This article was written by our expert who is surveying the industry and constantly updating the business plan for a retirement home.
This guide summarizes today’s (October 2025) revenue, margins, and cost benchmarks for a retirement home business.
It is written for first-time operators who need clear numbers, simple rules of thumb, and concrete targets to build a profitable retirement home. It focuses on stabilized, private-pay U.S. communities unless noted.
If you want to dig deeper and learn more, you can download our business plan for a retirement home. Also, before launching, get all the profit, revenue, and cost breakdowns you need for complete clarity with our retirement home financial forecast.
On average in 2025, a stabilized U.S. retirement home generates about $111,820 annual revenue per bed with 87%–88% occupancy and delivers 30%–35% operating (OpEx) margins and 25%–35% EBITDA margins. Net profit after taxes and debt typically lands at 5%–8%, with payroll driving ~42% of revenue.
Scale (100+ beds), strong occupancy (≥90%), and diversified ancillary services lift margins, while wage inflation and regulatory changes are the main headwinds to profitability.
| Metric | 2025 Benchmark | Notes for Retirement Home Operators |
|---|---|---|
| Annual revenue per bed (U.S.) | $111,820 | Varies by state, acuity mix, and ownership; higher in supply-constrained metros and with care add-ons. |
| Stabilized occupancy | 87%–88% (national) | Top metros >90%; sub-80% occupancy compresses margins sharply—target ≥85% for stability. |
| Operating margin (after operating costs, before interest/taxes) | 30%–35% median | Efficient, well-run retirement homes in healthy markets reach the higher end. |
| EBITDA margin | 25%–35% | Scale and professional management push margins upward; small sites trend lower. |
| Net profit margin (after interest & tax) | 5%–8% | Premium/luxury or highly efficient operators can exceed this; leveraged assets may be lower. |
| Payroll as % of revenue | ~41%–45% | Driven by staffing ratios and wage inflation; strongest lever in cost control. |
| Typical payback period | 8–15 years | Faster with high occupancy, ancillary services, and disciplined CapEx/OpEx. |
What is the current average annual revenue per bed by region?
U.S. retirement homes average about $111,820 in annual revenue per bed in 2025, with meaningful regional variance.
Higher-cost, high-demand states and metros (e.g., parts of the Northeast and Mid-Atlantic) trend above the average due to stronger occupancy and higher service intensity. Sunbelt markets with strong new supply can show slightly lower revenue per bed unless positioned as premium or memory care.
State Medicaid exposure, acuity mix (independent vs. assisted vs. memory care), and home size also shift the metric. For planning, use your state’s historical occupancy/census and price indexes to set conservative per-bed targets.
We cover regional pricing tactics for retirement homes in the retirement home business plan.
What occupancy rate keeps revenue consistent?
Target 85%–90% stabilized occupancy to maintain consistent revenue in a retirement home.
National occupancy averages ~87%–88% in 2025, with top primary markets surpassing 90% and weaker markets dipping below 85%. Margins erode quickly under 80% because fixed costs dominate.
Pipeline control, physician/referral relationships, and move-in funnels are critical to avoid volatility. Dynamic pricing and respite/short-stay programs can backfill vacancies without diluting brand.
You’ll find detailed occupancy playbooks for retirement homes in our retirement home business plan, updated every quarter.
What are the main revenue streams beyond resident fees?
- Clinical and wellness services in the retirement home (telehealth, medication management, therapy, memory care packages).
- Hospital and provider partnerships (on-site clinics, value-based care pilots, reimbursable services where applicable).
- Ancillary living services (concierge, transportation, laundry tiers, dining upgrades, salon/spa, tech support).
- Community access programs (day services, classes, events for non-residents to monetize unused capacity).
- Grants, donations, and limited government reimbursements (especially for non-profits or Medicaid-certified units).
What is the average operating profit margin today?
Most stabilized retirement homes post 30%–35% operating margin in 2025.
Well-run, scaled operations in strong demand markets can exceed 35%, while small facilities or sub-85% occupancy often fall below 25%. Tight labor management, menu engineering, and utility efficiency protect the spread.
Track margin monthly at the home and service-line level; variance analysis should trigger staffing and pricing adjustments within the same quarter. Pair margin discipline with a waitlist to sustain price integrity.
