What to Know About Paying for Retirement Communities and Assisted Living

The good news: We’re living longer. The not-so-good news: The financial cost of living – and living longer – is consistently trending higher.

If a retirement community is part of your plan – whether it’s independent living, assisted living, memory care, a nursing home or a continuing care retirement community – the mix of location, amenities, contract structure and level of care will shape what you spend over time.

Planning early with a financial advisor helps you compare community options, understand entry‑fee vs. monthly models and build a tax‑smart funding strategy across savings, income streams, home equity and insurance, so you can enjoy the benefits of a longer life without worrying as much about the costs.

WHAT DETERMINES RETIREMENT COMMUNITY COST?

A retirement community is, of course, a place to live, so a lot of the same factors that have always driven your housing costs – location, housing type, amenities – will continue to come into play. Some are more within your control than others, and your personal costs will depend on what you prioritize most.

LOCATION AND REAL ESTATE MARKET TRENDS

A big factor, of course, is the cost of living where you are (or where you plan to relocate). As is true in general, retirement housing tends to be more expensive in the northeast and west regions of the U.S., and less expensive in the midwest and south.

Within those broadly defined areas, there’s variation. Urban areas are typically most expensive, followed by the suburbs and then rural areas.

Another factor that can make a big difference is state and local taxes.

One development to watch is the state implementation of a payroll tax specifically to fund a long-term care benefit. Washington state became the first to implement such a program, and several other states are also considering similar programs. However, at least in Washington’s case, the lifetime benefit is too small (currently $36,500) to make much of a difference for most people – you'll see why as you read on.

TYPE OF SENIOR LIVING COMMUNITY

Costs will also vary by type of community and the amount of help you’ll have available.

Independent living

These communities are designed for active seniors who want to make their lives easier and fun. They typically include a lot of amenities (sometimes even approaching a luxury resort vibe), but limited health care and help with daily life.

Assisted living

These communities allow seniors to live mostly independently, but with help available for activities of daily living (like bathing and dressing). They have caregivers on staff at all times and amenities like transportation and housekeeping.

Memory care

These facilities are for seniors with dementia, who need extra attention and more secure environments. They also typically have specialized staff and programming.

Nursing

These facilities are what many people traditionally picture when they think of “going to a home.” Once the default option for seniors who needed help and didn’t have anywhere else to go, nursing homes are now specifically for people who need 24/7 medical oversight and trained supervision.

Continuing care retirement communities

Also called “life plan communities,” CCRCs combine multiple kinds of care in one place. A resident may start out in independent living and then progress through assisted living and then nursing as they age and need more help and care.

FLOOR PLAN

Independent living and assisted living communities may offer several floor plan options. Some have cottage-style housing as well as apartment-style, and each may offer a different number of bedrooms depending on your needs. A smaller place with fewer bedrooms is, of course, likely to cost less than a larger one with more bedrooms.

Nursing homes often offer both private and semiprivate rooms, which also have a cost difference.

LEVEL OF CARE AND AVAILABLE SERVICES

Personal care needs

As you can see, how much help you need is a big component of costs. In many cases, care is baked into the monthly fees; if you need more care, you move to a higher level of care and its commensurate costs. In some cases – for example, CCRCs – you may be able to choose a type of contract where you pay only for the services actually used, so if you stay healthy and active, you would pay less than if your health declined and you needed a lot of help for many years.

Amenities

Retirement communities are similar to other kinds of housing – like condos or HOA communities, for example – in that more amenities generally come with a higher price tag. Some communities include fitness centers, salons, dining options, pools, wellness programs, transportation services, social activities and entertainment, while others are much more basic.

ENTRY FEES VS. MONTHLY FEES

As we’ll explain below, for a CCRC, the type of payment model contract can also affect cost. Broadly, some CCRCs charge a large entry fee as well as monthly fees, while others follow a “rental” model where only monthly fees are charged, but your place in the community and access to higher levels of care may not be as secure. A few CCRCs follow an ownership model where you actually buy a home in the community, or a share of the co-op running the community, and pay monthly fees.

AVERAGE COST OF LIVING IN A RETIREMENT COMMUNITY

INDEPENDENT LIVING COST BREAKDOWN

The cost for independent living facilities can typically range from about $2,000 to $5,000 a month. The national median cost in 2025 was $3,100, according to senior living advisor service A Place for Mom, with a high of $4,963 in Hawaii down to a low of $1,830 in North Dakota.

