A recent report from Newsweek explores the troubling trend of financial distress among retirement communities which is causing many to file for bankruptcy. If you or someone you care about is either living in or considering moving into such a facility, be sure to read the article. Here’s the shorthand of what you need to know.
High Costs, Tight Budgets
The article indicates that both retirement community chains (like Sunrise Senior Living Inc.) and smaller, independent communities have been hit hard by the recession, partly because of the following:
- Expensive care: Between medical care, insurance costs, equipment and other miscellaneous costs, catering to the elderly tends to be a high-cost endeavor.
- Medicaid restrictions: The budgets allocated by this government health plan are often difficult to work around for institutions.
- Fixed income: Retirees no longer receiving significant paychecks can be reluctant to pay large sums for their living arrangements. These big costs can strain their tight budgets.
Because of these and other factors, many retirement communities have apparently had to raise their fees, sell out to large chains or close their doors altogether – all of which can be disruptive to residents.
Protecting Your Money
Many residential retirement facilities charge monthly fees in addition to a sort of “down payment” due at the beginning of a person’s stay – usually, this payment is refundable at the time of a resident’s death or decision to leave. But, according to Newsweek, if such a facility filing bankruptcy is the right course, for bankruptcy, those deposits can be used to pay off creditors instead, which can be terrible news for residents.
So what can you do to prevent serious financial loss from a failed retirement home?
- Contact a lawyer: Before signing any documents, consider enlisting the help of an attorney, who will know what clauses to look for in a contract. Review this checklist of questions to consider before signing onto a retirement home.
- Research the facility: Moving into a retirement home requires a bit of legwork anyway, so taking the extra time to delve into a facility’s financial history shouldn’t be too taxing. Check out these suggestions for choosing a retirement facility from the Department of Health and Human Services.
Unfortunately, some financial disasters are well concealed until they erupt. Remember: knowledge and preparation are your best defenses against financial turmoil in any area of life.
