Thinking about a Continuing Care Retirement Community (CCRC)—also called a Life Plan community? Barron’s Debbie Carlson, breaks down what these senior living communities actually are, how they’re structured, and the key things to look for before you commit your savings.
CCRCs can range from independent living all the way through memory care, assisted living, and sometimes skilled nursing—often all in one campus. That “continuing care” promise is a major draw, but the decision isn’t just about amenities and beautiful spaces. It’s also about real oversight, real financial stability, and real-life resident experience.
Jeffrey Snyder, Broadcast Retirement Network
We’re going to welcome back to the program Debbie Carlson. She’s a contributor to Barron’s as well as the Wall Street Journal.
Debbie, always great to see you. Thanks for joining us again this morning. Thanks for having me.
I, you know, we, I was kind of talking to you in the virtual green room about, we had Michelle Holloran, who’s an expert, a consultant to the senior living community. You actually took a deep dive into the retirement, the care communities and how to select one. As we take a step back, let me ask you, what are these, what, how would you describe these communities, these care communities?
Debbie Carlson, Barron’s
Yeah, so they’re, the official name is continuing care retirement communities. Sometimes they’re called life plan, but like the official name is CCRC. And these have residences ranging from independent living to memory care, all in one location.
That also includes assisted living and it can include skilled nursing. They’ve become very popular because, you know, they’re really nice amenities. I went to one in Chicago for the Barron’s article called the Admiral on the Lake.
And you walk into this place, it looks like a regular upscale condo. It has tons of activities, restaurants. This one has a beautiful roof deck.
And it’s been around for over a hundred years because it is a nonprofit and it started as a way to take care of the elderly. And that’s where many of these are built from, but this is a supply constrained industry because building new facilities is a lengthy process. You know, a lot of people are worried about, you know, long-term care, how are they gonna take care of themselves in old age?
And so this is why they’ve become popular.
Jeffrey Snyder, Broadcast Retirement Network
So they’re very popular. I can understand it. We have a lot of people that are turning age 65.
I think I read somewhere like 10,000 a day. I don’t know if that’s the right number, but in my head, that’s what I think. It’s like peak 65, I think is what the, there’s like an ad campaign around it.
In any event, so I could see the attractiveness of this and look, you know, I’m kind of approaching that age. I’m not there yet, maybe in another decade or so, but as these things pop up, I mean, what’s the process that someone should use to make a selection? Because you went to one in Chicago.
I have to think that there are other competitors in that area and they’re popping up all over the United States. So how do you pick one?
Debbie Carlson, Barron’s
Yeah. You know, many of these are nonprofits and that makes it harder to look at the financials. So you’ll get some marketing material on the entrance fees.
You’ll get marketing material on the monthly fees, which will include housing and amenities. Some entrance fees may be refundable, but this is a business model that often blends real estate, healthcare, insurance. So it is really tough to kind of puzzle out all of those.
So one of the things you want to start looking at, especially with a nonprofit, is your state’s department of insurance or the public health department will regulate these facilities. And only 41 states actually have oversight. So if there is oversight, the CCRC has to file disclosures with the state.
You can go to the state and ask for that disclosure information. Nonprofits also have to fill out forms to the IRS. You can get that information.
And then you can start looking at what they have filed to the state. You can look for information such as days cash on hand, which will give you a sense of how much money the CCRC has on hand to pay bills if no money’s coming in. And you want to look for something that’s about 200 days or so.
You want to look at occupancy rates because the CCRC’s revenues come from the entrance fees. They get that flush of cash right away and the monthly fees of people in independent living because that’s where they kind of make the money from. Because obviously if you’re in memory care, that’s going to be a lot more money.
And depending on the type of CCRC you’re in, you may not be paying market rate for that. So occupancy rates across the board, but especially those who are in independent living. And then you want to look at something called the debt to service coverage ratio.
These often have a heavy amount of debt from construction and building operations. So those are some really kind of key metrics to zero in on.
Jeffrey Snyder, Broadcast Retirement Network
Did this strike you as odd? You made the comment that only 41 states have a regulatory entity that oversees these. Did that strike you as odd that nine, I don’t know who the nine are, but it struck me as odd that as we’re reaching this influx of people and you often, you know, I do a curation of the news every morning.
I often read about, not often, but I see where, you know, nursing homes have faced lawsuits, et cetera. I’m calling them nursing homes, but facilities like this have faced, you know, had abuse and things and faced all sorts of legal challenges. So did it strike you as odd that nine of the states don’t have a regulatory entity?
Debbie Carlson, Barron’s
Yeah. Well, what really struck me as odd is there’s no federal oversight.
Jeffrey Snyder, Broadcast Retirement Network
Yeah.
Debbie Carlson, Barron’s
And so it is up to the states. So yeah, to your point, what’s with these other nine other states and, you know, to that point is, you know, the reason why you want to look at these financial are, you know, as nonprofits, so many of them have foundations because, you know, they may have this agreement to care, but, you know, they can go bankrupt and, you know, there’s no guarantee that they’re going to be bailed out. And often what happens is if they do go bankrupt, a for-profit entity can come in and take it over.
