The retirement focus for most people is on how much money will be needed, and they don’t give much thought to how their healthcare needs may dictate where and how they live. We discuss the connection between Continuing Care Retirement Communities and retirement with Oscar Skjaerpe, financial planner with ProVise Management Group based in Tampa, Fla.
Larry Light: Oscar, thanks for joining me today to talk about continuing care retirement communities, or CCRCs. Your latest guide offers a comprehensive look at the transition process. To start, what exactly is a CCRC, and why might it appeal to retirees?
Oscar Skjaerpe: A CCRC provides a full spectrum of housing and care options for retirees, ranging from independent living to assisted living and skilled nursing care. It’s a great option for those who value peace of mind, knowing they can stay in the same community as their healthcare needs change. CCRCs offer a combination of amenities like dining, fitness centers, and social activities, alongside healthcare services, which makes them attractive for retirees seeking both independence and long-term care stability.
Light: That sounds like an all-encompassing solution, but CCRCs are a significant investment. Can you explain the types of contracts available and how they work?
Skjaerpe: Generally, CCRCs offer three types of contracts. First is Life Care. This is the most expensive option upfront but provides the most predictability, covering a continuum of care with little or no increase in fees as your needs evolve. Next is modified. This mid-range contract includes some healthcare services initially, but costs increase as care needs grow. The third is fee-for-service. This has the lowest upfront cost, but residents pay for healthcare services as they use them, which can lead to higher expenses over time.
It’s crucial to evaluate these contracts carefully with your financial advisor and legal counsel to make sure the option you choose aligns with your long-term goals and financial situation.
Light: Financial planning is obviously a big part of this decision. How should retirees evaluate the costs versus the benefits of a CCRC?
Skjaerpe: The key is to weigh the upfront and ongoing costs against the value of long-term healthcare access and peace of mind. Entry fees can range from $100,000 to $1 million, and monthly fees vary between $2,000 and $5,000, depending on the level of care and amenities.
When evaluating these numbers, retirees should compare their current home expenses, including maintenance, property taxes and utilities, to the costs of living in a CCRC. The predictability of healthcare expenses in a CCRC can be a significant advantage, especially as healthcare costs continue to rise. It’s about understanding the financial certainty and quality of life you gain in exchange for those costs.
Light: Beyond finances, there’s an emotional component to moving into a CCRC. How can retirees prepare for this transition?
Skjaerpe: You’re absolutely right—moving to a CCRC is not just a financial decision; it’s a major lifestyle change. It often means leaving a long-time family home, which can be emotionally challenging. I recommend visiting multiple communities, speaking with current residents and assessing the culture and environment of each option. This helps retirees feel more confident in their choice. Additionally, working with a financial advisor can help to make sure the move aligns with their broader retirement goals, reducing stress and uncertainty about the financial aspects of the transition.
Light: For retirees with non-traditional income streams, like equity compensation or business ownership, how does the transition to a CCRC differ?
Skjaerpe: For those with complex financial situations, careful coordination is essential. Retirees might need to structure the sale of assets, such as a business, or liquidate stock options to fund CCRC entry fees and ongoing costs. A financial advisor can help optimize these transactions for tax efficiency, assisting retirees in maximizing the value of their assets while meeting their funding needs. Using tax-advantaged retirement accounts or strategically timing capital gains realizations can make a significant difference in the financial feasibility of the move.
Light: What are some common misconceptions about CCRCs that you encounter?
Skjaerpe: One common misconception is that CCRCs are only for those who need immediate medical care. In reality, many residents start in independent living and gradually transition to assisted living or skilled nursing if needed. Another misconception is that CCRCs are prohibitively expensive for most retirees. While the upfront costs can seem daunting, the predictability of expenses and the comprehensive services often make them a cost-effective solution over time. Lastly, some people believe they can wait until they’re older to plan for a CCRC, but starting the process early gives you more options and allows for financial readiness.
Light: What’s your advice for retirees who are on the fence about moving to a CCRC?
Skjaerpe: My advice is to take a proactive approach. Start by discussing the idea with your family and financial advisor. Visit communities to see what resonates with you, and don’t shy away from asking questions about the contracts, amenities, and healthcare options. Planning ahead allows you to make an informed decision without the pressure of an immediate need. The goal is to find a community that feels like home and supports your lifestyle and future needs.
Light: Any final thoughts?
Skjaerpe: My final thought is this: a move to a CCRC is not just about where you’ll live but about securing peace of mind for the future. It’s an opportunity to plan for changing needs while maintaining control over your financial and lifestyle decisions. With proper planning and guidance, the transition can be a rewarding step in your retirement journey.
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