I’m sure we can all remember the first time we thought about checking out those retirement communities. You know the ones I’m talking about, the “land cruise” with indoor swimming and tennis and with walking trails and of course it’s a gated community. Well if you just googled How Much Do Retirement Communities Cost, you must be trying to save yourself from some major heart ache when you find out how much these communities really cost.
To go a bit deeper we first need to talk about the different types of retirement communities and then go over the cost. At first glance a retirement community could cost as little as $500 a year, $500 a month or $5000 a month. With that much variance in how much a retirement community costs, it’s worth breaking down the difference and why they can cost that much.
Active-adult communities, assisted-living facilities, continuing-care retirement communities are broad categories for places people 55 and over might spend their retirements. However, each facility uses different terms and has different pricing structures, making shopping and understanding true costs, a nightmare.
According to the NIC (National Investment Center for Seniors Housing and Care ), there are about 4,060 retirement communities in the US that are classified as majority independent living (this is big distinction as there are over 40,000 total retirement community options available in the US). This includes communities that primarily serve those who are able to live for the most part, independently. Almost half of all majority independent living communities are rental communities. Some require a fee for admittance, which is typical among most continuing care retirement communities, also referred to as CCRCs or life plan communities.
How Much Do Retirement Communities Cost On Average?
There are four things to consider when understanding the cost of a retirement community.
- services provided,
- size of the actual residence
- location – probably the biggest one
An active adult community like Del Webb Orlando costs more than a similarly built community in North Carolina due to location (actually Del Webb does a nice job keeping the pricing similar, Del Webb in Waynes County MI called Bridgewater is roughly the same prices as Orlando or Village At Deaton Creek in Atlanta, that is starting at $200,000) In addition, these active independent communities are usually going to be less per month than an assisted community Then you have to think about the amenities, such as a community with only a few on-site activities would cost less per month than a provider offering transportation services, an on-site wellness center, swimming pool, access to healthcare, and other services.
A Note About Pricing of Retirement Communities
When comparing pricing, it is also important to keep in mind that the published rate for some providers is a base rate, and residents pay extra for certain services and amenities. Other senior living providers operate under an all-inclusive arrangement, whereby most everything offered is included in one monthly rate.
Continuing Care Retirement Communities
With three main “buckets” of retirement communities we thought we’d start with the most expensive and most popular, Continuing Care Retirement Communities, known as CCRCs.
Included within the category of majority independent living are most continuing care retirement communities, which typically offer residents access to a full continuum of care in one location. Therefore, in addition to independent living, residents have priority access to assisted living, memory care, and/or 24-hour skilled nursing care as needed.
In exchange for the contractual promise of lifetime housing and access to care services, most CCRCs require an entry fee in addition to their monthly service fees.
CCRCs have three different kinds of living arrangements: independent care (also sometimes called “active retirement”), assisted living and skilled nursing. As a resident’s needs change, he or she can progress through levels of care without ever having to leave the community.
How Much Do Retirement Communities Cost With The 3 Different Contract Types In Continuing Care Retirement Communities?
Type A – “Life Care”:
Type A CCRCs have a contract that has a predictable inflation adjustment in exchange for a larger entry fee. This is the most common and recommended type of contract. If you’re serious about answer the question of How Much Do Retirement Communities Cost with a definitive answer this contract will get you the closest.
Type B – “Modified Fee For Service”:
Type B is more flexible but also more costly the longer the retirees lives there. Entrance and initial monthly fees, however, run somewhat lower.
Type C – “Fee For Service”:
No contract, just pay the market rate, or at the very least this is a short term contract.
How Much Do Continuing Care Retirement Communities Cost?
The average entry fee for CCRCs is approximately $250,000 but this, too, can vary dramatically based on similar criteria as described above.
Average entry fees range from approximately $107,277 on the low end to $427,054 on the high end (across a blend of contract types).
It’s worth noting that not all CCRCs charge an entry fee, just expect that those are going to have a higher monthly rent.
The base rent for assisted-living and continuing-care retirement facilities rises about 4% per year to cover inflationary increases in utility costs and other expenses.
Assisted Living Communities
Assisted Living communities are often less expensive than their CCRC counter parts but also offer less service and amenities otherwise. Typically you can expect Condos or apartments with 25 to 120 units. In addition, typically Assisted Care facilities will have a dining hall with meals (sometimes extra) and not always, but usually staff that can help with personal attention.
Assisted Living communities will often have a full activity staff, and some even include a Pastor the comes and visits the facility’s chapel once a week. Not every Assisted Living Community has a medical professional on staff!
