Aging baby boomers are approaching the threshold of their golden years in record numbers, and recent trends indicate their attitudes toward aging can be summed up in the title of Frank Sinatra’s familiar tune, “My Way.”
Based on feedback from clients in this generation, “my way” indicates they want to deinstitutionalize and intergenerationalize their lifestyle experience as they age in place and, perhaps more importantly, age in community.
For attorneys whose practices have thrived on developing estate plans for baby boomer clients or assisting their parents with guardianship and elder law issues, “the times they are a-changin.”
What Boomers Want
A recent survey of 4,000 baby boomers by the Demand Institute found that most don’t plan to retire to a condo on a golf course. Instead of selling their homes and heading for retirement communities, they prefer to remain in their existing homes (or home of choice) and maintain a connection for as long as possible to their communities and families.
Unlike their parents’ generation, boomers plan to be more engaged in their communities as they age. They’re rejecting the stereotypes associated with aging and rewriting the script as they run triathlons, participate in lifelong learning courses and become new entrepreneurs. Many are plugged into their social networks and communities and don’t see why that has to change as they age.
The reality of the situation is that many baby boomers are in denial that at some point down the road, they may not be able to care for themselves. While baby boomers may be healthier and live on average to be age 100, those last 15 years from ages 85 to 100 are what boomers don’t want to talk about.
According to a 2013 research poll by AP-NORC, which yielded new insight about the attitudes of aging adults, nearly one-third of older Americans would rather not think about getting older. Their priorities are focused on promoting independence as they age, such as choosing homes with no stairs and living close to family members, health care facilities and stores. Only 35 percent have set aside money to pay for long-term care (LTC) needs.
As trusted advisors, we should help our aging clients think about their retirement years in three phases: (1) the active phase involving travel and hobbies; (2) the slowing down phase where mobility becomes limited; (3) the custodial period. Based on what we’re seeing in my practice, it’s this last phase that most boomers prefer not to think about and, in some cases, don’t even plan for.
As boomers redefine the housing options for their generation and begin experimentation with aging in place solutions that are sweeping the nation, their choices will be dictated by their lifestyle preferences and, to some degree, their level of net worth.
So what’s the average net worth of a typical estate-planning client? According to the 2012 Industry Trends Survey of estate planners conducted by WealthCounsel and Trusts & Estates, 66 percent of respondents indicated that their clients’ net worth ranged from $500,000 to $5 million.
From a broader demographic perspective of this age group, the typical household net worth for baby boomers in 2013 was $143,000, according to Federal Reserve data.
Given the disparity between the average net worth of the typical estate planning client as compared with that of boomers in general, estate and elder law attorneys serving this demographic group will want to be aware of the wide range of aging in place solutions to match clients with the options best suited to their financial capabilities.
New Research and Business Opportunities
Irrespective of whether the newer aging in place models discussed in this article are sustainable once older boomers begin to require help with daily activities, it’s clear that the housing needs and lifestyle choices of aging baby boomers will be transformational to our society in a number of ways.
A 2014 report by Harvard University’s Joint Center for Housing Studies noted that the aging boomers’ lifestyle preferences are creating new opportunities for businesses to innovate in the areas of housing design, home remodeling, in-home supportive care and other services that promote independence and integrate residents within the larger community.
One example of the boomer ripple effect in the housing industry is the creation of the Certified Aging-in-Place Specialist (CAPS), a designation program of the National Association of Home Builders established to meet the demand of a changing population.
To assist seniors in turning the home they love into a safer environment while they age, AARP recently published a 28-page HomeFit Guide that includes remodeling ideas ranging from installing lever handles on doors, to step free showers, to wheel chair-height microwaves.
Another example of inspiring new research is the Aging in Place Technology Watch, a market research firm that provides thought leadership, analysis and guidance about technologies and services that enable seniors to remain longer in their home of choice. According to the 2015 Technology Market Overview Report, the research group notes that “the marketplace for technology to assist aging adults in the longevity economy is expected to grow sharply from $2 billion today to more than $30 billion in the next few years.”
Narrowing Down the Options
Assisting your client in choosing the appropriate aging in place option will depend on a number of variables including their definition of what to means to age in place, the geographic accessibility of their choice in housing and the client’s financial capabilities.
It’s important for attorneys to update their knowledge about the nascent phenomenon of boomers aging in place and be prepared to discuss the topic with clients. While there may be other choices available depending on your location, below are five options you may want to discuss with clients.
- The Village Model
From Beacon Hill in Boston, to Sausalito, to pockets of San Francisco, to Capitol Hill, the village movement seems to be catching on with seniors of all income brackets who want to age in place at home within their communities.
This aging-in-place model is a membership-driven, grassroots organization through which volunteers and paid staff coordinate access to affordable services including transportation, health and wellness programs, home repairs, social activities and other daily needs so that aging seniors may remain connected to their community.
Also known as virtual retirement villages, the concept began in Boston in 2002, when a group of aging seniors were determined to remain engaged in their own neighborhood. Beacon Hill’s success has helped to spawn a nationwide network that continues to grow.
The Village-to-Village Network is a non-profit organization that tracks and coordinates villages around the country. Most villages are located in densely-populated, upper income urban areas and are funded through a combination of membership dues (averaging $450/month), government grants and corporate sponsors. There are nearly 150 organizations currently operating and 130 are in development.
The village movement is most popular throughout the Northeast and in California. In Florida, several villages are underway, including a newly opened Celebration Foundation, and the Neighbors Network located within my firm’s geographic location in the Winter Park/Maitland area.
