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WE RECENTLY MADE a down payment on our next home. After several months of research, we joined the waiting list for a continuing care retirement community, or CCRC.
We’re in our late 60s and only relocated to our current home four years ago. It’s in a metropolitan area two hours’ drive from our daughter and her young family. We know that perhaps 10 years or so from now, we’ll want to be closer to her, so we looked at CCRCs near where she lives.
We have some familiarity with the CCRC concept. Both of our parents lived in CCRCs and had positive experiences. I serve on the board of directors of a CCRC where we live now. I previously shared thoughts on choosing a CCRC in a HumbleDollar article.
We solicited ideas for which CCRC campuses to visit from some of my contacts. Ultimately, we visited three. There were things to like about each. Our preference was to find a type A community—those that lock in the monthly fee, regardless of the level of care you need. We only found type C communities, where you pay for each level of care at market rates. Type C communities are far more common due to the financial risk that type A communities assume.
All three facilities we visited had acceptable accommodations and amenities. They all appear to have the financial strength for the long haul. We screened for those things before we visited and we weren’t disappointed. In joining the waiting list, one of our intentions is to monitor the organization. Does it continue to maintain its facilities? Does it maintain its financial strength?
As the real estate cliché goes, our final selection was based on three things: location, location, location. Of the three we visited, our choice is closest to my daughter’s house and within a mile or so of one of the hospitals where she works. The proximity of that hospital, its reputation, and all of the associated doctors’ offices and medical facilities were important factors in our decision. On top of that, there was a bustling suburban neighborhood with shops and restaurants nearby.
In the meantime, the waiting list is a form of insurance. For the type of independent villa that we favor, the wait is estimated to be four years. This has grown from about two years when we visited late last year. This is not uncommon with CCRCs. The over-65 population is increasing much faster than the construction of new CCRCs or additions to existing CCRCs. The demand for the better facilities is increasing, and it’s expected to continue to increase. When I called to make appointments to visit, I was questioned about how soon we were thinking of moving. There was no point in visiting if we had an immediate need.
One of the criteria to consider before joining a waiting list: What happens when you get to the top? We don’t expect to be ready to move in four years. For the facility we chose, you simply “float” at the top of the list. If the CCRC makes us aware that a villa is available, we can say no and still remain at the top of the list indefinitely. I consider this insurance: If our health were to change and CCRC living was desirable at any point after we reach the top of the list, we have a place that’s available to us. Neither we nor our daughter will need to scramble to find some place to land.
The cost of joining the waiting list was $5,000. Of that, $4,500 is refundable if we change our mind. The full $5,000 is applied to our entrance fee. It’s also fully refundable if we die without moving in. The “insurance” cost is the forgone interest earnings or, if we decide to go elsewhere, $500 plus the forgone interest. As a person who likes to plan ahead, this strikes me as a small price to pay.
Howard Rohleder, a former chief executive of a community hospital, retired early after more than 30 years in hospital administration. In retirement, he enjoys serving on several nonprofit boards, exploring walking paths with his wife Susan, and visiting their six grandchildren. A little-known fact: In May 1994, Howard was featured—along with five others—on the cover of Kiplinger’s Personal Finance for an article titled “Secrets of My Investment Success.” Check out his previous articles.
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Interesting article, and what other considerations did you have looking at these CCRC options? Specifically how did you compare the facilities you looked at against each other separately from what you mentioned?
At each visit we explored the questions outlined in my 2022 article which was linked to this article. Entrance fees and monthly fees can be compared… all of the CCRC’s we visited were within our means, so that was not a deciding factor for us.
How does an existing LTC policy mesh with a CCRC?
My sense is the LTC policy coverage varies widely from company to company. If you enter “licensed care” which would include assisted living, long term or skilled care, or memory care, there will be monthly fees associated with that move. Presumably, the LTC policy would kick in some or all of those fees based on the provisions and limits in the policy. I don’t have an LTC policy.
