If you're nearing retirement age, the idea of moving to a retirement community may seem like a great option.
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These communities are residential neighborhoods or apartment complexes designed specifically for people age 55 and older. The aim is to foster connection and community among older adults, especially as they enter their golden years. Many facilities have additional amenities such as golf courses or social activities such as clubs.
While this lifestyle may sound ideal, there are financial downsides to consider before joining an over-55 community.
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Initial cost
According to senior housing website A Place For Mom, the median cost of independent living for seniors will be about $3,000 per month by 2023. That number varies depending on location, equipment, and specific unit.
Many of these communities cost the same or more than buying an apartment or home in that community, thanks to perks and additional amenities. You'll also have to deal with homeowner's association costs, including the cost of home repairs and lawn care. You may also be required to pay a monthly fee to access facilities and services.
Resale challenges
According to RealtyBizNews, trying to resell a home in a development that's more than 55 years old is a little more complicated than selling in the regular housing market.
All residents must meet a minimum age requirement, which limits who can purchase the property. You must also abide by the community's rules regarding sales. This also makes it difficult to pass on the home to adult children who are under the minimum age.
If you can't sell on the market, some communities offer buy-back programs to buy your home at a fixed interest rate. However, you may not be able to earn a similar profit on this sale.
loss of independence
Retirement communities encourage activity, but they also involve oversight. Management boards have strict rules and regulations on how homes are renovated, gardens are designed, and even how equipment is used.
For example, some clubs and restaurants may have their own business hours, but if your community is in a remote area, you may be at the mercy of those establishments. Other times, you may simply get bored with the activity and want more variety.
future health needs
As you get older, your needs often change, so it's especially important to start thinking about potential health issues. Unlike nursing homes and assisted living facilities, most senior living communities do not have on-site medical care.
Some offer transportation and other basic medical services, but it's important to consider how often (and how quickly) you'll need more medical services. The last thing you want is to be tied up with community payments and have to leave the area after a few years because he needs 24-hour care.
It's also important to budget for these additional medical costs and understand that your retirement community may not cover them.
More information: Retirement planning: Average monthly expenses for people 65 and older
If you have a chronic illness or are likely to need regular care, think carefully about whether joining a retirement community is worth it.
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This article originally appeared on GOBankingRates.com: Financial Risks of Retirement in the 55+ Community
