This is the 19th in a series of articles intended to demystify the experience of living in a retirement community.

Costs to live in the communities studied for this series can range from $22,000/year to well over $100,000/year, depending on the community, the size of the room or apartment, and any medical attention needed.

None of these communities requires a big upfront fee, but about two-thirds of the retirement communities around the country that offer a full range of services do. Because you may consider such a community in Phoenix or elsewhere, or have aging relatives in other parts of the country where such fees are common, I'll explain this model.

Such full-service communities are termed Continuing Care Retirement Communities (CCRCs). AARP reports, "CCRCs guarantee lifetime housing, social activities, and increased levels of care as needs change" and they "require a hefty entrance fee...(ranging) from $100,000 to $1 million." According to industry sources, the average is about $248,000. Do you have to be wealthy to consider any retirement community, much less one that charges big entrance fees?

As of 2009, according to an industry report provided by Angela Green, regional sales manager for Seniority, Inc., a national senior living consulting group, about half the residents in CCRCs had annual household incomes of less than $50,000. Nearly half of new residents had a net worth of under $300,000. (Net worth is the value of assets such as investments and/or a house less any debts or loans, such as a mortgage and/or credit card debt.)

Tom Dorough, executive director of a CCRC called The Terraces of Phoenix, explained that most residents use the money from the sale of a home to pay the entrance fee, and then use pensions, Social Security, retirement accounts and other investments and the income they generate to pay the monthly fees.

CCRCs such as The Terraces of Phoenix work hard to help address people's fears that they will run out of money. As is typical with such communities, potential residents undergo a comprehensive financial and medical review. A computer model uses information about their health, age, assets, and income to estimate how long they are likely to live, how long their money will last, and how much money they will have left in their estates.

Many CCRCs accept only residents who are able to live independently when they apply to enter. And not surprisingly, only people who are likely to be able to pay their bills are offered entrance.

Green, from the consulting company, commented, "Studies show that people who live in retirement communities actually spend less time in assisted living or long-term care, because they stay healthier and more active. That has tremendous financial benefits, because independent living is less expensive."

But occasionally, individuals are caught short by unexpectedly large expenses due to extended stays in long-term care or skilled nursing units. What happens then? Green explained, "Most nonprofit CCRCs commit to keeping people even if they run out of money. It is part of our mission."

Dorough, the CCRC executive, noted, "This commitment applies if residents' financial resources are depleted through no fault of their own. People may outlive their assets, and living in a CCRC ensures that even if this happens, their health care and lifestyle are still guaranteed."

Green pointed out that moving into a CCRC that operates under this model could be considered akin to buying a form of long-term care insurance. That is, everyone in the community contributes by paying a large upfront fee, and then a handful of people whose care ends up being considerably more expensive than anticipated are covered by funds the community has collected, even if a few individuals can't pay their bills.

The extensive medical and financial evaluation is a point of difference between the typical CCRC and the communities reviewed here in Prescott.

While a medical review may be done at communities here for the purposes of placing people in the right level of care, people may enter at any level that meets their needs and has space available. Financial reviews are far less extensive, and may be limited to credit checks and other standard reviews consumers may experience before signing any consumer contract.

-- Next -- 100. Stand-Alone Assisted Living and Nursing/Skilled Nursing Facilities