Liz Weston NerdWallet
Some people rent because they don’t have many options after retirement. They can’t afford to own a house. But even for retirees who can afford the cost of owning a home, renting can make more sense than owning in some circumstances, financial planners say.
Renting not only gives you flexibility, it also frees you from all the hassles and costs of maintaining a home. Not only do rentals have built-in communities for socializing, but they can also offer accessible housing features such as one-floor living to help people stay age-appropriate. People who are “rich in house but poor in cash” can sell their homes and use the equity to fund a more comfortable lifestyle.
Kirchenbauer, a certified financial planner in Arlington, Virginia, says, “Retirees often don’t want to rent, but renting can be a smarter choice for a variety of reasons.” talk to.
Consider renting if you are in transition
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When moving to a new neighborhood, financial planners often recommend renting first to better understand the pros and cons of different neighborhoods. Delia Fernandez, a certified financial planner in Los Alamitos, Calif., finds time to find a new doctor, research entertainment venues, find a favorite restaurant, and set up other support services. Say it takes.
“It makes sense to rent for maybe a year so you can dig deeper into the community and decide what’s right for you,” she says.
Renting is wise if you plan to move again in a few years. Buying and selling a home is expensive, and the value of your home may not rise quickly enough to offset the cost. Also, selling a home can take longer than expected, and moving can be stressful, delays, and extra costs, especially during a real estate downturn.
Renting may help you age more safely and calmly
Few housing is actually accessible for people with mobility impairments or other age-related disabilities, and retrofitting current housing can be prohibitively expensive. New apartment buildings come with ramps, elevators, one-floor living, and other amenities to keep them safe as they age.
According to the Centers for Disease Control and Prevention, social isolation and loneliness are also risks to consider, as they can have a significant negative impact on the health of older adults. Apartments offer a community of people who can interact and care for each other. Rental communities for seniors often offer organized activities and classes to help people connect, said Sarah DeSantis, a personal finance educator in Denver.
Another option for those who can afford it is the Continuing Care Retirement Community (CCRC). This allows them to remain in the same place if they need higher levels of care later. People usually move into one of these facilities when they are healthy and able to live independently, and are promised access to assisted living, skilled nursing, and possibly memory care services into old age.
Renting can help you get more out of your assets
Nicholas Bunio, a certified financial planner in Berwyn, Pennsylvania, says many people reach retirement age without enough savings, so they need to supplement their income with their home equity. Bunio said the two common ways of using wealth—selling the house to buy a cheaper one or taking a reverse mortgage—may not generate enough cash to make things much better. point out that there is
“If you sell your house and rent it out, you will have a lot of cash to cover rent and surcharges,” Bunio said.
Responding to rent increases
Many retirees are rightly concerned about the potential for significant rent increases when they have a fixed income. But retirees need to keep in mind that rent isn’t the only housing cost affected by inflation. Even with a fixed-rate mortgage, property taxes, homeowners insurance, and property maintenance and repairs can add up year after year, says Crystal Cox, a certified financial planner in Madison, Wisconsin. is said to be high.
Bunio said renters can mitigate some of the risk of rent increases by choosing long-term leases. So-called “mommy friends” landlords may be more open to rent negotiations than larger companies, and being a star tenant can also help, Fernandez said.
“Landlords like people who maintain their properties, and they like people who make any kind of maintenance easy,” says Fernandez.