Senior considers selling home, living in a retirement community

Q: I am a senior citizen. I’m thinking ahead to a time where I might consider selling my house and moving into a retirement community.

Can you tell me what to look for in a retirement community? I have heard disturbing stories where the retirement community filed for Chapter 11 because they had financial difficulties. I’ve also heard that during COVID-19, people bought a house in the retirement community but the present owners refused to move because they had nowhere to go.

A: You’re dealing with two separate issues: Selling your home and choosing where you’ll spend the rest of your life. Given that you’re thinking about making a substantial move, it’s helpful to be cautious and think through every aspect of this move.

Let’s start with the sale of your home. The first step is to think about timing. We mention this, because it’s always better to move on your timetable and on your terms. If you have to move on an emergency basis because of health or other lifestyle circumstances, you may make decisions you’ll regret later.

If you’re planning to move in a few years, you have time to choose a real estate agent. Together, you’ll decide what needs to be done to get your home ready for sale and when will be the optimal time to list it.

Moving in six months or a year also gives you time to investigate different retirement community options in your area or wherever you choose to live. You may want to buy or rent a home in a 55+ community, or you may be ready for assisted living. Either way, timing is important. You might have to wait for the right home to come up if you’re buying or renting. And, you may have to wait until your preferred unit becomes available in the assisted living facility or retirement community.

Different communities require different upfront fees, some of which are nonrefundable. An assisted living community may require a $40,000 or a $500,000 fee that is paid upon moving into the community. That fee may be used to reduce future living expenses and whatever is left is returned to your estate after you pass away. Or, it may be the price of entry. If you’re buying a home in a 55+ community, you’ll own the property, Typically, you won’t own anything in an assisted living community.

Once you’ve decided where you’re going, you’ll see whether you’ll need the proceeds from the sale of your home to make your next move.

If you won’t need the funds from the sale of your home, you may be able to move to your new home first and then sell your home. Sometimes moving out and then selling the home takes away the anxiety and stress around planning and coordinating this big a move. If that won’t work, consider that you may have to pay the expense of owning two homes for a while. Make sure you know how many months or years you can afford to carry both residences.

If you’re only renting an apartment in an assisted living community that either doesn’t have an upfront fee or requires only a small one, your financial risk is small. But if you have to put in a significant upfront fee or are buying a condo in a building that doesn’t have enough reserves, you’re more at risk financially if something happens.

The way to resolve your anxiety is to do a deep dive into the financials of the company that owns the assisted living community. See if you can find out any information about them. Talk with residents about the amenities and if the monthly costs have changed over the past few years. If they tell you the food quality has declined, there aren’t as many employees as there once were, and the property is not being kept up, there could be a deeper financial issue.

If you’re buying into a 55+ community, ask the HOA to provide you with the community’s current and future budget and minutes from the last two years of board meetings. Talk with other residents and see if they’re having issues that aren’t resolved. If the HOA reserves are severely underfunded, you could be walking into a heap of trouble.

If you don’t feel as though you can do all of this research yourself, enlist the help of your family or a friend. And, know that taking the time to plan your move, wherever you wind up going, will make the whole process much less stressful.

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(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, a financial wellness technology company. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)