I agree that living with your mother in law sounds out of the question! I hope you have your husband's support on that. He should probably be the one to tell her 'No.'

It sounds like she wants to move in with you because she is lonely? That's an inappropriate solution for her loneliness, but it's not your obligation to provide an alternate solution, especially if she is not receptive to it. I would be worried that mentioning the retirement community in response to her request to move in would trigger a debate about how your place is so much better than a community.

Is it up to you to find long-term care for her? Could one of her children do this?