A couple I know recently moved into a venerable life-care community here in Phoenix. They’re not that much older than I am… She has Alzheimer’s in her family and is beginning to show the earliest signs, and he is about ten years older than she. Their two-story house was getting hard for them to negotiate, so they figured now is the time. Another elderly couple — my current role models, come to think of it — are resisting being warehoused in a kennel for old folks, and getting by in their home pretty well, so far.
Within weeks after my mother died and was reduced to an urnful of ashes, my father moved himself out of their house in Sun City and into a Baptist-run old-folkerie called Orangewood. It was one of the early life-care “communities.” (Don’t you hate when the word “c0mmunity” is used to describe some development?) The idea with life-care is that you will move into an apartment in the joint, where, in exchange for a staggering amount of money, you will receive a variety of amenities, and, when the time comes, you will be guaranteed access to a halfway decent nursing home.
This expensive and, in my view, depressing arrangement turned out to be the biggest favor my father ever did for me. It relieved me of the responsibility of having to care for him as he declined into old age and death. He was only 69 when he moved himself in there, but he lived to be 84, and at the age of 80, he had a heart attack that reduced him to a cardiac invalid. Had he still been living in Sun City, I would either have had to get him into a nursing home at that point or would have had to move him in with me. Either scenario would have been a screaming nightmare.
So, occasionally I think I should do the same favor for my son.
But you know…I don’t want to live in one of those places.
For a dark little three-room apartment with an “efficiency” kitchen of the sort you see in motels (a hot-plate-like two-burner stovetop, a small sink, and an under-the-counter fridge), my father and his third wife forked over a $50,000 nonrefundable “endowment” and a monthly payment that was as much as my then-husband and I were paying for a 3,000-square-foot house on a third of an acre of the choicest real estate in North Central Phoenix, with a pool, five bedrooms, a huge country kitchen with breakfast nook, a vast family room, three bathrooms, fireplace, and pool. When I realized what he was paying for the little dump he and Helen were living in, I was just floored.
Now, they did get some amenities:
• Access to the institution’s nursing home and, if a lesser level of care was needed, to a studio apartment adjacent to the nursing facility. This was roughly equivalent to long-term care insurance, for which I now pay $107 a month, a figure that can be expected to rise steadily from now into perpetuity.
• A dining hall where they were required to take one meal a day and could also choose to take breakfast or a light supper.
• The option to have these meals delivered to their apartment. This cost extra.
• Semi-weekly light housekeeping.
• Electric bills (including air conditioning) were covered. Of course, this meant the institute would decide when the AC would be turned on in the spring…
• Access to an on-call doctor. Nevvermind that the guy was a dangerous, irresponsible quack who was enriching himself by defrauding Medicare. (Yes: my father caught him charging Medicare for visits after he (father) had told him and the institute that the guy was to stay away from him. Like all the other old folks there, he was afraid to report this abuse — getting into bad odor with the management would be counterproductive.)
• Access to a hobby room. Whoop comma de-doo.
• Access to a swimming pool that no one ever used.
• Access to a beauty parlor/hair salon/barber shop that dispensed dumpy-looking haircuts.
• “Free” shuttle-bus rides to doctors and a grocery store. Nevvermind that this meant once you were done seeing the doctor or dentist, you could sit in the waiting room for several hours until someone came to pick you up — it did defray some of the costs of transportation after one reached the point where one could no longer drive.
• Oh, and also please nevvermind that every time some kitchen worker came to work sick or failed to wash her hands after using the bathroom, a wave of dysentery would sweep through the entire population.
{sigh} Every time I think about the possibility of signing myself into one of those places, I recall not only the amenities but also the limits to the amenities. And I think how much I absolutely positively do NOT want to be warehoused into a kennel for old folks.
So, here’s the question:
Is it possible to stay in one’s paid-off home through one’s dotage by cloning those amenities, for no more than it cost my father to live in Orangewood?
Today, those inflation-adjusted fees are much higher. One newer outfit here in town charges an entry fee of $310,00 to $1.1 million, with monthly fees that range from $2,400 to $4,100 — for one person. The place where my father and his wife lived has been torn down and completely rebuilt, so it now commands an entry fee ranging from $279,900 to $389,900, with monthly fees from $3,040 to $8,130. Entry fees, however, now tend to be at least partly refundable, an improvement over the pay-it-and-lose-it arrangements of the early days.
