Home ownership has long held an honored position as an integral part of the American dream.
But when retirement time comes, rethinking that dream could be in order. Sometimes renting a house or apartment is the better bet both financially and in terms of the retiree's changing lifestyle and health, says Eric Kearney, an investment advisor for Retirement Wealth.
"When people plan for retirement, they focus on things like how much they have saved, how much Social Security will pay, and whether they have pension," Kearney says. "But as you get older, you also need to think about such issues as whether you can keep mowing the lawn or handling other day-to-day chores that homeownership requires. If you must hire someone to do them for you, how much will that eat into what may already be a tight monthly budget?"
The truth: There's no answer that will fit everyone's situation, he says. So retirees, or those approaching retirement, should weigh their personal pros and cons.
"There's a lot to think about," he says. "Should you sell the house you raised your family in and downsize to something more suitable for just the two of you? If you're planning to move to somewhere else in the country to enjoy your retirement, is it more prudent to buy in that new location, or is leasing the way to go to give you more flexibility if it doesn't work out?"
Some things retirees should think about as they ponder the own vs. rent question include:
- Maintenance issues. When you own a home, every leaky faucet, electrical problem or faulty appliance is yours to handle as best you can. If you can do it yourself, great; but often, these household repairs mean calling in a professional at a sometimes exorbitant cost. When you rent, it's up to the landlord or the property management company to take care of the repairs.
- Mobility.Selling a house can be a long and complicated process, and you never know what the market might be like when the time arrives. Whereas breaking a lease is much simpler. "If your children are scattered all over the country, you may want to move closer to one of them," Kearney says. "Also, if your health takes a turn for the worse, selling a home can be a significant burden on your family."
- The inheritance.For many people, a house is the most valuable asset in their estate and they might want to leave it to their children in the will. Once again, it's a matter of weighing the pros and cons. "Having a home to pass down to the children is a noble gesture, but it is not always feasible," Kearney says.
"Before considering whether owning or renting is the right option," Kearney says, "it's essential to review all the intricacies of your situation and decide based on your finances and your overall health and well-being."