Selecting where to live later in retirement is a big decision that involves one new major consideration: healthcare. We are faced with tremendous uncertainty, because we don’t know how long we will live, how much care we will need, what type of care we will need, or how our medical decline will unfold. The big question is: Will we make the last housing decision on our own and in advance or will we have a non-choice thrust upon us when a health crisis hits?
There are a variety of long-term care options, and with all of them there are many uncertainties regarding the future cost, quality/level of care, ongoing changes, potential disruptions, caretaker trust concerns, bill paying, etc. These options include hiring in-home care, living with relatives, assisted living facilities, nursing homes, or a Continuing Care Retirement Community (CCRC). Each option offers a different level of financial and healthcare risk and security as shown in the (qualitative) graphic below.
For example, if we elect to remain in our existing personal residence, this will eventually require the hiring of caregivers and/or nurses. While this is a good choice for some, it does create some complexities. The biggest concern is finding, retaining, and eventually replacing qualified help (of differing skills) with people you can trust—and doing so on an ongoing basis. This help may start out with meal delivery, move on to hiring a visiting certified nurse’s assistant, then to a day nurse, and finally, to full round-the-clock coverage. This must all be managed by a strong advocate for the resident. In addition, the house must be maintained and eventually a move to a nursing facility may be required. Finally, remaining at home can result in far less social support than some of the other options.
However, there is one option that does the best at minimizing these uncertainties and complexities, yet also provides a solid social support system. This is the “all-inclusive” Continuing Care Retirement Community (CCRC) - also known as Life-Care Communities, Type A, or Extensive Life-Care Contracts.
Thinking about our eventual housing and medical care is particularly important today. With increased longevity, family dispersion, unpredictable health, and busy children, planning for long-term care cannot be ignored.
What is a CCRC?
Think of a CCRC as a college campus for older folks! However, there is less emphasis on education (and beer) and more on medical care (and prescription drugs). A CCRC is not a 55 and older community where you are simply a homeowner. A CCRC provides housing, healthcare, housekeeping, meals, fitness classes, and recreational/social activities under a contractual agreement. You are guaranteed access to a rising level of care and living arrangements as needed - all on one “campus”.
CCRC housing choices include apartments or single-family homes for new and independent seniors, to assisted living, memory care, and nursing facilities as more care is needed. Because CCRCs offer many services on the same campus, you receive the level of care you need while remaining in a familiar community near friends and family.
All-inclusive CCRCs promise to provide the care you may require in a setting appropriate for that level of care. You don’t have to worry about what comes next. Social workers, who take time to know you and understand your needs, will help you navigate the bumps in the road like illness, surgeries, hospitalizations and moves through the continuum of care. Social workers will work with family advocates, but often alleviate the need for family to be as intensely involved. Couples have the comfort of living “together” even as one spouse needs more care than the other.
Most of the all-inclusive CCRCs are non-profit (~80%), and many (50%) are faith-based. Most of these will have a “benevolence clause”. This means that even if you run out of money, they will still take care of you as long as you had responsibly managed your assets. Most new residents are age 70-80 and are of middle-to-upper income levels.
Local all-inclusive (Type A) CCRCs include Cokesbury (Hockessin), Kendal-Crosslands (Chadds Ford), and Country House (Wilmington).
In addition to the Type A, all-inclusive contract, Type C contracts are also very popular. Type C contracts are also known as a “fee-for-service” CCRC because residents pay an increased cost when, and if, they begin receiving long-term healthcare such as assisted living or nursing care. Therefore, since these costs are not built into the up-front fee, fee-for-service CCRCs generally have a lower up-front fee This option is preferred by someone who doesn’t want to pay for what they don’t think they will need, or when a long-term care policy is owned (which will help pay for these additional costs if needed). A popular local Type C community is Maris Grove (Glen Mills). In past articles, which are available on our website, I wrote about my father’s experience living in his fee-for-service CCRC in New Holland, PA called Garden Spot Village.
