When researching retirement living options, one aspect should be at or near the top of your priority list: financial stability.
"You've spent your life saving for these years," says Samantha Long, certified financial advisor with Ameriprise Financial. "Whether you choose to stay in your house or move to a community, it's important to choose a retirement living option with proven financial strength, value, and reliability to ensure you can meet your basic monthly expenses while managing any investments."
That said, she stresses that the costs of home ownership must be accounted for in retirement. "If expenses of home ownership, for example, a new hot water heater or air conditioner or even larger expenses like a new roof, are not prepared for, they can severely impact your retirement goals," she says.
You may have set up a budget before or during retirement, but homeowners are more likely to get hit with unpredictable big bills, says Long, than people who live at a retirement community.
Among retirement communities, there are differences in the way each one operates. A number of financial structures, in addition to lifestyle and amenity options, exist among area communities.
Northern New Jersey is home to a variety of retirement living options outside the single-family home. Let's look at the main differences between each type.
Active adult 55-plus communities typically provide activities and a return on investment, but homeowners are still responsible for home maintenance.
Those who live at a senior rental community don't buy in to the property, so they don't receive a return on their investment. They pay one monthly fee to cover their rent and use of on-property amenities.
Life care communities, another option, require a long-term, upfront financial commitment. Residents pay a substantial fixed monthly payment that remains the same as they progress through levels of care.
At fee-for-service communities, residents pay for advanced levels of care only if and when they need it. It's a financial model that's both affordable and secure for most retirees.
Bruce Campbell, who had a career in sales, and his wife Margaret, a stay-at-home-mother turned administrative assistant, did their due diligence when researching retirement communities in the area.
"We weighed the decision quite heavily," Bruce says. "We spent a considerable amount of time investigating our options and looking at the value of each one."
Among their considerations were location; overall appearance and maintenance of the grounds, buildings, and facilities; friendliness; and financial security.
Ultimately, they decided on Cedar Crest, the fee-for-service continuing care community in Pequannock Township, N.J. "In terms of doing my due diligence, Cedar Crest came out on top. Pound for pound, dollar for dollar, they were the best," Bruce says.
When it comes to location, he and Margaret love Cedar Crest's proximity to their church, doctors, and all the area hospitals, while knowing that should they ever need to stop driving or should weather keep them in, a church and full-service medical center are located right on campus.
Additionally, Bruce says, the property is well maintained. "The outside is just prime, and inside it's not old and dated. It's just a very pretty place," he says.
Standardizing monthly expenses
Ruth Phillips and Kate Tanis, sales counselors at Cedar Crest, assist people who are deciding to sell their house and move to one of community's maintenance-free apartment homes.
"Our monthly service package is a really attractive aspect to Cedar Crest," Phillips says. "It helps community members budget by standardizing monthly expenses."
The predictable monthly service package, which corresponds to the size of each apartment home, includes all home maintenance, professional landscaping, property taxes, 24/7 security, utilities, a meal plan, and use of all amenities like the indoor pool and fitness center.
It also includes snow-clearing services in winter and year-round transportation to and from local destinations like the grocery store.
And when it comes to property taxes, that's just one more huge expense Cedar Crest residents worry less about.
New Jersey and neighboring New York claim the top two property tax rates in the nation. In 2019, New Jersey averaged more than $8,953, an average increase of 2.1%—quite a boost from 2018's average increase of 0.9%. To compare, the average American household spends $2,375 on property taxes each year, according to a February 2020 report by WalletHub.
At Cedar Crest, the monthly service package includes each apartment home's portion of property tax, which is divided among all community members based on apartment size and days of occupancy. This way, the tax is spread out over the entire year instead of cut into three large quarterly payments.
"Our predictable monthly costs give such peace of mind to our residents," Tanis says. "They don't have to worry about which bills have been paid and which need to be paid. It's convenient and budget friendly."
Which, Long adds, is imperative in retirement. "A monthly budget should be strictly followed and reviewed at least quarterly," she says, adding that a financial plan should also be done annually by a trusted financial professional.
She suggests reviewing the following to ensure a healthy retirement plan:
•Your current financial position
• Cash reserves
• Life insurance
• Long-term care
• Estate planning
Long recommends reviewing your retirement plan sooner rather than later. "Remember, the longer you wait, the more limited your options for change," she says.
No matter where you are in your retirement timeline, you should give your finances an annual checkup. People are living longer, which means their financial plans are more likely to run out before they do. But the sooner you make adjustments—like standardizing your monthly expenses—the better.