People often picture retirement as a chapter of freedom and enjoyment, but they also face big choices, especially about where to live. For many retirees, staying in the family home feels grounding and familiar. With the support of in-home care services, aging in place remains a popular option. However, a growing number of seniors are opting for Continuing Care Retirement Communities (CCRCs), which offer a full spectrum of living arrangements and health support, ranging from independent living to assisted living, skilled nursing, and memory care as needed.

While the appeal of CCRCs lies in their “aging-in-place within a community” model, moving into one involves significant lifestyle and financial considerations. These decisions demand careful planning, especially since fees can surpass hundreds of thousands of dollars. To help you evaluate whether a CCRC is the right path for yourself or your retired clients, this comprehensive guide examines the costs, contracts, financial risks, tax considerations, and lifestyle factors that every retiree should weigh before making a move.

What is a Continuing Care Retirement Community (CCRC)?

A Continuing Care Retirement Community, also referred to as a Life Plan Community, is a residential development specifically designed for older adults. Unlike standard retirement communities, CCRCs offer a comprehensive range of services that evolve in tandem with residents’ changing health needs and care requirements. Most CCRCs include:

Independent living: Apartment or cottage-style residences with full amenities and social programming.
Assisted living: Support with daily activities such as bathing, meal preparation, or medication management.
Skilled nursing care: 24-hour medical support for individuals with significant health needs.
Memory care: Specialized environments for residents with Alzheimer’s disease or other forms of dementia.

This continuum of care enables retirees to remain in the same community as their physical or medical needs evolve, providing stability and peace of mind for both residents and their families.

The Financial Reality: Entrance and Monthly Fees

Choosing a CCRC isn’t just a lifestyle decision; it’s a financial commitment. According to recent data from U.S. News & World Report:

Entrance fees: Average around $400,000, with many ranging from $100,000 to over $1 million depending on location, amenities, and contract type.
Monthly fees: Average $4,200 as of late 2024, with annual increases often pegged around 4% to reflect inflation and rising operating expenses.

These costs can be overwhelming, but what retirees actually pay in the long term depends heavily on the contract they choose.

Understanding CCRC Contract Types

One of the most critical decisions when entering a CCRC is selecting the right contract type.

Type A (Life Care Contracts)
- Highest entrance and monthly fees.
- Includes comprehensive coverage for future care needs, meaning costs remain largely predictable even as health declines.
- Best for retirees who want maximum cost certainty and protection against spikes in long-term care expenses.
Type B (Modified Contracts)
- Moderate costs, offering a blend of included care and potential out-of-pocket expenses if needs shift significantly.
- May cover a limited number of days in skilled nursing or memory care before requiring higher payments.
- A balance between affordability and protection.
Type C (Fee-for-Service Contracts)
- Lowest upfront and monthly fees.
- Residents pay for additional care as needed, which can result in a dramatic jump in expenses if long-term care becomes necessary.
- Attractive for those with substantial financial resources or those who have long-term care insurance.

Selecting the right contract is a high-stakes financial decision that should be evaluated not only from a budget lens but also from a risk management perspective—anticipating both health outcomes and the likelihood of long-term care utilization.

Evaluating the Financial Strength of a CCRC

Entrusting hundreds of thousands of dollars to a CCRC carries risks. Considerations include:

Financial stability of the facility: A bankruptcy could mean losing your entrance fee and having to relocate suddenly. Always review the CCRC’s balance sheet, occupancy rates, and available bond ratings.
Refund policies: Some contracts allow partial or full refunds of entrance fees to heirs upon the resident’s passing, while others do not.
State regulation: Oversight varies widely by state. Massachusetts, Florida, and Pennsylvania, for example, have stricter regulatory frameworks compared to other states.

Advisors and retirees should approach a CCRC decision with the same level of scrutiny as they would when evaluating a major investment, conducting thorough due diligence on the institution’s financial health, just as they would with retirement accounts or trusts.

Lifestyle and Quality-of-Life Considerations

Moving into a CCRC is about much more than financial planning. It has a direct impact on lifestyle, independence, and social engagement.

Important factors to evaluate include:

Community culture: Does the senior feel comfortable with the resident demographic, values, and activities?
Amenities and recreation: Fitness centers, pools, lecture series, on-site dining, gardening clubs, or arts programs can make a community vibrant.
Resident input: Are residents allowed to vote on meal plans, activity offerings, or facility expansions?
Quality of care: Look for resident satisfaction scores, state inspection histories, and staff retention rates.

The decision should align personally with a retiree’s lifestyle goals, not just be financially sustainable.

Tax Implications of CCRC Costs

One underappreciated factor is the tax treatment of CCRC expenses. In some instances, both entrance and monthly fees can be tax-deductible:

A portion of fees may qualify as pre-paid medical expenses if the facility provides lifetime future care.
These deductions are only helpful if combined medical costs (including CCRC payments, Medicare premiums, and out-of-pocket expenses) exceed 7.5% of Adjusted Gross Income (AGI).
Tax implications vary significantly depending on the contract type and how the facility allocates its revenues.

Given this complexity, retirees should consult their financial or tax advisor to model potential deductions and ensure accurate reporting.

Key Questions Retirees Should Ask Before Choosing a CCRC

Because CCRCs combine lifestyle, medical, and financial considerations, retirees should come prepared with questions, including:

What does the entrance fee include, and is any portion refundable?
How are annual fee increases determined?
What contract types are available, and which align with my financial and health outlook?
What is the community’s financial status and regulatory rating?
What quality metrics are available, such as staff-to-resident ratios, inspection scores, and resident satisfaction rates?
How does moving out or discharge work if I decide the community isn’t the right fit?

Asking the right questions upfront avoids unpleasant surprises later.

CCRC vs. Alternatives: Aging in Place and Standalone Facilities

While CCRCs are popular, they are not the only option. Alternatives include:

Aging in place with in-home care: Attractive for those deeply attached to their homes, though costs can add up quickly with full-time caregiving.
Standalone assisted living or nursing homes: Lower upfront commitment, but no guaranteed pathway for escalating care needs.
55+ active adult communities: Focused on lifestyle and community without the long-term care framework.

The best path depends on financial resources, health predictions, and lifestyle priorities.

Bringing Your Decision into Focus

Deciding where to live in later years goes far beyond choosing a floor plan or comparing amenities. It’s about ensuring security, comfort, and making wise use of your resources. Continuing care retirement communities present complex choices, costs, contracts, levels of care, and peace of mind, as well as family dynamics, all of which come into play.

Expert guidance makes all the difference. A financial advisor who specializes in integrating every aspect of your financial life can provide that perspective. By considering investments, retirement funds, liquidity, tax efficiency, estate plans, ongoing care costs, and everyday needs as part of a unified financial strategy, the right advisor helps chart a plan that truly fits. They can test “what-if” scenarios, project the long-term impact of entrance fees and monthly expenses, evaluate contract risks, and clarify tradeoffs between competing priorities. When these elements are connected, the outcome is more than numbers on a spreadsheet; it’s a practical plan for a future that feels right.

If you’re weighing options, it pays to work with a professional who sees the whole picture. Their partnership brings clarity not only to financial decisions, but also to the way those decisions shape quality of life. With carefully tailored guidance, the transition to a new community becomes less overwhelming—and far more rewarding.