Should You Rent Or Buy? Homeownership In Retirement

Owning your home can give you some stability in your retirement. On the other hand, renting can give you flexibility. Owners don’t have to deal with landlords; renters are not responsible for major repairs.

Weighing the pros and cons of renting versus owning is a constant question when considering where to live. And because housing is likely your biggest retirement expense, the choice you make can have a big effect on your lifestyle in retirement. These four questions can help you weigh your options.

What’s the real estate market like where I want to live?

You most likely have a region in mind, a desired way of life, or even a specific city. Research the local real estate market and look at historical and current rental prices. Ask a professional about the economic growth in the area to gauge where prices are going. Compare this information to the cost of buying a house by taking into account maintenance, property taxes, and home insurance.

How long will I live there?

Some people wish to own property, create space for their personal projects, and live out their days near their families. Others would prefer to explore the world with their newfound freedom. Be honest with yourself about your plans, taking into account your current healthcare needs and future assisted-living accommodations. If you know you’ll be moving around frequently, it’s best to rent; you’re not locked into a mortgage and homeowner responsibilities while you travel.

How much income do I need to maintain my lifestyle?

Depending on your retirement plans, you’ll want to calculate how much cash you need to help maintain your lifestyle. Renting can lower your monthly expenses and make them more predictable – no surprise roof repairs or busted furnaces. Renting can also save you capital. If you sell your home and invest the money, you may be able to make a return that’s higher than the appreciation on a new house.

Do I want to leave my house to my heirs?

This is one of the most personal questions to ask yourself when deciding whether to own or rent – and it can be tricky – since it forces you to think about legacy.

When you’re making your choice, remain realistic with your budget and diligent with your research. A financial advisor can look at your budget and help you sort through the costs and benefits of renting versus buying.

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