The social support that is available at a CCRC cannot be over emphasized. By moving into a CCRC where you find a good social “fit”, and while you are still physically active (say age 70-80), you will develop a strong social support system that will provide emotional support when you need it most (i.e., visits when you are sick). Retirees who move into CCRCs early continue to live active and independent lifestyles including maintaining a second home or traveling extensively.
How Much Does a CCRC Cost?
An all-inclusive CCRC is an insurance product where you are paying for guaranteed, unlimited, as-needed medical care (whether you end up using it or not). While not cheap, they are certainly affordable (for our typical client). Fees (which may be partially or wholly deductible) are comprised of an up-front entrance fee and an on-going monthly fee.
Entrance fees run (locally) from $200,000 to $500,000 depending on the type of “initial” housing unit desired and if an entrance fee refund option is selected. Most retirees have a home that is “paid-off”, and therefore, upon a sale, have the funds to pay this type of entrance fee. Residents don’t own their housing unit, but instead have the right to live in the community for the rest of their lives. Monthly fees range from $1,500– $6,000, also depending on the housing being used. The fees remain the same (although they are generally adjusted for inflation) regardless of the level of care needed. They also may cover (depending on the community) dining, social events, laundry, fitness/recreational facilities, transportation, housekeeping, and utilities.
I am Not Ready Yet!
Most of us just don’t believe we are old enough yet to move to a retirement community, and some may never feel that way. One reason for this is that according to one Pew study, 1/3 of those between the ages of 65 and 74 stated that they feel between 10-19 years younger than their chronological age. Therefore, it is easy to put off considering a CCRC so long that it is too late or difficult to move. It can also be emotionally difficult to leave a home you raised your family in for decades (not to mention the time involved in decluttering the accumulated “stuff”). Consider, too, that moving isn’t easy and it gets even harder as you age. If you do wait, you will not be eligible for entry if you can’t live independently or can’t pass a mental competency test. The other strong reason to go in early is that it is easier to make new friendships while you are still active. You will want to take advantage of the social life, many activities, and entertainment options while you are still healthy. Most residents never say, “I wish I had waited longer to move in.”
Today, one of the biggest issues facing retirees is waiting to evaluate a CCRC when you feel ready (say age 82) which will likely result in never making the move. The most popular CCRCs can now have 5-year waiting lists! Therefore, it is even more important today to begin looking much earlier (say age 68-72) than you would otherwise want to. The search can take months. Just think of how parents and kids today spend two years participating in the college selection process. Shouldn’t the time spent preparing and researching in the selection of your last retirement community be more time intensive than the college selection process?
I would also suggest that you put a deposit down at all of your favorite CCRCs in order to get your name on the waiting list. Deposits are about $1,000 and are (generally) largely refundable if you elect to go elsewhere.
Evaluating a CCRC
Evaluating CCRCs is too extensive a topic to cover in this article. However, I will provide two quick tips. First, the financial strength of a CCRC must be assessed. The most important element of financial strength is the 5-year occupancy rate. With a low (say under 90%) occupancy rate, the community may have trouble maintaining capital improvements, or providing needed services. You can get historical occupancy rates from the CCRC.
Second, meet with the president of the residence board. This board is made up of occupants who are meeting with management regarding issues such as food, staff, quality of care, and building maintenance. They have their finger on the pulse of the CCRC and are likely quite willing to speak with potential residents. To learn, look up “CARF” - an independent, nonprofit accreditor of health and human services which provides helpful information on selecting and evaluating CCRCs.
Will we make the last housing decision on our own and in advance or will we have a non-choice thrust upon us when a health crisis hits?
With an all-inclusive CCRC, your costs are quite predictable. You know where you are going, you know what you are getting, and your community remains with you regardless of your health or financial situation. There is peace of mind, certainty, and support in selecting an all-inclusive CCRC.