Conscious Aging: Looking at the Financials

Continuing care communities are basically self-funded health insurance pools, subject to all the risks involved: a relatively small base of people paying into the pool, the demographic reality that younger, healthier people may join for the activities and future assurance of care, but those same residents will age and perhaps live longer than actuarially predicted. Established facilities will face future competition from newer facilities, affecting the critical factor of occupancy rate. Outside factors — like the catastrophic water main break that occurred during the building phase of the facility I was looking at, which delayed construction and then rent-up — may severely strain capital reserves.

I was looking at a retirement community first from the standpoint of whether I’d like to live there, and only secondarily from the standpoint of whether the business model held up. Now I know I need to reverse what’s in the foreground and what’s in the background. I need to look at the biz model first, and then the amenities.

Here’s a beginning resource on how to do that:

“So how do you delve into a retirement community’s finances before plunking down a hefty deposit? Two industry groups have come up with dozens of questions to ask. CARF International, which accredits CCRCs, has a free “Consumer Guide to Understanding Financial Performance and Reporting in CCRCs.” (It is available on The American Association of Homes and Services for the Aging offers “The Continuing Care Retirement Community: A Guidebook for Consumers.” (Go to, click on “Choosing a Provider,” “Continuing Care Retirement Communities,” and then “Consumer Guide.“)”

This quote is from a Wall Street Journal article by Kelly Greene entitle “Continuing Care Retirement Communities: Weighing the Risk”. WSJ is protected by a paywall, which means you can’t read the article unless you subscribe. I was able to gain access when the article came up on a Google search of “financial risk in continuing care communities”. If you can’t read this article, a number of other good ones that are not paywall protected do appear in the search.

The most important thing is to go beyond the glossy annual report that the facility may put in your welcome packet, and ask for the most recent financials. Read them, including the footnotes, where all the juicy bits are likely to be hidden. If you don’t feel capable of deciphering the financials, it’s worth paying an accountant or financial advisor to do it for you.

We basically face an elder care crisis in this country. People don’t save enough to self-fund for as long as we may need to. We haven’t decided how much health care should be given in the last quarter of life, and at what relative cost, and who should pay for it. We face a shortage of caregivers.

Fancy retirement communities are a little like putting lipstick on a pig, and only for that very small segment of the population who can afford them. Such facilities may make the journey into old age seem softer and more manageable, but they don’t get us anywhere near resolving the basic problems.

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