As more people age and begin to explore their retirement living options, one question keeps coming up: Can you afford to live in a continuing care retirement community (CCRC)?
It’s a common concern for people who are potentially interested in living in these communities because the true cost of senior living often involves more than just an initial price quote. In other words, it’s complicated.
“Senior living options have evolved to offer a range of care levels and services tailored to individual needs, budgets and preferences,” says Tammy Hemmingway, executive director at Brookdale Hawthorn Lakes, a community in Vernon Hills, Illinois. “It’s essential for each person to evaluate their required care level, desired activities and financial capacity to find a solution that fits their unique situation.”
With careful research and the right resources, which we’ve laid out in this guide, you can find CCRC options that fit your budget and lifestyle.
[READ How to Determine if Your Aging Parent Needs Additional Support]
What Is a CCRC?
CCRCs, also known as life plan communities, were established more than three decades ago to provide an environment for people who prefer to remain in one place as their health care needs change. These communities offer a wide spectrum of options, from independent and assisted living to memory care, short-term rehabilitation and skilled nursing services all in the same place.
At a CCRC, healthy, independent seniors typically move into apartments or cottages with full kitchens and one or two bedrooms. As their care requirements change, they have the option to transition seamlessly to on-site assisted living or eventually to nursing care facilities that provide round-the-clock medical care and assistance with daily activities such as bathing, dressing, eating and getting around.
“One of the key factors in choosing a CCRC is how you’ll manage your future healthcare needs,” says Dee Pekruhn, director of life plan community services and policy at Leading Age, an advocacy association for non-profit providers, including CCRCs, based in Washington, D.C. “While no one has a crystal ball, it’s crucial to think about future health care costs and anticipate what your expenses will be down the line.”
[READ: Independent Living vs. Assisted Living: What’s the Difference?]
How Much Does a CCRC Cost on Average?
The cost of living in a CCRC will vary depending on health care needs, location, housing options and amenities. Many CCRCs offer the following pricing models:
— Monthly rental model: Residents pay an upfront fee of $1,000 to $5,000 and then a monthly rental charge from $2,000 for a studio or a small one bedroom to $6,000 for larger units with more space. Meals, housekeeping, transportation and more may be included in the monthly rental fee, but it’s important to double-check what’s included and excluded. On average, rent for a CCRC was $3,450 in 2023, according to the nonprofit National Investment Center for Seniors Housing & Care, known as NIC. By comparison, the average cost of assisted living is $4,500 a month.
— Entrance-fee model: Requires an upfront payment that can range from $100,000 to more than $1 million, with the average entrance fee around $410,000. The entrance fee is often paired with a monthly service fee. In many cases, part of the entrance fee may be refundable if the resident moves out or upon their death, depending on the community’s specific contract. Within the entrance fee model there are different types of contracts, including:
— Type A (life care contracts): Includes higher upfront fees but covers a wide range of services, including future care (such as assisted living or skilled nursing). This is the most expensive option, but it provides guaranteed care down the road when it’s needed. Monthly fees are adjusted each year by about 3% to 5% to account for inflation versus market rate, which might be significantly higher.
— Type B (modified contracts): This option requires a lower upfront fee but offers a limited amount of care services. Once the care limit is reached, additional fees will apply. While it includes many comprehensive services, similar to a Type A plan, some services will need to be paid for out of pocket. It also provides a few days of respite care, typically 10–20 days, allowing caregivers to temporarily place their spouse or loved one in a nursing home, giving them a break from their daily caregiving duties.
— Type C (fee-for-service contracts): This option has the lowest upfront cost but requires residents to pay full market rates for any care services they are needed in the future. It is closest to a rental arrangement, but the monthly fees are usually higher because of the lower down payment. This option also provides respite care.
— Entrance-fee model with refundable options: Many communities offer refundable entrance fees as part of their contract options. These refundable entrance fees vary depending on the community and the specific agreement you choose. Common types of refundable options:
— Partially refundable entrance fees: A portion of the entrance fee, typically ranging from 50% to 90%, is refunded when the resident moves out or passes away.
— Fully refundable entrance fees: In some CCRCs, residents may receive a 100% refund of the entrance fee upon vacating the community or after passing, though these contracts often come with higher upfront costs.
“Refundable entrance fees are often designed to offer peace of mind, ensuring that a portion of the initial payment is returned to the resident or their estate,” Pekruhn says. “However, the terms of these refunds, such as the timing and conditions, can vary significantly between communities.”
Factors that determine the cost of a CCRC
In addition to upfront costs and monthly fees associated with a given CCRC, there are other factors that influence the total cost:
— Location: Whether the CCRC is located in the suburbs or the city will dictate the cost structure. In urban settings, the entrance fees and monthly costs are typically higher.
— Size of living space: The type of housing, whether it’s an apartment, villa or cottage with one or two bedrooms will dictate costs.
— Level of care: Independent living is the least expensive option, while assisted living is more costly as it includes help with daily activities like bathing and medication management, and skilled nursing care is the most expensive due to the round-the-clock care provided.
