There may come a time, as you approach retirement age or are retired, that you want to make a change in your lifestyle. You don’t need the big house you had when your kids were growing up, and the upkeep that comes with it is now too important. Who needs to mow the lawn or shovel snow or keep putting money aside for major home repairs like a new roof?
Social security calendar: when will the first COLA checks arrive in January 2022
Social Security 2022: How COLA will increase benefits for the average elderly couple
If you decide to downsize, you have several options. You could sell your home and buy a maintenance-free condominium, rent an apartment while you figure out which retirement lifestyle is right for you, or move into a retirement home for those who can live independently without the need for retirement. ‘medical assistance.
What is a living community for the elderly? This is an area aimed at people typically aged 55 and over and includes housing types and amenities that meet their needs.
They come in a variety of shapes and sizes, such as luxury communities, those suitable for people of specific faith, RV retreat parks, and golf and retirement communities. Seniors’ communities often offer organized activities to keep residents happy and healthy. Some retirement homes are designed for tenants. Others are single-family homes.
Read more: $ 1 million is no longer the standard nest egg – here’s how much most Americans think you really need to retire
But, financially, is moving to a retirement home the right decision to make? There are pros and cons, of course.
As with all housing options, the cost of housing in a seniors’ residence will depend on the number of bedrooms, square footage, amenities and location. A Place for Mom, which focuses on senior care, said in an August 2021 report that the median monthly cost of independent living for seniors in the United States is $ 2,552. If you are buying a home in a senior citizen’s residence, you will likely have an appraisal from the homeowners association to cover things like lawn care. If you live in a rental community, your monthly fees will include extras, such as maintenance, utilities, and maybe even meals.
“One of the financial benefits of moving to an elderly community is that you won’t have to worry about maintenance costs because a lot of the community’s outdoor maintenance is taken care of,” said Hutch Ashoo, co-founder and CEO of Wealth Management Pillar. “Consider the weight of the work that would be taken off your shoulders. Exterior painting and repairs, roofing and lawn maintenance are often included in the price. In addition, communities may have security walls or barriers.
To be aware: All states that do not tax social security
Rebecca Awram, Mortgage Advisor at Loan center for the elderly in British Columbia, said the financial benefits come with other intangibles, such as stress relief.
“Moving to a senior community for the first time is a big decision, with many financial factors to consider. One of the benefits of this type of move is that your monthly price will cover most of your needs without worrying about any hidden costs or unforeseen events that might arise. You will no longer have to worry about pesky bills like property taxes, maintenance fees and Internet bills, ”she said. “Another advantage of living in an independent living community is that most of your amenities will be taken care of and you will live close to all of them. You probably won’t need a vehicle anymore, as you can walk quickly to get to your food, activities and entertainment. Living worry-free is incredibly precious.
See: Staggering Statistics on the State of Retirement in America
According to the National Council on Aging, citing figures from 2019, Americans 65 and over spent an average of $ 17,500 per year on housing-related expenses, or about $ 1,500 per month. That’s about $ 1,000 less per month than the median monthly cost of retirement homes cited by A Place for Mom.
So where does that $ 1,000 come from for those who have retired or are approaching retirement age?
One possibility is to tap into the money from the sale of an existing home. The National Council on Aging report states that nearly 80% of people 65 and over own their homes and the average home equity is $ 143,500. If that’s the route you choose to take, a financial advisor could help you figure out how to leverage your home equity and grow your money throughout your retirement.
Find out more: Everything you need to know about collecting social security while working
If you are choosing a retirement home, knowing exactly what is and is not included in your costs to live there is critical, especially since you will likely be paying more than the cost of living in your own home. . You will need to know the finances of the community and, for example, if you might be faced with unforeseen costs along the way.
“The fees that make it a convenient way of life can be quite high and can come with surprise reviews to manage facilities,” said Amy Ford, vice president of Silver nest and an expert on affordable housing for aging populations. “You have to keep a close eye on managing funds to reduce surprise billing for things like a new roof for the fitness center or new landscaping for the community entrance. “
“Overall, it is often more expensive to live in an organized community, so it may be worth exploring how you can instead leverage your current home to design the living experience you want,” Ford added.
Related: The biggest problems facing social security
The other factors
It is also wise to weigh other considerations when moving into a retirement home. There are also pros and cons.
Among the perks are accessibility to activities and an integrated group of potential friends who are at the same stage of life as you. Among the downsides, there could be strict regulations.
“There may be strict rules regarding the comings and goings of friends or relatives who are not in the recommended age range of the community, which may limit the ability to accommodate grandchildren or to stay. other family members for periods of time, ”Ford said.
More from GOBankingTaux