During my financial planning years I often presented on senior living options to older adults at Duke University through the Osher Lifelong Learning Program. With roughly fourteen continuing care retirement communities (CCRCs), also called life plan communities, in the immediate area, I fielded many questions about these communities. CCRCs allow people who are independent today to secure guaranteed or priority access to a continuum of care as needs evolve. Prospective residents frequently compared two or three communities, asking about contract types and payment plans, financial stability, nonprofit versus for-profit operators, and—most commonly—affordability. This article focuses on that last concern.
Data show that CCRC residents are, on average, more affluent than the general population aged 65 and over. In my conversations with prospective residents, the question is often not simply “Can I afford a CCRC?” but rather “To what extent can I afford it?” Many want a clearer picture of how choosing a CCRC could affect their estate under various scenarios. For example: “What if I live in the community for 15 years or longer and then need several years of higher-level care?” or “Is a lifecare contract better than a fee-for-service arrangement?” People want to estimate what might remain for heirs after paying an entry fee, monthly fees, and the cost of any required care.
A Continuum of Care, but at What Cost?
Finding precise answers can be difficult. Some try to model outcomes in spreadsheets, but it’s almost impossible to capture every variable: upfront entry fees, refundable portions of entry fees, periodic fee adjustments within the community (which vary by contract type and are more complex for couples), the role of long-term care insurance, inflation, investment growth, and other moving parts.
Consulting a financial advisor is another route, but you should work with an advisor experienced in CCRCs and life plan communities. Many financial planning tools don’t capture the nuances of CCRC pricing structures or how expenses change across the different stages of the continuum of care.
There is, however, a practical alternative for estimating long-term affordability. myLifeSite developed a CCRC financial tool that produces a clear, easy-to-read report showing projected savings and assets over a lifetime after accounting for inputs such as entry fees, monthly fees, type of contract, and costs of care. Like any projection, the results are hypothetical, but the tool makes it simple to tweak assumptions and re-run scenarios. That capability helps prospective residents and families see a range of potential outcomes and gain a general sense of financial impact.
Currently, this financial tool is available to senior living admission teams to help them illustrate potential financial outcomes to prospective residents and their families. A prospective resident can share the generated report with their personal financial advisor if they wish. If you are evaluating a retirement community—especially a CCRC—ask whether the community’s admission team has access to a financial modeling tool like this. It can be a helpful resource when weighing the costs and benefits of moving into a life plan community, comparing contract options, and planning for how expenses may evolve over time.