In the “I’m Not Ready Yet” blog series, we take an in-depth look at common reasons people delay a move to a continuing care retirement community (CCRC) or other senior living communities.
In last week’s post, we discussed one common reason people postpone a move to a continuing care retirement community (CCRC or life plan community) or other senior living options: they don’t feel ready to downsize. Deciding what to keep versus what to sell, give away, or discard can be a big task, but with guidance and motivation, it’s manageable. Another frequent reason people say they’re not ready to move is concern about cost and long-term affordability.
The “running out of money” fear
Many seniors worked and saved diligently for retirement. Paying off a mortgage is a common goal that reduces monthly expenses and increases net assets. Moving from the accumulation phase of retirement planning into the distribution phase—the period when you spend those savings—can cause anxiety.
Seeing the costs associated with a CCRC can trigger the fear of “running out of money.” That worry is often amplified by the idea of using the sale of a home—the single largest asset for many—to help fund senior living.
At first glance, some CCRCs can seem expensive or even cost-prohibitive for those concerned about preserving their retirement savings. That reaction is understandable.
Depending on the type of CCRC contract you select, you may face a significant entrance fee, sometimes a six-figure sum, often paid from the proceeds of a home sale. Most CCRCs also charge a monthly service fee. Depending on contract terms, that fee may be fixed or could rise if care services become necessary.
While these costs can be worrisome, it helps to examine affordability from another angle: what do you receive in return? For many people, the value and peace of mind a CCRC provides put the cost into perspective.
>> Related: What’s the True Cost of Staying in the Home?
Cost versus value
Although the price of a CCRC may appear high, consider what is included. Is the community providing a valuable product that justifies the expense?
In entry-fee communities, part of the initial fee may be refundable to the resident or heirs, depending on contract terms. So while the upfront outlay can be substantial, some or much of that amount may be returned later.
The monthly service fee typically covers the residence, utilities, property taxes, and at least one daily meal, with additional meals available for purchase. Many communities also include amenities and services such as housekeeping, events and classes, social activities, outings, and transportation.
Owning and staying in your current home carries ongoing expenses even if the mortgage is paid off: utilities, property taxes, homeowners insurance, maintenance, and groceries. Unexpected, costly repairs—like a failed furnace or a leaking roof—can be both expensive and stressful. Many of these homeowner costs are reduced or eliminated for those who move to a CCRC.
>> Related: The Cost of a CCRC vs. the Value to Residents
The biggest cost X factor
Perhaps the greatest unknown cost of remaining at home is the potential expense of care services should you need them.
According to Genworth’s Cost of Care Survey, in 2021 the median monthly cost for a home health aide or homemaker services was roughly $5,000—on top of other homeownership costs. If a higher level of care is required, assisted living averages about $4,500 per month and a private room in a nursing home averages around $9,034 per month. These costs are per person; for couples, homeownership expenses often continue even if only one spouse needs care.
This is where the value of a CCRC can be especially meaningful. Many CCRCs guarantee access to a full continuum of care, from limited assistance with daily activities to full-time skilled nursing, often under the terms of a lifetime contract.
Depending on contract type, monthly fees may or may not increase when care is needed, so it’s important to understand what is and isn’t covered. Still, many people choose CCRCs because they value the peace of mind that care will be available should it become necessary—often making the community worth the cost.
>> Related: Many People Underestimate Their Future Cost of Care
Overcoming the CCRC cost taboo
Research into spending behavior and the psychology of money helps explain why some people hesitate to spend on senior living. Data from the Bureau of Labor Statistics’ Consumer Expenditure Survey show that Baby Boomers and older generations sometimes prioritize discretionary spending differently than necessities—illustrating how people can be frugal in some areas and extravagant in others.
Other research has identified the “pain of payment”: for some individuals, spending large sums triggers real psychological discomfort. This affective response can make people reluctant to consider large, upfront costs—even when such spending would bring long-term benefits.
That psychological barrier helps explain why financial concerns are a top reason seniors don’t pursue information about CCRCs. In one survey by a readiness-assessment company, respondents who completed an online questionnaire but declined further contact reported affordability concerns as the main reason 81 percent of the time.
If someone believes they cannot afford a senior living community, they often rule it out even if the actual numbers show otherwise. That’s why the industry must communicate lifetime affordability clearly. When the value of what a community offers is considered alongside costs—services, amenities, potential care, and eliminated homeownership expenses—the long-term financial picture can look very different.
>> Related: Senior Living Pricing: Snapshot of Average Cost of Senior Living
A senior living cost decision informed by facts
Deciding whether to move to senior living involves emotions as well as finances. Don’t let fear of cost make the decision for you.
Do the math. When you account for the value you receive in a senior living community—convenience, included services, reduced maintenance, social opportunities, and the assurance of access to care—the cost may be far more affordable than it first appears.
Tools that model lifetime affordability can help prospects better understand the true cost and value of a CCRC. When seniors use such tools, many discover they can, in fact, afford the community. Communities that add lifetime affordability assessments often see a notable increase in qualified leads and in prospects who were not previously active on their lists.