So, you know, this is why when you’re going to, you know, look at one of these, you really want to suss out the financials as much as possible because the insurance fees, as I mentioned in this story, start with, you know, easily over a hundred thousand dollars and maybe up to a million dollars. That’s a lot of money. It’s a lot of money.
Jeffrey Snyder, Broadcast Retirement Network
So is this really for more, sorry to interrupt you, is it more for affluent people? I mean, I was worried about people like me, like the regular people, how am I going to afford a million dollars to buy into something like that?
Debbie Carlson, Barron’s
Yeah, well, you know, for instance, this Admiral on the Lake, the entrance fee for some of the smaller apartments is about 400,000. So, and this is in downtown Chicago, a desirable neighborhood, you know, and that’s, you know, pretty, that’s, you know, not terrible, but a lot of people do sell their homes to move in to one of these. So, but yes, these are for affluent people.
And that is one of the risks that you have to think about because, you know, recession, stock market declines that can limit how many people enter, since that may affect people’s ability to pay for some of these upscale communities.
Jeffrey Snyder, Broadcast Retirement Network
Let me ask you about, you know, it’s not uncommon for hospitals, doctors, businesses to have Google reviews or reviews on Yelp. Do they have a similar process? So if you don’t have the regulator, if the nine states don’t have a regulator, and there’s no federal oversight, is there a place that you can kind of suss out to use your term, what people are actually experiencing?
Debbie Carlson, Barron’s
Yes, there are. I mean, I imagine there’s probably Google reviews. I didn’t specifically look at that.
But there are, I mentioned my story, there’s, you know, a couple of places that people can look at. There’s some website called the National Continuing Care Residence Association. And this is imagine, like your condo board, this is how I would equate it to is there are residents who are actively involved with the building that they live in to make sure, you know, things are kind of on the up and up.
So you could look at that. There’s also some financial tools from a place like my life site, which can help people understand what to look at, you know, and of course, you want to, you know, speak to, you know, maybe your financial advisor, your, you know, accountant who has experience in some of these.
Jeffrey Snyder, Broadcast Retirement Network
You know, it’s interesting, you talked about some of the amenities. And look, I think it’s you want to live in a beautiful place, you want to live in a place that’s safe. Maybe they, you know, I think when I talked to Michelle Halloran of Darwin Consultants, she mentioned that they have like life learning, you know, places where you can go and actually learn different skills and things like that.
You know, I wonder, at what cost are those things relative to, you know, are they a value add? Or are they really a necessity? Because people coming buying in something like that?
It sounds nice. But you know, I have a sunroof in my car. I very rarely, I bought it, I very rarely use it.
Debbie Carlson, Barron’s
Yeah. Well, a lot of that’s quite all right. And other stories I’ve done for Barron’s on these senior living, you part of this, these facilities is this kind of focus on wellness.
And to so they’ll have a lot of exercise, or they’ll have, you know, people on staff to kind of help with, you know, beyond just like, you know, medical, but like I said, wellness. And, you know, it’s for you to kind of go to them and look around and see what the facilities are. Are you a swimmer?
Do they have a pool? You know, yeah, maybe you don’t care about that. But you know, a lot of these will have exercises, you know, or exercise rooms or art rooms.
So you do have to think about, you know, is this something many use or not? And there’s a culture too, with, you know, talking to the residents, because now that I’ve visited a few of these first stories for Barron’s that I’ve done, there’s definitely a vibe, I will say, to these. So that’s something you want to look at and see, is this really right for me?
Jeffrey Snyder, Broadcast Retirement Network
Yeah, I would imagine that, you know, some have a religious affiliation, I would imagine that there are, you know, churches and synagogues and mosques that support these types of things. You know, it’s like going to a school, or go picking a college, right? You want to pick one that, you know, I don’t do well in big school.
So I went to a smaller university, people may want that big, maybe more social butterfly. So you probably have to kind of figure out really what works for you. Do you get the sense from in your research that, you know, we’re, as we started out the conversation, more and more people turning 65, we’re going to need more of these facilities, that the builds are going to be quicker, faster and more plentiful around the country?
Debbie Carlson, Barron’s
Well, it doesn’t seem to be because as I was looking in the story that I was writing, the National Investment Center for Senior Housing and Care only expect a 4% growth rate this year. And the Admiral on the lake, this particular place, recently broke, I would say really out recently, but maybe about 10 years ago, added quite a bit more to their facilities. So, you know, if you have to think about it, it’s building any sort of like condo, large condo building, but with the addition that these are for seniors, so you need to have, you know, areas for skilled nursing, you have to have areas for memory care.
So it just takes a longer time for these to get built, I think.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, I think you’re right, but we’re, no doubt about it, we’re going to need more for people like me as I get older. And hopefully they allow cats as we, you know, both of us are cat owners. So hopefully they allow cats to live with their owners.
Debbie, always great to see you. Thanks so much for joining us. And we look forward to having you back on the program again very soon.
Great to see you.
Debbie Carlson, Barron’s
Thank you. You too.