As we grow older, many of us start to worry about the future and what will happen when we stop working. Will we be able to afford retirement? What if something happens and our health declines? How will we live out the rest of our lives in peace and comfort?
These are valid questions that deserve serious consideration. In terms of healthcare, security, and ease of mind in general, one solution is a continuing care retirement community or CCRC.
CCRCs offer all sorts of living arrangements so you can stay as independent as possible or move on to more intensive levels of care as your needs change. It’s ideal for people who don’t want to give up their independence but still need help doing everyday tasks.
And best of all, they provide a sense of belonging in an environment where people understand exactly what you’re going through. So before you decide how you want to live out your golden years, read on to see if a CCRC is a right choice for you.
What is a continuing care retirement community (CCRC)?
A continuing care retirement community (CCRC) is a community designed to offer long-term care for seniors in their golden years. It offers options to keep seniors living independently or to provide services as people’s needs change.
Also referred to as Aging in Place Facilities, the idea is that you’ll have a place to live out the rest of your life comfortably and as independently as your health allows and, if your health ever starts to decline, you will be transferred to another living unit with a higher level of care.
There are usually three levels of care in most CCRCs in the United States:
- Independent Living, or IL, is targeted to anyone above 60 years old who can still live alone and look after themselves but would rather avoid certain daily chores around the house. This usually means living in either an apartment or an independent cottage.
- Assisted Living, or AL, is the next level of care. This implies that you will need some help with tasks like cooking, cleaning your room, or bathing yourself. Assisted living care is normally provided in a studio apartment or a one-bedroom apartment. This unit may be located in the same campus or facility as the IL unit, or somewhere else.
- Nursing Care, or NC, is the highest level of care and is usually provided in a separate Skilled Nursing Facility (SNF). People who enter this unit require total assistance with daily tasks like eating and using the toilet. It’s the same type of care you would get in any nursing home, with qualified nurses making round to take care of your needs daily.
Besides these three levels of care, most CCRCs today also offer memory-care units with special support for people with Alzheimer’s disease or other cognitive disabilities.
CCRCs can be either not-for-profit or for-profit organizations. Around 80% of them are non-profits In the US, most of them associated with religious organizations.
The pros and cons of CCRCs
Everything has its ups and downs, and CCRCs are no exception. Here’s a look at the most important pros and cons of these senior care institutions:
Some of the pros of CCRCs include:
- A sense of belonging in an environment where people understand exactly what you’re going through.
- They provide a range of options to keep seniors living independently or provide services as people’s needs change.
- You’ll enjoy maintenance, housekeeping, and security services.
- Depending on the particular institution and its location, you may have access to various amenities, including golf courses, bowling alleys, theater rooms, etc.
- In some contracts, the price is fixed, so you won’t have to go through the stress of constantly adjusting your budget during your retirement years.
- Many CCRCs also offer special support for people with Alzheimer’s disease or other cognitive disabilities.
- Some contracts offer a full or partial refund of your entrance fee if you decide to move out or if you pass away.
- CCRCs are regulated by different agencies and are required to disclose financial information and key contract and financial terms related to the sales process, reserve requirements, and changes in fees, among other things.
Some of the cons include:
- The main con is the price. CCRCs are usually very expensive, especially if you’re required to pay an entrance fee.
- You may need to move into another level of care which may not be on the same campus as your first residence. This means plenty of stress and uncertainty.
- Moving between levels of care may result in separation from your spouse or partner if the facilities for both levels of care are not on the same campus (which they often are not).
- Maintenance, housekeeping, and security services are not always available 100% of the time.
- Depending on the community and its location, amenities are sometimes out of reach.
How much does it cost to live in one of these communities?
CCRCs aren’t cheap, and this is their main downfall. Depending on the type of contract you choose, you can expect to pay either a high monthly fee with a low entrance fee or the opposite. In the first case, the cost of living in a CCRC is usually based on the level of care that you need.
In this scenario, monthly fees can go as high as $3,000 and may or may not include healthcare costs. This usually ends up being a very expensive option later down the road.
In the case of entrance fees, these usually cover things like housing, maintenance, security, housekeeping, and other daily living services for the rest of your life. Sometimes they’ll also include healthcare. This type of care, obviously, involves a large sum of money upfront, but the actual fees vary wildly.
In some cases, entrance fees can go from as little as $20,000 to over $1 million, depending on the location and amenities they include. However, the nationwide average is currently close to $250,000.
It’s important to note that the final fee you end up paying depends on the type of contract. Some providers offer refund policies and therefore charge a higher fee on those contracts than on contracts without refund.
Some newer communities go as far as offering buy-in contracts where you end up owning real estate inside the campus. This ownership can then be passed down to family members when you pass away.
Tips on how to afford your CCRC entrance fee
A quarter of a million dollars is not exactly pocket money, so, naturally, you may be wondering how do people pay for that? As with everything else related to retirement, it comes down to planning ahead of time and making some important decisions along the way. Here are some tips to get you started:
Tip #1: Start investing early
Start planning and saving for retirement early, and you’ll be able to afford to move into a CCRC and more. We’ve talked about contributing to your 401(k) as a way to invest in your retirement before, but that by no means should be the only way to go about it. Investing is an important part of a healthy personal finance plan and, the sooner you start, the better.
When you’re young, you can afford to take on more risks like investing in cryptocurrencies or the stock market. Many crypto experts consider buying Bitcoin a sure investment, while others recommend investing in gold instead. It’s all a matter of studying the market and assessing your risk tolerance.
Tip #2: Sell your current home.
This is what most people do when they finally decide to move into a continuing care retirement community. After all, if you’re in it for the long haul, that is, for the rest of your life, you won’t be needing your current home anymore. This alone could provide enough for the entrance fee as well as for paying any recurring monthly fees, service fees or, why not, traveling.
Of course, this does have its downsides. What if the CCRC goes bankrupt? What if, for whatever reason, you end up not liking living there and want to move? These are all things you need to consider carefully before making this decision.
Tip #3: Work on your passive income streams.
If you’re going for a monthly fee (rental) contract, you won’t need a large sum of money upfront but rather a consistent income month by month. In this case, the best advice is to start creating passive income streams so that, as you get older, you can rely on that income instead of your salary. That way, once you retire, you’ll probably be making enough every month to cover the CCRC expenses.
Tip #4: Get an annuity
A lifetime annuity can assure a set amount to assist you in paying the high costs of long-term care when you have no other options.
Why do seniors ultimately choose to live in a CCRC?
People who weigh their options before moving into one of these communities tend to fall into three main categories:
- Those who choose to move into these communities because they want the benefits of a retirement community but still want to be close to family and friends.
- Some people decide to move into a CCRC after someone in their immediate family has experienced a loss of independence and needs a higher level of assistance or care than can be provided at home.
- Others see them as ideal places for aging in place, where you can feel comfortable knowing that even if health issues arise, there will always be support available nearby.
In addition to the ones stated above, research shows that other factors that play into moving to a CCRC are a strong desire to plan while still being able to do so, the fear of becoming a burden to their family or the fact that they simply don’t want to be bothered with home and yard maintenance.
Many of these factors help push or pull seniors to and from CCRCs and help offset some of the cons associated with the service.
When should you consider joining
Another common question people ask is when they should consider moving in once they’ve decided to do so. This is a difficult question to answer since the best time to go for it depends on a series of factors. In general terms, you can usually join by the time you turn 60. However, most people wait a long time before making the transition.
As Glenn Ruffenach from the Wall Street Journal states, it’s better to act early than late. There is an underlying risk that grows over time as you age. That means that if you wait too long, it may be too late to join a CCRC and enjoy the biggest benefits that come with it.
That said, it is true that most people who do join are over 80 years old (the average is close to 85), and most of them also happen to be women. This makes it less appealing to retirees in their early or mid-70s, which is the suggested age you should join.
The Bottom Line
CCRCs offer a range of options to keep seniors living independently and happy and they provide different services as people’s needs change.
These services can be expensive and many require that you move into another level of care as time goes by, which may or may not be on the same campus as your first residence. Maintenance, housekeeping, and security services are some of the perks retirees look up to when moving into an independent living unit while they still enjoy good health.
Meeting new people, acquiring a lost sense of belonging, and unburdening their families in case of future medical conditions are also good reasons to join.
Depending on the community and its location, pricing can vary wildly. Regardless, there are several different options and types of contracts that can fit into your personal finance nicely.
Whether you choose to make a single lump payment upfront to save on monthly fees, or you prefer a pay-as-you-go scheme, you’ll likely find a provider that offers what you need or want. The important thing is to plan in advance to make the jump when the time comes.