That typically covers:

• Housing
• Meals
• Amenities
• Maintenance
• Social activities

ASSISTED LIVING COST BREAKDOWN

The cost for assisted living facilities can typically range from about $3,500 to $7,000 a month. The national median cost in 2025 was $4,995, with a high of $7,000 in New Jersey down to a low of $3,642 in Wyoming.

That typically includes everything covered in independent living, plus:

• Support for activities of daily living
• Medication management
• Housekeeping
• Transportation

MEMORY CARE COST BREAKDOWN

The cost for memory care facilities can typically range from about $3,000 to $10,000 a month. The national median cost in 2025 was $6,200, with a high of $10,370 in Vermont down to a low of $3,210 in South Dakota.

It typically includes everything in assisted living, plus:

• Specialized staff and high staffing ratios
• Greater security
• Specialized programming and therapies

NURSING COST BREAKDOWN

According to Care Scout research, the cost for nursing facilities can typically range from about $5,500 to $30,000+ a month. The national median cost in 2024 was $9,277 for a semi-private room and $10,646 for a private room. The most expensive was a private room in Alaska at a monthly cost of $30,371, and the cheapest was a semi-private room in Texas at a monthly cost of $5,475.

These costs typically include everything in assisted living, plus:

• 24/7 care and support from skilled nursing staff

HOW MUCH DO CONTINUING CARE RETIREMENT COMMUNITIES COST?

It can be more complicated to get a sense of what you might pay for a CCRC. To start, different CCRCs have different payment models. Those using rental models charge based on the level of services needed (so, costs may be similar to those above at the same levels). They also may charge a small up-front fee. CCRCs using an entrance fee model have a large upfront fee and subsequent monthly fees. Depending on the contract, your care may be covered by the monthly fee no matter what, or there may be additional charges as more services are needed.

In any case, the average entry fee for CCRCs in 2025 was more than $480,000, and the average monthly fee was $4,325 (if starting at the independent living level) for entry fee communities and $3,950 for those using rental models.

CCRC contracts are extremely complex, so getting help to understand and compare contracts may help you plan your initial expenses as well as your potential future exposure.

Entry fees

CCRCs with entry fee models, while they have a large upfront cost, are popular for a few reasons.

• You don’t need to worry about finding a new home every time you need more care
• Your financial risk is more controlled
• You have guaranteed access to the increasing levels of care you may need in the future

Entry fees may be fully refundable, partially refundable or not refundable if you pass away or decide to move out, depending on your contract. Fully refundable contracts are rare and typically the most expensive.

Contract types

Most CCRCs use standard contract structures that affect how your payments may change over time.

Type A contracts are typically the most expensive, both in their entry fees and monthly fees. In exchange, they typically cover all future potential needs without substantial increases in cost.

Type B contracts still cover future needs without substantial increases in price, but only for specified lengths of time. If you need care for more days than the contract covers, you will then pay out of pocket for those services.

Type C contracts cover only housing, meals and amenities, but any additional services you wind up needing must be paid out of pocket.

Monthly fees

Monthly fees for CCRCs vary depending on contract type, whether they use an entry fee model or a rental model and what level of care you need when you move in.

HOW DO SENIORS PAY FOR INDEPENDENT LIVING AND ASSISTED LIVING?

USING YOUR HOME TO HELP COVER COSTS

An obvious option for covering the steep entry fee and ongoing costs of a retirement care community could be selling your home. Home value appreciation over the past few years makes this more attractive and feasible for many people – after all, the idea of moving to a retirement community is that you won’t be needing a house anymore.

Reverse mortgages are often mentioned as a possible way to fund moving to a retirement care community without selling your house. We generally don’t recommend reverse mortgages. There are almost always better ways to meet your financial needs.

In some cases, a spouse may choose to continue living in the house for now. A financial advisor can help you consider options for your home equity when selling isn’t the clear choice.

PERSONAL SAVINGS AND RETIREMENT INCOME STREAMS

Ongoing retirement income is another way to help pay for retirement care communities. It can include:

• Social Security
• Pensions
• Annuities
• Investments

Of course, your savings need to support other costs as well, and you may wish to leave an inheritance to family or charity. A financial advisor can help you determine how much of your savings can go toward retirement community fees and monthly expenses.

LONG-TERM CARE INSURANCE

If you have a long-term care policy, you can use those benefits once you need a certain level of care, which is typically help with at least two activities of daily living.

