Renting in Retirement: Pros, Cons, and Considerations

Although many Americans dream of owning a home, this goal may not suit everyone's life plan. Like most big financial decisions, homeownership presents balanced sets of pros and cons, and your responsibility is to gauge whether you'd be better off buying a forever home or renting when retired.

Some advantages of renting as a retiree

Below are five of the principal advantages of renting when retired. Not every item may apply to your circumstances, envisioned lifestyle, or financial circumstances, so we recommend consulting with a financial adviser to help you determine whether you should rent as a retiree.

Affordability

According to a 2024 analysis by Bankrate, monthly home mortgages across the nation tend to cost nearly 37% more than rent. That's an important factor to keep in mind when you leave the workforce. With less money coming in, you'd be wise to stretch your retirement income and preserve your savings as much as possible. To that end, renting your home can go a long way toward keeping you within your budget and reducing your financial stress.

Ease of living

Owning a home typically comes with numerous responsibilities, such as property and structural maintenance. These can be time-consuming, physically demanding, and expensive — qualities that don't normally agree with people's ideas of relaxation in retirement. In contrast, renters ordinarily don't have to worry about such things. Their leases tend to include services that handle things such as lawn care, snow shoveling, repairs, and replacements, so they can dedicate more of their time and energy to realizing their retirement goals.

Leveraging your equity

If you currently own a home, selling it may allow you to tap into its equity to cushion your retirement income. What you could do is set aside a portion of the sale proceeds to cover your rent and use the rest to fund your travel and leisure. For many, this may be a better route than alternatives such as a reverse mortgage (which can diminish or eliminate inheritances for your heirs) or purchasing a less expensive home (which may not free up sufficient equity to cover your needs and wants in retirement).

Greater flexibility

Travel and relocation are two common pursuits in retirement. Sometimes, retirees combine them into a joint endeavor, living out their golden years in different countries. The thing is, unless you have heaps of cash to spare, owning a home tends to tie you to a single location. Renters enjoy more flexibility in that regard. Typically, it's easier to wait out a yearlong lease and find a new place to rent than to sell a home and purchase a new one.

Simpler estate planning

It isn't uncommon for a deceased parent's home to become a point of contention among heirs, so you might want to remove your home from the asset equation and prevent such infighting among your survivors. Shifting from ownership to renting may also provide you with an impetus to downsize your physical assets altogether, minimizing the responsibility of managing or disposing of your possessions after your death. Therefore, your decision to rent in retirement can be simpler and less burdensome for your family in the long run.

Disadvantages of renting in retirement

As well as these advantages, renting in retirement can have its downsides.

Rent increases

Renting may be less expensive overall, but it also comes with regular rent increases. Rents often increase every year, and depending on where you live, your landlord may have the freedom to increase rent by any amount they deem appropriate. What was once affordable, then, may eventually become too costly for your retirement budget. Also, because rents may reflect local and regional markets, you may face difficulty finding an affordable rental in your preferred location.

If you own your home outright, you don't have to worry about making payments to live there. Even if you're still paying off a mortgage and your payments fluctuate, you have the assurance that your money is going toward full ownership down the line.

Moving costs

A corollary of housing flexibility is that you'll have to cover the moving costs every time you shift to a new rental. According to NerdWallet, a local move can cost upwards of $2,500, while a long-distance move can be more than double that amount. Depending on how often you want or need to move, the very act of relocation may significantly eat into your retirement savings.

Moving also presents a mental and emotional cost and can be stressful and involved. Among other things, you have to find a new place, close on it, coordinate help, and pack and unpack your belongings.

Restrictions and uncertainty

Renting means you're always somewhat at the mercy of your landlord. The conditions of your lease may restrict you from living how you want — for example, no pets, no grilling equipment, quiet hours — and breaking these conditions may subject you to eviction. The landlord could also decide to sell the property. Should the new owners not want to keep you as a tenant, you may find yourself in the inconvenient position of seeking new housing with little time to spare.

Rootlessness

A sense of transience often accompanies the renting life, even if you plan to stay at a particular property over the long term. You may feel as though you don't belong, which can have negative impacts on your mental health.

Owning vs. renting when retired: Important factors to consider

Consider the following factors to help you determine whether renting in retirement is the right path for you:

• Physical ability: Homeownership can involve a considerable amount of physical labor to maintain your property. If you suspect you aren't up to the task of mowing your lawn, cleaning your gutters, and performing other necessary upkeep chores, the renting life may be right for you.
• Retirement lifestyle: Homeownership typically aligns best with a quiet and sedentary retirement, maybe with occasional, short-term travel. On the other hand, the renting life may work better with a more active, on-the-move retirement.
• Legacy: If you wish to secure a home as part of your legacy your options are to continue living in it until your death or transfer it to a family member. You can live the renting life in the meantime, but you'd be denying yourself capital from your home's equity unless you sell it to one of your intended heirs.
• Personality: The problem of rootlessness necessitates that you take a serious inventory of your mental and emotional space and ask yourself whether you have the right personality to cope with a transient life. If you're the type of person who derives comfort and satisfaction from familiarity, you may be better off owning rather than renting.

Find support for your financial future at Blueprint Income

At Blueprint Income, we can help you build a more secure financial future no matter what living situation you prefer. Get in touch with one of our annuity consultants to discover how a fixed annuity or fixed index annuity can provide you with additional income to fund your retirement lifestyle. Call 888-867-7620 or email support@blueprintincome.com to get started.

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