Should you move to a 55-or-older community?

By Amy Fontinelle
Amy Fontinelle is a personal finance writer focusing on budgeting, credit cards, mortgages, real estate, investing, and other topics.
Posted on Dec 1, 2017

Imagine living in a quiet community where an association handles much of your home maintenance and you can spend your free time enjoying long walks, group fitness classes, golf, bike trails, games, and other activities with people similar to you in age and ability.

If that sounds appealing, a 55-or-older community could be a good choice.

A 55-or-older community is an active adult community designed to serve residents who are at least 55 years old. It might legally restrict residents by age, which is allowed under the federal Housing for Older Persons Act of 1995 (HOPA), or it might simply feature amenities designed to attract older, active adults. It has private, single-family residences: townhomes, condos, and freestanding homes. It is not an assisted living or continuing care retirement community, which often has apartments within a multilevel building, banquet dining, and skilled nursing care.

Communities of all types are available, from ones with newly built, luxurious, semicustom homes of 4,000 square feet to modest, older ones with two-bedroom condos that cost less than $70,000. Sometimes, a wide range of price points exist within the same community, as is the case in the Rio Verde 55-or-older private golf course community just outside Scottsdale, Arizona, where custom-built homes range from less than $200,000 to more than $1 million. (Related: Retirement calculator)

Communities for adults 55 and older have been popular in recent years, and industry experts anticipate that the trend will continue because they expect many of the nation’s 77 million baby boomers to move over the next decade in order to downsize, change geographic locations, relocate to a walkable community, or purchase a new residence for some other reason. By 2019, 45 percent of all U.S. households will be headed by someone 55 or older compared with 38 percent in 2012, according to the National Association of Home Builders.

Indeed, the association’s 55-plus Housing Market Index (HMI) for the fourth quarter of 2016 indicated the highest builder confidence in the 55-plus housing market since 2008. Respondents’ favorable views were based on current sales, prospective buyer traffic, and anticipated six-month sales. Their outlook is stronger for single-family homes than for condos.

Researching your options, onsite and online

In most cases, an online search will turn up various active adult communities in your area. Many results will be for third-party websites that want to collect your personal information in exchange for providing details and pricing. These sites get paid for referrals, which means they may contain incomplete listings of your options. Other sites freely provide addresses, listing prices, square footage, and photos, then direct you to contact an agent for more details—similar to any other real estate website.

Overnight visits are possible in some communities, especially newer developments, said Ann Willets, a Realtor-Associate® with Keller Williams Shore Properties in Toms River, New Jersey. She is also a resident of the Silver Ridge Westerly 55-or-older community in Toms River.

An overnight visit can be a good way to experience the community; it allows you to fully interact with residents and staff, use the amenities, and get a feel for what living there would be like.

Some communities encourage it. Mellody Fairbanks, Rio Verde Community Association board member and a resident of Rio Verde, said her community has six privately owned homes available for overnight visits of up to four days.

If an overnight visit is not possible, Willets said most communities have a clubhouse that can be visited, and some even have newsletters and websites with community news.

“You can ask to speak to someone on the board and/or visit the clubhouse to speak to residents,” she said. “Drive around the neighborhood and check out the shopping and services in the area, and talk to a local professional who specializes in real estate for seniors.”

Accessibility, health care, and long-term living

Whether a 55-or-older community offers health care services depends on the community, but many 55-or-older communities are just basic communities with freestanding homes and no services, Willets said. “It’s like living in any other community, just age restricted.”

It can be challenging to find a community that suits your current needs as an active and healthy adult but that would still be a good place to live if you slow down as you age. Homes that are single story or at least have a first-floor master bedroom and no entry steps can accommodate aging knees and hips and the possibility of one day needing a walker or wheelchair.

For example at Rio Verde, residents need a private vehicle to get around, although there are several residents who routinely assist with airport runs, Fairbanks said.

Other communities may offer private transportation or accessibility to public transportation, which can be important for getting the health care you need if you become unable to drive.

The Rio Verde community mentioned earlier has an on-site ambulance and an average emergency response time of less than four minutes and is supported by an EMS helicopter for critical emergencies. The community also has its own fire department with emergency medical technicians (EMTs). Rio Verde is a 30-minute drive from the nearest hospital, Honor Health, as well as the Mayo Clinic, both in Scottsdale. 

Rio Verde also has a nonprofit organization called VerdeCares whose volunteers assist those recovering from a medical issue by providing trips to the grocery, stores, barber, and hairdresser along with rides to the doctor’s office, Fairbanks said.

