When it comes to long-term planning for retirement, one of the biggest expenses that seniors need to budget for is a retirement home. Most seniors will transition to living in a retirement home before they consider a more care-centered solution such as a nursing home. A retirement home is typically defined as a privately-owned community designed to provide seniors with the best living situation possible during their golden years.
Retirement homes provide seniors with the opportunity to be independent while enjoying convenient access to the things that they need in order to live their life to the fullest. Some retirement homes are actual apartment buildings, while others are set up as communities or neighborhoods. Some even have large single-family homes available for seniors who want to have a little more space.
No matter what type of nursing home situation a senior chooses to live in, one of the most important considerations about that living facility should be how the senior, or their loved ones, plan on paying for that community. Planning how to pay for a retirement home is an important part of preparing for the future. However, many seniors find themselves ready to retire, yet unsure how they can afford their housing. Seniors are retiring at younger ages than ever these days, but only a very small percentage of seniors are financially prepared for retirement.
Being able to pay for this living expense depends on how the senior chooses to live and what type of retirement community they ultimately plan to live in.
Continuing Care Retirement Communities (CCRC's)
CCRC's, or continuing care retirement communities, are very similar to assisted living facilities. These communities are designed for those who may need additional care when they retire and who want to have care opportunities available to them as they age in place in one community. Typically, there are three different types of living options available in a single community: independent living, assisted living and skilled nursing.
This is basically a progressive form of retirement home that will allow residents to stay in the same location and change their care as their needs change. This is a great option for those who prefer to plan ahead and don't want to deal with the hassles of moving. There are many seniors who will stay within these communities or systems for years or even decades.
However, there are a lot of fees that can come with this type of community, especially for those that don't yet need care. There is typically a large entrance fee of tens of thousands to hundreds of thousands of dollars to get in the door, including a monthly fee for things like utilities, amenities, meals and transportation. This fee can be thousands per month as well.
While these continuing care communities have a number of benefits, they can be a big financial investment and cost a lot of money for seniors who haven't planned ahead.
For seniors who don't want to do as much housekeeping or home care, but still want plenty of independence in their senior years, there are age-restricted communities. Typically, these communities start at 55 and older, or 65 and older, and they are designed specifically with seniors in mind.
These communities can include apartments, condos, townhouses or even detached homes and they come filled with benefits. Age-restricted communities typically operate in the same way that any master-planned community does. They will typically have a HOA or governing community body and will have fees that cover some of the expenses associated with the neighborhood. Depending on the community, these fees may range from $100 to thousands of dollars per month, depending on the amenities.
Typically, seniors who purchase or rent these types of homes are paying for someone to take care of the exterior of their property, their yard work and other neighborhood maintenance.
While purchasing or renting one of these homes is typically no different than purchasing or renting any other home, it is important to pay close attention to the fees that come with these communities. Factoring the additional costs in with the mortgage and property taxes will only help any senior be more prepared for the expenses that come with their new community.
Independent Living Communities
Seniors who want to retire and enjoy having a little less work on their plate will probably benefit from age-restricted neighborhoods. However, seniors who want to retire and need a little help along the way will likely want to consider independent living retirement communities.
These retirement homes look very similar to age-restricted communities on the outside. In fact, many of them seem more like resorts filled with outstanding amenities rather than a retirement home. Most seniors will rent a unit in one of these communities, instead of buying, and they can expect to pay anywhere from $500 to $2,500 or more per month on their rental costs. The good news is that many times these rental costs include virtually everything from meal plans to utilities and even linen services.
One of the great things about these communities is that they are a little more focused on making sure that seniors can get the care they need, if they need it. This means access to meal services, light housekeeping, planned activities, transportation and even live-in managers.
These retirement communities are great for seniors who can live independently on their own, but who may benefit from having someone else drive or cook for them. These communities are also a great stepping stone towards assisted-living communities that may be more hands-on.
The most important thing for seniors and their families to remember is that the more they can save, the better off they will be. It is estimated that less than 5 percent of seniors have adequately saved for retirement, yet many people are in their retirement phase for close to 20 years or more. The earlier seniors and their families can prepare for these costs and the more of a plan they can make to take care of the expenses, the better off they will be.