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Continuing Care Retirement Community: Are you financially ready?

Considerations for CCRCs

A nursing home isn’t a place most people look forward to moving into.

Is a nursing home in your future?

Probably not.

The odds are against it for at least a couple of reasons. One is that advances in medicine and improved lifestyles are keeping more people in good health well into their 70s and 80s and beyond. Another is that you have more housing and health care options today than ever before.

Among those options — and one that’s growing in popularity — is a continuing care retirement community (CCRC).

When people ask us about the wisdom of choosing a CCRC, our general response is that for many it’s a viable lifestyle alternative with several potential upsides — provided you do your due diligence and ask the right questions before signing any papers.

This is one of an occasional series of articles aimed at helping those approaching retirement (or already in retirement) understand and prepare for some of the lifestyle choices they might need to make and their cost. Additional information for seniors will be available through our website and other channels.

What is a CCRC? Essentially it’s a housing development for seniors that offers various kinds of living arrangements. These include single-family homes and condominiums for fully independent living, along with other units that provide assisted living and still others that offer full nursing care for those who need it.

CCRC residents typically have access to a number of services, which can vary widely in scale. High-end CCRCs will have upscale housing, perhaps multiple dining rooms, golf courses, clubhouses, swimming pools and more, spread over many acres of real estate. Other CCRCs are more middleclass with somewhat fewer amenities. Like anything else, you tend to get what you pay for.

Buying into a CCRC essentially involves a real estate transaction much like purchasing a house. But in this case, instead of paying hundreds of thousands of dollars for a house, you might pay a fee of that amount to move into the CCRC. That would give you access to activities such as dining in the clubhouse (if you don’t want to go shopping and cook for yourself in your house, condo or apartment), joining a bridge club, taking the shuttle bus to shopping malls and going on outings to cultural events. You can avail yourself of such amenities as much or as little as you wish.

As you age, if you are no longer able to live independently, you can leave the home you bought initially and move into the CCRC’s assisted-living center. Should your health decline further, you could move from there into the on-site nursing home. All of this is prearranged at the time of your initial purchase.

Most CCRCs also charge a monthly fee in addition to the up-front cost, and the fee is based on the level of services you want. Residents in the independent living section would obviously pay less than those in the nursing home.

It’s a great concept for those who like the service packages and can afford them. They do require assets, of course, and most folks come up with the assets by selling their houses and moving the proceeds into the CCRC.

It’s a big decision, so you’ll want to go into it with your eyes wide open. Have an attorney and your financial planner examine the contract so that you truly understand what you’re getting and what you’ll be paying.

Vexing questions can arise. For example, what happens if you or your spouse needs more care than the other? What if one of you needs assisted living, but the other doesn’t?

In 2015 a couple living in a Virginia CCRC filed a lawsuit after the husband suffered a stroke and needed to move into the assisted-living section. He got the care he needed, but they filed the suit after being refused entry into the clubhouse dining room. They were told that people from the assisted-living and nursing-home areas were not allowed to eat there among the independent-living residents. The CCRC settled with the Department of Justice by agreeing to change this policy and others deemed to be discriminatory.

The point is, you want to know the policies of the CCRC you are considering. If you’re married, will the two of you be able to live together if one of you needs more care than the other? Will you have access to all the facilities?

The concept is a good one, but you need to do your due diligence. If you’re like many people, you might neglect to do so because this kind of arrangement is new to you. Sure, you’re familiar with nursing homes because your parents or your grandparents lived in one, but this isn’t a nursing home. It’s something else entirely — and policies and services may vary widely from one CCRC to another.

You have options today that haven’t been available before — and more new options are coming all the time.

The good news is that those options are far better than those of the past. It’s the reason we say you shouldn’t assume that you’ll wind up in one of those negatively stereotyped nursing homes of yesteryear that everyone tried to avoid. Those days are behind us.

Your future will be happier and brighter — but also more expensive and complicated. That’s why you need the good advice an independent, fee-based financial planner can provide if you’re considering a CCRC. We provide such guidance for our clients. We’d be honored to do the same for any of your family or friends.

Talk with a Financial Advisor

No Cost. No Obligation.

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