Should Retirees Own a Home or Rent?
For years the conventional wisdom of our culture has said that it is always better to own a home than to rent. This conventional wisdom is based on the closely related ideas of investing in a property from which you will eventually reap a profit when it is sold and the idea that renting amounts to throwing money into a big black hole. Some recent thinking, however, points up the merits of renting for at least some retirees.
In a plummeting housing market, such as the current housing market, many people are discovering that the reduced value of their homes will not even pay off the amount owed on their mortgage. A number of people who are selling homes today are literally losing money on their homes. Choosing the right time to sell is one of the most important decisions homeowners must make today. In today’s housing market it is even possible for someone who has completely paid for their home and supplemented their income with a reverse mortgage to suddenly find that they have borrowed more than the house is actually worth today.
Because many retirees live on a fixed (and often limited) income, the way we invest for the future and the way we put a roof over our heads are important financial considerations. Owning a home involves a larger investment than we often recognize. In addition to the cost of the home and the interest paid over the life of the mortgage, there are a number of other costs of maintaining this investment. These other costs include insurance, real estate taxes, maintenance or upkeep, lawn care, improvements, appliances, etc.
While it may be true that paying rent is spending money for which you can expect to receive no eventual return, some retirees might find that they are better off just paying rent and being able to forget about upkeep, improvements, taxes, insurance, maintenance and yard care. The freedom from worry about keeping up a home might be worth a good bit to many retirees.
What about you? What is working best for you? Are you just trusting the conventional wisdom that it is better to own than to rent? Or have you compared the costs and made a considered decision?
I hope you will share your thinking and your experiences with the rest of us. This is a major expense for all retirees. It is helpful to hear different points of view.