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Living Independently: Is a 55-Plus Community Right for You?

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From time to time here on the Blog, we take a took a look at the pros and cons of various housing options for seniors. Today we’re revisiting the idea of what’s often called “active adult living” in a 55-plus community.

It’s true that many seniors are wrestling with how best to care for loved ones who are frail or otherwise impaired by poor health or cognitive decline. For these seniors and their families, the choice is often between home care, assisted living, skilled nursing care, or perhaps an adult family home. Each of these has benefits and drawbacks.

But millions of seniors who are still healthy and independent are looking for a different living experience. For them, the benefits of giving up home ownership in favor of living in a community of other like-minded adults has genuine appeal. But what are the upsides and downsides of 55-plus communities?

To reexamine the question, we’re bringing you this early-2024 article from US News in which reporter Geoff Williams provides some food for thought. Let’s take a look.

Active Adult Communities: Great Benefits, Steep Costs

The attraction to living in a retirement community is not difficult to understand, as Williams begins his article. He writes, “Many people like the idea of living in a retirement community – particularly one aimed at adults 55 and older that offers amenities such as fitness centers, swimming pools and cooking classes. These communities often resemble country clubs more than senior living.”

But, like country clubs, this style of living is not cheap.

“Most people way, way underestimate the costs of needs and long-term care during retirement,” says Thomas Mitchell, a certified financial planner in Phoenix. Williams provides the following financial and practical context to help you figure out whether this kind of living situation is right for you – and your budget.

Active Adult Communities: Definitions and Benefits

First, Williams provides us with a basic definition: “A retirement community is a neighborhood or housing complex designed for older adults.” These are otherwise known as senior living communities, independent living communities, or active adult communities. Some have a minimum age of 60 or older, but age 55 is a common starting place for new residents.

“Retirement communities” are obviously different from assisted living facilities and nursing homes, which offer different levels of service but sometimes with some overlap. Some retirement communities allow for easier transition from independent to assisted care services as a resident’s needs change over time. “These are often referred to as continuing care retirement communities, or CCRCs,” Williams writes, since they offer what is often called a continuum of care.

The perks of a retirement community can include free housekeeping services and public transit, utilities included, entertainment provided like cable, and other amenities such as a swimming pool, library, and in-facility salon or barber. You also, often, get the safety of a gated community, which is attractive to many folks.

Williams adds, “All retirement communities are different, but they typically require at least one person living in a home to be 55 or older. Some retirement communities may have age-related rules, such as no residents under the age of 18, while others may be more flexible.”

Budgeting for an Active Adult Community

What about the expense? Williams isn’t able to give a concrete answer, because the costs for such facilities can vary widely depending on the type of community, the amenities provided, and the region of the country.

That said, Williams explains that an independent living facility “typically costs $1,500 to $4,000 a month, according to AssistedLiving.org. Meanwhile, assisted living centers range in cost from $3,500 to $10,500 per month. Caregiver resource company A Place for Mom says the median cost of senior independent living in the U.S. is approximately $3,000 per month.”

Entrance fees are also a hefty consideration, with average entry fees sitting at around $402,000, according to A Place for Mom. Williams notes that you or your beneficiaries may get some of this fee returned if you move out or pass away.

These entrance fees can often mean all the difference, says Nashville-based certified financial planner Timothy Kirch. “I’ve seen entrance fees as low as $100,000 with some creeping up closer to $1 million,” he says.

Sale of the Family Home Often Pays the Entrance Fee

With such steep entrance fees, you may be wondering how anyone manages to pay for such a move. Kirch explains that this fee is usually paid for by the sale of the family home. That said, he advises those who are considering retirement communities to think very carefully and do plenty of research when comparing facilities, especially ones with a high financial barrier to entry.

Despite the cost, communities with plenty of amenities can be a real boon for many retirees. “A lot of their needs can be handled by the community, so they could actually have less costs overall if they can afford the entrance and monthly fees,” he says.

Even so, reading the fine print of the contract is vital. Kirch says, “Depending on their health at the time of entry, they could lose a significant amount of that initial fee as part of their legacy if they aren’t even there all that long.”

Pros and Cons of Moving Into an Active Adult Community

Williams provides the following list of pros and cons for those considering an independent living community. It’s such a good list that we’ve included it here mostly verbatim.

Pros

*You may make fast friends. After all, you’re living among people close in age and in the same stage of life.

*If you can afford a retirement community, you may find that you save money by taking advantage of the amenities.

*You’ll enjoy the convenience of entertainment options, services and shops nearby.

*The community typically covers home maintenance, so you can remove that from your to-do list.

*If your new community offers nursing care, this could be the last move you’ll need to make.

Cons

*Retirement communities are expensive.

*If you change your mind and decide to move elsewhere, you may lose money.

*If you like to march to the beat of your own drum, you may feel suffocated by the rules of a retirement community.

*You may miss living among people of different ages.

*If you need added care that your facility doesn’t offer, you could be required to move again.

Timing is Key When Moving to an Active Adult Community

In his role as a financial planner, Thomas Mitchell explains that it’s important to understand the three basic stages of retirement and the different budgets you’ll need for each.

“They all go about 10 years each,” he says. “You’ve got from about 65 to 75 years of age – the ‘go-go’ years. You’re going and going and traveling and doing all the things you wanted to do that you couldn’t when you were working.”

During the first ten years, according to Mitchell, people usually spend more money than they did while they were employed. “That’s because you have all of this free time. What are you going to do, sit on a chair all day? No,” he says. “Every day is Saturday.”

During the span of age 75 to 85, Mitchell calls these the “slow-go” years, in which “you’re still doing things, just not as often, and you don’t spend as much.”

The final stage is from age 85 to 95, which Mitchell calls the “no-go” years. During this time, the costs rise again as you potentially need assisted living or specialized care.

Williams writes, “These spending stages are worth considering if you’re thinking of moving into a retirement community. It may be better to wait until your spending slows, or you may see some wisdom in diving into the retirement community scene as early as possible.”

Williams ends the article with Mitchell’s encouragement that folks considering a move into a retirement community should try to move in before it’s necessary to do so, “perhaps somewhere in the middle of the go-go years,” since many places have a three to five year waitlist.

The sooner you can do your research, prep your budget, and make your plans, the sooner you can make your move.

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(originally reported at https://money.usnews.com)

Need assistance planning for your successful retirement? Give us a call! 1.877.762.4464

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