The dream of a retirement community is appealing. It promises a maintenance-free lifestyle, social activities, and on-site amenities. Many people budget for the obvious costs, like the monthly fee or the initial buy-in. But beneath the surface of the glossy brochures, there are often strange and unexpected costs that can take you by surprise.
These hidden fees can significantly impact your retirement budget and peace of mind. Before you or a loved one signs on the dotted line, it’s crucial to understand the full financial picture. Let’s uncover eight strange costs that can be hidden in retirement communities.
1. The Second Person Fee
Are you moving in as a couple? Many communities charge what is known as a “second person fee.” This is an additional monthly charge for your spouse or partner, even though you are sharing the same unit. This fee can range from a few hundred to over a thousand dollars a month. It supposedly covers the second person’s use of amenities, but it can feel like a surprise tax on being a couple.
2. Mandatory Meal Plans
Most communities with dining halls require residents to purchase a meal plan. You might think this is optional, but it is often baked into your monthly fee. Even if you love to cook and plan to eat most meals in your own apartment, you could be paying for a certain number of meals each month whether you use them or not. To make matters worse, these credits often don’t roll over.
3. “Tiered” Housekeeping Services
The promise of no more chores is a huge selling point. However, the included housekeeping might be more limited than you think. The standard service could be a light cleaning every other week. If you want more frequent visits, deep cleaning, or help with tasks like laundry, you will likely have to pay for a higher “tier” of service at an additional cost.
4. The Cost of On-Site Healthcare
Many communities, especially Continuing Care Retirement Communities (CCRCs), offer on-site healthcare services. This is a major benefit, but it’s not always included in your standard fee. For example, you might have to pay out-of-pocket for visits to the on-site clinic. If you need to move to a higher level of care, like assisted living, your monthly fees will also increase substantially.
5. Pet Fees and “Pet Rent”
If you plan to bring a furry friend, be prepared for extra costs. Most pet-friendly communities charge a non-refundable pet deposit upon move-in. On top of that, many are now charging monthly “pet rent.” This is an extra fee added to your rent simply for having a pet, even if they cause no damage.
6. The “Move-Out” Fee
You might be focused on the cost of moving in, but many communities have fees associated with moving out. When you or your estate eventually sells your unit, the community may take a percentage of the sale price. This can be a significant amount, and it can reduce the amount of equity you or your heirs receive.
7. Special Assessment Fees
Just like a condo association, a retirement community may need to fund a major capital improvement, like a new roof. To cover these costs, they can levy a “special assessment” on all residents. This is an unexpected, one-time fee that can be thousands of dollars, and it is usually mandatory.
8. The Annual “Cost of Living” Increase
Your monthly fee is not set in stone. Nearly all retirement communities include a clause in their contract that allows them to raise the fees annually. While some increase is expected to cover inflation, these increases can sometimes be much higher than the standard cost of living. For this reason, it’s important to ask what the average annual increase has been over the last five years.
Ask Questions Before You Sign
A retirement community can be a wonderful place to spend your golden years, but financial surprises can tarnish the experience. The key is to do your homework. You must read the contract carefully, ask direct questions about all potential fees, and talk to current residents. Understanding these strange costs hidden in retirement communities can help you make an informed decision and protect your financial future.
Have you encountered any other surprising fees? Share your story in the comments.
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