Is it Better to Rent After Retirement?

If you are around retirement age, you’ve probably heard all your life that it’s better to own your home than to rent. After all, when you own a house, you’re building equity every month when you pay your mortgage; when you rent, that money disappears into someone else’s pocket. So the idea of renting after retirement may seem unwise, even a little scary.

The reality is that for many retirees, it’s a good idea to rent after retirement rather than own a home, even one that is fully paid off. In this blog post, we’ll discuss several reasons why renting in retirement might be the best idea for you.

You want to downsize.

Like many people, you may have needed a bigger home when you were younger and had a growing family. Now your kids are grown, and you feel like you have more space than you need. You don’t need that big house, or the many possessions you filled it with. Downsizing to a rented apartment allows you to get rid of years of accumulation now so you (or your kids) won’t need to do it later.

You’re tired of maintaining the house.

All houses need repairs once in a while, and (like people) the older they get, the more maintenance they may need. If you find yourself less able to do repairs around the house, or less willing to pay someone else to do them, you may want to rent after retirement. When you have an apartment and something breaks, usually all you need to do is make a call to the landlord to get it fixed.

You want to reduce your cost of living.

It may not seem like you’re lowering your cost of living by moving from a house to an apartment, especially if the house is paid off. But remember that homeownership comes with property taxes. And if you chose your home because it was in an elite school district for your kids, you might be paying some pretty hefty taxes. If you move to an apartment you won’t have those taxes, and you may be able to find a nice place in an area that is nearby but significantly less expensive overall.

You want to have more money to invest.

If you have equity in your house, that’s where it will remain until you sell the home or take out a loan against it. If you’d like to have access to that wealth, say to invest and earn additional income, selling the house allows you to do so. Having the proceeds from the sale of your house may also give you the cash you need to enjoy your retirement more. This is something that reverse mortgages promise, but selling your home outright is a better option for many people

You’re planning a move to a new area.

Many retirees move to another state, or even another country, after retirement. Sometimes the move is for a better climate, or to be closer to children or grandchildren. Whatever the reason, if you are moving to a new area, you may want to get a better understanding of the area before buying a home. Renting a home gives you the freedom to explore your new area like a local and make a more informed decision about precisely where you would like to live.

You are worried about safety at home.

If you have problems with balance or concerns about falls, there are steps you can take to make your home safer, but it might be easier, and more effective, to move to a place you can rent. For example, if your home has stairs, moving to an apartment on one level could significantly reduce the risk of falls. There are even apartments designed for seniors with attention to common safety issues.

You want social interaction.

If you live alone in your house, you may feel isolated, and if you have physical limitations, you may find it difficult to get out and get together with people. If you choose to rent after retirement, especially in a complex that caters to seniors, you will suddenly have neighbors at hand, many in the same boat as you. Your apartment complex may also have amenities such as gyms and pools, common areas for socializing, and scheduled events.

You worry that someday you won’t be able to live independently.

There are growing numbers of “transitional living” facilities that allow seniors to rent an independent living apartment, then, as needed, transition into assisted living or nursing home care, often on the same campus. This prevents you or your family from needing to find a facility with the level of care you need and then apply for admission. The independent living component of these facilities offers many amenities, such as shuttles for medical visits or grocery shopping, onsite restaurant-quality dining, and a variety of activities from bridge to billiards and mah jongg to movie nights.

The Downsides of Renting After Retirement

While there are many advantages to renting after retirement, there are some disadvantages, too. You may have less space, forcing you to get rid of some of your possessions before you’re ready, and you may not have the room to host visiting friends and families for overnight stays. Depending on where you move to, there may be a lack of outdoor space—a great disappointment if you enjoy gardening. You might be less able to customize your space than in a house, and you may have to deal with noisy neighbors who share a wall.

In the end, deciding whether to own a home or rent after retirement is a personal decision based on your own goals and concerns. To get help weighing your options, contact Estate Planning & Elder Law Services to schedule a consultation.