One of the biggest decisions you need to make when planning for retirement is deciding on selling your home or aging in place. Once you clear this hurdle, the next big decision is just as challenging: should you buy a smaller retirement home or rent one? As with everything in life, there are pros and cons to either of these choices.
Determine How Much Can Afford For Housing In Retirement
In general, renting a home in retirement is less expensive than taking out a mortgage on a new home. Especially when you consider the interest rate for home loans is currently on the rise. Then again, if the proceeds from selling your previous home are enough to pay for a smaller home in full, buying a new place may be a better financial decision. Of course, owning a home means paying insurance premiums, property taxes and maintenance costs.
Decide If You Want To Simplify Responsibilities
When you own a home you’re responsible for everything – repairs, upkeep, property taxes – the list goes on. When you rent, you’re no longer spending time and money on these responsibilities and, no matter where you choose to live, you won’t have to mow the lawn or shovel snow ever again. On the other hand, buying a smaller home for retirement may appeal to those who look forward to gardening in the back yard and keeping busy puttering around the house.
“You already have a good feel for the lifestyle and you’ve researched essentials like where to shop, dine and get healthcare services.”
Decide Where You Want To Live For The Rest Of Your Life
If you’re moving to a location that you’ve visited often, buying a new home may be a good idea. You already have a good feel for the lifestyle and you’ve researched essentials like where to shop, dine and get healthcare services. However, if you’re not 100% sure about relocating, a short-term rental enables you to test drive the destination before making an investment in a new home.
Consider How Your Health & Physical Needs May Change
When downsizing to a smaller home, it’s important to consider how long you’ll be physically able to handle all the responsibilities of home ownership. Any health issues you or your spouse might be dealing with as you age should be factored into to your decision to rent or buy. Making renovations to a home you own to accommodate mobility challenges can get expensive. On the other hand, renting gives you the flexibility to change where you live when your physical needs change.
Before you decide, connect with an FRC® trained advisor to compare the pros and cons of renting or buying a home in retirement.