Most policies have a waiting period (for example, the first 60 or 90 days) before benefits kick in, as well as a maximum payout. And in many cases, the daily or monthly benefit will help offset, but not completely cover, the monthly fees.

If your state, like Washington, has a tax that funds long-term care benefits, you may also be able to use those benefits once you need a qualifying level of care. On average, Washington assisted living facilities charged $5,425 a month in 2025, so the maximum benefit might only pay for about 7 months.

If you’re still on the younger side, a financial advisor can help you decide whether a long-term care policy makes sense for you. And if you have an existing policy, an insurance professional  can help you understand how much it might pay, for how long and under what circumstances.

MEDICARE VS. MEDICAID: WHAT THEY ACTUALLY COVER

Medicare doesn’t cover long-term care, so it won’t pay for general retirement living costs, although it can cover medical costs. Some Medicare Advantage plans may cover help with costs related to activities of daily living, however. And Medicare also covers skilled nursing home care for dementia patients.

Medicaid will cover some long-term care costs, but to be eligible for Medicaid, you generally must have spent almost all of your own money first. It’s also important to note that the room and board portion of assisted living costs isn’t considered long-term care, so it won’t be covered no matter what. The portion of expenses that may be covered varies by state, depending on its specific Medicaid waiver rules.

 A financial advisor can give you more details on what retirement community expenses might be covered by your Medicare plan or Medicaid and when.

VETERANS BENEFITS

If you qualify for VA benefits, they can cover the additional services (but not the monthly fees) that you have in an assisted living facility.

Additionally, if you have no family that can care for you and you can no longer live alone because of a medical condition, you may qualify for the Community Residential Care Program, which can cover assisted living expenses at certain facilities.

If and when you need 24/7 nursing care, the Community Nursing Program also covers care at specific nursing homes for eligible veterans. The qualification criteria include military status, disability level and income.

Finally, if you get a VA pension and need help with activities of daily life, you might be eligible for VA Aid and Attendance, which is an extra amount added to your pension payments.

 A financial advisor with experience in VA and military benefits can help you understand how they could fit into your financial strategy.

LIFE INSURANCE OPTIONS

You may also consider using withdrawals from cash value life insurance policies to help pay monthly fees. It’s sometimes possible to convert a term life policy to a whole life policy with a cash value, although you should talk to a professional about whether there are better ways to meet your need for cash.

Some life insurance policies have accelerated benefit riders, which allow for an early payout in certain circumstances including, potentially, the need for long-term care. If you’re considering buying a life insurance policy specifically to help pay for potential retirement expenses, talk to a financial advisor first.

HOW ASSISTED LIVING WORKS FINANCIALLY

BASE RATES VS. LEVEL OF CARE ADD-ONS

Your contract will always control what is covered by your monthly fees and what’s an additional add-on, so you should read it carefully and make sure you understand. It’s smart to have a professional like a financial advisor take a look too. They can help you compare contracts, understand how your expenses might change over time and decide on a funding strategy.

The type of community where your monthly rates are most likely to change dramatically over time, or to leave you with exposure to substantial add-on costs, are ones that offer different tiers of care, like CCRCs. Unless you have a Type A contract that guarantees all-in care at every tier, you may potentially find yourself in a situation where you need increasing care that’s not covered by your contract and must be paid as an extra expense.

What happens in communities where there’s only one level of care? Rather than racking up increasingly large bills, if and when your needs are beyond their capacity to meet them, you will likely have to move to another facility with a higher level of care.

ANNUAL FEE INCREASES AND WHAT TO EXPECT

The kinds of monthly fee increases you can expect to see depend on your contract terms. At a minimum, you should expect increases that are in line with inflation.

Inflation hasn’t been kind to seniors. While price increases have hit everyone hard in the past few years, they’ve risen even more for Americans age 62+ than the general population, because of the different types of goods and services seniors tend to spend their money on.

Specifically for CCRCs, entrance fees have risen more than 22% over the past 5 years, and monthly fees also continue to grow, with 2025 yearly increases of 3.6%-4.9% depending on CCRC model and care level.

Meanwhile, standalone assisted living facility costs went up 4.7%, memory care 5.2%, and independent living 2.7% from 2023 to 2024.

A financial advisor can help you model future increases to help you be confident they’re accounted for in your plan.

WHAT’S INCLUDED VS. NOT INCLUDED IN MONTHLY FEES

Retirement communities generally include housing and meals in the monthly fees. (The quality of the meals and the amount of choice you have depend on the facility you choose and its price point.)

