As you approach retirement age, you may want to carve out time to think in concrete terms about your post-career life. This will be especially true if you’re considering a retirement community. Will you live near the beach or the mountains? Do you want to downsize or move closer to your grandchildren? Would you prefer a traditional retirement community or the one where everyone acts like life is one big party?
The process of finding the right community to live your best life in retirement can be fun—but confusing. Here, we’ll review the considerations that individuals and couples, both pre- and post-retirement, may want to keep in mind when searching for a retirement community.
Create a Timeline Attached to a Realistic Budget
Whether you want to retire at age 55 or are holding off for the more traditional retirement age of 65—or older—the best place to start is with a clear timeline.
If you want to retire at a younger age, calculate how much money you will need for a longer post-work life. Any decision you make should account for your retirement savings, and any major lifestyle changes you’re planning for retirement should be built into your retirement plans.
After you’ve accounted for your retirement finances, turn to the fun part: planning where you want to live. Here are four things that may slow down your timeline or expand your budget, so plan accordingly.
● Waitlists. If you have a retirement community in mind, be proactive about securing your place there, because many have waitlists.
● Construction costs. If you’re buying a lot (or leasing land) where you’ll build a new house, budget enough time into your plan for any construction delays. And if you’re moving into an existing space, like a condo, keep in mind that you may need to renovate or at least redecorate.
● Downsizing. If you’re downsizing, it will take time to decide what goes and what stays, so get a head start on cataloging the important items you’ll take with you to your new place.
● Talking to family. This is a big decision. So keep your family and friends up to date on your plans and start early.
Consider the Costs of Each Community
Once you have a concrete sense of your retirement budget, take a hard look at how a retirement community will affect your finances. Whether you’re retiring on a tight budget or you have the means to live lavishly, you should choose a community that won’t break the bank.
How much will you be bringing in each month, and what are your needs? Be specific about how you’ll pay for living costs. Include any employer retirement plans you’ll draw on, for example, and account for how early retirement may affect your Social Security payments. Be sure that you truly can afford the retirement community of your dreams. Plan early and review your plan at least once a year to confirm your progress.
Then, turn to specifics: Will you rent a space in a community, or will you buy? Will you sell your current home or rent it out? Include the amount you might expect to earn on an existing home sale—and any other financial windfalls that will help you transition to new housing. Also consider whether moving to a new state will lower your tax burden or other ongoing costs. Be sure to factor in any additional amenities that the community offers, like gym memberships and meals.
Find a Community That Matches Your Lifestyle
These days, the phrase “retirement community” can mean a lot of different things. One thing is for sure, though: Modern living for seniors emphasizes the community in “retirement community.” If you pick your community carefully, you’ll be able to enjoy retirement at your own speed among like-minded people.
Keep in mind that there are many communities that cater to specific demographics. Some communities are focused on the Silent Generation and baby boomers, so if you’re a Gen Xer, these might not be the best fit for you. Some communities might focus on group travel and cruises, while others might reap the benefits of living in a city.
Do your research, make a list of communities you’re considering, and then set up an interview to ask questions about the social scene. Are residents active? What networking opportunities are available for new residents? What activities does the community offer? Also be sure to factor in questions about cleanliness, maintenance and safety when making your decision.
Consider the Four Main Types of Communities
Here’s how to narrow down your choice even further. Consider the four primary types of retirement communities:
● Independent Living. If you don’t need specialized medical care, or if you’re on the younger side, an independent living community might be for you. Often called 55-plus communities or senior apartments, this is the perfect setup if you want a high level of independence.
● Assisted Living. If you need some daily assistance—such as medication reminders or help with bathing—but you still want privacy, assisted living might be right.
● Nursing Homes. Those who require a higher level of medical care might find nursing homes are a good fit. While they tend to be more expensive than independent living and assisted living communities, many nursing home residents value the sense of community they provide.
● Continuing Care Facilities. These communities feature a hybrid model, with residents living independently and transferring to nursing home care as needed. If you value stability and want to live in the same place long term, continuing care fits the bill.
Active Adult Communities: A New Option
While most retirement communities fall under the four types listed above, a new entrant has arrived—one that caters to active retirees. So-called active adult communities take into account the reality of retirement today: As people live longer, many are enjoying several decades of satisfying retirement. If you don’t feel like slowing down, this option might be right for you.
Active adult residences are usually (but not always) rental properties that only allow residents of a certain age with similar goals and lifestyles. Much of the upkeep of the unit, such as yard work and exterior maintenance, is covered by homeowners association (HOA) fees, so residents can focus on fun—that means more time for socializing, exercising and travel.
The best part is that there are countless themed communities to make your retirement years fulfilling: senior arts colonies, communities focused on lifelong learning and homes for RV enthusiasts, to name just a few.
Find the Hidden Fees
After you’ve found the retirement community of your dreams, return to your budget and factor in any hidden fees associated with the community.
Many retirement communities charge one-time entrance fees in addition to a monthly fee. Depending on the amenities your community offers, you may be required to pay for things like pool upkeep, gym memberships and meal preparation. Ongoing HOA fees, too, can take a meaningful chunk out of your budget.
Medical fees can also add up. Because many communities, even independent ones, offer healthcare options on-site, there may be one-time or monthly fees associated with medical care. Some facilities charge for health screenings, medication management and on-site pharmacy or doctor access. If you’re unsure about any hidden fees, be sure to ask questions upfront.
Fortunately, expenses paid for medical care can be tax-deductible. For those over 61, long-term care premiums are deductible up to $4,520, and this increases to $5,640 for people over 71. Furthermore, if you’re in a nursing home primarily for medical care, the entire cost (including lodging and meals) is deductible as a medical expense.
Ease Into It
As fun as it can be to dream about retirement, it’s also true that moving away from your long-time home can be stressful. Likewise, building a new life in a retirement community can take an emotional toll. Making new friends, adjusting to new accommodations and getting used to a new setting isn’t always easy.
Consider how you’ll be affected by the move and lean on family and friends to help you readjust. If finding a new friend circle is important to you, promise yourself you’ll be proactive about joining community activities. But give yourself the time and space that you need. Remember: You’re moving to a community for potentially several decades, so everything doesn’t have to happen all at once.
This is a big decision, so it’s worth visiting the community and confirming you’ll like it before going all in. Ask if the community offers a short-term rental option to try before you buy. And build in an exit strategy in case it doesn’t work and you have buyer’s remorse.
With enough planning—considering your budget, your ideal lifestyle and your retirement living needs—you can be sure to find a retirement community that suits your needs for this rewarding new stage in your life.
William Myers is a financial writer based in Dallas.