The latest trend is away from the old model of “buying-in” to a senior living community.

Retirement living isn’t just about where you plan to play golf. It’s about making important decisions about where you live and why, as well as how to pay for it. Seniors are living longer and healthier lives so this requires long-term planning. Thankfully, there is a model for paying for retirement living that keeps control and independence in the hands of seniors and their families.

Since 2000, the senior population has increased 29% compared to overall population growth of 12%. On average today’s 65-year-old will live for another 18.5 years.

“Between 2007 and 2020 our region’s aging population will grow from 160,000 to 257,000, a 62% increase. And one in five of us will have a disability,” says a recent research paper from Senior Services of Southeastern Virginia.

One report (the 2014 Senior Living Research Study) says as many as 42.8% of seniors expect to “downsize” their living situation in the next five years. And as this wave of aging population begins to hit the marketplace, one of the biggest issues that seniors and their families will be dealing with is how and where to live.

Senior living communities, specifically apartments for independent seniors and those who require some assisted care, provide two of the biggest needs for this growing population: convenience and security. But in a growingly competitive landscape, not having to cut the lawn isn’t enough.

Today, many senior living communities are improving on-site amenities ranging from concierge-style services to having healthcare professionals conveniently on staff to hiring executive chefs to offer more and better dining options.

But the latest trend is away from the old business model of “buying-in” to a senior living community, as is the case with many Continuing Care Retirement Communities. This requires a substantial up-front deposit, often costing hundreds of thousands of dollars. Usually this requires withdrawing money from a retirement plan for the payment.

“While everyone’s situation is unique, there are financial ramifications when senior living facilities require large buy-in fees,” says Oscar Alvarez of Pathway Financial Planning in Newport News, Virginia. “The biggest factor to consider is the lost opportunity cost. You need to consider the potential growth your money could have over 10, 15 or more years, and how will this impact your future income and legacy issues.”

The growing alternative is to lease space in a retirement community. Renting in the right place means seniors still have the advantages of amenities, meal plans and on-site support. The benefits include:

  • Investment and tax control – Not having to tap into retirement funds can mean not losing valuable future tax deferral benefits and avoiding possible penalties.
  • Flexibility – Not being locked in long-term means if your personal or family situation changes, it’s easier to move.
  • Peace of mind – As Forbes reports, “Many retirees report a psychological boost from not having a big debt hanging over them at this stage of life. And that’s worth something, too.”

Harmony Senior Services operates a variety of senior living communities, with no buy-in fees, located in Virginia, North and South Carolina that include independent and assisted living, as well as memory care options.