Owning a home is a great way to build wealth over time, but some retirees find that becoming renters better suits their lifestyle and their bank account.
Homeownership carries many financial responsibilities. In addition to paying off a mortgage, you have to maintain homeowner insurance, pay property taxes and budget for ongoing maintenance.
Renting relieves you of those burdens. Your only concern is paying the rent.
What follows are several reasons retirees should consider becoming renters.
1. Gain access to your home equity
It often makes sense to sell a home so you can use the proceeds to create a better life in retirement. If there are things you’ve always wanted to do but haven’t, now is the time to do them.
Some people worry that selling their home would leave them with less wealth to pass on to heirs. However, adult children often support their parents’ decision to tap into home equity to make their retirement more comfortable.
So, talk to the kids and consider “7 Unexpected Benefits of Downsizing in Retirement.”
2. Enjoy a dwelling that better suits your needs
When you rent, you can choose a house, apartment or condo that suits your current needs.
If you bought your present dwelling when you were raising a family, you may find a smaller dwelling is more practical now. If you want to reduce your dependence on driving, moving to a rental unit that’s close to public transportation and shopping you get to by walking makes sense. If you have mobility problems, you can rent a home without stairs.
You can try living in a different neighborhood or town — or see what it’s like to live in a different size of home — by booking a stay in a vacation rental. You’ll find lots of properties listed at Homestay and VRBO (Vacation Rentals by Owner).
3. Live closer to children and grandchildren
You may have been eager to see your children grow up and leave the nest, but things change as you approach retirement. You may have a strong desire to see your children more often and to play a greater role in grandchildren’s lives.
If your children live in different communities, you can divide your time among them, changing to new rental homes when it suits you.
4. Avoid home repairs and maintenance
One great thing about being a renter is that when something breaks, you don’t have to fix it yourself — or pay someone else to fix it. In many rental agreements, the landlord is responsible for property maintenance.
You don’t have to seek estimates from several contractors and make sure they are properly licensed. And you won’t have to replace a faulty furnace.
5. Explore the world
Do you plan to be a traveler in retirement, sampling the lifestyles of several countries? If you’re planning extended stays, renting makes more sense than staying in hotels.
If you eventually decide to retire overseas permanently, renting a home, at least at first, gives you time to decide if the country you’ve chosen truly is right for you before you commit to homeownership.
Not sure where to start? Check out “5 Overseas Cities Where You Can Retire on Less Than $37,000 a Year.”
6. Gain more freedom
When you own a home, you aren’t free to move anytime you’d like. Selling a dwelling is a major effort.
You likely will need to hire a real estate agent to help get the best price for your home. Perhaps improvements will be needed to raise your home’s value. If the economy is suffering, you may need to postpone the sale until you can sell your home for its full value.
When you rent, though, you’re free to move at any time.
7. Get help with daily tasks
If you need help with day-to-day activities, such as dressing or cooking, one solution is to rent a unit in an assisted-living community. Many such communities offer private apartments with a wide range of services that are tailored to the needs of residents.
Assisted-living communities offer residents greater independence than skilled nursing homes, which provide around-the-clock care.
Just remember that assisted-living communities aren’t cheap. Genworth Financial’s 2018 Cost of Care Survey found that the national median cost for a private one-bedroom unit was $4,000 a month.
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