The Average Cost Of Living In A Retirement Community Might Make You Pause

Retirement planning comes down to making smart decisions for the next chapter. Financial planning and savings are the hard part — yes. But there's also deciding where to live and what type of living arrangement is best for you. While most of us would prefer to age in place, the truth is that as we get older, we are more likely to require outside care and support for day-to-day tasks. This is where retirement communities come in — merging housing, care, and the company of other seniors and retirees. 

As an umbrella term for several different types of senior living options, the phrase "retirement community" can apply to everything from independent living facilities to more structured care complexes and seniors-only apartments, which are the same as traditional apartments but with safe, accessible design features like ramps and walk-in showers. Independent living — which offers amenities, help with chores, and home maintenance services — is the next best thing in terms of freedom for residents. Assisted living and continuing care communities focus more on providing necessary care, which typically goes beyond medication to include more personal tasks like bathing and washing. Tethering closer to traditional healthcare facilities are the memory care communities for people living with dementia, Alzheimer's disease, or other forms of cognitive or memory decline. 

Because all these kinds of communities merge housing and care services to some degree, they tend to be expensive, ranging anywhere from $1,600 to $6,270 a month. And since they aren't considered medical care, standard health insurance and Medicare plans don't cover them. That means it's up to you not only to plan your retirement fund around these costs but also to figure out ways to manage your money so you can sustain the lifestyle you've chosen for retirement.

Retirement communities provide housing and various levels of care, with each type of community offering a different mix of options. While specific costs vary across states, the pricing tiers themselves tend to be consistent. At the bottom (least expensive portion) of the tier are the seniors-only apartment communities, with a national median cost of $1,475 per month. This typically covers home maintenance and repairs, and in some cases, meal plans. Because senior living apartments are so hands-off and include minimal care services, the pricing is closer to that for an average apartment rental. The next step up is independent living. Here, residents get as much freedom as possible, with individual apartments to themselves but also a range of benefits and amenities. The average cost of these per month is around $3,145, which covers transportation, housekeeping, home maintenance, and (in some cases) a community activity calendar to encourage social engagement. In assisted living communities, residents sometimes need help with activities of daily living (ADLs) like bathing and dressing, and additional fees may be charged for those levels of care. Occasionally, meal plans and chores like laundry and shopping are also covered. 

Assisted living is the halfway point between independent living and a nursing home, where even higher levels of personal, non-medical care are provided but autonomy is maintained as much as possible. The additional care comes at a higher price, with costs ranging from $4,000 to $8,000 a month, depending on the state where the facility is located. Finally, memory care communities provide assistance for those with symptoms of memory and cognitive decline and are yet another option. These tend to be quite expensive, sometimes up to 25% more than assisted living. The monthly fee for memory care varies across states but can range from $4,000 to $11,000 per month, which covers everything from accommodation and feeding to medication management and memory-enhancing therapies.

Of all the options, continuing care communities (CCRS) offer the longest-term living options for residents. Here, all the choices — from independent living and assisted living to nursing and memory care — are offered on one large campus, allowing seniors to move from stage to stage within the same location based on what level of care they need. Payment looks a little different in a CCRS, with most requiring an entrance fee averaging $350,000 plus a monthly fee of $3,500 to $4,500. 

One of the biggest retirement mistakes you can make in the planning stage is thinking that you can get by on savings and social security alone, especially if you see retirement communities in your future. Each option is relatively expensive for the average citizen, and depending on your financial situation, it may not be an expense that's easy to sustain. If prices range from $1,500 to $10,500 per month, that totals up to between $18,000 and $126,000 per year. 

A layered financial plan taking advantage of tax benefits and insurance policies might be what it takes to accomplish your long-term goals. For example, long-term care insurance is one of the most popular ways to plan for retirement costs. These policies are designed to reimburse immediate family members for the amount they spend on long-term care. Depending on the plan and provider, benefits start going out when an insured person requires a specific degree of care. There are also life insurance policies with accelerated death benefits, which allow a beneficiary to get an advance to pay for assisted living.

While Medicaid will not cover most retirement community costs, some states have waivers (like the Home and Community Based Services waiver) that can provide some assistance. Qualifying seniors can also divert veteran benefits and supplemental security income (SSI) toward elderly care options. Even if you're not planning to stay at the most expensive retirement homes, taking these steps will go a long way in helping you have a comfortable lifestyle well into your retirement years.