— Amenities: Facilities with more extensive amenities such as fitness centers, swimming pools, dining options, on-site medical care, social activities and transportation tend to charge higher fees. Personalized services (e.g., concierge care, private duty aides) also add to the overall cost.
“Understanding these factors helps prospective residents better assess the long-term financial commitment required for a CCRC,” Pekruhn says.
[READ Long-Term Care Facilities: Types and Costs]
What CCRC Costs Include and Exclude
The costs associated with CCRCs can vary widely depending on the type of contract, location and level of care needed. Here’s a breakdown of what is typically included and excluded in CCRC costs:
Included in CCRC Costs:
— Housing: Apartments, studios, cottages or other housing options
— Assisted living services: Help with daily activities like bathing, dressing or mobility, if part of a contract for an assisted living facility
— Routine medical services: On-site clinics, medication management and basic medical check-ups, if independent living communities provide such services
— Housekeeping: Cleaning services for living spaces (frequency of services and cost will vary)
— Maintenance: Repair and upkeep of indoor and outdoor community buildings, apartments, kitchen appliances, heating/cooling systems and outdoor grounds and landscaping
— Meals: CCRCs provide either full dining options or limited meal plans in independent living. Meals and snacks are provided in assisted living and nursing care centers. Some communities provide residents with a “credit” that they can use toward any meal they choose.
— Parking: One or two parking spots are sometimes available unless the CCRC is in an urban setting and pays garage fees. Some communities offer free EV charging but others do not.
— Fitness facilities and classes: Access to fitness centers, pools and certain exercise classes are often included. Special fitness classes may cost extra.
— Security: Gated access, security staff and emergency response systems
— Social events and clubs: Organized social activities like clubs, hobbies, educational classes and entertainment are usually included. Trips and extended excursions are typically an extra expense.
— Transportation: Shuttle services for medical appointments, shopping and local excursions
— Utilities: Water, electricity, heating, air conditioning and even basic cable are often included. Premium channels and streaming services are usually an added cost.
Excluded from CCRC costs:
— Extra meals or dining upgrades: Additional meals or special dietary plans may have added fees.
— Grooming: Salon or spa services are an added expense.
— Home healthcare: If residents need additional help at home, such as private nursing or in-home therapy, this may be an out-of-pocket expense. Some communities offer private duty home care provided by nurse aides or certified nursing assistants. The hourly rate may vary from $30 to $50 an hour for help with medication management, meal planning and just companionship.
— Non-refundable entrance fees: Some contracts have non-refundable or partially refundable entrance fees. Not all CCRCs return the full entrance fee upon a resident’s departure or passing.
— Off-site healthcare: Visits to specialists or non-affiliated hospitals or doctors are typically the resident’s financial responsibility.
— Personal care items: Toiletries, laundry or in-room cleaning services beyond what is covered by basic housekeeping are not included.
— Rehabilitation therapy: Physical, occupational or speech therapy may not be included and might require additional fees.
— Skilled nursing care: This type of care is usually not included in independent living, and usually provided in assisted living and nursing homes.
[READ Understanding the Different Elder Care Options]
Does Medicare Cover CCRC costs?
The expenses associated with living in CCRCs are not covered by Medicare. The exception is when someone qualifies for rehabilitation after a three-night hospital stay and requires nursing or rehabilitation care to recover and regain strength to move home.
How to Pay for CCRC Costs
There are several ways to pay for CCRCs, each with its own implications and pros and cons. Here are some common ways to pay for the entrance fees and monthly costs of moving into a CCRC.
Plan ahead and start saving early.
Saving for retirement can be challenging with ongoing mortgage payments, car loans and various other bills to pay every month. However, even modest savings over the years can build into a substantial retirement fund, potentially covering the upfront costs of CCRCs and giving you more options to choose from.
Financing
Financing options may include personal loans or home equity loans to cover CCRC costs. However, these options may involve high interest rates and fees to the bank or lending institution and should be considered carefully.
Medicaid
Medicaid does not cover the cost of monthly rental fees for independent and assisted living communities. However, Medicaid can help cover the costs of long-term care needs, such as nursing care, once a person becomes eligible based on income. Learn more at U.S. News to find out how to qualify for Medicaid. Many communities set aside a certain number of beds in nursing care for Medicaid-eligible individuals. Reach out directly to the community to learn if they accept Medicaid payments.
Long-term care insurance
People who are exploring aging-in-place options such as CCRCs must first determine what the community’s policies will cover and what they will not. People who have long-term care insurance need to be aware that this type of insurance typically does not cover or assist with the independent living portion of CCRCs.
“If the CCRC also offers advanced levels of living and care then the long-term care insurance benefits can assist with funding those options when and if they are needed,” says Lance A. Slatton, a certified senior care manager and founder of All Home Care Matters YouTube show and podcast based in Livonia, Michigan.
Private health or life insurance
Private health insurance or employer-provided health care does not cover the cost of CCRCs, including assisted living and memory or nursing care. However, life insurance policies can assist with covering some or all of the cost of CCRCs. Some policies can be converted into a lump sum that can be used to pay for the entry fees of CCRCs or ongoing monthly costs.
