For people who live in an increasingly aging society, a retirement community could be a good option when they retire. A retirement community will offer the seniors food, amenities, care, recreation, and most importantly, companionship.
Before the seniors move into a retirement community, they should at first figure out how much it will cost thoroughly.
The cost of a retirement community includes entrance fee and monthly fee.
- Entrance fee
Some retirement communities charge entrance fee which requires new comers to pay an additional fee when they move in in order to pay for the services that retirement communities offer such as food, amenities, and medical care. Entrance fee is commonly seen in continuing care retirement communities, and the older people become, the more they need to pay.
Note that it is not certain whether the entrance fee is refundable or not. Therefore, people should go through their contract carefully before they sign it.
- Monthly fee
Monthly fee is the regular cost of a retirement community. It normally costs about $2,500 per month and it can vary according to the location of the retirement community. Some people may think that this number is rather huge, but if we compare it with the average cost of senior people if they live along, we will find that living in a retirement community is in fact cheaper than living on their own.
Besides, the seniors should keep an eye on their budget. For those who choose to move to a retirement community at age 55, there will be a gap before they can finally take social security benefit. In this case, they should compare the cost of retirement community with their budget and draw their money from regular saving accounts or a taxable brokerage account instead of their 401(k) or individual retirement account in order to avoid tax penalties. They can also choose to sell their current house and use the money to cover the cost of retirement community and they may even get tax deduction if they meet ownership and use tests.