Well, think about it: $2,400 to $4,100 for base living expenses for one person strikes me as passing exorbitant, especially considering that person likely will find herself in a cramped one-bedroom apartment, with walls through which she can listen to the hard-of-hearing neighbor’s TV blaring.
My base nondiscretionary budget is $620/month. That includes all utilities, phone, DSL, yard care, and long-term care insurance. Add another $167/month for property tax and another $79 for homeowner’s insurance, and about $52 for car insurance, and you get a total nondiscretionary cost of $918 a month. As a practical matter, these expenses come in lower during the fall, winter, and spring, because the budget is based on summer costs, when power and water bills are at their highest.
Everything else, I class as “discretionary.” This category includes clothing, gasoline, food, entertainment, dog care, hair care, personal care and cleaning products, house and pool maintenance, and whatnot. The discretionary budget presently is $1100/month, although sometimes I overspend. Ruby’s endless veterinary bills caused a $300 overrun this month, resulting in $1,400 in discretionary spending for the current budget cycle. So let’s figure that’s a typical range for discretionary spending: $1,100 to $1,400.
What that means is that for everything — all my routine costs, which include nursing home insurance — I’m spending $2,018 to $2,318. That is less than the lowest rate for a mid-range life-care community. And what do I get for the price?
• A private pool that I can use any time of the day or night I please, that I can skinny-dip in; and I know who has been in it and what they’ve been doing in it.
• A large, low-maintenance yard with fruit trees, climbing roses, and three private garden “outdoor rooms.”
• The privilege of keeping pets.
• A garage (not an open carport) in which to park my car.
• No one on the other side of any of my walls.
• Central location.
• Brand-new light-rail going in within walking distance.
• A large, bright kitchen with a gas stove.
• My own propane grill.
• More living space than Carter has oats.
Sooo… What do I not get that, say, my father had at his old-folkerie, and what would be entailed in acquiring those amenities?
• Access to a nursing home.
The long-term care insurance I have plus Social Security and a 4% drawdown from savings should amply cover foreseeable nursing home costs. As for getting me into it? That’ll be my son’s problem, I suppose. As a practical matter, not all elderly Americans ever need nursing home, and often such care can be delivered in one’s own home (my insurance covers in-home nursing care). At age 60, your lifetime chance of needing nursing care is only 50%. If you have a policy with a 90-day elimination period, a typical 60-year-old’s chance of using that policy drops to 35% — meaning you have a 65% chance of dying or recovering within 90 days of admission.
• A dining hall providing two meals a day.
It’s impossible to describe how dreadful those meals were! Since eating and drinking are the two major pleasures of my life, I would be suicidal if I had to live in a place that served up swill like that, especially given that about twice a year the stuff made everybody in the institution good and sick.
• Option to have meals delivered, for an extra fee.
What part of Chinese order-out is hard to understand?
Okay, that’s flippant. But as a practical matter, many excellent meals can be delivered, for a reasonable price. On the low end, there’s a social service agency called Meals on Wheels, which provides healthy food for seniors in need. For those of us who can afford to buy groceries, grocery stores deliver these days! And most grocery stores stock various kinds of prepared meals, either in the frozen-food cases or at the deli. Here in Phoenix, both AJ’s Fine Foods and Whole Foods sell complete, fully cooked gourmet meals, and both stores deliver.
Would having groceries and take-out meals delivered raise your food bills? Sure. But I’ll bet it wouldn’t add another $2000 a month to my existing bills. And the cost would be offset by lower gasoline bills.
• Light housekeeping
The going rate for a cleaning lady here is $80/visit. So two house-cleanings a month, which is what my father got, would set you back all of $160. Like food prep, this obviously costs more than DIY cleaning, but it’s not prohibitive…and it would not increase costs much more than I’m spending.
• Electric bills covered
For $4,000 a month? Seriously? Utility bills in these places are not free; they’re included in a staggering monthly fee.
• Access to an on-call doctor.
I have access to an on-call doctor. Young Dr. Kildare’s office is within walking distance of my house. And he is not an incompetent, dishonest quack who hands out sedating, brain-dazing, addictive pills like candy. If I need help on a weekend, I call his office and get the doctor who is on call.
