In this episode, Wade Pfau and Alex Murguia are joined by Rob Cordeau to discuss Continuing Care Retirement Communities (CCRCs). They provide an overview of what CCRCs are and how they relate to long-term care planning. They also explore how CCRCs can be an alternative to long-term care insurance and the different financing models for CCRCs. The conversation covers topics such as the large upfront costs of CCRCs, the benefits of living in a CCRC, and the options for refundable entrance fees. Rob Cordeau provides insights into continuing care retirement communities (CCRCs). He clarifies that purchasing a CCRC is not a real estate purchase but rather a contract to live in the community throughout one's life. The entrance fee varies based on the size and features of the apartment, and there are different types of contracts, including non-refundable and refundable options. Rob also discusses the financial aspects of CCRCs, such as the relationship between entrance fees and ongoing cash flow, the potential tax deductibility of entrance fees, and the importance of financial due diligence when choosing a CCRC.

Takeaways

• CCRCs are retirement communities that offer various levels of care on one campus, including independent living, assisted living, and skilled nursing care.
• CCRCs can be an alternative to long-term care insurance, especially for those who want to downsize and plan for their long-term care needs.
• There are different financing models for CCRCs, including large upfront costs with lower ongoing monthly costs or lower upfront costs with higher ongoing monthly costs.
• Some CCRCs offer refundable entrance fees, where a portion of the fee is returned to the resident or their heirs upon moving out or passing away.
• CCRCs are not real estate purchases but contracts to live in a community throughout one's life.
• The entrance fee varies based on the size and features of the apartment.
• CCRCs offer different types of contracts, including non-refundable and refundable options.
• Financial planning is crucial when considering a CCRC, including modeling the affordability of entrance fees and monthly service fees.
• Some entrance fees may be tax deductible, depending on the contract.
• Due diligence is essential to assess the financial stability and reputation of a CCRC.
• CCRCs may not be suitable for individuals who prefer independent living in their own homes.
• Buyer's remorse is rare among individuals who have thoroughly considered and chosen a CCRC.

Chapters

1. Introduction and Overview of CCRCs 2. Exploring Different Financing Models for CCRCs 3. Understanding Refundable Entrance Fees in CCRCs

4. Understanding the Dynamics of CCRCs 5. Financial Underwriting and Considerations for CCRCs 6. Different Types of Contracts Offered by CCRCs 7. Financial Planning for CCRCs 8. CCRCs vs. Independent Living: Choosing the Right Option

Links

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/roth/ to download McLean’s free eBook, “Is a Roth Conversion Right For You?”