We are looking into memory care facilities for my mother-in-law, who does have a LTC policy. Depending on a couple of factors, such as whether she has a private or shared room, for example, her LTC payments would cover roughly 50% of her monthly costs. The facility will direct bill the LTC company, and my father-in-law will pay the balance.
Interesting and helpful article- thanks Howard. Two issues we are thinking about as my wife and I consider CCRC options are (1) are there any good for-profit options, and (2) is an ownership model a good thing to seek out? For question (1), we have a Liberty Senior Living facility under construction in the heart of our neighborhood (literally a short walk from our house) so we definitely want to consider that place. For question (2), my father-in-law is at a CCRC where he owns his unit, and the appreciation in unit values has been significant. Any thoughts or comments are welcomed. Thanks again!
I don’t have personal experience with for profit CCRCs. MyTimetoTravel (below) makes some good points. First, a NFP most likely has provisions to cover your costs if you run out of money, possibly backed by a foundation as in her example. Second, while there is lots of merger activity in both NFP and FP organizations, I agree with her assessment that you might have more risk on the FP side of getting a bad operator.
If you are evaluating both, I would definitely ask about their history of rate increases, especially in the last couple of years with high inflation. A NFP has to cover its costs and set aside monies for future capital expenditures. A FP has to do those things and pay the owners. A NFP borrows at tax exempt rates for improvements; a FP borrows at taxable rates so their borrowing costs are higher. A FP might tend to carry higher leverage and therefore more financial risk to the organization. If you plan to live there for a long time, you are assessing their long term viablility in various economic environments.
I am also not familiar with ownership models. Would it be like a condo where there might be assessments for future improvements? Could one owner neglect their property to the detriment of others? If the value can go up, can it also go down? Lots of questions to ask!
Everything Howard said. Also, not being familiar with Liberty Senior Living, I looked them up. They have four properties in my state, so I looked at the financial Disclosure Statement for one (required by the licensing department in NC). The ownership structure is so complicated it requires a diagram, plus they are leasing the buildings.
There are several issues with purchasing your unit. One is a higher up-front cost. The second is that the CCRC only has access to the interest on the funds and therefore the monthly fees may need to be higher. One local CCRC was operating at a loss because of this and then changed to the more usual (in my area) 0%/50%/90% refundable model. It’s also not clear to me what happens when you need to move to a higher level of care.
I appreciate your and Howard’s thoughts on this. I am also in NC – my father-in-law lives at the Cypress of Raleigh and seems to be very happy with their ownership model and with their overall operation and management. I can’t figure it out but I do know that the Cypress gets a cut every time a unit is resold. Hayes Barton Place is the new Liberty facility under construction near our house. Lots of homework for me to do, and y’all’s comments have been very helpful. Thanks again.
Suggest reading the Disclosure Statement for Hayes Barton and seeing if you can untangle the management structure. It appears to be a rental CCRC, and the buildings will be leased. Liberty also operates Templeton of Cary, and I have been hearing bad reports of that property, including rapid management turnover.
I met someone last year whose mother is at Cypress. After a fall she required considerable care but was deemed not yet eligible for the health care facility. Instead she is receiving in-home care, and her daughter is having to spend considerable time looking after her – exactly the situation that you are supposed to avoid by moving to a CCRC.
My wife and I are in the same boat and took an Olli class last fall on senior housing options which looked at both aging in place and CCRCs. We are also in our mid to late 60s. After classroom learning, we visited 5 CCRCs. Following the class we visited 5 more. The waiting lists in our area, depending on accommodation preference, can be 10 years or more. We were encouraged in class to get on several waiting lists to keep our options as things can change over time. We decided to get on 4, ruling out one with a 5K waiting list charge as we were unwilling to lose the opportunity cost for 10 or more years-that one still might be an option in 10 years because the waiting list there is much shorter. Most of the places had good facilities, happy and engaged residents with lots of activities and appeared to be well-run. Aside from location which is very important I would say our additional criteria includes: 1-Well compensated and happy employees. Attracting and maintaining good employees in the health care industry will be increasingly difficult. (It may be even harder to get good care while aging in place which is a factor in our pursuit of CCRCs. 2-solid financial structure with good management where residents get a voice and a non profit framework, 3-high quality health care with good access and availability to residents and where family and friends can easily visit in higher levels of care, an emphasis on holistic wellness, good food (very important!) but in particular capability for individual variations due to my wife’s food allergies and a nice campus for outdoor activities, amongst others. Another insurance option that we are not exercising, but which is available at some CCRCs is to pay in and while you are on the waiting list, you have access to amenities and have guaranteed access to higher levels of care.
