This paper is the third in a series of four based on the 2011 Residents Financial Survey (RFS) conducted by the Center for Retirement Research at Boston College. Having looked at overall resident incomes and net worth levels in the second paper in the series, the authors go into greater detail regarding the cost of living in a senior housing facility and the residents’ financial concerns. Most residents of independent living (IL) and assisted living (AL) facilities have mid to high incomes, with Social Security, pensions and annuities the primary sources. Resident net worth is positively correlated with age and less correlated with elapsed time since the resident moved into the community. A recent move from one community to another, however, correlates with lower net worth, perhaps reflecting a resident’s move to a more-affordable option.
Residents paid, on average, $3,741 at Freestanding AL communities and $3,655 in the AL portion of a Combined IL/AL property. Independent living residents paid $2,442 at Freestanding IL communities and $2,809 at Combined IL/AL properties. IL residents appear to subsidize part of the cost of providing AL care. We surmise that the presence of AL services at a Combined IL/AL property helps IL residents justify paying more for IL.
The AL and IL fees do not cover all expenses, however, and 13% of residents report that they pay extra for outside agency services. Additional services include fees for companions, medication assistance and personal care.
Nearly all the respondents (84%) indicated that they are the primary payer, but less than half the residents pay all of their monthly expenses from current income. The survey suggests that 40% of IL residents cover all their expenses from current income, as do 21% of AL residents. The rest pay from a combination of income, spending down their assets, long-term care insurance and family support. Among those that do not cover their expenses from current income, AL residents have a greater incidence of relying on family members to make the payments.
A majority of the residents either “agreed” or “strongly agreed” that their community offers a good value. Roughly one-third were neutral and less than 10% “disagreed” or “strongly disagreed.” AL residents, however, expressed concern about their ongoing ability to pay the fees, with 70% indicating “some concern” or “considerable concern.” Married residents were more likely to have the concerns, as were those that paid higher fees. The authors suggest that economic turmoil, low house prices, low fixed income yields, a sold-down stock market and the lack of a cost of living adjustment for Social Security in 2010 and 2011 contributed to the concerns.
Perception of the value of the community helps determine financial concern: 38% of residents who “agreed” or “strongly agreed” that the community offers good value had “no concern” that they would be able to pay in the future. Just 12% of the satisfied group indicated “considerable concern” about future ability to pay. By contrast, the residents that were not convinced of the value of the community (responded “neutral”, “disagree” or “strongly disagree”) also expressed financial concerns, with 44% indicating “considerable concern” about their ability to pay. Meanwhile, 9% of the dissatisfied group expressed “no concern” about finances. It appears that concern about future ability to pay serves as a proxy for satisfaction or dissatisfaction with the living environment.
“Costs and Concerns Among Residents in Seniors Housing and Care Communities: Evidence from the Residents Financial Survey,” Norma B Coe and April Yanyuan Wu, Center for Retirement Research at Boston College, April 2012.
Click here to download this and the other papers within the series (listed below):
“Residents in Seniors Housing and Care Communities: Overview of the Residents Financial Survey,” Norma B. Coe and April Yanyuan Wu, Center for Retirement Research at Boston College, April 2012.
“Financial Well-Being of Residents in Seniors Housing and Care Communites: Evidence from the Residents Financial Survey,” Norma B Coe and April Yanyuan Wu, Center for Retirement Research at Boston College, April 2012
“Geographic Mobility Among Residents in Seniors Housing and Care Communities: Evidence from the Residents Financial Survey,” Norma B Coe and April Yanyuan Wu, Center for Retirement Research at Boston College, April 2012.