Continuing Care Retirement Communities: What You Need to Know

Where you live during retirement can have a significant impact on the financial and personal sides of your life. For many, there will come a time when moving from the family home to a retirement community makes sense.

It’s often challenging for families to navigate the emotional, financial and logistical complexities of caring for senior loved ones whenever living at home no longer remains viable—regardless of how comfortable it may seem and how many great memories were made there. If you’re thinking about a retirement community for yourself or your parents, we’ve got some helpful information to share about Continuing Care Retirement Communities, or CCRCs.

Primary housing options for the elderly to consider

Many (if not most) people want to age in their own home, but because of health or safety reasons, as well as the burden and costs of upkeep, at some point, they may want to consider moving to a community environment.

Maybe it’s an age-restricted community where the senior is just downsizing their home to something more manageable but maintaining complete independence. Or maybe it’s an all-inclusive community, like a CCRC, where they can get higher levels of care if needed. Certainly, some people stay in the home too long and then have a nasty fall or a health episode that requires them to go directly into an assisted living or skilled nursing facility. However, if they move to a CCRC at an appropriate time, perhaps they can receive ongoing care and undertake preventative measures that allow them to stay healthier for longer, thereby delaying admittance to a facility where more intensive care is required.

Debunking the stigma around CCRCs

If you’re not overly familiar with the concept of CCRCs, you might be inclined to envision them as being similar to “your grandmother’s nursing home.” On the contrary, many of them are more like country clubs in certain respects. You’re buying into a lifestyle where you have access to socialization and amenities, plus quality care whenever you need it. Costs notwithstanding—more about that later—CCRCs may represent the best of both worlds.

While it’s true that people tend to equate staying in their home with remaining independent, living alone in the family residence may also be a source of unwanted isolation. By and large, humans are more drawn to being social, and that’s part of what these communities provide.

Common decisions to make regarding CCRCs

When considering a CCRC, you’ll first need to determine and prioritize what’s important to you. It’s similar to deciding what you’re looking for when buying a house. There are qualitative factors to address, such as the amount of space, the location, the amenities, the people and whether there’s proximity to family or to places you enjoy visiting, etc.

Next, it’s the question of care options. Many communities operate on a fee-for-service basis. You pay an entry fee and a monthly fee, plus you’ll likely pay extra for any assisted living or skilled nursing that you require.

Other communities offer life care, which is similar to long-term care insurance. You typically pay a higher entry fee and higher monthly fee, but that fee stays level whether you need independent living, assisted living or skilled nursing. This helps provide some cost certainty to your budget as your personal circumstances evolve over time. Be sure to look at how life care would integrate with any other insurance you may have.

Then, there are refundable contracts and non-refundable contracts. With some communities, you may cancel your contract within the first several years and get back a percentage of your entry fee.

So, what you end up with is this “decision matrix” of life care, no life care, refundable, non-refundable, percentage refundable—and the costs associated with each option. You’ll have to weigh all of these important factors to determine which CCRC best meets your unique needs.

It often comes down to cost. Most CCRCs in the U.S. are structured as nonprofit organizations, but it doesn’t necessarily mean they’re inexpensive. Depending on the specific community, entry fees could be fairly modest, or they could range significantly higher.

From a financial standpoint, do CCRCs make sense for you? If you’re selling your primary residence, how much will you get from that sale? What portfolio assets and savings do you have to support not only the entry fee but also the ongoing inflation-adjusted monthly fees moving forward? Liquidity is another consideration. For instance, non-refundable contracts are typically cheaper, but do you want those funds tied up for life?

Remain on solid financial footing 

Since moving to a CCRC can have major financial implications, you should consider hiring an elder attorney to explain all the terms and conditions, and answer your questions. You can also look at the financial health of the community. With help (if needed) from a professional like your Corient Wealth Advisor, talk to the CFO and review the CCRC’s financial statements and their debt ratings if they issue municipal debt. Also check occupancy rates because communities with higher occupancy rates tend to be more stable and financially healthy.

It’s also worth noting that one of the benefits of CCRCs is that a portion of the non-refundable entry fee and monthly fee can potentially be a medical tax deduction. In addition, you might be able to deduct property taxes each year, which would help lower your after-tax cost.

Could CCRCs be what you’re looking for?

At Corient Private Wealth, we’ve witnessed many heartwarming success stories about elderly clients transitioning to a CCRC. You see clients move into these communities, and then you have dinner at the on-site restaurant with them, and every neighbor says hello, and your client tells you about all the ways they’re living well and staying happy and healthy.

We recently heard about a CCRC resident who suffered an injury when she fell. Her husband pulled the alarm chain, and in less than five minutes, the ambulance was there to swoop her up and rush her off to receive the appropriate care. When you’ve got top-notch healthcare services readily available to you, that’s part of the success story, too.

We know people have made the right decision when they tell us, “I wish I had done this sooner.” Since CCRCs might not be suitable for everyone’s situation, consult with your Corient Wealth Advisor as one of the first steps toward making a decision about living arrangements that works well for you.

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