Can I Afford a CCRC? Here’s What You Need to Know

Have you heard the good news? People in the U.S. are living longer than previous generations, and older adults make up the fastest-growing age group in the country. That means it’s more important than ever to prioritize financial security so you can enjoy every moment of your life ahead. 

Continuing care retirement communities (CCRCs) offer an unmatched independent living experience that may be more accessible than you think. Here’s everything you need to know about affording a CCRC.

What is a CCRC?

A CCRC is a 55-and-over community that offers all the same retirement community benefits but with a wider range of amenities and services. You’ll enjoy the convenience of living close to everything you need, like on-campus dining, health and wellness facilities, and personal healthcare services. These communities are designed to help you thrive during this new era through access to classes, clubs and scheduled events. 

CCRCs provide everything you need to plant new roots while simplifying your life through a simple monthly fee that covers things like maintenance and utilities. 

Factors influencing CCRC costs

Every CCRC is different, and how much you can expect to pay depends on factors like location, amenities and the level of care you require. Communities in highly desirable locations or areas with a higher cost of living typically cost more. Choosing a smaller living arrangement within a CCRC, like an apartment, will likely be more affordable than a stand-alone cottage with a two-car garage.

One of the best parts of CCRC living is the easy access to countless amenities like fitness centers, greenhouses and on-site dining. Communities with more premium services may have higher fees than those with more standard offerings.

CCRCs have built-in healthcare options, and the level of care you require will impact your overall expenses. For example, ongoing skilled nursing will be more of an investment than occasional visits to the clinic.

Types of CCRC contracts and fees

Your individual retirement agreement with the CCRC will determine how much and how often you pay. The three primary contract types are:

• Life Care (Type A): These contracts let you prepay for a portion of your anticipated healthcare needs in the form of a higher entrance or monthly fee. They’re a good option for those who want better predictability for future budgeting, as they protect you from fluctuating fees based on market rates or requiring more care than before. 
• Modified (Type B): Type B contracts generally include a lower entrance fee than Type A plans with a monthly fee that may fluctuate as your healthcare needs change. Some modified contracts may include a temporary discount for healthcare costs or have a needs-based system that allots a certain number of “healthcare days” per contract that accumulate or expire from year to year.
• Fee-for-Service (Type C): These contracts operate on a fee-for-service basis, letting you pay a lower entrance and monthly fee that will increase as your needs change. You only pay market rates for healthcare services if you need them, which makes them an affordable option for those who don’t anticipate needing a higher level of healthcare.

All contracts include an initial CCRC entry fee that covers the cost of your housing and whatever healthcare option you choose, based on your contract type. Some entrance fees may be partially repayable or refundable. You’ll also pay a recurring monthly fee that covers most of your living expenses, including maintenance, utilities, amenities and healthcare services. Should you decide to relocate within the same community to a different dwelling, you might also pay a one-time transfer fee.

How to evaluate affordability

Follow these steps to determine your financial readiness for CCRC living:

1. Assess your income, assets and debt

You’ll start by noting all your forms of income, including contributions from your individual retirement account (IRA) or employee-sponsored retirement plan, Social Security, pension and investment returns. Calculate how much you still have in your savings accounts and reliable assets like your home equity. 

This is also the time to total up how much debt you owe from credit cards, loans, mortgages and healthcare bills.

2. Calculate future expenses

The next step in retirement cost planning is to determine your average monthly expenses to calculate for the future. Housing, transportation, food, utilities and healthcare expenses make up about 80 percent of spending for many older adults:

• Housing: This includes your monthly mortgage or rental payment and associated property taxes, as well as the cost of regular maintenance and upkeep.
• Transportation: Calculate the cost of public transportation, fuel, car insurance and maintenance for any personal vehicles.
• Food: Estimate how much you spend monthly on groceries and dining out.
• Utilities: This includes how much you pay for water, sewage, gas, garbage pickup, telephone service, cable television and internet.
• Healthcare: The typical 65-year-old may need to budget for as much as $165,000 in after-tax medical expenses, though that figure varies greatly depending on your own needs and insurance coverage. Talk to your doctor about what to expect for future healthcare expenses, such as prescription medication or advanced treatments. 

You should also factor in recurring expenses like entertainment, loan and credit card payments, vacations and pet care.

3. Compare your options

Once you’ve got a good picture of how much money is coming and going out each month, compare that to the cost of moving to your chosen CCRC. Remember, one of the biggest advantages of living in a community like this is the financial predictability — you can make a single payment that encompasses most or all of your living expenses. Your entry and monthly fees will cover a lot of the same expenses you’re already paying.

Also, consider how living in a CCRC may save you money and enhance your well-being in the long term. For example, we all know that mobility decreases as we age, making it harder to get around easily and safely. Living in a CCRC that provides easy, on-site access to everything you need is one way to simplify your day-to-day and increase your quality of life, right down to gaining access to fitness centers and classes that can help you build strength and balance.

Financing a CCRC

Financing your move to a CCRC may be helpful. Explore options like:

• Selling a home: You can use some or all of the income you make after selling your home to pay for your CCRC entrance fee, which covers the cost of your new housing. 
• Retirement funds: Retirement savings were designed to support you during this phase of your life — consider how much you can pull from IRAs and employee-sponsored accounts to help cover the cost of living in a CCRC. 
• Insurance: While insurance plans don’t typically cover residential expenses, some policies may help you pay for things like assisted living expenses or required care services. Some states also include CCRC services as part of Medicaid benefits for qualifying individuals.
• Veteran aid: Certain types of veteran aid — such as the Community Residential Care (CRC) program or VA Aid and Attendance (A&A) pension benefit — may help you offset the cost of CCRC living and care expenses.

Embrace your next chapter at Garden Spot Communities

With a bit of planning, you can enjoy an active, purposeful life as part of a continuing care retirement community. Garden Spot Communities is passionate about connecting you with the tools you need to enrich your retirement years, whether that’s participating in one of our many micro-communities to foster a new hobby or connecting with like-minded volunteers to make a difference through stewardship and service. 

Contact us to learn more about our pricing options, or attend a look and learn informational session to experience life at Garden Spot Village and Sycamore Springs for yourself.