Assisted living communities are not to be confused with nursing homes.
Nursing Homes are for people who can’t care for themselves but who don’t need a hospital.
In addition, Assisted Living Communities are not “Active-Adult Communities” either. The biggest difference is that most residents WANT to live in an active adult community, many will need to live in an Assisted Living Community and some will HAVE to live in a CCRC.
How Much Do Assisted Living Communities Cost?
Assisted living communities and independent living communities generally have a monthly rate that could range from $1,500 to $6,000. The median price for a one-bedroom assisted living apartment with a single occupant is $3,628 per month in 2016.
Active Adult Communities (aka 55+)
Age-restricted or 55+ senior apartments or “Active Adult Communities” are just like any other kind of master-planned community where occupants own their own homes. Accommodations run the gamut from condos to mobile homes, large vacation-style homes to high-rise apartments, and costs vary accordingly – making it difficult to answer the question, “How Much Do Retirement Communities Cost?” As in any other kind of real estate investment, prices depend on the size of the unit purchased, the amenities offered and of course, location.
In addition to the cost of the home itself, the best retirement communities usually charge fees for exterior maintenance, recreational amenities and services, running anywhere from a few hundred dollars to thousands of dollars a month, depending on the level of amenities offered.
Because active adult communities are fuel by wants and not necessarily needs prices have the potential to climb to luxury real estate levels. In fact, there are a few communities at this level that are clearly for retirees but are not classified as such. So How Much Do Retirement Communities Cost? When it comes to active adult communities… it depends on what you want.
How Much Do Active Adult Communities Cost
While the real estate itself is generally more expensive than the CCRCs entry fee, the overall monthly fee is considerably less. Depending on the neighborhood it could be as low as $100/mo to as much as $1,000/mo. Keep in mind with this wide range in prices come with a wide range of amenities.
The popular Del Webb communities average around $500 a month and include yard maintenance, a full time activity director, staffed gated security and sometimes water, cable, as well as other amenities like tennis, yoga or golf.
Keep in mind that these communities allow you to own the real estate. Ownership will be enhanced (or detracted from) based on the land values in the area. Popular areas will obviously maintain their values longer than rural ones.
Hidden Costs of Retirement Communities
A problem for both Assisted Living and CCRCs are “add on” fees. Although they are spelled out in the contract, these fees can creep up or they can be announced but not paid attention to. Surprise fees include additional fees for services such as meal delivery for those not feeling well enough to go to the dining hall, transportation to the local mall, and some places include medication management for up to five different prescriptions at no extra charge, for example, while others might charge per drug. You can see why answer this question of How Much Do Retirement Communities Cost is so difficult to answer.
How To Pay For Retirement Community Costs
Medicaid pays certain long-term care costs for people who have exhausted their assets and meet strict income criteria. About 70% of nursing home residents and 19% of assisted living residents are on Medicaid.
Facilities receive less compensation from Medicaid than they do from residents who pay out of pocket, which makes Medicaid-eligible residents less desirable from a financial standpoint. When trying to figure out How Much Do Retirement Communities Cost as it relates to medicaid it might be worthwhile to consult a specialist in order to maximize Medicaid.
Take the Tax Break
Taxpayers 65 and over who itemize their deductions can deduct medical and dental expenses exceeding 7.5% of their adjusted gross income. The definition of medical expenses includes certain nursing services, such as bathing and changing dressings, whether those services are provided in the home or in a care facility. It also includes part of the “life-care fee” paid to certain continuing-care retirement communities, which is essentially a pre-payment for future medical care.
Residents, or family members acting as their power of attorney, should ask for an itemized bill and bring it to their accountant to determine how much they can deduct.
In Conclusion to How Much Do Retirement Communities Cost
Instead of leaving you with an “it depends” you’re likely looking at spending over $200,000 for an active adult community or an entry fee into CCRC. On top of that it’s a sliding scale for for your monthly fees. Here’s a run down of the states with the highest median and the lowest median cost to help you answer the question How Much Do Retirement Communities Cost.
Where Do Retirement Communities Cost the Most?
- Massachusetts – $4,002
- Maryland – $3,964
- New York – $3,895
- New Hampshire – $3,537
- Connecticut – $3,490
Where Do Retirement Communities Cost the Least:
- South Dakota – $1,399
- Minnesota – $1,679
- Louisiana – $1,804
- Utah – $1,806 (on the top 10 cities to retire list)
- Illinois – $1,859