• Access to a hobby room.
Be still, my heart! I have two spare rooms, one of which is now dedicated to my jewelry-making hobby. My office (which would not exist if I lived in an old-folkerie, because of course the presumption would be made that I do not need office space) is fully equipped, spacious, and dedicated fully to my writing and editing business. And I don’t have to share it with anyone.
• Access to a swimming pool that no one ever used.
I use my pool several times a day during the summer. Cost is nominal, and the light jobs of cleaning and maintaining it amount to mild, healthy exercise. If and when I reach the point where I need someone to clean and dose it with chemicals, regular pool service runs about $100/month and includes the chemicals.
• Access to a beauty parlor/hair salon/barber shop that dispensed dumpy-looking haircuts.
Granted, I can spend a startling amount on Shane: $70 for a haircut. However, my hair looks incredible, and as it gets longer, it has to be done less and less often. At this point I’m visiting him about once every six months. Here, too, this seeming “benefit” is not free to old-folkerie residents. You pay for it with your amazing monthly fee, and if you don’t care for dumpy-looking haircuts and drugstore coloring kits, you end up having to track down and pay the likes of Shane anyway.
• “Free” shuttle-bus rides to doctors and a grocery store.
What cost a free ride? Is it really worth spending three, four, even five hours sitting in some doctor’s waiting room, just to save a few bucks? Another circumstance, I’d say, that would lead me to consider suicide.
With grocers, drugstores, and Amazon delivering for little or no cost, I think I could afford a taxicab for the few trips I’d need to take around town. The amount saved on car registration, auto insurance, gasoline, depreciation, maintenance, and repairs would probably cover most of the cab fare.
It looks very much to me as if I can turn my own home into a life-care facility, if need be, with surprisingly little effort and, compared to an expensive institution, not all that much more cost than I’m already paying to live in my home.
Let’s consider what those extra costs would be:
| Lifecareifying the house | |||
| Item | Cost | Times/month | Total |
| Light housecleaning | 80 | 2 | 160 |
| Extra yard care | 75 | 2 | 150 |
| Groceries, Whole Foods | 6 | 4 | 24 |
| Groceries, AJs | 6 | 4 | 24 |
| Groceries, Safeway | 12.95 | 1 | 12.95 |
| Pool care | 100 | weekly | 100 |
| Lightrail rides | 32 | monthly pass | 32 |
| Cab fare (senior citizen) | $12/$40 ride | 2 | 80 |
| Less monthly gasoline | $80+/month | 2 refills/mo. | -80 |
| Total added cost: | 502.95 | ||
So, the additional cost, above and beyond what it costs to live now, to approximate the added benefits of living in an old-folkerie, comes to about $503. Innaresting.
Let’s see how that translates when added to the existing cost of living here at the Funny Farm.
| Discretionary | 1100 | |
| Nondiscretionary | 620 | |
| Added old-age costs | 503 | |
| 50% Murphy’s Law | 251.5 | |
| Total old-age cost | 2,474.50 | / month |
| Total annual old-age cost | 29,694 | |
| Percent of savings: | 4.60% |
This assumes a 50% “Murphy’s Law Tax” on the projected old-age costs. And it produces a figure to cover ALL costs, including whatever indulgences one pleases, that is comparable to the BASE costs on the low end. Total annual drawdown to cover this amount would in theory be 4.6%, but in fact it would be significantly less, because Social Security would cover more than half of it.
Suppose, though, that Murphy’s Law applied to the TOTAL projected costs of living after one can no longer drive. Then what?
| Discretionary | 1100 | |
| Nondiscretionary | 620 | |
| Added old-age costs | 503 | |
| Plus 50%, Murphy’s Law | 1112 | |
| Total old-age cost | 3,335 | / month |
| Total annual old-age cost | 40,020 | |
| Percent of savings: | 6.20% |
In this scenario, we end up with a cost comparable to the mid-range cost of living in a life-care community, totaling about 6.2% of total savings. But here, too, some $14,400 of the cost is covered by Social Security, meaning the drawdown from retirement savings would be significantly less than that: just under 4% per annum.
