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Continuing Care Retirement Communities: What They Cost, How They Work, and When to Start Preparing

  • Writer: Eiger
    Eiger
  • 1 day ago
  • 7 min read

Updated: 16 hours ago

Why Is This Conversation So Important Right Now?

The U.S. is in the middle of a sustained demographic shift. More than 61 million adults are aged 65 and older as of 2025, and that number is projected to reach approximately 82 million by 2050. Every day until 2030, roughly 10,000 Baby Boomers will turn 65.

Elderly couple walking on a garden path by houses, with mountains in the background. Text: "Planning Today for Tomorrow: Exploring CCRCs."

And the care infrastructure that served previous generations is under pressure: staffing shortages, cost considerations, and longer lifespans are converging in ways that make decisions more complex than they have ever been.


Against that backdrop, we find that one of the most consequential financial decisions our clients face is also one that can be overlooked: where and how they will live as their care needs evolve in their 70s, 80s, and beyond.


CCRC diagram with independent, assisted, and skilled living options. Lists benefits and considerations. Elderly couple pictured below.

What Is a CCRC, and How Is It Different From Other Senior Living Options?


A continuing care retirement community, also known as a life plan community, is an integrated system that provides independent living with on-campus access to assisted living, memory care services, and skilled nursing as a resident's needs change over time.


The core premise is that you move in while you're still healthy and independent, and the community provides a continuum of care without requiring you to relocate to a different facility if your health declines.


This is fundamentally different from other options. Aging in place keeps you in your current home but requires you to coordinate and pay for care services individually as needs arise. A 55+ community simplifies housing but typically offers no healthcare infrastructure. Assisted living and skilled nursing facilities are usually accessed reactively, after a health event has already occurred.


There are approximately 1,900 CCRCs operating across the U.S.


The Cost Range for a CCRC


CCRCs typically require two financial commitments: a one-time entrance fee and ongoing monthly fees.


The national average entrance fee is approximately $400,000, though the range is enormous, from $40,000 to $2 million depending on the community, the size and type of residence, the location, and the contract structure.


Monthly fees average $3,353 nationally and generally cover meals, housekeeping, maintenance, transportation, activities, and access to varying levels of care depending on the contract type.


Those numbers can cause sticker shock. But to evaluate them accurately, they need to be compared against the alternative: the cumulative cost of aging in place with care needs. The national annual median cost of a semi-private room in a skilled nursing facility reached $114,975 in 2025, a 3 percent increase from the prior year. The price of a private room climbed 1 percent to $129,575 annually. Assisted living facilities now cost a median of $74,400 per year, a 5 percent year-over-year increase.


To put that in perspective, a nursing home stay projected 20 years out, accounting for average inflation, could cost nearly $186,000 a year.


What Are the Different Types of CCRC Contracts, and Why Do They Matter?


One of the most important factors in CCRC discussions is the contract type, which determines how much financial risk you retain versus how much is transferred to the community.


Type A (Life Care or Inclusive): These contracts carry the highest entrance fees, often ranging from $150,000 to over $1 million, but provide access to higher levels of care with little or no increase in monthly fees. This is essentially a prepaid care model. Monthly fees typically range from $2,500 to $5,000.


Type B (Modified): These contracts include a limited amount of care, often a specified number of days per year, before market rates apply. Entrance fees generally range from $80,000 to $750,000, with monthly fees between $1,500 and $2,500.


Type C (Fee-for-Service): These have the lowest entrance fees, usually $100,000 to $500,000, but residents pay prevailing market rates for any care they need. Monthly fees have the widest variability and can escalate significantly if higher levels of care are required.


Some communities also offer equity or co-op models, and many provide refundability provisions that can return a portion of the entrance fee to the resident or their heirs, though contracts with refundability options can be more expensive.


Why Do CCRCs Function as More Than Just Expensive Housing?


