If your needs do change and you have to move, make sure getting out will not be too difficult. How much of your investment would be refunded if you decided to leave? How easy would it be to sell your home, given that you must sell to another retiree?
There can also be financial anxieties attached to staying in a retirement community:
When I bought my apartment here in 1978, the pool, the golf course, and the health club were free, and my maintenance was a hundred dollars a month. Now all the amenities are extra and my monthly charges have increased fourfold. So far I can afford things, but I worry about the future. One of my neighbors had to move because she could not afford the increases.
Although at the time you buy your home it may be hard to predict exactly how much your future costs will rise, you can get an idea by examining the current financial health of the community you are considering. Ask for documents such as the annual report or financial statements and discuss them with a qualified person – perhaps a banker or an accountant. Learn who sponsors or owns the community and what their financial responsibility is. Assess whether the management seems to have the experience to run the community well. As I will describe in the next section, getting a full picture of a prospective community’s financial health is especially critical if you are moving to a continuing-care retirement community.
A fascinating study of thirty-six representative retirement communities conducted by a research team at the University of Florida in the early 1980s underlines that people who choose this type of housing may have more worries than they bargained for. The researchers classified the communities they studied into two ownership types. In type 1 communities, the residents own the land the community is on. Once the developer withdraws, they are responsible for running it. In type 2 communities, the residents rent the land from the owner/developer, and so the community’s fate continues to be in outside hands.
Living in each type of community entailed special anxieties. In type 2 communities, where the developers stay boss, the residents were vulnerable to their decisions. For instance, an owner might raise the rent drastically, impose new community rules, or even sell the community to another person who might change its character totally by renting to younger people. In the type 2 communities the research team studied, residents usually passively submitted to developers’ decisions because they were afraid of what might happen if they made Waves. They were particularly concerned about the ace in the hole their developers had if they made too much trouble: selling the community to someone else.
The worries of residents of type 1 communities centered on their own ability to govern themselves. What if competing resident factions vying for leadership polarized and fragmented the whole community? Or as a community and its residents grew older, what if no one wanted to assume the job of governing? This is not to say the residents were miserable or felt they had made a mistake. But they were a bit disappointed. Living in a retirement community was less like heaven and had more real-world risks than they had imagined.
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GENERAL HEALTH
