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Seek trusted financial advice in retirement planning

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May 22nd, 2012

At every important stage in life when we marry, buy houses, start families, or launch businesses it s prudent to consult with a financial advisor. The same goes for making plans for retirement living. If you re considering moving to a continuing care retirement community (CCRC), a trusted advisor can devise a financial plan that s right for you. Kurt Wiegert, a certified financial planner with Maryland-based Brooks Financial Group, Inc. (brooksfinancial.com), says there are many different ways to afford CCRCs. He helps clients figure out which strategy fits their unique circumstances. We re big believers in CCRCs in general and what they mean to seniors financial security, Wiegert says. When clients who are considering a move to a CCRC come to Wiegert for financial advice, one of the first things he helps them determine is what it will cost them to live at a retirement community compared to the true cost of staying in their houses. Most CCRCs require an initial entrance deposit, which may be refundable, and charge a monthly fee thereafter. Wiegert says many people who have paid off their mortgages incorrectly assume that living at a CCRC will cost more.

Less expensive option

When you really dig into numbers and look at what someone is spending on independent living in their house versus a community, more often than not, on an average of a two- to three-year period of time, it s going to be less expensive at a CCRC because people forget about all those big ticket items, like the $10,000 you might have to spend for a new furnace, Wiegert says. Moving to a CCRC actually makes financial planning easier, Wiegert says, because residents can better predict their ongoing monthly expenses. That enables Wiegert and his colleagues to create plans that give clients high levels of financial stability. One couple who recently moved to a CCRC was worried that if the husband, who had a high pension, passed away before his wife, she would be unable to afford the monthly fee at the retirement community. So Wiegert s firm evaluated their situation and advised the couple to purchase a life insurance policy that would cover the wife s living expenses if she outlives her husband. Another client, Wiegert says, was planning to withdraw money from an IRA to pay his CCRC entrance deposit. He would have been hit with a large tax bill if he took out a lump sum. Fortunately, Wiegert s firm advised him that many CCRCs accept entrance deposits in installments, so he was able to make the move and minimize his tax exposure. Brandon Corso, a financial planner with Virginia-based Edelman Financial Services, LLC (http://www.ricedelman.com/cs/invest_with_edelman/invest_with_edelman_fin...), also fields inquiries from clients considering moves to CCRCs. Corso says monthly service fees at some CCRCs seem high at first glance, but that is because they usually include a lot of perks. CCRC contract terms vary, so Corso advises clients to ask questions about monthly fee escalations, entrance deposit refund terms, and the financial stability of the company. And, as you would with any important contract, Corso says to have your attorney review it before you sign on the dotted line. meghan.streit@erickson.com

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