
Housing costs will be one of the major living expenses in retirement.
Many people in their 50’s and 60’s think about downsizing and if they want to rent or own in retirement. To rent or buy is always a tough decision. Making that decision before retirement can be even more challenging.
You should figure out your cost of living in retirement, the potential house prices, the cost of home maintenance, property taxes and insurance, and then compare it with rent prices in the same community.
Besides making a financial decision, you need to think about how it will fit into your new lifestyle. Do you love to own your place and fix it up the way you want it? Or it will be a big relief not to worry about yard work, broken faucets or a water heater?
If you’re getting closer to retirement you might already have an idea how you want to spend your days. Buying a condo by the water or on a golf course might fit your retirement lifestyle perfectly.
Other people want to sell the house, cash out and spend money on travel.
How to figure out if you are better off renting or buying? Here are some key factors to help you with rent or buy decision.
Where do you want to live in retirement?
The good thing about retirement that finally you can live anywhere you want. It’s nice to know that you no longer need to live closer to your work or where your kids go to school. Instead, you can relocate to a place with a better climate, lower cost of living or just a place you were dreaming about.
Did you think about where you want to live in retirement?
- Are you planning to relocate to a different city or state?
- Do you want to live closer to your kids, grandkids or friends?
- Or maybe you want to move abroad and live there for the next 5 or 10 years?
I have a long list of places where I want to live in retirement. But I’ll be honest with you, living closer to my daughter will be one of the biggest reasons why I might choose to make a move in retirement.
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What is your lifestyle in retirement?

What do you want to do when you stop working? What kind of lifestyle do you want to have? What kind of activities do you want to be involved in?
Whether you realize it or not, you probably already have different ideas or dreams in your head. So, take a piece of paper and write down the list of your ideas. And don’t forget to discuss it with your partner to see if it will work for both of you.
Here are some ideas for your list and questions to answer:
- Do you have any hobbies?
- Do you like gardening? Do you like to read?
- Do you like traveling?
- What would be your daily routine when you stop working?
- Are you planning on working part-time?
- Are you healthy and active? What are you doing to stay healthy?
Where you’ll live and how you want to live in retirement will be one of the most important decisions you have to make. This decision will affect how much money you’ll spend on housing and how much you’ll have left to enjoy life. Compare and discuss with your partner the options of where and how you want to live in retirement.
If you’re in your 50’s or 60’s and working you still have time to decide. Moving can be expensive in terms of money and time spent. Therefore, you don’t want to make a decision that you’ll regret in a few years.
What are the pros and cons of owning in retirement?

When you start thinking about downsizing you need to decide whether home-ownership or renting makes the most sense for your situation. Like any decision, it will depend a lot on emotional and financial issues.
Pros of home-ownership
Emotionally attached. Home-ownership is special. We are emotionally connected to our home which means downsizing and selling a home will be painful.
Sense of stability. Home-ownership gives you a sense of security and stability. Many people feel safer knowing that they own their home. There is a sense of security in knowing that this is your home, and nobody will kick you out of it. Although, you don’t need to worry about a landlord bumping up the rent or start major renovation and ask you to move out.
Fixed mortgage payments. I know that many of us worry about mortgage payment and how to afford it in retirement. But if your mortgage is paid in full, you’ll only need to pay property taxes and insurance. Even you still have to make mortgage payments in retirement, it comes as a fixed payment.
Home equity and tax benefits. For me, there is another important advantage of home-ownership – building equity. I like to know that with every mortgage payment we accumulate more equity. We can take a home equity loan, line of credit or even a reverse mortgage if we need it.
Increase in value. Everyone knows that housing prices are going up. In many popular places, you can see a significant increase in value if you own a home for 10 or 15 years.
Control over updates or improvements. If you own your home, you can do any kind of improvements or renovations without asking landlord permission. The same comes with pets. There are different kinds of policies and restrictions on what kind of pets are allowed in rental buildings. When I was a landlord one of our tenants had a rabbit and they didn’t take good care of their pet. After tenants moved out, I had to renovate the entire apartment and repair the damage done by that pet.
Cons of home-ownership
Your money is tied up. If you decide to buy a house or condo in retirement you will be using a big chunk of money for down payment or paying full price in cash. Your money will be tied up in that home for a long time. It’s going to be harder to get a mortgage when you retire because you don’t have an income. So, if you consider buying a home, make sure to do that before you stop working.
Cost of repairs, maintenance, and renovations. We all know that owning a house means repairs, maintenance, and yard work. It could cost thousands of dollars if you need to replace the roof or your heating system. Maintaining the house and the yard takes time and money. Also, you might want to renovate your new home and make it more personal. But it could be expensive when you live on a fixed income.
Hard to sell. Your home is a real estate investment and real estate is not considered a liquid investment. It cannot be quickly converted to cash like stocks or bonds. As a result, it is hard to sell when you need money.
What are the pros and cons of renting in retirement?

