Should You Rent in Retirement?

What Is Retirement and Why Should You Rent?

Retirement is a time when one can enjoy the fruits of their labor in life. It usually comes with an increased leisure time, no more stressful deadlines and you are free of many responsibilities. Unfortunately, this lack of financial planning can lead to retirement deficiencies and a lack of mobility in an increasingly expensive real estate marketplace. According to a study by the AARP, the average retired couple spends an estimated 35% of their income on housing. This means, in order to stretch retirement funds, many retirees consider renting rather than purchasing.

If you are considering whether or not to rent in retirement, here are some pros, cons and important considerations:

Pros of Renting During Retirement

1. Lower living costs: Renting can often be more affordable than owning a home. You don’t have to pay homeowners insurance, property taxes, or for maintenance and repairs, leaving more money for other financial priorities.

2. Location: When you rent, you have the flexibility to choose any area that suits your particular lifestyle. Whether it’s closer to family or simply the climate or scenery that appeals most to you, you can be sure that there are rental options available.

3. Amenities: Many rental properties and communities come with a variety of amenities. This includes decks, pools, fitness centers, game rooms, clubhouses, and more that you may find a great value added living experience.

Cons of Renting During Retirement

1. Lack of mobility: Renting provides less of an investment. Even if your neighborhood appreciates in value, you will not benefit. Plus, you may not have the funds to take advantage of any new opportunities that may arise.

2. Rental increases: Your landlord has to cover the cost of upkeep and property taxes, which may lead to annual agreements that can cause your rent to increase.

3. Security: Rental agreements do not typically provide as much security as owning a home. This means that if your landlord decides to decide to sell or move in, you may need to suddenly find another place to live.

Important Considerations When Renting in Retirement

1. Age Restrictions: Many rental properties have age restrictions that only allow seniors or young adults. Make sure you are aware of potential age limitations before you sign a lease.

2. Cost of Renting: Make sure to work out a budget before you rent. Calculate how much of your retirement income will go towards rent, utilities, and other necessities.

3. Move Early: Moving during an off-season could save you money on rental costs. Look for properties during the winter when there is lower rental demand.

4. Pets: Before you move, make sure you discuss any pet policies with your landlord. Some places may allow cats, dogs, or even exotic animals while others do not.

5. Security Deposit: Be aware that a security deposit may be required before you move in. Be sure to ask exactly how much the security deposit is, and what will be done with it when you move out.

Renting during retirement is an important decision. It can make the difference between a comfortable retirement and retirement without proper financial protection. Fortunately, if you consider the pros, cons, and necessary considerations mentioned above, you can make an educated decision that is well suited for your situation.

Retirement should be a time of relaxation and enjoyment. But, with the increasing costs of housing, many retirees opt to rent rather than buy to save on cost. If you are considering renting during retirement, make sure to consider the pros, cons and important considerations mentioned above. This will help you make an educated decision that is best for your situation.