There has actually been an increase in older renters over the last 10 years. Those over the age of 55 now contribute to about 42% of the rental market. This percentage is projected to increase as Baby Boomers presumably follow the same path of renting a home.
It’s important to understand the pros and cons however of choosing between renting and homeownership. Let’s break each one down so you can better decide theater or not you should spring for that home after retirement.
Pro: No More Mortgage
If a really big focus for you is the fact that you’re still having to chip away at that mortgage then clearly you’ll be happy to rent. One less thing to worry about when you finally retire. You might even find a place to rent that has a lower monthly cost than your mortgage did. So you do have the potential to be saving money here.
Con: “Bye Bye” to Tax Breaks
Homeowners receive substantial tax breaks. There are deductions on the property tax as well as the interest on the mortgage. Saving on these taxes can add up significantly especially if your property taxes are significantly high.
If you’re really focusing on traveling after you retire then renting will be ideal for you. Renting gives you the flexibility to bounce around either on a month to month basis or 6-month basis. However, if you’re looking to stay in one city/place for a longer period of time, maybe near your family. Consider owning a home.
Con: Home Owner Status
Most people have a sense of pride from being a homeowner. If you’ve lived in your home for a while you’re probably emotionally attached to it. So it’ll be important to prepare yourself emotionally if you’re planning on selling your home.
Obviously one of the most challenging things of home ownership is keeping up with the home maintenance. If you’re choosing to rent this isn’t an issue for you anymore. If you decide to sell your home these worries can fall onto your landlord’s shoulders.
Con: Renting can be expensive
This one really varies depending on where you live. Typically however, it is cheaper to own a home than rent one. Also, when you consider the low mortgage rates today it’s one of the best times to own a home. The mortgage rates have recently hit an all-time low of 3.25%, and when you are renting, you are helping the landlord pay that lower cost mortgage.
One of the big pro’s surrounding apartment and condo complexes is that most of them offer a wide range of amenities. Everything from a nice gym to a pool and even game rooms and office centers. You can even have a concierge on staff and if you’re retiring that can make your life a little easier when it comes to the little things.
Con: The Landlord
You may not be accustomed to dealing with a landlord or property management company. It can be a little bit of a difficult task and I would recommend doing some in-depth research on the situation before you sign a lease. That includes speaking to current tenants if at all possible and find out how quickly maintenance and other issues were resolved. There is also the potential for your lease to be raised at a moments notice so be prepared for that eventual increase in your monthly expense.
Pro: Insurance Is Cheaper
Renters insurance averages around $180 and $360 a year, while your potential homeowners insurance cost is significantly higher.
Not sure which is the right decision for you? Reach out with your contact info as I’d love to answer any questions you might have. Choosing to rent or own a home really comes down to your individual circumstances and it’s important to consider all the pros and cons carefully. If you’re looking for more info, feel free to comb through my blog for tips that will save you time and money during your real estate buying or selling process.