Yahoo Finance I’m a Real Estate Agent: Here’s When It Makes Sense To Rent in Retirement
For many, the idea of renting in retirement doesn’t seem very logical or financially sound. After all, there’s a good chance you’ve already paid off your mortgage and own your home by the time you’re ready to retire.
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But truth be told, there are cases in which renting might actually make more sense. This is especially likely for those seeking greater flexibility or financial liquidity in their retirement years.
GOBankingRates spoke with licensed real estate professionals Ritika Asrani and Richard Mews about why someone might want to rent once they retire. Here’s what they said.
You Seek Flexibility in Your Retirement Years
Renting in retirement could make sense for those who want flexibility or the option to live a more nomadic lifestyle during their later years.
“Ever considered a nomadic retirement lifestyle? Renting provides the flexibility to explore different regions without the commitment of ownership,” said Asrani, the head broker and founder of Century21 St Maarten Real Estate. “You can spend a few years in the mountains, then trade that for a seaside retreat. It’s like having a customized retirement adventure.”
Mews, a licensed Realtor and CEO of Sell With Richard, also said flexibility is a major reason to rent rather than own.
“Renting in retirement can be beneficial when retirees prioritize the flexibility to easily relocate,” he said. “Without the constraints of homeownership, individuals can explore different areas or move closer to family and friends, adapting their living situation to changing preferences or circumstances.”
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Renting Allows You To Invest More Strategically
Being able to invest and save strategically is essential to ensuring a comfortable retirement. Some retirees even choose to rent rather than own to increase their financial security and agility.
“If you’re savvy with investments, renting allows you to allocate your capital dynamically,” Asrani said. “You can seize investment opportunities without being tied down by property ownership. Think of your housing as a service, freeing up resources for ventures that align with your retirement goals.”
You’re Renting Temporarily for Long-Term Gain
Another scenario where renting makes the most sense is when it’s temporary and strategically planned. Depending on how you do it, you could even end up owning your home when the time is right.
“Here’s a gem that often flies under the radar: rent-to-own agreements,” Asrani said. “If you’re unsure about committing to a purchase but love the idea of ownership down the line, explore rental contracts that offer a potential pathway to ownership. It’s a middle ground, allowing you to test the waters before diving into homeownership in your retirement years.”
Renting Lets You Explore More Dynamic Social Connections
Retirement can be an exciting time, but it can also feel a bit lonely or limiting in terms of social connections. By renting in a community tailored to other retirees, you can expand your social network and engage in activities that enrich your retirement years.
“For a lesser-known twist, explore co-living options tailored for retirees. These arrangements provide not just a home but a community of like-minded individuals,” Asrani said. “Imagine shared spaces, communal activities and built-in social circles. It’s a modern take on retirement living that fosters connections without the commitment of traditional homeownership.”
You Seek Financial Liquidity
Renting also can free up your financial resources in ways that could benefit you more than buying — in some cases.
“Opting to rent makes sense when retirees want to avoid tying up a significant portion of their retirement savings in a home purchase,” Mews said. “Renting eliminates the need for a substantial upfront investment and allows retirees to use their funds for other investments, travel or leisure activities, providing increased financial liquidity.”
You’re Downsizing (or Want Less To Maintain)
You’ve probably heard about the benefits of downsizing for retirement. If you currently own your home, selling it can simplify your life. It can also free up time, money and energy. This is especially true if you originally had a large house to maintain.
“Downsizing and transitioning to smaller living spaces can be a reason to rent in retirement,” Mews said. “Renting a smaller apartment or condo often aligns with a simpler lifestyle and can reduce the physical and financial burdens of maintaining a larger home. This choice caters to retirees seeking a more manageable and efficient living arrangement.”
Tips for Those Renting During Retirement
If you choose to rent during retirement, it’s important to prepare accordingly. Here are a few ways to do this:
Budget your finances. “Establish a realistic budget, factoring in not just the rent but also associated costs like utilities, maintenance fees and any community fees,” Mews said. “Ensure that the total cost aligns comfortably with your retirement income and financial goals.”
Consider lease terms carefully. Not every lease agreement is in your best interest, so pay careful attention to yours for things like rent hikes, community restrictions and hidden costs. “Understanding the lease terms helps prevent surprises and ensures a harmonious living arrangement,” Mews said.
Shop around. Just like how you wouldn’t buy the first house you see, it’s also important to check out potential rentals and community amenities before committing to anything. “Walk through the space, assess its condition, and inquire about any included services,” Mews suggested. “This firsthand experience is invaluable in determining if a property meets your needs and preferences.”
Check out the neighborhood. As you check out different rentals, pay attention to the neighborhood or community as well.
Think about your future needs. Last but not least, consider your future wants and needs. “Anticipate potential changes in your health or mobility,” Mews said. “If possible, choose a rental that accommodates evolving needs, such as accessibility features or proximity to healthcare facilities, to ensure a comfortable living situation in the long run.”
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This article originally appeared on GOBankingRates.com: I’m a Real Estate Agent: Here’s When It Makes Sense To Rent in Retirement
