Is it cheaper to stay at home or move into a CCRC?

Earlier this week, I promised to put up an analysis of the financial impact of living in a CCRC versus living at home.  For simplicity’s sake, let’s call our fake resident “Mary.”

First, let’s start with the assumptions.  For the Mary’s case, I assumed the following:

  • Mary’s house and the entrance fee are both $350,000.  (While some people might want to downsize, the analysis works better when the value of the entrance fee and the person’s home are the same.  One can always go back and redo the numbers to assume different fees.)
  • A $30,000 additional LifeCare payment (bringing the CCRC cost to $380,000 up front).
  • A 90% refundable contract for the CCRC that does not include the LifeCare premium (Therefore, a refund of $315,000 upon death.)
  • An independent living monthly fee of $2,600.  An ongoing living at home expense of $1,700.
  • Inflation, discount rates and home value appreciation of 3%, 8%, and 4%, respectively.  (We’ll be playing with these numbers later in the analysis.)
  • Mary will live another 11 years (with 3 years of assisted living and 1 year in the nursing home).
  • Current annual assisted living, memory care, and nursing costs of $50,000, $65,000, and $80,000, respectively (adjusted for inflation in the calculations).

Now, let’s talk about monthly costs.  I assumed that Mary has already paid off her mortgage.  Her monthly expenses look something like this:



This is obviously way less than that CCRC charges for their monthly fee.  It appears as if living at home is already winning.

Then, I constructed this expense projection (you can click on it to see a slightly bigger version):


Since Mary bought LifeCare, she has no additional health care expenses late in life.  Her estate also receives a $315,000 refund of her entrance fee upon her death.  That brings her total CCRC projected expenses to $146,719.

If she lives at home and enjoys 4% home value appreciation (that includes 3% inflation), then her estate will inherit a house worth $560,361.  However, Mary will be paying her health care expenses out of pocket.  This will cost over $110,000 in 2024.  Even with that expense, the total cost of choosing to live at home is $70,000 less than the CCRC.

Living at home appears to be winning again.

But, that’s only one analysis.  Let’s run it again several different times and see what happens when we change different variables.  Here’s what we find:


If you’ve never read one of these tables before, let me walk you through it:  The left column of numbers are our original assumptions.  Each successive column changes only one value, which is highlighted in gray.  The others (the ones not highlighted in gray) don’t change.  The bottom two rows show the total cost for living in a CCRC versus staying at home.  I’ve taken the liberty of highlighting the ones with the lowest expenses.

You’ll notice that staying at home wins in almost all categories except when Mary has a longer illness and when her home doesn’t appreciate very much.

What does this analysis really tell you?  Well, for one, it tells us which categories have more influence on Mary’s lowest expense choice.  If Mary expects to be relatively healthy in her later years and to have some appreciation in her home value, then staying at home might make more sense to her.  If she has a family history of extended illness, the CCRC looks like a better option.

There are other analyses that one can run given this data.  For instance, having dementia may necessitate several years of intense care.  This shifts expenses such that a CCRC is a better deal in all but one scenario.   Secondly, if Mary decides to downsize into a small apartment, the lower fees might make living in a CCRC a much better deal.

Thus, there is no one true formula for determining whether or not a CCRC is a better deal than just living at home.  For one, your inputs will change dramatically given the situation.  Secondly, the longer Mary lives, the less certainty we get with regard to what her expenses will be at the end of her life.  Third, (and most importantly) there are a ton of other noncash things to consider like one’s social life, whether or not family members are present to provide aid during times of illness, the quality of care at the CCRC versus at home, and the ease of not having to coordinate maintenance, yard work, and other services when living at home.

I’m not saying that a CCRC is better than living at home (or visa versa).  Given the way the math works, it’s hard to judge one way or another unless we know more about Mary and her life.  However, this is how a typical analysis would be generated given the question: Is staying at home cheaper than a CCRC?

As always, email me with questions: