Continuing Care Retirement Communities: Good as Gold or Just Digging for Gold?


In more ways than one, continuing care retirement communities (CCRCs) are the “Rolls Royce” of senior living options.

Beyond the usual luxury retirement home benefits, like gourmet meals and spas, they are also equipped to provide health care services. Depending on the contract that you choose, these health services may be included… or they may be charged for on an “as needed” basis.

The fact that continuing care retirement communities can offer all of these services allows them to market themselves as the perfect “aging in place” solution. In other words, they argue that, once you move in, you can expect to live in their facility for the rest of your live, regardless of your changing health situation. Sounds good to me!

Continuing Care Retirement Communities: What’s Not to Love?

It’s easy to see why this is such an appealing option for so many people. Who wouldn’t want to live in a retirement community in which all of your basic needs, from healthy food to healthcare, are taken care of for the rest of your life?

One obvious downside of continuing care retirement communities is the cost. In fact, the up-front fees to join a CCRC can be so high that many seniors end up selling their homes to pay for them.

Even once you pay the initial joining fee – which, according to this U.S. Government Accountability Office report, can be as high as $600,000 – you still have to pay a monthly service charge. According to the same report, these monthly fees can run from $2,500 – $10,000, depending on the contract that you choose.

If it was just a matter of cost, continuing care retirement communities wouldn’t be controversial. After all, if you have the money, why not live somewhere spectacular?

The problem, according to the same report, is that many CCRCs aren’t as financially stable as they would like us to believe. When you think about what it takes to set up a continuing care retirement community, this simple fact won’t come as a surprise. Not only do CCRCs have to build luxury accommodation, but, they also have to hire expert staff, including medical professionals.

What Happens When a CCRC Runs Out of Cash?

It depends. According to the GAO report referenced above, several CCRCs have filed for bankruptcy protection in recent years. If a GAO runs out of money, residents may have to pay for services that were once included. Or, in extreme cases, they may even lose some or all of their deposit, which, as you recall, can run into the $100,000s.

Of course, all senior living communities can run into financial trouble. The difference in the case of CCRCs is that the residents are asked to put down a large amount of money up front. In many cases, these joining fees represent the majority of the residents’ wealth. If some or all of this money were to go away, the results could be devastating.

CCRCs Can Still Be a Good Choice… if You’re Careful

Just like anything in life, there are good and bad continuing care retirement communities. The most important thing is to arm yourself with the information that you need to make an informed decision.

For starters, I would recommend asking the following questions to every CCRC that you visit:

Can I see your audited financial statements?

How much debt do you have? How does this compare to your cash on hand?

What expansion plans do you have and how will you pay for them?

Do you plan on raising any additional capital in the next 2-3 years?

Once you have narrowed your search down to a couple of options, share the information that you have collected with your accountant or financial advisor. No-one likes paying their financial professional to look over documents, but, given the potential amount that you may have to invest in your chosen CCRC, it’s worth it!

The Bottom Line About Continuing Care Retirement Communities

If you have the money – and you are willing to do your homework – CCRCs can be a fantastic senior living option. They offer the promise of “aging in place” and have the facilities to make the best years of your life truly golden.

Just remember that not all continuing care retirement communities are created equal. This is true of the services that they offer, as well as, the financial security that they provide. So, do your homework!

Before selecting a CCRC, make sure that you talk with the staff and, most importantly, the other residents. Ask them what they like most… and what they wish they could change. Then, before making a final decision, talk with a financial professional to make sure that you can afford to make the move. It’s not just about the up-front payment. It’s also about making sure that you can be reasonably certain that your investment will be there for you in the best years of your life.

What have you heard about continuing care retirement communities? Do you know anyone who is staying at a CCRC? What has their experience been? Please join the conversation.

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