55+ Communities

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55+ Communities

There’s a lot of buzz nowadays about "55+ communities," also called "active adult developments." They are popping up all across the country—near cities and in the middle of nowhere. These communities tend to be very social places that encourage interaction among residents. Many are oriented to particular activities or lifestyles. (Nudist golf, anyone? You can find it—no kidding.)

Why the attraction?

A major attraction of the 55+ community is a child-free, grownup lifestyle—in many cases without the enormous school tax burden that typical residential communities must bear. (Don’t worry—of course, grandchildren are quite welcome to visit, but mercifully, these bringers of joy must go home with their parents.)

Experts agree that millions of Baby Boomers are moving to new homes within the first year after their youngest child goes off to college. Enter the builders and developers; rest assured, if you have a retirement dream destination, there is an active adult community there.

What do they cost?

It’s not possible to offer much general guidance as to cost; like anything else, the price tag varies widely according to the region and amenities associated with a given community. As a rule of thumb, buyers can expect to pay a premium of about $20 to $30 per square foot for a house in a typical 55+ community, relative to the surrounding residential areas.

Keep in mind, however, that your home in a 55+ community will probably be a lot smaller and less expensive to maintain than the house in which you raised your kids. The house will also likely be a ranch, designed for maximum accessibility—a cost-saving convenience later, when mobility may be more of an issue. Many developments are laid out to minimize the need for driving—another money-saving feature. Finally, remember to inquire about and factor in the lower property and school tax rate you may enjoy as a child-free, 55+ community dweller, as well.

Remember the other costs

In shopping around, be sure to make apples-to-apples comparisons regarding activity fees and other costs. Some communities are all-inclusive—one "built-in" fee, for example, might buy access to all the golf you care to play on the community course(s). That’s probably a good deal for those who play a lot. Those who like the community but don’t play golf at all, however, would prefer a "pay as you go" fee structure.

Don’t lose sight of your finances

A move to a 55+ community—or any change in living arrangements—obviously involves big decisions that depend greatly on finances. With retirement benefits, it’s easier to see where you stand just by looking at your periodic account statements. The equity in your current home, however, is also probably a large chunk of your personal wealth, and that may be more problematic to assess if there is a slump in real estate prices.

During a market downturn, it’s likely that prices in your areas of buying interest have fallen along with the home prices in your current neighborhood, but it’s not safe to assume that the declines offset each other dollar for dollar. So do a market analysis; you may decide to delay your contemplated move for a couple of years until there is some improvement in home sales. If so, that time can be well-spent doing all the research that should go into any final decisions.