The Cost of a CCRC vs. the Value to Residents

A few weeks ago, I shared a blog post, which discussed some of the reasons why it is wise to make a move to a continuing care retirement community (CCRC or life plan community) sooner rather than later. Among the advantages of moving to a CCRC sooner, it can be easier to get acclimated and settled in to a CCRC at a younger age, you can begin taking advantage of the many wellness programs that can improve your long-term health, and you can form relationships that will serve as a support system should health issues arise.

In the post, I also shared some of the common reasons that people give for putting off their move: feeling like they are too young, concerns about downsizing and getting rid of all of their “stuff,” and worries about long-term affordability and running out of money.

A real-world experience

In response to my blog post, I got an insightful email from a current resident of University Retirement Community-Davis (URC), a CCRC in California, who I’ll refer to as Sarah. In her email, Sarah agrees that many people do put off their CCRC move based on the concerns I noted in my blog post, but she adds one more to the list: concerns because the “fixed costs” start, including the often sizable CCRC entry fee.

And she’s right. Depending upon which CCRC contract type you choose, when you make the move from your current home to a CCRC, you must not only pay the entry fee, which can be a 6-figure amount, your monthly expenses do become somewhat fixed. And for some people that monthly dollar amount looks daunting. This is likely why I often hear people say that, while they would like to move to a CCRC, they believe staying in their home will be less expensive on a month-to-month basis.

But as Sarah notes in her email to me, she and her husband have found that, in actuality, many of their monthly expenses have gone down since they moved to their CCRC. Of course, this is just one person’s experience, and your situation could be different.

For one, Sarah says, her property insurance has decreased dramatically, going from a costly homeowner’s policy to a much more economical renter’s policy. Although she didn’t mention it, CCRC residents also no longer pay personal property taxes, which can be quite hefty in some states. Sarah also remarks that their monthly CCRC bill includes things like home maintenance and lawn care, which can either be expensive for a homeowner, or can take up a lot of their leisure time (not to mention the sore muscles!).

As for their monthly entertainment expense, that’s gone down too. “There’s a shop and a crafts/sewing room,” says Sarah. “Free movies are shown, free concerts happen downstairs more often than we used to go in New Jersey, and URC celebrates holidays with glee and special decorations, and great brunches.”

Another cost-savings

Another big expense that has virtually disappeared is Sarah and her husband’s transportation costs. “We haven’t bought a car, and may not. Why? Because the facility actually has a shared car,” she explains. She goes on to say that the community van takes them to church on Sundays, and the community also provides transportation at a reasonable price (less than a Lyft or Uber) to go to doctor’s appointments, thus eliminating the cost of parking and the headaches of traffic. URC also arranges group trips to places like Yosemite and San Francisco.

In addition to using the Davis city buses, which are free for seniors, Sarah shares that URC has communal bicycles and adult trikes equipped with baskets, which they take to do most of their grocery shopping and are able to enjoy on the area’s many bike paths and greenways.

Sarah sums up that their “cost of new car, maintenance, gas, and insurance are currently zero.”

A price worth paying

So, while the monthly expense of a CCRC may seem a bit pricey at a glance, as Sarah says in her email, when you take into account what you get for your money, “the TOTAL monthly cost isn’t that bad, and the convenience makes it very worthwhile.”

Again, this is just one person’s experience, and monthly costs can vary based on your CCRC contract type, your personal expenses, and the various offerings at your particular retirement community. This also doesn’t include the entry fee that is applicable at most CCRCs, which is typically covered by the proceeds from selling a home.

It’s also important to keep in mind that some expenses do not go away regardless of where you live, such as doctor visits, Medicare, certain other insurance premiums, etc.

But when you look at the cost of a CCRC versus the value you get for your money—the services and amenities, on top of the availability of a continuum of care services if needed—many people come to the same conclusion as Sarah that the benefits that come with living in a CCRC make the cost seem much more reasonable.

Crunch your numbers

If you would like to calculate the monthly cost of remaining in your home as compared to moving to a CCRC, we have created a simple “Monthly Cost Impact of Moving to a Retirement Community” downloadable worksheet (PDF), which lists the typical things that homeowners pay for each month, so you can fill in those values for your particular home situation. (It’s worth mentioning that some of the benefits that Sarah described might not be fully reflected in this worksheet.)

Then, go through this worksheet with the senior living communities you are considering to get a full picture of what the side-by-side cost difference really is. Quite often people find that the monthly difference is much less than they thought. In fact, some actually find that they will save money each month.

It’s important to note that the cost of assisted living or healthcare services would be in addition to the expenses listed within this worksheet, but this is true of staying in your home or living in a retirement community. However, as it relates to CCRCs, the cost of such care services may be included in your monthly fee, depending upon which type of contract you choose.

In addition to the downloadable worksheet above, myLifeSite has an interactive financial tool that projects the long-term financial impact of moving to a CCRC or other retirement community. It incorporates not only your month-to-month expenses, but also the impact on your savings and assets over lifetime.

If you plan to use this tool, it will be helpful to have on hand the community’s pricing, as well as other basic information such as your approximate level of savings, investments, and income.

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