Should Downsizing Retirees Rent or Own Their New Home?
Downsizing your home is a popular retirement strategy as it lets retirees simultaneously cut back on maintenance costs while potentially freeing up a chunk of cash that can be put toward other expenses.
But while most downsizing seniors expect to remain homeowners, albeit of somewhat smaller domiciles, for many renting may actually make more sense than buying something new.
In fact, says Phil Cannella, a retirement planning expert based out of King of Prussia, PA, for the majority of people, renting can be “the better option.”
That might come as a surprise, particularly given the broad popularity of homeownership in the U.S., where even with the post-2008 slump almost two-thirds of people own their homes. Nonetheless, renting has a number of benefits for retirees.
One major consideration is cost. “Owning a home comes with high property taxes, costly homeowners insurance, as well as unpredictable maintenance costs,” he says. “If [for instance] your furnace breaks, you are responsible for replacing it.”