Retirement Budgeting: How To Estimate the Cost of a Home in a 55+ Community

Active adults sticking to a budget can still find their dream home in a 55+ community.

When you look for a home in a 55+ community, you’re making a big decision. The biggest portion of retirement budgeting is going to be where you choose to live. It might just be the last house you purchase, and you want to make sure that you spend your retirement in a home of your dreams—without blowing your budget.

Especially in retirement, your budget becomes an ever-more important consideration. Whether or not you’re on a fixed income, you need to spend your money wisely for it to provide you with a comfortable life.

This guide can help you get started on the process of retirement budgeting. We’ll give you the variables you need to consider in order to estimate your budget for your new 55+ community home.

Understand Your Financial Sources

A small wooden model of a house beside three stacks of gold coins with a blurred nature background
Retirement budgeting always starts with the biggest number.

Retirement budgeting always starts with the biggest number. In this case, that’s the amount of money you can expect to have available on a monthly basis. This can include but isn’t limited to:

  • Your retirement income, such as your pension, social security, etc.
  • Monthly or one-time payout from a secondary retirement investment account.
  • Interest or dividends from savings accounts and investments.
  • Money you can expect to gain by selling or moving out of your current home.

Consider splitting these figures into two areas. The first is the lump sum available to you as you find your next home, which can be used as a down payment or for any other initial expenses. The second forms your monthly budget for the next home of your dreams.

Subtract Your Fixed Expenses

An older man sitting at a desk and estimating the cost of a home in a 55+ community
Beyond these fixed expenses, you also have variable expenses that change every month.

Of course, all the money you receive on a monthly basis can’t go towards a rent or mortgage payment. Everyone has expenses, and this step in retirement budgeting helps you make sure they’re accounted for. Potential fixed expenses might include:

  • Your current rent or mortgage.
  • Insurance payments.
  • Car payments.
  • Any monthly debt payments, like credit cards or loans.

Beyond these fixed expenses, you also have variable expenses that change every month. That might include groceries, medications, or simply the money you like to spend on yourself and your family. Average them out to make sure they’re accounted for as you calculate the budget available for your home.

As part of this step, it might make sense to take a close look at your last three months’ worth of expenses. That eliminates any guesswork and ensures that the final figure you come up with is as close to accurate as possible.

Consider the Primary and Secondary Costs of a Different Living Environment

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The most important consideration is what type of living environment you choose.

With a firm budget in hand, it’s time to consider your potential future home. Here, the most important consideration is what type of living environment you choose.

While that choice goes beyond your budget, understanding the costs involved in each environment can help you see just what is the most realistic for you. Below, we’ve broken down the four most common choices: renting an apartment, buying a traditional home, living in a retirement community, or moving to a 55+ community.

Primary and Secondary Costs of Renting an Apartment

The primary cost of renting your apartment can vary significantly, from $725 in West Virginia to more than $1,600 in Hawaii. But if you choose this option, it’s just as important to keep the secondary costs you’ll need to account for on a monthly basis as well. This part of retirement budgeting might include:

  • Electricity: typically between $75 and $150 per month
  • Water: between $25 and $100 per month
  • Gas: between $25 and $90 per month
  • Internet and/or TV cable and streaming: between $100 and $200 per month
  • Renters insurance: between $15 and $40 per month

Some rental agreements include at least some of these costs. Still, it’s important to keep them in mind when considering whether an apartment is the right choice for your budget.

Primary and Secondary Costs of Buying a Traditional Home

The typical home-owning American pays between $1,000 and $2,000 a month, depending on the state in which they live. That includes property taxes and mortgage insurance. But some secondary monthly expenses will be separate. They tend to be similar to renting an apartment, but with the costs slightly higher:

  • Electricity: typically between $100 and $200 per month.
  • Water: between $40 and $150 per month
  • Gas: between $40 and $130 per month
  • Internet and/or TV cable and streaming: between $100 and $200 per month.

Keep in mind to build a budget for potential unexpected expenses, as well. You never know when the water tank breaks, or your A/C unit needs a recharge.  And of course, the costs don’t necessarily end there, especially if you pay for lawn care or house cleaning on a monthly basis.

Primary and Secondary Costs of Living in a Retirement Community

Because of the many secondary expenses that come with either renting a traditional apartment or buying a traditional home, retirement communities are popular choices for retirees still looking to have a nice space to spend their time.

The appeal of a retirement or assisted living community is that all primary and secondary costs tend to be wrapped into one. That includes housekeeping, lawn maintenance, social activities, meals, and utilities. Depending on the services as well as your location, monthly costs can range from $2,000 to $3,500.

Primary and Secondary Costs of Moving to a 55+ Community

The rise of popularity for 55+ communities can largely be attributed to one thing: They present a nice balance between the extremes listed above. You get a greater sense of independence than you would in a retirement community, while still receiving some extra services that make your daily life easier than a traditional apartment or home would.

The average cost of living in this type of community varies drastically depending on the specific community you choose. But averages range between $1,500 and $4,000 per month. For that price, you typically get community services, like lawn maintenance and transportation, included, making the retirement budgeting process much easier than buying or renting a traditional home or apartment.

When choosing this option, the best place to start is finding a 55+ community that appeals to you and researching the price of a home to your liking. Ask what services are included, and what secondary expenses you’re expected to pay. With your own budget firmly in hand, it’s the best way to make sure that the home you choose will match your monthly retirement income and expenses.

Plan Well To Live Better in Your Retirement

A mature couple walking a bicycle through a field in a 55+ community
Start your search to see which of these options might be in your budget.

Ultimately, the choice is yours. Finding the right situation means knowing exactly what you’re looking for, then making sure it matches your retirement budget. We hope this guide was helpful in getting you halfway there.

And of course, we’d love to help! At 55places, you can find 55+ communities for your needs from across the country. Start your search to see which of these options might be in your budget.

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