Continuing care retirement communities: what you need to know

Where you live during retirement can have a big impact on the financial and personal sides of life. For many, there will come a time when moving to a retirement community makes sense.

If you’re thinking about a retirement community for yourself or your parents, Jim Ciprich and Melissa Weisz have helpful information to share. They lead the Senior Solutions practice at RegentAtlantic, a New Jersey wealth advisory firm that is part of CI Private Wealth, where they specialize in helping seniors navigate areas such as healthcare, legacy planning and housing options.

I recently sat down with Jim and Melissa to ask them about Continuing Care Retirement Communities, or CCRCs. Here are some highlights from our conversation.

How did you come to specialize in senior housing options?

Jim: I’ve been in financial services for about 20 years, and around 10 years ago, a client introduced me to CCRCs. Since then, my whole practice has moved towards meeting the needs of seniors.

Melissa: I was a caregiver for my mother and I saw how challenging it is for families to navigate the emotions, finances and logistics of caring for loved ones. I was really pleased to join this specialty practice with Jim where I can make a difference.

What are the primary housing options that people think about as they age?

Jim: A lot of people want to age in their home, but because of safety reasons and the burden of upkeep, at some point, they may want to consider moving to a community.

Maybe it’s an age-restricted community where they’re just downsizing their home to something more manageable. Maybe it’s all-inclusive, like a CCRC, where they can get higher levels of care if needed. Certainly, some people stay in the home too long, and then have a fall or a health episode that requires them to go directly into an assisted living or skilled nursing facility.

Is there a negative stigma around CCRCs, like nursing homes?

Melissa: CCRCs are not your grandmother’s nursing home. Many of them are more like country clubs. You’re buying into a lifestyle where you have access to socialization and amenities, plus quality care when you need it.

Jim: People have always equated staying in their home as remaining independent, but during COVID, we saw so much isolation. I think there became more of a motivation to be social, and that’s part of what these communities provide.

What are the common decisions that people are going to be faced with?

Melissa: First it’s qualitative factors - the amount of space, the location, the amenities, the people, is there proximity to family or to places I like to visit, things like that.

Next it’s the care options. Many communities operate on a fee-for-service basis. You pay an entry fee, you pay a monthly fee, and you pay extra for any assisted living or skilled nursing that you need.

Other communities offer life care, which is similar to long-term care insurance. You typically pay a higher entry fee and higher monthly fee, but that fee stays level whether you need independent living, assisted living or skilled nursing. You need to look at how life care would integrate with any other insurance that you may have.

Then there’s refundable contracts and non-refundable contracts. With some communities, you can cancel your contract within the first several years and get back a percentage of your entry fee. 

So you get this decision matrix of life care, no life care, refundable, non-refundable, percentage refundable, and the costs associated with each option.

With so much to evaluate, how do people manage these decisions?

Jim: It often comes down to cost. I believe over 80% of the CCRCs in the U.S. are structured as nonprofits, but it doesn’t mean they’re inexpensive. Melissa and I see communities with entry fees from below $100,000 to over $2 million.

Retirees need to think: Are they selling a primary residence? How much will they get from that? What portfolio assets and savings do they have to support not only the entry fee, but the ongoing inflation-adjusted monthly fees moving forward?

Melissa: You also need to consider liquidity. Non-refundable contracts are typically cheaper, but do you want those funds tied up for life? Retaining control tends to be a factor in the decision-making as well.

Are there any red flags to watch out for with these contracts?

Jim: I recommend hiring an elder attorney to explain all the terms and conditions. You can also look at the financial health of the community. Talk to the CFO and review their financial statements and debt ratings if they issue municipal debt. Also check occupancy rates, because communities with higher occupancy rates tend to be more financially healthy.

What are the tax considerations regarding this decision?

Jim: One of the things that really attracted me to CCRCs is that a portion of the non-refundable entry fee and monthly fee can potentially be a medical tax deduction.

Melissa: You may also be able to deduct property taxes each year, which can help lower your after-tax cost.

What outcomes have you seen with people moving to CCRCs?

Melissa: The success stories really warm your heart. You see clients move into these communities, and then you go have dinner at the restaurant with them, and every neighbor says hello, and they tell you about all the ways that they’re living well and they’re happy and healthy.

We recently heard about a resident who had a fall. Her husband pulled the alarm chain and in less than five minutes, the ambulance was there to swoop her up. When you’ve got these five-star healthcare services available to you, that’s part of the success story too.

We know people have made the right decision when they tell us, “I wish I did this sooner.”

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