Feb 21, 2025
After forking over $840,000 to live in a New York continuing care retirement community following the sale of their home three years ago, Bob Curtis, 87, and his wife Sandy face losing a huge chunk of that investment, according to Bloomberg.
"I can't replace what I have here," Bob told the publication in an article posted Dec. 3. The couple expected to spend the rest of their lives receiving care at the facility, Bloomberg reports, but it went bankrupt in 2023. That left them, along with nearly 200 residents, afraid a large portion of the money they invested could go up in smoke.
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Continuing care retirement communities (CCRCs) are a type of retirement community that provides for seniors through the entirety of their later years. The idea behind CCRCs is that they offer different levels of help as the resident's needs change. They may include independent living apartments, assisted living facilities and skilled nursing homes all in one place.
CCRCs are attractive to retirees who want to prepare for an uncertain future — but they can have steep entrance fees. Bob's original contract with his facility entitled him or his heirs to recover up to 90% of that initial investment in the case of a move or death, per Bloomberg, but these contracts can be voided in bankruptcy court. Residents and their families stood to lose up to $130 million unless a deal was reached with a new owner.
Well, now we know they won't be left completely emtpy-handed. On Feb. 20, a judge approved a sale agreement that sets aside around $42 million for entrance fee refunds, according to Bloomberg. The families of deceased residents or those who relocate will receive pennies on the dollar. Some residents occupying independent living units, however, will have the option to stay.
If you're considering living in a CCRC, here are some things to consider about this living arrangement.
Financial trouble at care facilities
Sandy suffers from dementia, and moving to a new home could cost between $12,000 and $19,000 a month for care alone, according to Bloomberg, while an apartment for Bob at a senior community would cost another $8,000 a month. Losing a big chunk of their investment would present a steep financial challenge if they were to move facilities. The couple and their fellow residents aren't alone in their plight.
At least 16 CCRCs nationwide have filed for bankruptcy since 2020, the publication reports, with blame being placed on pandemic restrictions, labor shortages, higher wages and a rise in supply costs. Bloomberg also cited a survey of one type of CCRC — those that charge a monthly fee and offer housing, residential services and unlimited health care all on-site — found half of facilities operated in the red in 2023.
Some facilities depend on entrance fees coming in regularly to cover operating costs, provide promised refunds to residents and pay debts. Disruptions to that stream can quickly drain cash — some CCRCs won't refund entrance fees until a new resident moves in, per the publication.
"They spend a bunch of that upfront fee and then they don't have the cash reserves that they need for the long-term care," Jack Barker, a business consultant who has studied CCRC finances, told Bloomberg. "[Residents] are taking major league credit risk on those fees and nobody really likes to talk about that."
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High stakes
To be fair, the CCRCs that have filed for bankruptcy represent a small fraction of the approximately 1,900 facilities in the U.S., according to Bloomberg, and it's uncommon for residents to be forced out and lose their entire entrance fee in a bankruptcy. Forty-one states regulate CCRCs, but only 17 require them to have a reserve fund.
Still, the stakes are high for older Americans who require care. These types of stories should give seniors pause when deciding to join a retirement community. Nobody wants to be in the same position the Curtis family and their fellow residents were in, hoping for a financial savior.
Those considering buying into a CCRC should take a careful look at the facility's finances, if possible, and be sure they know how the money works before they sign on the dotted line.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
