Are Continuing Care Retirement Communities Right for You?

As the population ages, the concept of continuing care retirement communities (CCRCs) has gained prominence. These specialized communities offer a range of living environments—ranging from independent living to skilled nursing care—tailored to the changing needs of residents. Based on my experience with my father, who spent his last years in a CCRC until 2015, I can offer insights into the benefits and challenges of this option.

What Are Continuing Care Retirement Communities?

CCRCs are designed to meet the comprehensive needs of residents as they age. The typical model involves residents purchasing a unit, usually an apartment, in independent living. The initial purchase price can be substantial, often around $300,000, though some of this amount can be refunded to the estate. Once the resident moves into independent living, they enjoy all the benefits of a supportive community, including excellent amenities and facilities. There’s typically a monthly cost, which is usually proportional to the buy-in amount, often around $4,000 per month. This fee generally covers all services, with one cooked meal a day included.

The Benefits of CCRCs

One of the key advantages of CCRCs is their holistic approach. As health needs change, residents can seamlessly transition to assisted living, skilled nursing, or memory care units without relocating. In my father's case, when he moved to the assisted living unit, he received significantly more nursing and other services at a modest additional cost. The monthly fee for high-quality assisted living was around $4,500, which was still a bargain compared to the $4,000 cost of independent living. As a form of medical expense, these monthly fees are also partly income tax deductible.

In the event that additional care was required, they offered hospital-style rooms with no further increase in room charges, and they even had a memory dementia unit. Most importantly, if a resident ran out of money, the CCRC had policies to ensure they were not forced to leave. A prerequisite was that they had sufficient financial resources to prevent this from happening.

Comparing CCRCs to Traditional Retirement Options

Compared to the “on your own” scenario, CCRCs offer a more integrated and supportive environment. If a resident needs to move to a different facility, it can be challenging, especially with long-term nursing care. Medicare typically covers only 30 days of nursing home care after a 3-day hospital admission, and any subsequent care is the responsibility of the individual. With CCRCs, the financial burden is shared, making long-term care more manageable.

For individuals who may require extensive long-term care and can afford the initial buy-in and independent living costs, CCRCs can be a financial bargain. Imagine a person who buys into a CCRC lives a few years in independent living and passes away. In this scenario, they might have spent more on a CCRC than they would have in a non-CCRC retirement community. However, if the same person lives a short time in independent living then many years in assisted living, skilled care, or dementia care, their long-term costs would likely be much lower than those of someone who had to buy long-term assisted living or skilled care on the open market.

Pros and Cons

While CCRCs offer numerous benefits, they also come with some drawbacks. The high initial cost and long-term financial commitment can be a barrier for many. Additionally, if the resident moves out, they may only receive a partial refund, depending on the contract. Moreover, for those who don’t expect to need significant care, a CCRC might not be the most financially sound option.

CCRCs also offer unique physical facilities and special recreational opportunities. My father, for example, loved working in the woodshop and the jacuzzi, which were features not available in a typical senior community. However, the choice must be made carefully, with a thorough understanding of the costs and long-term financial implications.

Conclusion

Whether a CCRC is right for you depends on your financial situation, health expectations, and lifestyle needs. For those with sufficient assets and a realistic assessment of future care needs, CCRCs can provide a supportive, integrated living environment that minimizes the chaos of relocating as your care requirements evolve. But it’s crucial to shop around, compare costs, and understand the terms of the contract fully before making a long-term commitment.