Choosing a CCRC – Or Not

CCRCs – also known as a life-plan community – allows retirees to shift from independent living to higher levels of care, such as long-term care for chronic conditions and memory care for those who have dementia. Besides care, CCRCs also provide a wide range of amenities and activities.

But is choosing a CCRC right for you?

The financial commitment is significant: You’ll usually have to pay a large entrance fee – an average of $414,722 in the second quarter of 2022 – plus a monthly fee that averages $3,774 for independent living, according to the National Investment Center for Seniors Housing & Care.

And in choosing a CCRC, there’s an investment of time to tour your options before you commit to one.

Touring CCRCs as a prospective resident is often likened to the experience of a high schooler visiting college campuses. “Each community has a distinct personality and feel,” says Jennifer Doone, senior director of sales and marketing at Pine Run Retirement Community in Pennsylvania.

Do you prefer a large, sprawling community or one with a more intimate feel? An urban setting or a rural retreat? A high-rise apartment or a stand-alone home? You may be able to arrange an overnight stay at a CCRC to get a better sense of what it’s like to live there. Think about where you want to spend the rest of your life geographically, too – especially as you get older and traveling becomes more difficult.

A CCRC will take a close look at your financial situation before accepting you as a resident, and you should apply the same due diligence to the CCRC. If a CCRC goes bankrupt, residents may fall into the category of unsecured creditors, putting them at risk of losing out on reimbursement of their entrance fees.

In choosing a CCRC, vet your choices first

Ask the CCRCs you’re considering for the following information and documents. A financial adviser, such as an accountant, can help you decipher them.

Occupancy rate

In an established community, look for an occupancy rate of about 90% or higher. CCRCs typically rely heavily on resident fees to stay afloat.

Financial statements

A statement of financial position or balance sheet includes information on assets and liabilities, including net assets, on a given date. The statement of operations provides information on a CCRC’s performance in terms of revenues and expenses, and the cash-flow statement shows how cash is coming in and going out of the CCRC.

Audit report

Most CCRCs undergo an annual audit from a third-party firm, which provides an assessment of the CCRC’s accounting practices. The audit report may include financial statements.

IRS Form 990

Each year, nonprofit CCRCs must submit financial information to the IRS on Form 990. At www.guidestar.org, you can see their 990 forms for the most recent three years.

Financial ratings

Credit-rating agencies such as Fitch Ratings and S&P Global Ratings assess some CCRCs with publicly issued debt. Ask CCRCs whether they have such a rating.

For more on judging a CCRC’s financial standing, see CARF International’s Consumer Guide to Life Plan Communities: Quality and Financial Viability (download it at www.carf.org/Resources/RetirementLiving) as well as the consumer guides from the National Continuing Care Residents Association (go to www.naccra.com and click on “NaCCRA Consumer Guide”).

Related: Learn more about CCRCs right here at SeniorsGuide.com

Lisa Gerstner is a contributing editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.

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