Since the recent recession, one ongoing debate has been around the question, “Is it better to rent or buy?” While the right answer is unique to each individual situation, there is one demographic where renting gives the greatest benefits. When retirees rent, there are several significant advantages.
Consider that most retirees are empty nesters; chances are the old home no longer fits their lifestyle. So while some will choose to downsize, buying a smaller home or condo is not necessarily the answer.
A growing number of older downsizers are choosing to rent rather than buy their retirement home. Out of 100 largest U.S. cities, fifty-two were majority-renter in 2015, according to Bloomberg, and that rate is likely to increase as more Baby Boomers retire.
It is a choice, retirees say, which can be physically, mentally and financially freeing.
Some retirees rent for these reasons
- Retirees rent because homeownership consumes too much time and absorbs energy that can be used in other ways.
- Monthly mortgage payments are history when you sell your home and start living life as a renter.
- The regular expenses of home upkeep and related bills for gutter cleaning, roof repairs, service agreements, sewer connections, etc., and fuels like oil or firewood are eliminated.
- Many things are cheaper and that also applies to insurance; the average renter’s insurance policy is anywhere from under $200 to just under $400 per year.
- Retirees rent because they watched their parents going through the downsizing process, sometimes traumatically and swore they wouldn’t inflict the same experience on anyone.
- When traveling forms part of your dream retirement, renting gives you the flexibility to lock up and go. If you rent in an apartment complex, there’s the added perk of a concierge service who can accept your deliveries when you are traveling.
- Retirees rent because life is simplified; no more unused empty rooms, less paperwork – fewer bills, fewer outgoings, no more mowing the lawn or shoveling snow.
- Downsizing your home is the start of a new chapter – a second act – that symbolizes your new life in a new home.
- Retirees often find that financially renting is a cheaper deal than owning. The one caveat is the major retirement communities can be more pricy.
- Retirees rent because many complexes give free access to facilities such as a swimming pool, fitness center, and private parking.
One welcome effect of downsizing to a rental is losing the stress and worry associated with homeownership and the upkeep of too much house and yard. This can be the first step to a minimal and stream-lined life that will free up your time for leisure activities and spending time with family and friends.
Weigh up the disadvantages
You have a lot to gain by giving up homeownership but you’ll sacrifice, too. Like most things in life, there are disadvantages to becoming a renter when you retire.
- You won’t qualify for any homeowner’s tax incentives.
- You lose the sense of pride that comes with being a homeowner.
- Are you mentally ready to sell your home and move on?
- You’ll have to deal with a landlord or property management company.
- You want to leave the home as an inheritance.
This is a circumstance when having equity in your property at the end of your life will be an advantage. If you want to leave the family home to your heirs as an inheritance, selling your property won’t be an option.