However, whether you should rent or buy a house in retirement depends on a number of factors including your current lifestyle, financial situation, health, location, and age.<\/p>\n
As with many things in life, there are trade-offs no matter which way you slice it. We\u2019ve broken down the benefits of each path so you can start prioritizing toward a happy retirement.<\/p>\n Retirement brings lots of changes in spending, most of them reductions. The average retired household spends about $46,000 each year, which is 25% less<\/a> than the average working household, according to SmartAsset.com.<\/p>\n But while retirees spend much less on education, personal insurance and pensions, apparel, transportation, food, and even housing, other expenses rise. Health care, for instance, can rise about 44 percent, these statistics show, making it crucial to cut costs once you retire<\/a>.<\/p>\n Even if you haven\u2019t paid off your mortgage, it may make sense to stay in your current house if the mortgage payments are manageable, especially if you\u2019ve built up a substantial amount of home equity.<\/p>\n Home equity<\/a> is the market value of your property, minus the amount you owe on your loan. (HomeLight\u2019s Home Value Estimator<\/a> is one online automated valuation model that can give you a ballpark figure of your home\u2019s current market value.)<\/p>\n Your home\u2019s value increases over time<\/a>, making your equity a greater resource. With the average 65-year-old couple saving about $100,000 for retirement<\/a>, tapping into your home equity can help supplement your income. You also can use the equity strategically through a reverse mortgage<\/a>, freeing up money for unexpected expenses.<\/p>\n But accessing equity<\/a> isn\u2019t an easy decision, either. The dividends from investing equity<\/a> can increase your income, which may in turn reduce your Social Security benefits<\/a>.<\/p>\n Plus, the cost of homeownership goes beyond the mortgage. It includes utilities, property taxes, and homeowners\u2019 insurance, which increases for older homes. You also may have HOA and other municipal fees, plus maintenance costs. (The New York Times <\/i>offers a detailed online tool<\/a> to help you compare renting versus buying over time.)<\/p>\n \u201cWhen you have an older home, you want to look at potential maintenance issues. Does it need a new roof? Does it need an air conditioner? What kind of maintenance issues are you expecting over the next few years?\u201d said Uli Wills<\/a>, a top-selling agent in North Port, Florida<\/a> who\u2019s also a Seniors Real Estate Specialist<\/a>.<\/p>\n What are the benefits that have the 60-plus demographic flocking to the rental lifestyle? Some of them include:<\/p>\n Renting makes your budget more predictable<\/a>, at least for the term of your lease. The cost of rent, especially in an apartment or similar community, may include fees for amenities, such as water use, gas, internet, and cable<\/a>.<\/p>\n The median price of rent of an unfurnished apartment in the United States in 2017 was $1,492 per month<\/a>, with the most expensive rents in the Northeast and Western regions of the country.<\/p>\n 46% of retirees<\/a> own their homes free and clear, and could feasibly use the proceeds from selling that home toward the purchase of a smaller, more manageable residence outright.<\/p>\n But there\u2019s still extra costs associated with owning that renters don\u2019t have to factor in.<\/p>\n \u201cEven if you don\u2019t have a mortgage, you have ongoing costs of ownership,\u201d says Wills, noting the additional monthly expenses of homeowners insurance and property taxes.<\/p>\n This depends on the attentiveness of your landlord or management company, but a rental allows you to pick up the phone and call someone to fix the washer that doesn\u2019t spin properly, the screen door that won\u2019t shut right, and other maintenance problems that homeowners have to hire out and arrange for.<\/p>\n Maintenance assistance becomes more important as time goes on and handling upkeep on your own gets increasingly difficult. You also won\u2019t have to pay additional repair costs or set aside 2% of home\u2019s value<\/a> for yearly maintenance.<\/p>\n As long as you pay your rent on time, your place belongs to you, so if you rent an apartment, townhouse, or condo, you have the freedom to travel whenever you like without necessarily finding someone to housesit.<\/p>\n In a large building or rental community, good neighbors tend to notice anything amiss when you\u2019re gone; they also can contact the landlord or management company for a problem like, say, a noticeable water leak. \u201cIf you like to travel in your retirement years, you just pack up and go,\u201d Wills said. \u201cIf there are any issues, the owner will take care of the property.\u201d<\/p>\n As a homeowner for many years, you have to remember that renting would mean once again dealing with landlords and potentially close quarters. Plus you\u2019d no longer be investing into an asset, but spending money you\u2019ll never see again.<\/p>\n So before you sign that lease, consider the benefits of your alternative: finding a residence more suitable for your needs, and buying it.<\/p>\n If you\u2019re not ready to give up having a backyard that\u2019s separate from your neighbors and put a premium on boundaries, then buying a house in retirement could allow you to continue the lifestyle you\u2019ve been accustomed to. Don\u2019t let sharing a wall with noisy loud neighbors put an end to your peaceful retirement dreams. You didn\u2019t like living in an apartment<\/a> back in the day, so why would you now?<\/p>\n Rent has been increasing at a rate of 3.7% every year<\/a>, so with every lease you sign, you\u2019ll have to pay more for the exact same living situation.<\/p>\n When you own a house, you don\u2019t have to worry about the landlord jacking up the cost of rent year after year. And to start, the average national cost of a mortgage payment is $1,030<\/a> (as we mentioned above, renting is more like $1,500 on average). Keep in mind, the mortgage payment doesn\u2019t include the costs of taxes and additional fees.