Pros & Cons of Renting in Retirement
There has actually been an increase in older renters over the last 10 years. Those over the age of 55 actually contribute to about 42% of the rental market now. This percentage is projected to increase as more Baby Boomers find themselves renting in retirement.
It’s important to understand the pros and cons however of choosing between rent vs. own. Let’s break each one down so you can better decide whether or not renting in retirement is best for you.
Pro: Bye Bye Mortgage
If a really big focus for you is the fact that you’re still having to chip away at that mortgage then clearly you’ll be happy to rent. One less thing to worry about when you finally retire. You might even find a place to rent that has a lower monthly cost than your mortgage. So you do have the potential to be saving money here.
Con: Bye Bye Tax Breaks
Homeowners receive substantial tax breaks. There are deductions on the property tax as well as the interest on the mortgage. Saving on these taxes can add up significantly especially if your property taxes are high.
If you’re really focusing on traveling after you retire then renting in retirement is ideal for you. Renting gives you the flexibility to bounce around either on a month to month basis or 6-month basis. Airbnb now makes it easier and easier for short term rentals.
Con: Bye Bye Home Owner Status
Most people have a sense of pride of being a homeowner. If you’ve lived in your home for a while you’re probably emotionally attached to it. So it’ll be important to emotionally prepare yourself if you’re planning on selling your home. A great place to start is to slowly begin to de-clutter your home. This will make it easier to make the transition when the time comes to move.
Obviously one of the most challenging things of home ownership is keeping up with the home maintenance. As we age it becomes more and more difficult to maintain the landscaping and day to day maintenance of our homes. As a tenant you will no longer be responsible for these things. Of course, you can hire contractors to help you with the maintenance. But choosing a contractor to help can also be overwhelming. I work with a variety of contractors and can provide a list of competent and reliable individuals and companies. Please feel free to contact me for this list.
Con: Renting in retirement can be expensive
This one really varies depending on where you live, the size of your current home and your mortgage balance. Typically however, it is cheaper to own a home than rent one. Also when you consider the low mortgage rates today it’s one of the best times to own a home.
One of the big pro’s surrounding apartment complexes is that most of them offer you a wide range of amenities. Everything from a nice gym to a pool and even game rooms and office centers. You can even have a concierge on staff and if you’re renting in retirement that can make life so much easier when it comes to the little things.
Con: The Landlord
You may not be accustomed to dealing with a landlord or property management company. I’d recommend doing some in-depth research on the situation before you actually sign a lease. One way to do this is to contact current and previous tenants if at all possible and find out how quickly issues were resolved by the landlord. There is also the potential for your rent to be increased at the start of new lease periods so be prepared for that potential increase in your monthly expenses
Pro: Insurance Is Cheaper
Renters insurance averages around $180 to $360 a year while your potential homeowners insurance cost will be significantly higher.
Housing needs for you or your aging family member is obviously a very important decision. Variables such as personal preference, geography, financial considerations, health concerns, renting in retirement, etc can make that decision quite challenging. As a Seniors Real Estate Specialist (SRES), my goal is to help guide you through the process, making the decision of renting in retirement vs owning less stressful and more successful for everyone involved.
I treat my clients the way I like to be treated – with care and respect.
If you’d like to be treated that way too, please contact me with your real estate questions and needs. I’m here to help.
by Rick Sheppard