Most people think that it is always best to own a home in your retirement years. However, some would argue that renting a home is more ideal for your retirement years. There are pros and cons for both renting and buying in retirement, so lets take a quick look at some aspects of both — to help you make a more qualified decision.
Owning a Home in Retirement
Obviously, owning a house or condo in retirement has a lot of upsides. Your payments are fixed and won’t ever go up, and you can feel more secure about always having a home. With a fixed rate mortgage, your payments are all set.
“With a fixed-rate mortgage, you can control the principal and interest components of the mortgage. You can also control when that gets paid off,” said Greg McBride, senior financial analyst at Bankrate.com. Owning a home also opens up the possibility of getting a reverse mortgage to help with cash flow, he said.
A recent analysis from the Mortgage Bankers Association’s Research Institute for Housing America concluded that retirees generally come out ahead when they’re homeowners.
“The study found older Americans who own their homes are more financially secure and generally experience fewer impediments to good health than their peers who rent,” said Michael D. Eriksen, a professor at Texas Tech University and an author of “A Profile of Housing and Health Among Older Americans.”
Renting a Home in Retirement
So, what could possibly be better about renting a home for retirement? For one thing, you may not need that huge 5-bedroom house anymore. Instead, you can sell your home and have more money toward retirement and seeing the world. This will allow you to downsize into a nice condo and afford a better retirement.
Renting also offers more flexibility in retirement. You may want to move around, try different places, and live in different climates. Renting will offer you this, as you can pick up and move and go wherever your heart desires.
Both renting and owning a home in retirement offer different options for the retiree. What you do will be based on personal preference, but there is upside to both.