Aug 15 2017
By Jim Vogel of ElderAction.org
 
 
For many Baby Boomers, home ownership is sacrosanct and a signal of security and success. However, when it comes time to downsize or head off to that retirement dream home, you may find yourself wondering if it makes more sense to rent, rather than buy. The answer to that question will be different for everyone, but there are some pros and cons to consider for either option.
 
Renting
The conveniences of renting a home can bring a sigh of relief to retirees who have spent decades mowing the lawn, calling the plumber, and paying for unexpected repairs. Suddenly, dealing with a leaky faucet is as simple as calling the landlord. Plus, modern apartment complexes come with a bevy of amenities from on-site gyms to club rooms, so you can keep an active lifestyle without going far.

However, living in a rental also means you won't be able to adapt your home to meet your needs. If you suffer a fall and need home modifications to get around safely, you're going to hit some roadblocks. If you have pets, your housing options will be limited and you may be faced with exorbitant pet fees.

Renting also leaves the possibility that your landlord will raise your rent, making your home suddenly unaffordable, or that the property will be sold and you'll have to find a new place to move to.
Buying
Most retirees favor buying over renting thanks to the security of knowing you'll have your home as long as you want or need it.  A home you own can be adapted to meet aging-in-place needs, and while you'll have to pay for any updates or repairs yourself, you know they'll be completed to your exact specifications.

And owning a home doesn't have to mean extensive maintenance needs. Many seniors choose condo living to minimize yard work, and paying for a landscaper or cleaning help is affordable when you opt to downsize.

However, many seniors are disappointed to discover how far the money from the sale of their previous home will go in today's market. If you've lived in your home for years without making updates, it's not going to sell for as much as your neighbor's remodeled house. So even if you're downsizing, it could be a challenge to find a home that meets your needs within your budget.

But buying a home late in life doesn't have to mean paying for it outright. While the thought of a  mortgage in retirement makes many people uneasy, it can actually be a smart financial decision. Since mortgage rates are low and you can deduct mortgage interest (along with property taxes) from your taxes, making a substantial down payment and investing the rest can leave you coming out ahead.
 
How to Decide?
The right choice between renting and buying will be different for everyone. To figure out what's best for you, weigh your priorities, finances (including cost for storage if you need to rent a unit as you downsize), and how long you plan to stay in the home.

If you hope to leave a home to your children, that's a big checkmark in the pro column. However, if you don't have the cash for a down payment and would need to tap into your retirement funds, buying may not be a wise financial decision. Moreover, if you don't expect to stay in your new home for at least seven years, or you're moving to a new state in retirement, it may be wise to rent until you're ready to settle.

No matter which way you're leaning, consider hiring a professional to help assess your finances and housing needs so you can make the decision that lets you make the most of your retirement.