Understanding the costs
CCRCs have varying cost structures, which can make it feel like you're comparing apples to oranges. "It can be challenging to directly compare two separate communities," says Daniel Ruppel, a TIAA Financial Planning Strategist. Because terminology can vary as well, being familiar with the basics of what to expect can help you ask the right questions during tours or information sessions.
Many CCRCs require a lump sum payment, also called a buy-in fee, admission fee or initial payment. According to the AARP, the average buy-in in 2019 was $329,000Opens in a new window. Be sure to ask not only about the fee itself but about refund provisions. "Some communities are going to have that be partially refundable if you leave for some reason," Ruppel says. "Or, if you pass away, is there some portion of that that would be passed along to your heirs as an inheritance?"
At a CCRC, you'll also pay a monthly service fee that is either fixed or increasing as you move through each level of care. Some communities offer residents the opportunity to lock in a set monthly rate for all levels of care for the remainder of your lifetime if you move in at the independent living stage. "[Think about] which [cost structure] you can accommodate with your own financial picture: potentially lower costs today with higher costs later, or spreading that out over retirement, so that you're bearing a bit of that load over the years, much like you would pay an insurance premium," Ruppel says.
Deciding how you'll pay
After you have a handle on the costs, you can start thinking about how you'll plan to pay for them. "With a big upfront amount, how are you going to cover that? Are you going to sell the house; are you paying out of financial assets? That's the first part," says Mark Schrader, a Financial Planning Strategist at TIAA. "And then, how are you covering monthly payments—do you have lifetime income sources, social security, pension?"
"These communities are different than a standalone nursing home—they're really meant to promote independence," Ruppel says. "That can be a comfort to people who would see it as a jarring transition to move from living at home to living in an entirely different facility. It can actually make that process a bit more smooth and incremental."
It can also mitigate some of the feeling of uncertainty you might be facing. The median length of stay for residents in assisted living, for example, is 22 months, according to The National Center for Assisted Living. Although it's impossible to predict how much time you might spend at each level of a CCRC, having the appropriate tiers of care lined up in one location can be a comfort for both you and your family.
Even if you're still highly independent, CCRCs typically offer services that could help prevent injury and make you feel safer in case of emergency. "You have staff that are right outside your door to help you with lifting something that’s heavy or providing security that you may not have [otherwise]," says Shelly Eweka, Senior Director of Financial Planning Strategy at TIAA.
Examining the amenities
If you're considering a CCRC with all-inclusive pricing, take a close look at what facilities and services that includes and how likely you'd be to take advantage of them. If you don't enjoy golfing, for instance, a community with its own on-site course might not be a cost-effective choice, says TIAA Financial Planning Strategist Rob Stevens. "A golf course is very expensive to maintain, so you're definitely paying for that whether you use it or not." Likewise, if you consider yourself a foodie, you'll likely make the most of a community with a mix of bars and restaurants to choose from. "You have to really make sure that what that particular place offers is a good match for your lifestyle and interests," he says.