Important Variables to Consider When Researching a Retirement Community

Important Variables to Consider When Researching a Retirement Community

Many seniors have started to move into full service retirement communities. However, some seniors are proceeding with caution, as they ponder whether there will be a financial collapse. As an alternative, many seniors have decided to move into a Continuing Care Retirement Community. These communities allow seniors to live there for as long as they want, while also giving them access to important medical services.

While many analysts have pointed out that the likelihood of a financial collapse is slim, there have been problems at many retirement homes, which have caused the homes to raise their fees while also slashing their services. Some Continuing Care Retirement Communities have been forced to file for bankruptcy. Analysts have noted how many people who end up in cash strapped communities have to deal with more uncertainty than they expected.

Analysts are closely watching what Continuing Care Retirement Communities are doing with their entrance fees. With a lack of government regulation, there is real concern that the fees will be used to make harmful investments. To assist seniors as they decide which retirement community is the right fit for them, here is a look at some important variables to consider.

Profitability: You should look for a community that normally brings in more income that it spends. Research the retirement community's cash operating expenses. This should help you determine if the community is profitable or whether it can barely afford to cover its expenses. If the community has a percentage of cash operating revenue score of 98, it means that the community is in good financial shape.

Reserves: Check to see if the Continuing Care Retirement Community regularly goes over potential risks and liabilities. Looking at an actuarial valuation can help you figure out if the community has the necessary income and cash flow to provide housing to residents. The valuation may also be an indicator of potential fee increases over the next few months.

Improvements: Look at the community's capital spending and contrast that with the depreciation stats. Many analysts note that the capital spending should be equal to at least half of the depreciation value.

However, none of the stats can take the place of actually visiting the community home. When you go for a visit, inspect the home to see if the rooms are in good shape.

The Importance of the Residents: Take note of how involved the residents are in regards to decisions that are made concerning the community. Analysts point out that there should at least be a few residents on the Board of Directors or Community Council.

Community Members: If the community is pretty close to maximum capacity that is a good sign that helps emphasize that the community is appealing to many people and will likely be appealing to you as well.

Take the time to do extensive research on each Continuing Care Retirement Community so that you can find the right fit for your needs.

Phil Shawe is the CEO of TransPerfect.