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Summary: Planning for Senior Living — CCRC Insights for Advisors
1. Understanding Client Concerns About Aging
Before discussing CCRCs, advisors should acknowledge the emotional and financial concerns driving senior living decisions:
Health problems (gradual or sudden) and the cost/logistics of care.
Avoiding burdening family members with caregiving responsibilities.
Running out of money despite prudent saving.
Losing independence — a subjective term clients often equate with “staying home.”
Social isolation and loss of purpose, both of which correlate with higher mortality and depression.
📖 Fact Check: National Institute on Aging – “Social isolation, loneliness in older people pose health risks.”
https://www.nia.nih.gov/news/social-isolation-loneliness-older-people-pose-health-risks
Advisors should initiate conversations that explore what “independence,” “purpose,” and “security” mean to each client.
2. Housing as a Core Retirement Planning Element
Where clients live in retirement directly affects nearly every other financial and emotional outcome:
Housing decisions shape healthcare access, safety, socialization, and costs.
Planning should shift from “retirement planning” to “planning through retirement.”
3. Senior Living Options on the Care Continuum
Brad Breeding explained that all senior living arrangements fall somewhere along a continuum of independence and care:
| Type | Description | Care Level | Ownership |
|---|---|---|---|
| Home | Aging in place; may need home modifications, caregivers, or tech upgrades. | Fully independent → full-time care as needed | Own |
| Active Adult Community (55+) | Owned homes with HOA dues; no care services provided. | Independent | Own |
| Active Adult Apartments | Rentals for 55+; no dining or care; limited amenities. | Independent | Rent |
| Independent Living w/ Services | Meals, housekeeping, and some care; no skilled nursing. | Partial assistance | Rent |
| Assisted Living or Nursing Home | Custodial or medical care; not independent. | High assistance | Rent |
| CCRC / Life Plan Community | Campus-style, multi-level care from independent to skilled nursing. | Full continuum | Entry fee + monthly fee |
📖 Fact Check: U.S. Administration for Community Living – “Types of Long-Term Care.”
https://acl.gov/ltc/basic-needs/types-long-term-care
4. Key CCRC Characteristics
A Continuing Care Retirement Community (CCRC) or Life Plan Community offers:
Independent housing plus access to assisted living, memory care, and skilled nursing on one campus.
A Continuing Care Agreement, which guarantees access to services for life.
Financial assistance provisions—many nonprofit CCRCs promise residents will not be forced to leave if they outlive assets.
State regulation, not federal. Definitions and financial requirements vary widely by state.
📖 Fact Check: LeadingAge – “Continuing Care Retirement Communities (CCRCs): An Overview.”
https://leadingage.org/continuing-care-retirement-communities-ccrcs-overview/
5. CCRC Financial Models
Most CCRCs require an entry fee plus ongoing monthly fees. Entry fees typically range from $100,000 to $1 million, depending on location, floor plan, and refund structure.
Entry Fee Models
Declining Refund (Traditional) – Refund decreases (e.g., 25% per year for 4 years) until zero.
Partially Refundable (50%) – Half the entry fee refunded to heirs upon vacancy.
High Refund (90%) – Large refund guaranteed, often with higher initial cost.
Refunds usually depend on the unit being reoccupied, and no interest is paid on held balances.
📖 Fact Check: AARP – “What to Know Before You Move Into a CCRC.”
https://www.aarp.org/caregiving/financial/info-2023/continuing-care-retirement-communities.html
6. Monthly Fee Contract Types
The monthly fee structure depends on contract type:
| Type | Description | Cost Pattern | Best For |
|---|---|---|---|
| Type A (Life Care) | Pay more upfront; healthcare costs included for life. | Stable monthly fees | Predictability seekers, couples |
| Type B (Modified / Hybrid) | Discounted care or limited days included; then pay reduced rates. | Moderate | Balanced risk tolerance |
| Type C (Fee-for-Service) | Pay full cost when care is needed. | Low initially, higher later | Clients with LTC insurance or higher liquidity |
📖 Fact Check: U.S. Department of Health & Human Services – “Understanding Long-Term Services and Supports.”
https://aspe.hhs.gov/reports/understanding-long-term-services-supports
7. LTC Insurance and Medicare Coordination
Life Care contracts resemble a built-in long-term care insurance policy.
Clients with LTC insurance can coordinate benefits to offset care costs under Type C contracts.
Medicare still applies to covered services (hospital, rehab, limited skilled care), but assisted living and custodial care are not covered.
Medigap policies may still be useful for medical cost gaps.
📖 Fact Check: Medicare.gov – “What’s not covered by Medicare.”
https://www.medicare.gov/what-medicare-covers/whats-not-covered-by-part-a-part-b
8. Tax Advantages of CCRCs
Residents in CCRCs may qualify for significant medical expense tax deductions:
A portion (often 30–40%) of annual monthly fees and part of the initial entry fee can be deductible as prepaid medical expenses.
The deduction applies if total medical expenses exceed 7.5% of AGI.
Advisors can leverage this deduction to offset Roth conversions or IRA withdrawals in the entry year.
📖 Fact Check: IRS Publication 502 – “Medical and Dental Expenses.”
https://www.irs.gov/publications/p502
9. Evaluating Financial Stability of CCRCs
Advisors should assess the community’s:
Occupancy rate (higher = more stable).
Audited financial statements (available upon request).
Debt service coverage ratio and operating margin.
Sponsor and management experience.
Medicaid certification and financial aid provisions.
📖 Fact Check: CARF International – “Continuing Care Accreditation and Financial Performance.”
https://www.carf.org/continuing-care-accreditation/
10. Advisor Planning Checklist
When advising clients on CCRCs, evaluate:
Financial qualification (1.5–2× entry fee in assets; income ≥1.5× monthly fee).
Contract type (A, B, or C) and refund terms.
Tax implications and timing of entry.
Compatibility with LTC insurance and Medicare.
Community reputation and occupancy.
Potential family dynamics and estate implications.
✅ Bottom Line for Financial Advisors:
CCRCs can provide lifetime housing and care stability, but contracts vary dramatically in structure, cost, and financial security. Advisors should help clients:
Clarify values around independence and family involvement.
Model entry and ongoing costs under different contract types.
Integrate LTC coverage, tax strategies, and estate planning.
Proper due diligence can transform what seems like a lifestyle choice into a strategic retirement planning decision that protects assets, provides peace of mind, and safeguards family relationships.