So, even in the worst-case scenario, aging in place ends up costing the same as or less than residing in a life-care community. And for the price, I get a house — not an apartment in a people warren — plus the cuisine of my choice, the doctor of my choice, privacy, and independence.
Hopefully this will turn out as you plan. My MIL got dementia and was unable to remain in her paid off home. With 24 hour care she could have stayed a little longer, but not until the end. 24 hour care is pricey and not sure how it compares. She went to assisted living then memory care -essentially a nursing home. The cost was about 6k per month. Very sad place and it’s a blessing she is no longer there. We cannot plan everything, just sayin.
No, we certainly can’t.
Some things are plannable but totally unthinkable: dementia, Parkinson’s, Lou Gehrig’s and the like being among those.
Some things are thinkable and plannable: cancer, stroke, heart attack, and such things to which one would expect to fall victim in old age.
And some things are neither plannable nor thinkable. Heaven help us!
IMHO about the best any of us can do is consider the state we’re in now; consider the state to which we might be vulnerable given our genetic heritage, our bad habits, our good habits, and the occupational hazards we’ve taken on; pray for the best; and plan (or not) accordingly.
It’s scary. Very scary.
It’s worth noting, too, that there’s a difference between the institution my father joined — which was a “life-care community” — and a nursing home or a convalescent home.
Policies may have changed since 1977, when he went into the place, but at the outset of this strategy, the corporations that ran them required prospective residents to be in reasonably good health. You couldn’t already be in a wheelchair, for example, or be suffering from the dementia. It was assumed that eventually most residents would reach that point, but the idea was to get their “endowment” upfront and to pocket their large monthly payments for several years before that happened. And of course, some people are fortunate enough to retain most of their faculties all the way up to the end — thereby costing the organization relatively little.
So, the people who moved into Orangewood were by and large much like the people who moved into Sun City: older than the typical incoming Sun Citizen, but active and, within reason, healthy.
This means they paid $50,000 up front — quite a lot, in 1977 dollars, likely comparable to the $280,000+ that you’d pony up today — and then they spent the rest of their lives paying a monthly bill that was MUCH more than it would have cost them to live in a paid-off private home. At $3,000 a month, my father and his wife spent $540,000 at Orangewood.
And that was AFTER they married — his wife had lived there for some years before he showed up. After her husband died, she decided she missed her friends back in Ohio, and so she left, moved back to the Midwest, discovered “you can’t go home again,” and returned to Arizona and to Orangewood, paying a SECOND endowment! Because in those days you didn’t get any of your entry fee back (hence the charitable-sounding “endowment” word), she sacrificed her first gigantic payment and had to pay up again to get back in the door. What she could afford at that time got her into — oh yes! — a cramped one-room studio!
But her story aside, just looking at his: during the 15 years that he lived in this place, he paid out something over $590,000, and that doesn’t count whatever they charged him for extra services like delivering meals to his door toward the end.
Now let’s look at his health.
He was well until he had a heart attack at the age of 80, about 10 years after he’d moved in. This led to triple-bypass surgery.
Because he was way too old to be subjected to such a drastic procedure, he was thrown for a loop and never really fully recovered. It may have relieved him of some angina, but he told me repeatedly that if he had known how much he would suffer, he would never have called for help that day.
However, after a convalescent period of about three months, he was again ambulatory, he was able to care for himself, and he went back to the three-room apartment where he lived, more or less independently, for the remaining four years of his life. He certainly didn’t feel well, but he was able to live on his own and get himself down to the dining hall twice a day to eat. At least, most days he did.
So let’s say we’ve got four years there…hm. At $3,000 a month, he pays $144,000 to live in a tiny apartment eating bad food that sometimes makes him sick but which can occasionally be delivered to his door, and where he is attended to by some very nice people who more or less keep an eye on him.
That’s $48,000 a year…okay. For 48 grand, you probably couldn’t hire someone to come to your home once a day, check on you, be sure you’re eating, see that you at least put your clothes on in the morning, and that you’re still alive.
Or could you? If that’s all the person was doing? It’s surely more than I earned during those years… By the time he dies, it’s 1992; I now have a full-time faculty job, earning an assistant professor’s pay: $43,500, about the median household income in Arizona. He’s paying the Baptists more than my entire annual salary, which for 1992 was halfway decent, to do casual oversight, pay his electric bills, and provide starchy, salty, sugary institutional food twice a day.