While the village model may be sustainable for seniors during the initial phases of retirement, advisors should help these clients plan for the time when they’ll need round-the-clock care. Ask them to think through important questions, such as who will serve as their quarterback when it comes to coordinating caregivers, arranging doctors’ visits and making decisions regarding medical tests. If the quarterback is a family member or loved one, what type of toll will that take on that person? Ask clients if they’re financially prepared to finance the costs of professional in-home care that often exceed those of institutional care.
Another option for seniors who want to avoid the isolation of institutional living is the cohousing model. It’s designed to promote social connectivity and avoid the isolationism of suburban developments. Members usually maintain private residences but share common spaces, such as dining areas and recreational facilities. While some cohousing communities cater exclusively to retirees, others are designed for an intergenerational experience.
According to The Cohousing Association of the U. S., cohousing opens up new alternatives for baby boomers to live as independently as possible in the last 20 to 30 years of life.
While California, Colorado, Massachusetts, North Carolina and Washington State appear to have the greatest number of cohousing communities, other states, including Florida, either have sites under development or in the early planning stages.
An example of a well-established cohousing site is a community located in the District of Columbia known as Takoma Village, opened in 2001. This cohousing community features 85 families ranging in age from newborns to residents over 90. An example of a recently opened and highly successful aging in place cohousing community is the Durham Central Park Cohousing Community located a short distance from the Duke University Medical Center.
- Continuing Care Retirement Communities (CCRCs)
For most middle and upper middle class boomers, the CCRC is an attractive option for those who want the assurance of multiple levels of care as they age in place. CCRCs differ from community to community, and many offer a resort-like setting with world-class amenities. As the expression goes, “when you’ve seen one CCRC, you’ve seen one CCRC.”
CCRCs generally require new residents to be in good health in exchange for a lifetime health care contract that provides them with unlimited LTC at no additional cost beyond the initial entry fee (averaging $280,618 nationwide) and monthly service fees that average $3,000. For many of our clients, the initial entry fee is often funded by the sale of their homestead. In terms of the CCRC monthly fees, we recommend that our clients look at their monthly cash flow (for example, social security, pensions) as the source for monthly fees, while the remainder of their retirement savings can be used for quality of life.
According to the Milliman actuarial consulting firm, the ages at entry of residents who enter CCRCs can range from 65 to 95. A mature CCRC that’s been operating for more than 10 years will have an independent living population with an average age of between 85 and 87. Milliman indicates that in the last 20 years, average entry ages have increased from the mid 70s to the lower 80s. While residents’ ages vary from community to community, today the average ages at entry fall in the 80 to 83 range. For younger baby boomers seeking an intergenerational experience, CCRCs may not be their first choice but they may be inclined to revisit this option as they advance in years.
All CCRCs offer at least three levels of care that include independent living, assisted living and round-the-clock skilled nursing home care. Routinely located in campus-like settings, CCRCs feature the entire residential continuum from studio or garden apartments to single- family homes to high-rise buildings. Many CCRCs provide units for patients with special medical needs, such as memory support care for dementia patients.
- University Based Retirement Communities (UBRCs)
UBRCs are considered a popular choice for many seniors seeking a high quality, intellectually stimulating environment in which to age in place for the next 20-plus years. A significant percentage of residents are graduates or retired faculty of the university with which the retirement community is affiliated.
According to Bankrate.com, UBRCs are among the fastest-growing options for seniors. Because these retirement communities have ties to colleges and universities, it gives residents access to campus activities that range from auditing classes to enjoying concerts.
Several examples of highly successful UBRCs include Holy Cross Village at Notre Dame, Green Hills Retirement Community near Iowa State University, Meadowood Retirement Community near Indiana University and Oak Hammock at the University of Florida.
A Golden Network for the Golden Years
In addition to the village concept, another virtual-type aging in place solution designed for single mature adults who want to stay in their neighborhoods but who don’t want to live alone emerged last year.
The Golden Girls Network, featured last year on the PBS News Hour, started in 2014 as a nationwide electronic database designed to help mature adults (both women and men) find roommates and ease their way into shared living. Based in Bowie, Md., the organization also has a “Home Companion” program that assists seniors in finding a suitable live-in companion who can share activities and help with household chores. While the organization is still new, it currently has 600 members in 37 states and recently expanded its operation to include the Orlando, Fla. area.
Several of the aging in place concepts I’ve mentioned are still in the early stages, and time will tell how successful and sustainable they are in meeting the needs of the baby boom generation as they advance into their elder years. Given the fact that in 2015, the current age range of baby boomers is 51 to 69, much will change between now and the time they approach the end of their life expectancy.
For senior housing options that require long-term contracts and a substantial initial investment, advisors may be called on to assist clients in conducting due diligence on a facility’s financial stability and determine the client’s legal rights in the event of a facility’s future bankruptcy.
For clients insisting on staying in their homes, attorneys should suggest they consult a CAPS-certified remodeling specialist. In addition to modifications to make their homes safer, these clients should plan for the time when they may need 24-hour in-home care and analyze the cash necessary to fund it compared to the cost of similar care in a nursing home.
While each solution mentioned in this article may have merit, attorneys should remind clients to think long term. Ask them how they envision being cared for 20 years down the road when they’re physically less active and are likely to encounter health issues. Ideally, it’s best to help clients avoid facing limited options when a major health crisis suddenly occurs.