They also generally include a program of educational and entertainment activities, as well as access to the community’s amenities.

In assisted living facilities, they may also include things like housekeeping, laundry and transportation to medical visits, as well as support with whatever activities of daily living you need help with.

Nursing and memory care monthly fees additionally cover a higher level of 24/7 care by trained nurses and specialized support staff.

Things that may not be covered include some luxury entertainment activities or amenities (for example, community-sponsored travel and on-site spa services) and medical care. In a CCRC, your contract may also require you to pay some or any services out of pocket.

PLANNING FOR LONGEVITY: HOW TO MAKE SENIOR LIVING COSTS SUSTAINABLE

ESTIMATE LONG-TERM COSTS FOR MULTIPLE CARE SCENARIOS

Most people have a vision of how aging will go, maybe based on how your parents aged and what kind of care they needed. But it’s important to remember – and build into your plans – that anything could happen. You may be able to stay relatively independent, or you may need assisted living or even memory care or nursing at some point.

If you choose to move to a CCRC with a Type A contract, that will likely give you the greatest idea of what your future expenses could be and make it easier to confidently plan for any scenario. But that security comes at a price. A financial advisor can help you weigh the trade-offs, evaluate the best fit for your needs and “game out” multiple scenarios, including those in which you and your spouse need different levels of care.

USE PROJECTIONS BASED ON HEALTH, AGE AND INFLATION

Another critical point to remember is that costs aren’t static; you can’t plan for 20 years in the future using today’s rates.

Websites like CareScout have calculators that can help you find average costs for different types of facilities in your state and project them into the future. As you get closer and if your health changes, it’s smart to re-run your calculations to make sure they’re still in line with expectations.

A financial advisor can also help with long-term cost modeling and can match your potential expenses to cash flows and income so you can feel more confident about your plan.

BUILD A SUSTAINABLE FUNDING STRATEGY

Most people use multiple funding sources to pay for a move to a retirement care community. Remember that a significant source of initial funds could be your primary home, but you’ll need to project income and cash flows well into the future to help ensure you won’t run out of money.

If you’re still on the younger side, consider a long-term care policy, which could help cover expenses if you need to move to assisted living or nursing. A financial advisor can help you decide whether it makes sense and come up with a plan to combine funds from savings, Social Security and other income streams to make it work.

WHEN TO WORK WITH A FINANCIAL ADVISOR

A financial advisor can help you model your future income and withdrawals so you have a better sense of what’s affordable for you.

And an advisor with experience in retirement community contracts could also help:

• Ask the right questions so you can choose a community that will be a good fit for your personality and future needs
• Compare contracts so you understand what’s covered and what’s not, how entry fees might impact your future finances and how monthly costs could change
• Explain some nuances you could otherwise miss, like the fact that nonprofit communities are more likely to have financial funds that can allow you to stay in the community even if you run out of money (as opposed to those run by for-profit companies)
• Assess the financial strength of a community, which is critical if you’re signing a contract with a steep entry fee that guarantees lifetime benefits
• Calculate how much of your entry fee might qualify as prepaid medical expenses, which can be deductible on your federal tax return

Beyond help with considering your retirement care community options, financial advisors can help you develop a tax-smart withdrawal plan – potentially giving you more room in your budget – and guide you on investments and estate planning needs.

FAQs ABOUT RETIREMENT COMMUNITY COSTS

Q: What is the average cost of living in a retirement community?

Average costs vary based on type of facility, location, amount of care needed, amenities and payment model. It can be anywhere from $2,000 a month to $10,000+.

Q: How do seniors pay for independent living?

Most seniors use a variety of funding sources to pay for independent living, including selling their home, Social Security, retirement savings and an annuity or pension.

Q: How does assisted living work financially?

Assisted living facilities charge monthly fees. If you have long-term care insurance and need help with activities of daily living, the policy can help pay the monthly fees for an assisted living facility. If not, you’ll probably pay out of pocket.

Q: How much do CCRCs cost?

Costs vary depending on the type of model (entry fee or rental) and the type of contract, which may cover all, some or no extra services. In 2025, the average entry fee was more than $480,000 and the average monthly fee was about $4,000-$5,000 depending on situation.

Q: When should I talk to a financial advisor about retirement community costs?

Meeting with a financial advisor early can help you evaluate community options, compare contract types and build a funding plan that aligns with your long-term goals.