When evaluated as part of an overall financial strategy, CCRCs are better understood as a bundled risk management approach. As the Kitces team recently noted, CCRCs are "best evaluated not by amenities or aesthetics, but by how effectively they transfer, pool, or reduce risks that otherwise fall squarely on the client, and often on their spouse or family."


The risks a CCRC can help manage include care coordination risk (the community handles transitions between levels of care rather than placing that burden on family members); care access risk (residents receive priority placement rather than scrambling for availability during a health crisis); social and cognitive decline risk (built-in community, wellness programs, and engagement help reduce isolation); and caregiver burden (for couples, a CCRC significantly reduces the strain on the healthier spouse, and for solo agers or those without nearby adult children, it can substitute for informal support networks that may no longer exist).


Research from the University of Chicago has found that older adults who live in senior retirement communities tend to live longer, receive more home health services, and benefit from more rehabilitation services and preventive care.


Tax Considerations With a CCRC?


This is one of the most commonly overlooked opportunities. The IRS has recognized through multiple private letter rulings that a portion of the entrance fee and monthly service fees paid to a CCRC can be classified as prepaid medical expenses.


In practice, this means a portion of both the upfront entrance fee and ongoing monthly fees may have tax considerations, though part depends on the community's structure and the resident's individual tax situation. Your tax, accounting, or legal professionals should be included in these conversations.


Residents may also have flexibility in how the entrance fee is treated for tax purposes. Some may have tax options in the year the entrance fee is paid, which can be particularly valuable if it coincides with a high-income year or a liquidity event. Others may choose to adjust their tax approach over time to better align with ongoing income needs. The medical portion of the monthly service fees may also create a recurring item that could have tax considerations.


Why Does Timing Matter So Much?


One of the most consistent insights from working with clients on later-life housing is that the best time to explore these options is when clients feel "too young" to need them. Clients in their late 60s and early 70s are typically healthier, more financially flexible, and more likely to meet admission criteria than they would be later.

Many CCRCs require applicants to be in reasonably good health and capable of living independently at the time of admission. Some communities have multi-year waiting lists. And the logistics of selling and managing a long-held home, managing temporary dual residences, and navigating health underwriting all require more lead time and cognitive bandwidth than most people expect.


Waiting until a health event forces the decision often narrows choices. At that point, the decision becomes reactive rather than strategic, and the emotional and financial costs can be higher.


What Should You Consider Before Making This Decision?


The decision of whether a CCRC is the right fit involves both financial analysis and personal values. A few questions worth exploring:


What are your expectations around longevity and health? The average life expectancy for a 65-year-old is about 84 for men and 87 for women, and for married couples, there is a meaningful probability that at least one spouse will live to 90.


How important is it to you that your children not become your default caregivers? Many residents cite this as a primary motivation, even though it rarely appears in financial projections.


What would happen if one spouse needed a higher level of care while the other remained independent? CCRCs allow couples to stay in the same community even when their care needs diverge.


How would you coordinate and pay for escalating care if you stayed in your current home? Aging in place often appears less expensive, but costs can become unpredictable once paid home care, home modifications, and crisis-driven facility placements enter the picture.


How Can Financial Professionals Help?


Later-life housing decisions involve cash flow, health risks, longevity assumptions, estate implications, and deeply personal family dynamics. These decisions are too important and too complex to make based on a brochure or a single facility tour.


As financial professionals, we can help clients evaluate the tradeoffs between different housing and care strategies using a structured framework, model the long-term financial impact of each option, coordinate with tax and legal professionals on tax management and estate considerations, and start the conversation early enough that it remains a proactive choice rather than a reaction to crisis.


If you or someone you care about is beginning to think about later-life housing, even if the decision feels years away, we welcome the conversation. The best outcomes tend to come from a proactive approach that starts long before it feels urgent.


Sources:


The information contained on this site may not reflect current developments; does not constitute investment, tax, or legal advice; and should not be relied upon for such purposes. There is no guarantee that any forecasts made will come to pass. We make no representation about the accuracy of the information or its appropriateness for any given situation. This information is not an offering. Past performance does not guarantee future results.


 
 
 

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