By Michelle Murdock, Contributing Writer
Is it time for your next chapter in life? Are you an empty nester, retired, need assistance or moving on to a new stage in your life and wondering what different types of housing you should consider? Whether you are downsizing, trying to determine if you can afford to stay in your current home, or need to learn more about support services, to help get you started here is a general overview of some of the available housing options for elders.
For those who wish to remain in their current home, a reverse mortgage may be one option to consider. A reverse mortgage is a special type of home loan that lets seniors age 62+ convert a portion of the equity in their home into cash. It can be used to supplement Social Security, meet unexpected medical costs, and make home improvements or modifications and more. Unlike a home equity loan where borrowers must make monthly payments on principal and interest, reverse mortgages pay the homeowner. In addition to being age 62 or older, the homeowner must also own his/her home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan. You must also have the financial resources to pay ongoing property charges including taxes and insurance, and you must live in the home.
“A reverse mortgage can be an effective tool for improving the quality of life and remaining financially independent,” writes Alain Valles on the Direct Finance Corp. Reverse Mortgage website dfcmortgage.com). “Common uses of a reverse mortgage are to receive additional monthly cash, payoff a mortgage or other debts, home improvements, or just having the peace of mind knowing emergency funds are available. However, it is not a decision to be taken lightly. It’s important to work with an experienced mortgage specialist who will help you assess your unique situation to determine if a reverse mortgage is right for you.”
Counseling is required prior to applying for a reverse mortgage and is provided by the U.S. Department of Housing and Urban Development (HUD). HUD sponsors counseling agencies throughout the country that can provide advice on buying a home, renting, defaults, foreclosures, and credit issues. The official reverse mortgage consumer booklet approved by the U.S. Department of Housing and Urban Development can be found online at www.ncoa.org/news-ncoa-publications/publications/ncoa_reverse_mortgage_booklet_073109.pdf
In Massachusetts, 55+ communities are age-restricted housing developments that require at least one member of each household to be age 55 or older. Other members of the household may be younger, but all residents must be at least 18. 55+ communities are designed for the active, independent retiree and offer no medical services or personal care assistance. The amenities offered vary by community, but often include exercise facilities, a clubhouse, indoor/outdoor pools, hobby and craft clubs, security and maintenance. Some communities are themed and may include a golf course.
While there can be different amenities and rules at some of these communities, the U.S. Department of Housing & Urban Development (HUD) and the Housing for Older Persons Act, which says that housing must include at least one person who is 55 or older in at least 80 percent of the occupied units, regulates these communities. Like other senior living options, research is required to determine if a 55+ community is right for you. Questions to ask when thinking about 55+ housing include financial status of the developer, details of rules and regulations and if there is money set aside for maintenance.
According to the Massachusetts Executive Office of Elder Affairs, one of the most rapidly growing forms of residential long-term care in Massachusetts is Assisted Living. A typical assisted living facility resident would usually be a senior citizen who does not need the level of care offered by a nursing home but prefers more companionship and needs some assistance in day-to-day living. Assisted Living Residences (ALRs) are designed for those adults who may need help with daily activities such as bathing, dressing, meals, and housecleaning or medication reminders. And while specific services may vary by facility, most ALRs offer a combination of housing, meals and personal care services to adults on a rental basis. They are not designed for people who need serious medical care.
According to the Mass.gov website, “the underlying philosophy of assisted living is based on providing needed services to residents in a way that enhances their autonomy, privacy and individuality.”
The Jewish Healthcare Center in Worcester describes assisted living as “offering residents the ability to continue a gracious and vibrant lifestyle, while also receiving some assistance with their daily routine.”
Continuing Care Retirement Community
In addition to assisted living facilities, a newer option is the Continuing Care Retirement Community (CCRC). At a CCRC, accommodations for independent living, assisted living, and nursing home care are all on the same campus offering residents a continuum of care. As described on the Mass.gov website, “CCRCs offer a supportive environment in which elders can live amongst their peers and receive services that will allow them to ‘age in place’. As their personal and health care needs change, elders can receive increasingly comprehensive care while remaining in the familiar setting of the community.”
In addition to the monthly service fees, many CCRCs require a one-time entrance fee. Entrance fees vary from one community to another depending on the type of housing and services and the extent of health care that is provided.
Per the Mass.gov website, “all CCRCs are required to have a “declining-refundable” entrance fee, which means when a resident leaves the community, they or their estate, will receive a refund of a portion of the entrance fee after subtracting no more than 1 percent for every month the resident lived at the community.” The entrance fees often range anywhere from $100,000 to $300,000 depending on the size of the unit. Monthly fees typically cover a variety of different services that may include a meal plan (usually in a community dining hall), security and grounds, transportation, housekeeping and laundry, emergency assistance, and social and recreational activities.
Investing in a CCRC requires research and comparison of costs and services. Among the issues to be considered are what type of health services are provided in the independent and assisted living units, who decides when a resident needs a higher level of care, staffing ratios and availability in the nursing home facility, and what types of insurance are accepted.
To read more about CCRCs, including an overview, general services and amenities, issues with health care services, and financial considerations, visit www.mass.gov/elders/housing/ccrc/.