One big part of retirement planning involves figuring out where you’ll live and what it will cost on a monthly and yearly basis. Many retirees stay put in their home—particularly if it’s paid off or close to it, avoiding one major cost-of-living expense in the post-work years.
But then, many others choose to move. Common reasons include to downsize, to find a place more suited to the lifestyle they want in retirement, to relocate for any number of reasons (e.g., proximity to family, more desirable weather, a large senior population), and so on.
If you’re involved in retirement planning and intend to move once you stop working, you have a lot of decisions to make. One of the choices you’re faced with is whether to buy a new home or rent. There are a number of pros and cons of renting a home after retirement, so weigh which ones matter most to you, and of course your personal preferences affect what’s right for you.
So, here’s a quick look at some of the most significant pros and cons of renting a home after retirement. But one caveat: These assume that you sell your home; the lists would look different if you kept your home and used it as a rental property and moved into your own rental, which could be a sensible option in certain circumstances.
Pros of Renting a Home in Retirement
- Eliminate the debt of a mortgage
- Avoid the stress and expenses of home and yard maintenance and repairs—especially the serious (and seriously costly) unforeseen headaches when something big breaks or needs replacement
- Travel more freely without being as tied to home maintenance
- You can gain access to amenities like a pool, fitness room, etc. without associated costs (either from adding/maintaining them at home or paying membership fees)
- Renter’s insurance costs much less than homeowner’s insurance and property taxes
- There’s far less pressure and a simpler process when picking out a rental than when choosing a home to buy
- Depending on your location, you may have many more home options by renting
- It’s much easier to move, should you decide to for any reason
- Renting is a good way to sample life in a new location without the major commitment of purchasing a home
Cons of Renting a Home in Retirement
- There’s sometimes an element of insecurity, like in a situation where the homeowner could decided to sell or stop renting out the home
- Monthly rent payments are often higher than mortgage payments (though again, this can often balance out or still be cheaper when you factor in insurance and taxes)
- You lose some tax advantages, like deductions for mortgage interest and property taxes
- You give up a significant asset and access to your home’s equity
- There’s less predictability in your annual housing cost
- You’re at the mercy of a landlord when you need maintenance, how much your rent increases when your lease is up, etc.
- There’s usually more noise and less privacy if you’re in an apartment, condo, townhouse, etc.
- You have less control over customizing your home to make it exactly as you want it
- You no longer have the status of “homeowner,” if that’s important to you