Rob – how do I locate a class like that? I was googling Continuing Care Center Education Classes and came up empty. What is Olli? Thanks – I live in New York – Hudson Valley.
OLLI stands for Osher Lifelong Learning Institute. I believe it’s usually connected with a university.
Thank you Rob for adding your insights. You have done more thorough homework than us… and I thought we were ahead of the curve.
Howard, excellent article. Thanks for the detailed information and well written article. I like how you laid out your timeline and the thinking behind it. At 66 my wife and I should start discussing if this is something we want to plan on, and start doing some investigation in our new area.
Thanks Rick. Please also consider the excellent reader comments below. Good luck!
Congratulations on the research and the decision. I moved to my chosen CCRC in October, and have not regretted it. I believe mine to be a modified Type A – I will pay more for Assisted Living and Skilled Nursing than for Independent Living, but less than market rates. I chose to gamble that I would spend longer in Independent Living. I get a tax deduction (prepaid medical expense) for part of my monthly fee. You are correct that wait lists are getting longer. In my area early 60s would not be too soon to start serious research, especially if you want a villa or cottage.
Some other considerations:
I only looked at non-profits. A good for-profit could too easily be taken over by a bad one, and in any case your interests are not fully aligned with the owners.
I only looked at places that promised to keep me if I run out of money. My choice backs the promise with a Foundation. I’ll be making a donation by QCD later this year. It has been in operation for 30 years and no-one has had to leave for lack of funds.
I only seriously considered places that had been in operation for a while.
Typically you need to pass both a physical and financial check before moving in. If that is the case at your choice you may not want to wait too long.
I hope your daughter appreciates the gift you are giving her with this plan.
The tax deduction is only useful if you itemize and have medical expenses that exceed 7.5% of your AGI. My late mother was also able to deduct a share of her CCRC’S property taxes. A share of her initial buy in was also a deductible medical expense.
The tax deduction for the entry fee was large enough that I paid no taxes last year.
Absolutely on your last sentence. We’re in such a stressful situation with my in-laws, who live 400 miles from us, have no real local support, and need lots of help. We asked my husband’s stepfather a few years ago (when my MIL’s dementia became very apparent) to move closer to us and my husband’s sister, but he didn’t want to uproot them.
Thank you for your encouragement. Your additional criteria are spot on as we took the same things into consideration.
Howard,
Thank you so much for this excellent analysis!
We chose to move into a regular condo instead of a CCRC. It is a closer to all our children. None of them have moved away from the area.
Sometimes now we wonder if that was the right decision to make.
Most of our friends have decided to “Age in Place”.
Two couples bought ranch houses … no steps … in other States to be closer to one of their children.
I don’t think there is one right decision.
Like all so much in life … it depends
We’re in our 60s and moved to a condo when we were 59. It’s not an over-55 community, but many of our neighbors are retirees who moved there to be closer to their children in town and/or who didn’t feel like a CCRC was their jam.
It does depend. As we’ve discovered with my in-laws, having in-home care when needed is VERY expensive and can be hit-or-miss in terms of quality and reliability. If your kids can/will help provide care either to supplement or replace paid in-home care, that makes a big difference. But it could be asking a lot of them, depending on how things go.
Thank you for commenting. Your comment “I don’t think there is one right decision” is absolutely true. To each his own.