I’m Past Retirement Age And Want To Relocate. Should I Rent, Or Own?

Many people want to relocate in retirement. Since you’re not tied to a location because of work, you can live where you want. You may also move to be closer to your grown kids or want to relocate so you can downsize from a house that’s too expensive or too much of a burden to take care of.

When you are relocating as a retiree, though, you’ll have to decide whether to rent a new place or purchase a new property. And that’s a big decision with major financial implications. To make this choice, here are a few key things to think about.

Are you confident you’ll stay in the new place?

The biggest and most important question to ask yourself is whether you are 100% sure that you’ll stay put in the new area you are relocating to.

The transaction costs of buying and selling a home are high, with closing costs typically adding up to between 2% and 6% of the purchase price. As a result, the last thing you want to do is buy a house and have to sell it in a few years.

If you don’t know exactly where you want to live in your new area and if you aren’t 100% sure that you are going to remain there for at least a few years, you may want to rent to have more flexibility. You can always buy later if you decide you love where you live.

Will you be able to buy your new house in cash or will you be taking out a mortgage?

The next key thing to ask yourself is whether you can buy the new house in cash, if you’d have to tap into your retirement accounts to pay for it, or if you’ll be taking out a mortgage.

If you can sell your current house and generate enough money to pay outright for your new place, it probably makes sense to do that since mortgage rates are pretty high right now and you could avoid committing to a monthly payment. But, if you would have to take too much out of your retirement accounts to buy a house, that’s a bad idea as it could increase the chances of running out of money.

If you’ll potentially need to take out a mortgage, find out if the cost is affordable. Rates are down from recent highs but are still well above 6.00%, so a home loan may be pretty expensive. Committing to this cost could eat into your fixed income. 

If buying a house isn’t really affordable, don’t stretch to do it and put your future retirement security at risk. 

How does the cost of renting compare to owning

In some markets, it is cheaper to rent than to buy. In others, the reverse is true. Find out about how the market is in the area you are moving to.

If you can rent a comparable house for much cheaper than you could buy it for, you may want to do that — at least for a while, given the fact property values are pretty high right now and some have expressed concern that the market is in a bubble.

Do you want to commit to the hassles of homeownership?

You’ll also need to think about the kind of lifestyle you want to lead. Renting a house can be a lot less hassle than buying one. Your landlord would have to take care of things like lawn maintenance and repairs if an appliance breaks. You may not want to deal with the uncertainty, time, and stress involved with being an owner at this phase of your life. 

Renting also means you have a pretty clear idea of how much your housing is going to cost you since you simply pay rent and that’s it. But, if you are a homeowner, you never know when you’ll face a huge bill because of a water leak or a surprise electrical issue. 

Do you hope to pass a house on to the next generation?

Finally, you’ll need to consider whether you want to pass a house on to the next generation. If you rent, you’ll be sending money to a landlord with nothing to show for it. If you buy your own place, you’ll be able to build equity that increases your net worth and helps you to leave a legacy. 

A financial advisor can help you decide

Ultimately, your best option might be to get professional advice. A financial advisor can help you assess your financial affairs, money goals, and life goals to make the best and most informed choice about whether renting or buying is right for you. 

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