Obviously, we are here to help if you need it.
“Of all the self-fulfilling prophecies in our culture, the assumption that aging means decline and poor health is probably the deadliest.” ~ Marilyn Ferguson
Market Update: More of the Same
5-31-18 YTD Dow: -0.2%
5-31-18 YTD S&P 500: 2.0%
5-31-18 YTD World EX US All Cap: -1.4%
5-31-18 YTD US Agg Bond: -1.5%
As talk of trade wars rage and the global political stage is going through radical changes, we’re seeing a little volatility. Volatility is not a bad thing in and of itself. It actually can lead to some good planning opportunities at times. Don’t worry about that. There are also some structural things happening out there that are interesting- like GE getting kicked out of the Dow. It was one of the originating companies in the Dow, but because of bad management decisions in the past couple decades, it’s a company that has come on hard times and its value has come down. Who would have guessed 20 years ago? This is a great example of why diversification in your portfolio is so key. Even companies that have long histories and have done very well over decades can meet their doom. It’s one of the main reasons we almost always recommend not to own any one company as more than 5% of your overall investment strategy. It’s one of our many guidelines to help people protect them from their emotions.
The views expressed represent the opinion of The Planned Approach. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. While The Planned Approach believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and The Planned Approach’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.