<\/p>\n No need to base your location on school districts or proximity to work, so why not buy a house in a fast-rising real estate market? If you can afford to buy in a more expensive market, Boston, New York, and Seattle are some of the best cities to invest in property<\/a> at this age, helping you earn roughly $10,000 a year or more in equity, according to an analysis by the Department of Housing and Urban Development.<\/p>\n Homeownership also provides a sense of security in that you have an asset to leave to your heirs. There are ways to gift the home with limited tax liability<\/a> if you decided to rent down the line, or you can transfer it seamlessly with smart estate planning<\/a>.<\/p>\n Under the Tax Cuts and Jobs Act, homeowners can deduct the interest on up to $750,000 of their mortgage debt<\/a> as well as $10,000 in state and local property taxes.<\/p>\n As you set out to examine the next best move for your retirement plans, a few good rules of thumb apply:<\/p>\n Going smaller<\/a> doesn\u2019t mean you need to embrace tiny house living<\/a>, but you should evaluate what you can reasonably maintain and afford. The National Association of Realtors notes that buyers ages 73 to 93 were among the highest share of buyers in 2018 to opt for a smaller home<\/a> (17%), with the second lowest median home price at $243,000.<\/p>\n Wills helped one couple find a single-family house in another state closer to relatives after the husband had a stroke. They couldn\u2019t truly enjoy their 2,200-square-foot house with three bedrooms and amenities such as a den, a pool, and a shed. \u201cBefore, he helped with the maintenance. Now it\u2019s all on her, and it\u2019s a big place. It\u2019s just not practical anymore,\u201d Wills said.<\/p>\n Location doesn\u2019t always translate to warmer weather. U.S. Census figures show that Florida is popular with residents over age 65, comprising 19% of the population<\/a>. But these same statistics show that other states with high numbers of senior residents include Maine, West Virginia, Vermont, Pennsylvania, Montana, Delaware, Hawaii, Oregon, and Arizona.<\/p>\n Often what\u2019s more important is closeness to family members and accessibility, particularly to shopping and health care. In fact, the most valued senior housing amenity in North America is easy access to transportation<\/a>, according to Statista, a provider of market and consumer data that compiles information for 170 industries and from more than 22,000 renowned sources.<\/p>\n Wills said that whether buying or renting, many of her clients look for community amenities, such as a pool that they can enjoy but they\u2019re not responsible for the upkeep.<\/p>\n \u201cAlso very popular are communities with clubhouses with activities: card games, mah-jongg, social lunches,\u201d she said. \u201cThey don\u2019t have the maintenance issues, and they meet new friends.\u201d<\/p>\n Ten percent of the $214 billion home improvement industry is dedicated to \u201caging in place<\/a>\u201d features, such as non-slip flooring, bathroom aids such as grab bars, wider doorways for wheelchairs and walkers, and lever handles on doors instead of knobs.<\/p>\n If your current home doesn\u2019t have these features, you may want to consider one that does, whether you buy or rent.<\/p>\n A step-in tub or a curbless shower<\/a> removes the difficulty of lifting a leg over a tub\u2019s edge, not to mention maintaining a good sense of balance. Doorways often are 24 inches wide, but wheelchairs need a doorway that\u2019s at least 32 inches wide<\/a>.<\/p>\n \u201cWe see that a lot with folks having to sell their homes if their health situation changes because the doorways are not wide enough,\u201d Wills said.<\/p>\n At the least, consider having nearby parking and a single story layout, as well as no stairs to reach your door. Wills said that she\u2019s tactfully swayed some clients of advanced age away from a second-story condo with no elevator to one that has an elevator.<\/p>\n Whether you see a move in retirement as a forever one or something more suitable for the short term, examining these different lifestyle factors will help you decide whether renting or buying is the right step for this next stage of life.<\/p>\n After you\u2019ve crunched all the finances and weighed the pros and cons, the bottom line is: Which path will lead you to the happiest retirement? Whether that\u2019s tennis court access or maintaining independence with a more accessible single-family home, define your dreams, then decide the best way to get there.<\/p>\n Header Image Source: (Edgar Chaparro\/ Unsplash)<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Is it smarter to rent or buy a house in retirement? As with many things in life, there are trade-offs no matter which way you slice it. <\/p>\n","protected":false},"author":76,"featured_media":10684,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"cybocfi_hide_featured_image":"","footnotes":""},"categories":[429,319],"tags":[],"class_list":["post-10683","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-retirement","category-selling-advice"],"acf":[],"yoast_head":"\n![\"\"](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2019\/05\/rent-or-buy-in-retirement-health-care.jpg\")
<\/a>How your current housing and financial situation factors into your future<\/h2>\n
![\"A](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2019\/05\/rent-or-buy-in-retirement-community.jpg\")
<\/a>The case for renting in retirement<\/h2>\n
Fixed costs for the lease term<\/h3>\n
Owning still costs money even if you\u2019ve paid off your mortgage<\/h3>\n
Convenient maintenance<\/h3>\n
Flexibility<\/h3>\n
![\"A](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2019\/05\/rent-or-buy-in-retirement-fence.jpg\")
<\/a>The case for buying another house in retirement<\/h2>\n
Keep your personal space and privacy<\/h3>\n
Mortgages are cheaper<\/h3>\n
Investment opportunity<\/h3>\n
Security for future generations<\/h3>\n
Tax benefits of homeownership<\/h3>\n
![\"\"](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2019\/05\/rent-or-buy-in-retirement-globe.jpg\")
<\/a>What to consider before your next move<\/h2>\n
Decide if you need to downsize in price, square footage, or both<\/h3>\n
Pick a location<\/h3>\n
Think about long-term use and aging-in-place features<\/h3>\n
Do the work, then follow your dreams<\/h3>\n