Buying Versus Renting a Home in Your Golden Years

Buying Versus Renting A Home In Your Golden Years

Deciding whether it makes more sense to buy or rent during your retirement years is a personal decision. Like most financial decisions, there is no right answer that works for everyone. Some people plan on traveling a lot during their golden years, while other boomers are more interested in sticking close to home to be near loved ones.

Below is a review of some basic considerations to evaluate before making your next move.

Factors to Consider Before Buying or Renting Your Next Home

Where you want to live out your life will play an enormous role in determining the logic behind renting or buying a home. Investopedia published findings from a 2016 Trulia report that claimed that renting was less expensive in 98 of 100 cities where a large population of seniors resides. Interestingly, this finding did not hold true in the South, where owning a home was cheaper than renting.

The lifestyle you imagine for your future years also impacts a decision to buy or rent. If you have planned to do some globetrotting to see the world, then owning a home may be too much responsibility. Rentals typically offer much more flexibility with no maintenance concerns and the ability to move on more easily when the mood strikes.

Practical concerns about whether it is feasible for you to age in place in a home that you currently own are also key determinants. For example, if you live in a home where the bedrooms are all upstairs, this is likely to pose a problem if you sustain an injury or develop a condition that makes it difficult to navigate stairs.

Homes located in rural areas far away from medical care may also prove impractical as you grow older. There is no arguing the fact that when a medical emergency occurs, the closer you are to the hospital emergency room, the better.

In situations where baby boomers have not saved enough money to survive when they retire, cashing out your home equity might be the best solution. Stashing that home equity into a liquid account that is easily accessible may provide the peace of mind that you need.

Advantages of Owning

1. Owning ensures stability.

Comparatively speaking, owning provides security that renting rarely does. Fixed-rate mortgages are set in stone. Even adjustable mortgages are more stable than rent with defined rules about how often they can change and by how much. Rents can change significantly and with little notice when market conditions change.

When you factor in landlords who might decide to sell your home right out from under you, then it is easy to see why rentals are deemed unstable living situations. The idea that you could be forced to move is unsettling for many seniors.

2. Homeowners can customize and change their homes.

While landlords might agree to allow a renter to paint the walls to reflect their personal taste, it is unlikely that you will be able to customize it enough to become a dream home. The simple fact that a rental is not your property means that you have little control over needed upgrades or even maintenance issues that can become inconvenient realities when the air conditioning or heat is interrupted.

3. Build equity.

Probably the most basic reason homeownership has always been a big part of the American Dream relates to the idea that you build equity in a home. This type of wealth is highly valued and is probably the most acceptable argument against renting in many cases.

Advantages of Renting

1. Renting is cheaper in many U.S. cities.

As of January 2021, Kiplinger reports findings that renting is less expensive than buying in 34 out of 50 of the country’s largest cities. Specifically, this report cited $1,988 as the median-priced mortgage payment for a home compared to $1,727 as the median rent paid.

2. Liquidates capital for other investments.

Renting can free up your capital so that you can earn a higher ROI than is possible in real estate. While real estate can be an excellent investment in some markets and during certain years, it can underperform in down markets. When the housing market is crashing, then your money is literally stuck and can’t be as easily accessed.

Liquid assets allow you to adjust investments to mirror the opportunities available in any given market. While homeownership can be a great investment, your cash is definitely tied up and more difficult to access.

3. The landlord pays for home repairs.

One of the most difficult financial aspects of living on a fixed income as a retiree is dealing with unexpected home repairs. As a renter, you don’t have to worry about this in most cases. When the roof springs a leak or the air conditioner goes on the fritz, the landlord is on the hook for the repairs.

Granted, there may be some exceptions to this general rule. That’s why it is important to read your lease carefully before signing on the dotted line.

4. Provides more flexibility for travel and moving.

Retirees longing to see the world and spend a large percentage of their time on the road are likely to appreciate the freedom provided by a rental agreement. Responsible homeownership requires a certain amount of ongoing attention to maintenance details that no one wants to bother with while they are traveling.

5. Retirees might find it more difficult to qualify for a mortgage.

When the income stops, it can be much more difficult to qualify for an attractive mortgage. Comparatively, qualifying for a rental agreement is much easier.


Chances are good that you will face this decision about whether to buy or rent your next home at some point after you retire. This type of important decision becomes even more important for boomers as they carefully plan for the life they want. Evaluating all the factors is critical.