Whether you want to rent a smaller house or a downtown condo, you need to decide what you want out of a rental. And again, it will depend a lot on financial and emotional matters.
Pros of renting
Renting is cheaper than owning. In some places renting makes sense if rent is cheaper than your mortgage. When we retire Roman and I want to move closer to the city. So far, our mortgage is $2,100 a month. There are several newly built apartment buildings in Cambridge, MA. When I checked out the prices, I found out that to rent a one-bedroom apartment would cost $2,500 a month or higher. Therefore, in that part of the city, renting is not cheaper than owning for us.
Your money is not tied up. Owning a home in retirement is not always financially wise. If renting is cheaper than owning, you’ll be better off to invest your retirement funds and let it grow. It can increase your retirement income because investments often grow at a faster rate than real estate. The only money you tie up is your security deposit. With the fixed cost of rent and no taxes or insurance, you can have enough cash for travel, activities or charity.
No yard work or maintenance. When you became a tenant, you hardly have any responsibilities, besides paying rent on time. So, when the water heater needs to be replaced or the faucet leaks, you just pick up a phone and call the landlord. You don’t need to worry about the upkeep of the rental building or any repair costs. You can spend time and money on your favorite hobbies and activities.
Flexibility – I like the idea that I can lock the door and go away. I don’t need to worry about who would collect leaves, trim bushes or clean gutters. And if I want to relocate to another place it is faster to end when I’m a tenant and not an owner.
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Cons of renting
Increase in rent. Usually, rents go up every year. When you own a home, your mortgage is a fixed payment and you could only expect an increase in taxes and insurance. With rent, you could expect a 3 to 10 percent increase every year. Also, with every payment, you don’t build any equity. Besides, when the real estate market is booming and prices are going up, you don’t get any appreciation. Your landlord builds equity and gets all appreciation from the rising real estate prices.
No feeling of security. I know that dealing with a landlord is not always easy. I had been a tenant and a landlord myself. Your landlord can decide at any time to sell the place, force you to end the lease and find another place to live.
Inconveniences of renting. Renting a place might include many inconveniences. You will need to get permission from a landlord or property manager if you want to re-paint or decorate your place. Some rentals do not permit pets or have a strict pet policy. You might deal with issues like noisy neighbors, poor maintenance, shortage of parking places, and more.
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Putting it all together
My husband Roman and I dream of traveling around the world when we retire. We want to explore the world living off our retirement money for 5 or 7 years. While we plan on buying a home, we consider renting a place as a home-base while we travel.
Short-term renting will fit our lifestyle. We won’t worry about leaving our rental apartment for several months as we would be if we owned the place. I will have more peace in mind locking up and leaving as a tenant than as an owner.
There are lots of options to consider. But the key is to decide what you would like to do. And then to have enough money to live your life the way you want it.
Have you thought about renting or buying in retirement? Share your ideas with us in comments.
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