Rent or own? What’s the best choice when you’re retired?
According to The Motley Fool1, despite the many benefits of homeownership, the US rental market has seen a steady increase since 2007, and people in their 50s and 60s account for the largest portion of the rental market increase.
If you’re retired or retiring soon, perhaps the idea of liquidating your assets and shedding the responsibility of homeownership to live life as a renter is one you’ve considered. But is it right for you? Obviously only you can make that decision based on your budget, investments, health, and your projected retirement income, but we’ve created a list of renting pros and cons to give you some additional fodder as you consider your options.
- Flexibility. You can move whenever you want to. You can change neighborhoods or even cities, and get a larger or smaller rental as your needs change
- Freedom from repairs and maintenance. Homeownership can be a hassle. Roofs leak, paint peels, dishwashers break down, and windows get dirty—and dealing with that is all on you. Obviously you have to make sure you know what you’re responsible for when you sign a lease, but it’s far less than if you owned the home
- Freedom from yard maintenance. Lawns need mowing, gardens need tending and, depending upon where you live, snow needs shoveling and walks need salting. When you get to the point where these tasks are physically too much for you, you have to pay to have someone else to do them—and that’s not cheap. Depending upon what type of place you rent, all these tasks could be the responsibility of the landlord
- Fewer unexpected expenses. If your budget can’t tolerate “surprise” expenses like a new furnace, a tree falling on your roof, or fixing raccoon damage, renting can be an appealing idea because you have no liability for regular maintenance costs, equipment failures, and catastrophic events1
- Amenities. Depending upon your budget, you might be able to live in a building that has very appealing amenities like a concierge or doorman, a gym, a community room, or a swimming pool
- Lack of stability. You may want to stay in your rented home or apartment forever, but it can be sold or your landlord can choose not to renew your lease. Moving can take a huge physical and emotional toll, particularly as we age, so the potential for multiple moves may be a deterrent
- Dealing with a landlord or management company. You may have a great relationship with the landlord, or you may struggle with getting action when you need it for noisy neighbors, repairs, and maintenance
- A less stable community. Renters are often also movers. You have no idea how long any of your neighbors will be staying, and they may have less of a vested interest in the community and its surroundings
- Less choice. You can’t always decorate, renovate, or remodel the way you’d like to or that best suits your needs. You may be stuck with that ugly 1980s kitchen for the duration
- Rent increases. If you have a fixed mortgage, you always know what your monthly living expenses will be. Rent prices can fluctuate
Retirement is meant to be as carefree and as enjoyable as possible. When deciding if you should sell your home and rent during your golden years instead, figure out what “carefree and enjoyable” means to you, determine what your budget can handle, and factor in any health issues.
If you want to talk through the financial aspects of your decision with a professional, remember that as a Foresters Financial member, you have access to Everyday Money. Our toll-free financial helpline connects you to an accredited counselor who can help answer your questions about personal financial matters such as debt management and budgeting. Visit MyForesters.com to access the toll-free helpline.
417028B CAN/US (06/19)