Retirement: Rent vs. Own

You are retiring. Congratulations. But how are you going to downsize? Well you can rent. Or you can own. Let's sort out what's best for you.

- So you've made the decision to retire. Congratulations. And you've decided to get out of that house - the one that's just too much to manage now that the kids are gone.  Many people turn to a much more manageable condo or townhome, but do you have to buy the next place you live? Well, let's think about that. The idea of putting up that 'for sale' sign and living without a mortgage is liberating, but the idea of apartment rental also feels a bit less secure.

Kiplinger, a personal finance site, weighed the pros and cons of both. So get out a pencil and paper and start adding up the costs. Let's start with renting. Moving into a rental for a year can be a great idea. You can think about how and where you really want to live your new life. You might think you want to live right around the corner from the kids, get there then realize you want to be closer to your church and your social network. But for a long-term solution you have to remember rent goes up and your income is likely fixed. And you have to consider how much elbow room you have for increased rent.

Now, if you buy, you will still have costs. Homeowner association fees in a condo community, even some subdivisions, can be steep and also will go up as will your property taxes. But you can deduct mortgage interest and that's a nice benefit.

Obviously owning something feels good, but being able to pack up and move anytime you please does, too. It's a tough decision you want to make by really crunching the numbers. There are very good rent versus own calculators out there that. Try one, fool around all of the 'what ifs' - what if you moved to the beach? What if you got a condo in the city? Because in the end you can only do what your wallet will let you.

 


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