This is one of the strategies explained in our retirement home business plan.
What are the main cost categories and their share of revenue?
Payroll is the largest cost in a retirement home, averaging ~41%–45% of revenue; facilities, food, and administration follow.
| Cost Category | Typical % of Revenue | How to Control It in a Retirement Home |
|---|---|---|
| Payroll (nursing, caregivers, dining, housekeeping, admin) | 41%–45% | Optimize staff mix and scheduling; reduce agency hours; invest in retention to cut churn and overtime. |
| Facilities (rent/mortgage, utilities, maintenance) | 15%–20% | Retrofit for energy efficiency; planned preventive maintenance; negotiate service contracts. |
| Food & supplies | 10%–13% | Menu engineering, standardized recipes, supplier bids, waste tracking. |
| Medical & activity programs | 8%–10% | Right-size consumables; bill reimbursable services; leverage group programming. |
| Admin, insurance, IT | 8%–10% | Policy shopping, cyber hygiene, shared services, automate back-office workflows. |
| Marketing & transportation | 3%–5% | Digital lead gen with tight CPL targets; route optimization for shuttles. |
| Other & contingency | 1%–3% | Hold reserves for repairs and episodic compliance costs; track by GL code. |
What is the benchmark EBITDA margin?
EBITDA margins for retirement homes cluster between 25% and 35% in 2025.
Facilities with 100+ beds, strong private-pay mix, and efficient staffing routinely reach the high 30s in good submarkets. Subscale or highly regulated Medicaid-heavy properties sit at the lower end.
Benchmark your site monthly against a peer set and investigate >200 bps swings. Align incentives for administrators on NOI per occupied room.
It’s a key part of what we outline in the retirement home business plan.
What is the average net profit margin after taxes and debt service?
Expect 5%–8% net profit in a stabilized retirement home after interest and taxes.
Premium positioning, high census, and disciplined leverage can push above 8%, while debt-heavy or low-occupancy assets may land at 0%–4%. Stress-test DSCR under a −300 bps occupancy shock and a +150 bps interest-rate shock.
Align capital structure with operating realities: fixed-rate debt where possible and staggered maturities to reduce refinancing risk. Maintain cash cushions equal to 2–3 months of OpEx.
Get expert guidance and actionable steps inside our retirement home business plan.
How does the size (beds) affect profitability and margins?
Larger retirement homes (100+ beds) enjoy scale, lowering cost per occupied bed and lifting margins.
| Size (Beds) | Typical EBITDA | Operational Implications for Retirement Homes |
|---|---|---|
| ≤40 | 15%–22% | Personalized feel, but higher per-bed overhead; requires niche services or premium pricing. |
| 41–80 | 20%–28% | Some scale benefits; watch staffing coverage across shifts; add paid ancillaries to lift ARPPU. |
| 81–120 | 25%–32% | Balanced scale; standardize processes, adopt shared services for back-office. |
| 121–160 | 28%–35% | Strong economies in procurement and scheduling; invest in CRM and referral networks. |
| 161–200 | 30%–36% | Complexity rises; require robust middle management and KPI cadence. |
| >200 | 30%–38%* | *Upper bound assumes strong market, private-pay mix, and high occupancy with care add-ons. |
| Note | — | Beyond ~120 beds, fixed costs spread efficiently; be careful not to dilute care quality. |
How do staff-to-resident ratios shape costs and quality?
Tighter ratios improve quality in a retirement home but lift payroll; optimal bands depend on acuity.
| Care Setting | Typical Ratio (Day) | Profitability & Quality Notes |
|---|---|---|
| Independent living | 1:12–1:18 | Lower staffing needs; focus on hospitality and activities; watch response times. |
| Assisted living | 1:6–1:8 | Main payroll driver; schedule to census and acuity; reduce agency reliance. |
| Memory care | 1:4–1:5 | High touch; training and consistency reduce incidents and liability. |
| Overnight coverage | +20%–40% looser than day | Use roving teams; tech-enabled monitoring preserves safety with fewer FTEs. |
| Clinical overlays | RN/LPN per regulation | Meet or exceed local rules; document competencies to lower insurance premiums. |
| Impact on margins | — | Every 1 FTE per 60 residents saved can add ~30–60 bps to EBITDA if quality is maintained. |
| Quality safeguards | — | Track falls, med errors, response times, family satisfaction; adjust ratios by unit. |
What is the typical payback period or ROI for new investments?
