There was an insightful interview in Forbes last year titled “Dilemma: Senior Living Facility or Kids’ Inheritance?” in which financial expert Larry Light spoke with Certified Financial Planner Rick Kahler about seniors’ common wish to leave money to their adult children.
The conversation examined a frequent concern: that moving into a senior living community could make leaving an inheritance impossible. Because of this worry, many seniors choose to stay in their current homes as they age.
But is it truly an either-or choice today? Does aging in place guarantee enough savings to leave an inheritance? Kahler warns that the answer is not so straightforward. He points out that some choices parents make can both eliminate an inheritance and even end up costing their adult children money.
The high cost of a senior living community
In the Forbes interview, Kahler describes a local continuing care retirement community (CCRC), also known as a life plan community. CCRCs typically offer a continuum of care — independent living, assisted living, and skilled nursing. Many CCRCs require a substantial entrance fee — Kahler cites an example range of $100,000 to $300,000 depending on unit size — plus monthly service fees typically between $1,500 and $3,500.
These figures vary by location, amenities, and contract type, but they are significant for most households. Kahler also notes that in his example the entrance fee was non-refundable, which means no equity remains for heirs when a resident dies. He explains that, in effect, the entrance fee operates like a form of long-term care insurance, and the IRS allows a portion of an upfront fee to be deducted as a health expense in some cases.
Prioritizing leaving an inheritance
Given these costs, Kahler knows people who decided against moving to a CCRC because they wanted to leave assets to their children. Instead they chose to downsize and build a smaller home rather than pay a non-refundable entrance fee. Some CCRC agreements do offer partial or full refunds of entrance fees, but that depends on the contract.
Building a smaller house can be expensive — sometimes costing more than the CCRC entrance fee — but such homeowners hope the house’s equity will pass to their heirs.
Still, whether that equity remains for heirs depends on many variables, some outside the senior’s control.
A potentially expensive gamble
Kahler warns that staying in a home with the goal of leaving an inheritance is a gamble because long-term care needs are common: about 70 percent of people who turned 65 in 2020 are expected to require some degree of long-term care during their lifetime, according to U.S. Department of Health and Human Services data. That raises three core questions:
- Where will care be provided?
- Who will provide it?
- How will it be paid for?
Answers vary by health, finances, and location, but typically:
- Where: Care can take place at home or in an assisted living or skilled nursing facility. Finding a desirable facility with immediate availability can be difficult in a crisis, and CCRCs often require a health assessment and a degree of independence to move in, which limits that option once care is needed.
- Who: Care may be provided by unpaid family members, paid caregivers, or a mix. Paid in-home care can be expensive and difficult to secure because of nationwide caregiver shortages.
- How: Care costs may come from personal savings, long-term care insurance, proceeds from selling a home, or unpaid family caregiving. Many of these options reduce assets available to heirs. Medicare generally does not cover most long-term care services.
The cost to the unpaid caregiver
Unpaid caregiving is not free. It often imposes financial and health burdens on the caregiver. A 2021 AARP study found that the typical family caregiver spends around $7,242 annually out of pocket for the person they care for — roughly 26 percent of the average caregiver’s income. Long-distance caregivers add travel expenses on top of that.
Some caregivers face far higher costs. For example, one real-world case showed a caregiver whose parent had monthly medical costs exceeding $10,000 and who required significant paid in-home care beyond the unpaid hours provided by family.
There are also significant non-financial costs. Research from AARP and the National Alliance for Caregiving found that many family caregivers experience isolation, worsening personal health, and work-related impacts. Common findings include:
- Many caregivers report feeling alone.
- Some say caregiving has negatively affected their own health.
- A majority face work disruptions such as reduced hours or taking time off.
- A portion of caregivers have had to give up work or retire early, costing them income and retirement savings.
The gift of peace of mind
Returning to Kahler’s point: moving into a senior living community while still in good health can be expensive up front, but remaining at home may also be costly — financially, physically, and emotionally — for both the senior and their family if long-term care is needed. Choosing a community that offers a continuum of care can reduce uncertainty. For a resident in independent living, a single phone call during a health crisis can trigger increased in-home support or a transition to assisted living or skilled nursing.
Beyond the financial aspects, senior living communities can provide companionship, opportunities to stay active, transportation assistance, and built-in safety features.
In short, while moving to a CCRC might seem like reducing what you leave to your children, it can also protect the senior’s wellbeing and preserve family finances by avoiding potentially greater future costs and burdens. For many families, that peace of mind makes the expense worthwhile.