For 48 grand, might he not have been able to live on his own and get someone to ride herd on him? Today, in 2014 dollars, it’s only costing me $20,640 a year to live comfortably in a full-sized home with a yard, a pool, a car, and access to public transit. That 20 grand covers the cost of yard care and is about to also cover the cost of a cleaning lady who does one hell of a lot better job than the pop-in, pop-out service he got at Orangewood, where all they did was dust, vacuum, and change the sheets. It pays for all my food (which is pretty luxurious), meals out, entertainment, clothing, upkeep on the house, car maintenance, utilities, computer connection, and whatnot.
He paid more than twice my cost of living in 1992 dollars for a quality of life that doesn’t compare with mine.
What he was getting, of course, was in effect nursing home insurance. If he ever NEEDED the kind of care Barb’s MIL needed, it was there and he could get it without hassle and without very much extra cost.
And indeed, that was what worried him. While my mother was dying, we had to put her in a nursing home. That was a certifiable horror show, and he was shocked to discover that Medicare would not cover the crushing cost. Fortunately, she died on the very day Medicare and her gawdawful HMO were going to throw her out of the home. But while she was in there, he met a woman whose husband had been turned into a vegetable by a stroke and who had been in a nursing home for TEN YEARS. Needless to say, forced to pay for this out of pocket, she was pauperized. Her life was not only hideous on an emotional level, financially she was destitute, having had to spend all of her own and her husband’s savings to keep him in a nursing home, unconscious and unaware of anything going on around him.
My father lived in horror of that possibility.
But I have nursing home insurance. No, it will not cover every single penny of care that extends for year after year after pointless year. But it will cover enough of it that my regular income from Medicare and a standard drawdown from savings will cover the rest of it. So…yes, I also live in horror of what could happen. But I think I don’t need to institutionalize myself any sooner than necessary to deal with the worst eventuality.
And it’s important, I think, to realize that eventuality may never come. My father, as I noted, was not well in his last half-decade, but nevertheless he was relatively mobile and able to live, with some assistance, on his own. He died of a stroke, which carried him off quickly because he had a living will that forbade doctors to keep him alive under the very conditions in which he found himself. This was as he wanted it.
Medicare covered those final expenses.
Thus, I suspect he didn’t need to spend $590,000 in 1992 bucks to achieve the kind of oversight and care he needed. Holy mackerel! According to the US Inflation calculator (http://www.usinflationcalculator.com/), in today’s dollars that’s $996,952.82!
Why do I doubt that it would have cost him almost a million dollars to cover three months of convalescent care after his bypass surgery, to have food delivered to his home for four years, to pay someone to come in once a day to check on him during that time, and to pay for taxi rides for the five years or so after he quit driving?
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Waitaminit…my math may be wrong here — based on Orangewood’s present fees. I think he actually paid something like $270,000 over those last 15 years, in 1992 dollars. That would translate to $456,232.64 n today’s dollars, or $38,020 a year.
That’s ten grand more than I’m paying, per year, for a lot better lifestyle. Could I hire someone to help me for $10,000 a year? Obviously not (although the cleaning lady will cost all of $1,920/year, not unaffordable). However, if some of that care is extreme enough to trigger my long-term care insurance, then some of the cost will be covered by LTC.
I’d guess that, barring another ruinous recession, I could come up with another $20,000/year. And no, that would not cover anything more than the most casual, brief personal care. On the other hand, if by the time that care is needed I’ve downsized into an apartment, 20 grand worth of extra care may not be needed, since all exterior maintenance and some interior maintenance would go away. Depending on one’s health, then, it may be possible to accommodate aging without having to move into a rabbit warren for the elderly.
It’s admirable that you’re trying to work this all out, although I do think you may be forgetting a few things.
Are you accounting for all the maintenance costs of your home? I mean something like fixing or replacing the roof or some other large capital expense project?
What about costs of a household manager? Someone who coordinates all these workers coming and going, ordering the groceries, etc? I know it seems like that is an easy job, but there is time and effort in coordinating it all.