“Some life insurance policies offer a cash value component that can be accessed while the policyholder is alive. The proceeds from the loan are non-taxable,” Slatton says. “Like any insurance policy, it is important to understand coverages and options before making any financial decisions and commitments.”
Social programs (PACE, SHIP, Veterans Affairs, Social Security Disability Insurance)
— Social Security Disability Insurance (SSDI): This program alone typically cannot cover the full cost of a CCRC, as the monthly benefits are generally not enough to pay for high entrance fees and monthly living expenses. However, SSDI benefits can help supplement income to partially cover ongoing monthly fees, depending on the cost of the CCRC and the individual’s total financial situation.
— Veterans benefits: Eligible veterans or their spouses may qualify for the VA Aid and Attendance benefit, which provides financial assistance to help cover the cost of care in CCRCs, particularly for assisted living and nursing home care. For more information on benefits and eligibility, contact the U.S. Department of Veterans Affairs at 800-698-2411.
— SHIP: The State Health Insurance Assistance Program (SHIP) provides free, objective insurance counseling and assistance to Medicare-eligible individuals and their families. SHIP counselors primarily provide assistance about Medicare coverage changes and prescription drug plan options. While SHIP does not cover the cost of nursing care, it can provide information about other assistance programs like Medicaid.
— PACE: The Program of All-Inclusive Care for the Elderly (PACE) is a Medicare and Medicaid program designed to help seniors receive comprehensive health care services in their community rather than in a nursing home. PACE provides a wide range of care, including primary care, prescription drugs, home care, therapy and transportation, with a dedicated team of health care professionals coordinating each participant’s care. To qualify, individuals must be 55 or older, live in a PACE service area, need nursing home level of care and be able to live safely with PACE support. Costs vary based on eligibility for Medicare and Medicaid, with Medicaid recipients paying no premium for long-term care services.
Personal assets (Pensions, Annuities, Investments, Real Estate)
Many people use their personal savings, including pensions, retirement accounts such as IRAs and 401(k)s and stock and bond investments to cover the entrance fee and monthly costs. For some people, their homes represent their largest asset, so selling their home is a common way to finance the upfront costs of living in a CCRC.
Budgeting for a CCRC
While aging in place may seem like a simpler choice in the short term, the financial landscape can shift dramatically if you end up needing higher levels of care later on. Factors such as location, services, amenities, tax implications and contract types with varying levels of care can influence the overall cost.
Figuring out how to pay for CCRCs involves setting financial goals early on, creating a retirement budget that accounts for housing, health care, food and entertainment as well as discretionary spending for travel and hobbies.
Tips for Retirement Planning
— Establish retirement goals: Estimate how much money you will need based on your desired lifestyle, healthcare costs and inflation. Consider factors like housing, travel and hobbies. Use the U.S. News retirement savings calculator.
— Maximize contributions to retirement accounts: Contribute to a 401(k), especially if your employer offers a matching contribution, and put money into a traditional IRA or Roth IRA, which offer tax advantages. Roth IRAs are funded with after-tax dollars, but withdrawals in retirement are tax-free.
— Build up investments: Put savings into a diversified portfolio with stocks and bonds to manage risk. Adjust the balance based on your risk tolerance as you get closer to retirement.
— Estimate health care costs: Health care expenses can be substantial in retirement, especially if long-term care is required. Consider purchasing long-term care insurance or building a health care fund.
— Plan for Social Security: Know when to start claiming Social Security benefits. Delaying benefits until age 70 increases monthly payments, but you can begin as early as age 62 with reduced benefits. Choose from one of these calculators to determine when to get benefits.
— Lower debt before retirement: Pay off high-interest debt like credit cards or personal or home equity loans. Being debt-free in retirement provides more flexibility in choosing different types of communities with additional amenities.
“Planning ahead for housing needs as a senior can be challenging because it’s difficult to predict future health care needs, which will directly influence the type of housing required,” Pekruhn says. “Consider talking to a financial advisor
about the best way to afford moving to a CCRC that includes the services, amenities and health care coverage that you may need down the road.”
Explore Top-Rated CCRC Facilities with U.S. News
Choosing the right CCRC involves careful planning and research. It’s important to start your search early, especially if you live in an area with limited options. When evaluating a CCRC, consider the range of services offered, from independent living to nursing care, and how they align with your current and future needs. Touring communities is a crucial step; it allows you to assess the environment, meet the staff and speak with current residents to gauge their satisfaction and the quality of care. Look for communities that offer a broad range of activities and social events, which foster a sense of community and engagement among residents.
Financial considerations are also key when selecting a CCRC. Assess your budget and the costs associated with different levels of care and amenities. Understand the various types of contracts and fees involved and explore options for financial assistance if needed. Utilize resources like the U.S. News rankings to compare facilities and use word-of-mouth recommendations to find reputable communities. Ultimately, visiting the communities in person will provide valuable insights and help ensure that the chosen CCRC aligns with you or your loved one’s lifestyle, health care needs and financial situation.
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How Much Do CCRCs Cost? originally appeared on usnews.com
