Data/Assumptions Used in Triangulation

• Number of CCRC units in the U.S. was 380,200 as of June 2018
• Occupancy rate of 91.4% 
•  2/3 of facilities have an entry fee
• Average monthly fee per unit that has entry fee ranges from $2,000-$4,000 so we assumed $3,000 for our calculation
• Average monthly fee per unit without entry fee ranges from $3,000-$6,000 so we assumed $4,500 for our calculation
• According to a report from Actuarial Awareness published in 1997, the average length of stay at CCRC facilities (based on life expectancy) was 11.5 years. Since this data was outdated, we compared the U.S. life expectancy from 1997 to 2020 and found that it had increased by about 2.5 years, from 76.31 in 1997 to 78.93 in 2020. Therefore, we added 2.5 years to the 1997 data and used an average length of stay of 14 years for our calculations.
• Average entry cost per unit is $329,000 (paid at 2/3 of facilities)

Triangulation

• Since we were unable to find data on the market size of the CCRC industry in the U.S., we gathered some statistics to triangulate an estimate. Our estimate is based on the following calculations:
•  380,200 (total number of units) x 91.4% (occupancy rate) = 347,503 (total number of occupied units)
• 347,503 (total number of occupied units) x 2/3 (the share with entry fees) = 231,669 (total number of occupied units with entry fee)
• 347,503 (total number of occupied units) - 231,669 (total number of occupied units with entry fee) =115,834 (total number of occupied units without entry fee)
• 115,834 (total number of occupied units without entry fee) x $4,500 (assumed median monthly fee per unit without entry fee) x 12 (months per year) = $6.3 billion (annual income from units without entry fee)
• As we could not find data on the unit turnover rate for CCRCs either globally or in the U.S., we decided to calculate an annual cost of the entry fee based on the average length of stay for new residents at CCRCs. Using the average length of stay of 14 years that was explained above, $329,000 (average entry cost per unit) / 14 (average length of stay) = $23,500 (average annual cost of entry fee).
• 231,669 (total number of occupied units with entry fee) x [$3,000 (assumed median monthly fee per unit without entry fee) x 12 (months per year) + $23,500 (average annual cost of entry fee)] = $13.8 billion (annual income from units with entry fee)
• $6.3 billion (annual income from units without entry fee) + $13.8 billion (annual income from units with entry fee) = $20.1 billion (total annual revenue per year for unit rental)
• Of note, this estimate does not include any income earned from supplemental services that may be offered at these facilities., which means that the estimate is likely low. No data was found on what portion of income comes from supplemental services.
• To check for reasonableness, we know that Western Europe accounts for the highest share (41.6%) of the global retirement communities market which can be estimated at $106.5 billion (global CCRC market size) x 41.6% (Western Europe's share) = $44.3 billion. North America holds the next largest share, with Asia Pacific, Eastern Europe, South America, Middle East, and Africa all holding a share as well. There is $62.2 billion ($106.5 billion - $44.3 billion) left of the market that is divided between the six regions. The U.S. having a share equal to $20 billion seems reasonable, as it is less than Western Europe, and almost a third of the remaining market size.