Finally, you’ve noted several times that you are not feeling very safe in your neighborhood. How do you manage that with this plan?
Just pointing out some extra things for you to think about.
Good points!
Yes, there’s money in savings to replace the roof — although it’s unlikely that I’ll outlive the lifetime of the present roof, which was replaced on the insuror’s dime after the last hail storm. Within the next 10 years, it will cost approximately $10,000 to replaster and renovate the pool; I should be able to cover that from savings. There also is about $30,000 to cover the cost of another car; if I buy used, I may not have to pay out that much. The house needs a new paint job, something I’m planning to do within the next year or so; if I make Bila buy top-grade paint, it probably will last as long as I stay here.
A household manager would be grand, wouldn’t she??? Wow! Obviously, paying for a service like that would jack up your costs. But again…if you’ve reached the stage where you need such a person, you’re no longer driving. So you’re not paying auto insurance, gasoline, car repairs and maintenance, and of course you sell your car and get $10,000 or so back in your pocket.
I don’t believe any neighborhood in any modern American city is “safe.” Meth use and other kinds of drug use are endemic, and people have to pay for those products. Most users come up with the money through various kinds of criminal activities, and most of them have cars. They can drive to any neighborhood they please to burgle and rob. As for managing, my home and car are secured with heavy-duty locks; I’m armed and not at all above shooting an intruder.
Living in Orangewood, my father was burgled. They stole one of his guns while he was down at the dining hall for the mid-day meal — evidently the thief was one of the employees who knew when he would be gone and where he kept his property, since they went right to the drawer where the thing resided.
And people were ripping him off in other ways — particularly the quack doctor, who was stealing from Medicare. He paid a lot of money to be “safe,” and IMHO, he was no safer there than I am here.
Life is “messy”…and unpredictable ….kind a like baking. Despite one’s best laid plans and intentions life throws you a curve….and the “cake falls”… My folks are in their late 70’s early 80’s and IMHO waited too long. They have several health issues and their older home requires almost constant care. Add to this that they have very limited resources and it’s not a pretty picture. It then falls to the kids to pitch in and take up the slack. Some do this willingly and consider it an honor….others…not so much. And of course my generation is the “sandwich generation”….caring for aging parents and growing g-kids while getting old ourselves. And all of this work at their place is done in the name of independence…theirs. I can only imagine the comfort they feel in having “control” over their lives. It seems that is what your trying to do …. maintaining control without being an undo burden on your son…Not an easy task….
Yes. One of my parents’ biggest concerns as they entered old age was to avoid being what they called “a burden” on me.
I suspect it’s not required that one stay in an aging house throughout one’s dotage. At some point, for example, this shack is simply going to be more than I want to or can care for.
My neighbor Sally, who’s over 80, has reached that stage and recognizes it. Her plan is to move into a nice apartment in Scottsdale, closer to her sister. It will provide her with the amenities she enjoys but relieve her from the tasks and day-to-day expenses of homeownership. Downsizing at the strategic moment, I think, makes good sense. She proposes to move herself into a smaller place where someone else takes care of maintenance and repairs, but NOT to move into a warehouse for old folks.
With a house paid off, one can use the proceeds from its sale to cover rent. Sally, for example, would net about $250,000 on her house; she proposes to pay $1650/month for the desired apartment. That’s 151.5 months of rent: 12 years’ worth. She’s in her mid-80s now, and so she may not live another 12 years. But even if she does, she still hasn’t had to increase drawdowns from savings to cover the rent. If she starts doing so in her early to mid-90s, it’s unlikely that paying the rent out of life savings will run her into the poorhouse.
This reminds me of what we did for my grandma. While it was much more affordable because we were paying American dollars for it, she lived in her home until she died, with a live in housekeeper/house manager. We paid for all the meals and the salary, but she did all the shopping, cooking, cleaning, organizing, laundry, etc.
I would imagine that for much less than those insane rates that we’d be expected to pay for a nursing home (and believe me THOSE numbers have been haunting me for years), you could hire someone who did just about all the shopping, cooking, cleaning, driving about, and scheduling.
Obviously you’d need contingencies for cases of mental decline :/ I wouldn’t have trusted just anybody to take care of my mom during her worst years of dementia without checks on their spending/reach into her bank accounts if she’d had any.