Because active adult communities generally do not offer regular on-site medical care or assistance with activities of daily living, residents may age in place by using services like visiting nurses. Others may need to sell and move to assisted living or a nursing home.

Cost and management

Willets said many 55-or-older communities have a nonrefundable capital contribution fee upon purchase, which ranges in amount depending on the community and its amenities.

In other communities, residents only pay the customary costs associated with buying a home.

To manage the financial aspect of selling a home and moving into a 55-or-older community, some communities have delayed purchase programs that only require a down payment up front. Once the individuals sell their existing primary residence, they complete the purchase of their new home.

Fifty-five-or-older communities typically have monthly association fees to maintain common areas, clubhouses, and other shared amenities. Monthly fees may also cover costs such as landscaping, security, and exterior building maintenance. If maintaining your home is a concern, learn what you will remain responsible for and what it would cost to hire additional help.

Prospective residents should learn what the monthly dues are and how well the community’s finances are managed. Mismanagement could result in poorly maintained common areas and amenities and special assessments on homeowners to pay for repairs and upgrades. An attorney can help by reviewing the homeowners association documents before purchase to make sure you understand what your legal and financial responsibilities will be if you join the community.

While buying is the norm in a 55-or-older community, it may be possible to rent a home from its owner as long as the community’s bylaws allow it.

Location and timing

When to move to a 55-or-older community, if at all, depends on your goals.

You do not have to be retired to move to a 55-or-older community; many residents still work.

Willets, who still works as a real estate agent, said she loves her 55-or-older community. “We sold our larger home in Monmouth County and downsized,” she said. Their property taxes are now less than a quarter of what they used to be, and their utility bills are much lower as well.

“We now live in the home, not for the home,” Willets said. “As a result, we have a new motorcycle, a boat, and we travel.” She said her neighbors range in age from 55 to 95, “and they’re all lovely. I know everyone in the community and we all watch out for one another. It reminds me of how I grew up in a close-knit community in New York.”

Some people have moved to a 55-or-older community expecting to enjoy the company of people their own age only to find that most residents were decades older than them. If you are a vibrant 55, it might be depressing to live among 85-year-olds whose health and mental and physical abilities are significantly less than yours and are a constant reminder of what might be in store for you as you age.

Willets said that in New Jersey, where she lives, many 55-or-older communities were built in the 1970s and 1980s and are seeing considerable turnover now.

“I did an open house at one yesterday and had several couples where one partner had just turned 55,” she said. “They were worried about being around old people, but were surprised driving around the community to see a mix of ages, lots of folks out on bikes, motorcycles, walking dogs, etc.”

If you feel isolated where you live now, moving to a 55-or-older community may be a good way to make new friends and gain a sense of community.

Moving to a community near your existing home will allow you to stay in familiar surroundings, remain close to any family and friends who are still in the area, and continue seeing your existing doctors. But you will be in an environment where it is easier to meet people and participate in activities ranging from tennis to Scrabble® and sometimes even university lectures.

Potential problems

Oftentimes, family or financial circumstances change, and that could present problems if you live in a 55-plus community.

Say you suddenly find that a grandchild needs to live with you for several months — or indefinitely. You may be forced to make the difficult choice between moving or finding another living arrangement for your grandchild. These communities are legally allowed to restrict minors from living there as long as the communities follow the federal HOPA rules.

Another problem is resale value. If you plan to sell someday—or even if you don’t plan to but circumstances later force you to—you’ll be selling to a limited pool of potential buyers, which could make it harder to sell your home quickly and get top dollar than if you did not live in an age-restricted community.

When you purchase a home in a 55-plus community, you face the same financial risks that you do anytime you purchase a home that belongs to a homeowners association. If too many homes are vacant, residents will be responsible for a larger share of homeowners association fees because there will be fewer people to pay for them but all the communal facilities and structures still need to be maintained.

Further, monthly dues that are too low to keep up with ongoing maintenance can lead to expensive assessments down the road to catch up on deferred maintenance and fix major problems that could have been prevented. Ideally, monthly assessments will not only pay for timely, ongoing maintenance, but also fund a reserve that can be used for larger projects as needed without asking residents to pay extra.

The Bottom Line

Fifty-five-or-older communities can offer numerous amenities and a vibrant social life for active adults, but may not offer the medical services you could need as you age. Visit any community you are considering, ideally with an extended stay, and examine its bylaws and financial condition to make sure the community is well managed and has reasonable rules.

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The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.