An elderly couple spent a staggering $840,000 moving into a New York retirement home — then it went bankrupt, report says. Here's why they're not alone

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. The loss of their investment would present a steep financial challenge if they were to relocate. And they're not alone.

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 position of the Curtis family and their fellow residents, 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.