Plan for an 8–15 year payback period for a retirement home project, depending on leverage, occupancy, and pricing power.
| Scenario | Payback | Assumptions for a Retirement Home |
|---|---|---|
| Core market, private-pay, 100–140 beds | 8–11 yrs | 90% occupancy, robust ancillaries, disciplined CapEx, fixed-rate debt. |
| Secondary market, mixed pay | 10–13 yrs | 87% occupancy, moderate rate growth, some Medicaid exposure. |
| Value-add acquisition | 7–10 yrs | Census lift of +8–12 pts, cost takeout, rebranding, service expansion. |
| New development (ground-up) | 11–15 yrs | Lease-up risk, construction inflation, interest carry, marketing ramp. |
| Luxury positioning | 9–12 yrs | Premium ADRs offset higher staffing and amenities; strong demand gating. |
| High-leverage structure | 12–16 yrs | Debt service delays equity recovery; sensitive to rate spikes. |
| Note | — | Accelerate ROI via ancillary services, dynamic pricing, and occupancy management. |
How do regulations and reimbursement policies affect margins?
- Staffing mandates in retirement homes push payroll higher; plan scenarios for +2–4 percentage-points on labor.
- Licensure and health/safety compliance require recurring training, audits, and systems—budget permanent overhead.
- Medicaid and state reimbursements can lag true costs; cross-subsidize with private-pay or premium services.
- Insurance premiums (general/professional liability) have trended up; risk management programs can curb increases.
- Interest-rate moves affect refinancing and DSCR; stress-test every quarter.
What is the industry benchmark for EBITDA margins?
Across retirement homes, a 25%–35% EBITDA range is the practical benchmark in 2025.
Homes above 100 beds, with high private-pay mix and efficient staffing, target the top end. Properties with heavy Medicaid mix or chronic staffing challenges sit below 25% until operational fixes land.
Use rolling 12-month EBITDA and split out by unit (IL/AL/MC) to see where value is created. Incentivize site leaders on EBITDA per available bed and resident satisfaction together.
We cover this exact topic in the retirement home business plan.
What is the average net margin after taxes and debt service?
Most retirement homes settle at 5%–8% net margin once fully stabilized.
Sustained occupancy above 90% and strong ancillary revenue can lift net margin into high single digits. Conversely, elevated debt service or rate spikes reduce net to the low single digits.
Monthly cash flow waterfalls should highlight debt service, reserves, and distributions to maintain discipline. Revisit pricing quarterly to keep pace with wage and insurance inflation.
This is one of the many elements we break down in the retirement home business plan.
What trends or risks could shift revenues and profits over the next five years?
- Labor costs and staffing shortages in retirement homes remain the #1 margin risk; automation and retention programs are essential.
- Insurance and compliance costs trend upward; proactive risk management and documentation lower severity.
- “Aging in place” slows move-ins in some markets; counter with wellness, healthcare integration, and community programming.
- Interest-rate and credit-market volatility affect cap rates, valuations, and refinance ability; maintain conservative leverage.
- Demographic tailwinds support demand, but local overbuild can pressure occupancy and pricing—track permits and pipeline.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.
Want to keep going? Explore detailed financial models built specifically for retirement homes, including staffing templates and sensitivity tables.
Prefer a step-by-step approach? Our plan shows how to combine pricing, occupancy, and ancillary services to reach target margins faster.
Sources
- Assisted Living Magazine – Government Data on nursing homes (revenues, payroll, occupancy)
- Senior Housing News – Industry occupancy 2025
- NIC – Senior housing occupancy Q1 2025
- NIC MAP – Occupancy rises in 2Q 2025
- Senior Housing News – Margin momentum ahead of 2025
- First Page Sage – Assisted living EBITDA benchmarks
- DojoBusiness – Retirement Home Business Plan
- Senior Housing News – Ancillary services to boost revenue
- Arthur J. Gallagher – Inflation and rates pressuring margins
- A Place for Mom – Retirement community costs
