Whether you’re renting or you own a home, peering toward retirement can make you reimagine your life.
Where do you want to live? Who do you want to be around? How do you want to spend your days?
Those questions lead some people to move into communities reserved for those who are at least 55 years old. But are these communities worth it?
That’s what a listener of the Clark Howard Podcast recently asked.
Should I Buy Property in a 55+ Community?
Should I purchase a home in a 55+ community?
That’s what a listener wanted to know on the June 26 podcast episode.
Asked Lori in California: “What are Clark’s thoughts on purchasing a home in over 55 communities? I am 53 years old. I would love to buy a home to live in from 55 until my old age.
“The only drawback I can see is I wouldn’t have a property to hand down to my daughter should I pass before she’s 55 (she’s 22 now). What would you recommend, Clark? I’m tired of paying $2,400 rent for a place I’ll never own.”
Living in a 55+ community is a viable option, Clark says. But it’s more about quality of life and enjoying your peers than it is about investing or leaving something to your children.
“So Lori, 55+ communities are intensely popular all over the country,” Clark says. “And if you want to live in one, don’t think of it like a traditional real estate purchase.
“It is a lifestyle choice. So many people go into a 55+ community and love it.”
Why Purchasing Real Estate in a 55+ Community May Not Be the Best Investment
Clark just told us that joining a 55+ community is a lifestyle decision. So the point isn’t to buy a home and flip it for more money in 10 years. It’s not a traditional real estate purchase.
However, it’s important to make sure you’re committed to living in the community long-term. Or at least the idea that if you decide to leave, you may not get the best deal financially.
“The thing I’ll tell you about 55+ communities is, it is an investment in yourself rather than a traditional investment,” Clark says.
“Because there’s a certain limitation to it. With the restrictions on who can live there, the pool of potential buyers is smaller. [If you decide you don’t want to live there], it may or may not be a good time to sell that property.”
This is one of those purchases you want to go into with your eyes wide open. Otherwise, the rules, restrictions, and potentially the selling process may surprise you.
“And I would say look at many different communities and read the contracts and the policies to make sure it’s something you want to get into,” Clark says. “Because it is in terms of housing, it is easier to get into it than it is to get out of it.”
Clark Addresses the Potential for Passing Along Your 55+ Property to a Child
It’s difficult to predict where anyone will want to live more than three decades from now.
I’ve discussed why property in a 55+ community may not represent great investment value. So if your goal is to optimize for the maximum possible inheritance, it’s not the best choice.
Putting that aside, it seems like a nice thought to consider the needs of your daughter. But it seems like it should otherwise be low on your list of priorities when you make a decision.
Lori’s daughter is 22 now. So she’s a little less than 33 years from being eligible to live in a 55+ community.
“So you’d be 86 [years old],” Clark says to Lori. “You could certainly live that long. But then your daughter may not even want to live there.”
2 Types of 55+ Communities
There are two styles to these communities, as Clark noted on the podcast.
“One is a 55+ community that is just a bunch of people living independently in homes or townhouses or even potentially in a high rise,” Clark says.
In other words, there’s no on-property transition later in life when you need more medical care or help with daily tasks.
“And then there are those that are referred to as continuing care. You start off living independently in your own home,” Clark says.
“And then much later in life, if you need care, that care will be available in the same property where you’re living independently.”
Enjoying time with your peers is something we all aspire to do. In a way, it could be even more important as you get closer to retiring.
Just make sure that before you join a 55+ community, you understand the unique aspects involved with the purchase. That you understand all the rules. And that you know what type of community is the best fit for you.