By: John Kolb

There are few choices in life that are more consequential than where we choose to live.  Whether it’s a college dorm, the apartment we rent in early adulthood, or the home we choose to raise a family in, the decision can have a gigantic impact on both our finances and our quality of life. 

But the choice of where to spend our golden years?  That’s a decision that often doesn’t get the attention it deserves.  A decision that, for many people, boils down to two options:

Stay put, or move into a retirement community? 

If you are newly retired or nearing retirement, you probably aren’t thinking too much about this yet.  But the further into retirement you go, the more it’s a question worth considering.  That’s because moving into a retirement community can bring all sorts of potential benefits and advantages.  Benefits that can make growing older one of the most enjoyable and fulfilling periods of your life. 

But there are also a number of potential downsides to consider that make the idea of “senior living” not right for everybody. 

Before we get into those considerations, let’s first define some terms.  A retirement community can mean several things, but for this article, let’s define it as a community designed for seniors age [55] and up who can still care for themselves, need little-to-no assistance going about their daily lives, and either want to live around people with similar interests or simply remove the hassle of maintaining a house.   

This is distinct from an assisted living facility, which is for seniors who need help with more aspects of self-care.  (Think eating, bathing, dressing, and transportation.)  Note, however, that some retirement communities do come with assisted living facilities.

Finally, you have nursing facilities, which are designed for those who need a higher level of medical care.  For example, those in the advanced stages of dementia often stay in nursing facilities. 

So, why would someone who can still live independently choose to live in a retirement community?  There are several reasons, including:

Peace of mind.  Many retirees choose a community because it means they simply don’t have to worry about the stresses of owning a house.  There’s less maintenance, fewer chores, and more options for meals and activities close at hand.  Furthermore, many retirement communities are subdivided into both apartments and condos, so residents have plenty of options for how much space they want or need. 

Personal growth and fulfillment.  A day chock-full of activities is one of the biggest benefits of joining a retirement community.  Residents can enjoy all sorts of games, classes, and clubs. Here at Hudock Capital, many of our clients who live in such communities tell us how intellectually stimulating it is. They learn new languages or instruments, participate in theater productions, and enjoy plenty of doubles tennis.  (Or pickleball if that’s your thing.)  And that’s just scratching the surface!

Creature comforts. Many retirement communities are gated and come with their own walking paths, parks, gyms, and eateries.  And for those who want to attend church or go out and do some shopping, some communities offer shuttle service to nearby destinations. 

Now, none of this is to say that you should go out and reserve your place at the nearest retirement community today.  You see, not all retirement communities are as good as they look in the brochure.  Furthermore, despite all their many advantages, they may not be the best option for you. 

When looking into where you will spend your senior years, there are some important considerations to make.  Here are ten of the most important:

1. “Can I afford it?” Many communities have very large and up-front buy-in costs.  It’s extremely important to determine whether living in such a community is within your budget…or whether it will devour most of your hard-earned retirement savings.
2. “Am I in time?” The best communities are in demand and may have very long waiting lists. If you can’t get into the community you really want, you shouldn’t automatically settle for the “next best thing.” 
3. “Will the community provide long-term care if I ever need it?” Some retirement communities come with assisted living and even nursing facilities that help people with nearly all their health needs as they lose independence near the end of their life.  But not all communities do.  If the one you have your eyes on does not, it’s important to ask yourself: “What will I do if I lose my independence and am forced to move out? Can I afford to?”

Furthermore, even if the community does provide long-term care, it’s important to determine the quality of that care.  Not all facilities are equal in this regard.

4. “Will I need long-term care insurance to stay here for the rest of my life? If I already do, can it be used to offset the monthly fees if LTC is needed?” As incongruous as it may seem, some facilities may not accept your insurance for certain fees and not others. 

For example, I once worked with a client couple who had sadly lost their child. As a result, the need to leave an inheritance was no longer a concern.  Since there was nobody else around to take care of them, they began considering a move into a community to enjoy that peace of mind we discussed earlier.

The community they found accepted their LTC insurance, but there was a caveat: They couldn’t use it to cover their entire monthly fee. Only 70% of the fee could be covered by insurance; the rest had to be paid out-of-pocket. 

1. “Would it be cheaper to receive the care I need or live the lifestyle I want at home?”  Sometimes, a deep look into a retirement community reveals that it simply doesn’t provide as much bang for your buck as you’d expect. 
2. “How likely is the community to stay financially solvent?”  In the past, some facilities have been forced to declare bankruptcy or lower the quality of care they offer due to financial issues.  While the chances of this are low, the last thing you want is to pay a hefty price to live in such a community only to be forced out a few years later if it goes under.

When considering a community, do your due diligence. Ask for the company’s financial details, insurance details, and contingency plans if occupancy rates fail.  How have monthly rates increased based on inflation?  How many different facilities does the company operate, and how full is the average one?  Are there other facilities affiliated with the one you are joining that you could move to if circumstances required it?  

1. “Can the community recover from an environmental disaster?”  If you are retiring to a location that frequently gets hit by natural disasters — Florida is the obvious example here — you must determine if the community can survive a direct hit. Another client of ours were all set to move into an assisted living facility when they learned that the possibility of a devastating hurricane hitting the area was a very real possibility.  It was later determined that the facility would not have had enough insurance to cover a complete replacement of the property.  This caused our client to cancel their reservation…which unfortunately meant losing a significant portion of their down payment. 
2. “Can I change my mind?”  Before committing to a hefty deposit or reservation fee, check if there are any “back out options.”  Can you ask to be taken off the wait list and still get your down payment back if you change your mind?
3. “Does the community/facility accept pets?”  Some do, some don’t.  But given that having pets is one of the best ways to improve your quality of life as you get older, it’s important to make sure you can bring your furry friends along if you have them.  For many people, home simply isn’t home without a dog to greet you at the door or a cat to curl up in your lap!
4. “Is it close enough to my family?”  A senior community could be a palace and still not be worth it if it means only seeing your grandkids once per year.  Remember, when you select any senior living option — independent retirement community, assisted living, nursing, etc. — you aren’t just choosing a facility.  You’re choosing a home.  And since home is always where the heart is, it’s important that yours be close enough to spend quality time with the people you love most. 

As you can see, there’s a lot to think about when mulling over a retirement community.  The good news is that you can find positive answers to just about all these questions if you start doing your research early.  In fact, just a few months back, a different client of ours moved into a retirement community after years of thinking about it.  When I went down to meet with them, I was thrilled to see how happy they were.  They’ve made some wonderful new friends, and told me all about the various book clubs, poetry readings, movie nights, and art lessons they’ve been enjoying.  As they put it, it was almost like being back in college — except they didn’t have to worry about grades! 

If you are ever considering your options for senior living, please feel free to give us a call.  We can help you:

• Weigh your options
• Factor your needs into your overall financial plan
• Evaluate what you can afford and how it will impact your other financial goals

To help you get started, we have put together a free Retirement Community Evaluation Checklist.  You can use this as a handy resource for determining whether the community you have your eyes on represents good value or not.  To get your copy, simply click here. 

Ultimately, remember this: Where you live matters as much in retirement as it did in your twenties and thirties.  It’s not just about having four walls and a roof — it’s about finding a place where you can maximize every minute, cherish every hour, and continue to grow as a human being.  Take the time to make an informed choice, because it’s one of the most important you will ever make.  And please let us know if we can ever help in any way!

— John Kolb