Should you rent or buy when you retire?

If you’re about to retire, you’ve probably thought about selling your family home so you can spend less time on maintenance and more on your hobbies, travelling or simply relaxing.

But then what? Should you rent or buy again? And if you buy, what type of home should it be?

The advantages of renting – especially if you choose an apartment or sectional title townhouse – are that you will have less responsibility for home maintenance, most likely better security, more freedom to lock-up-and-go when you like, and none of the costs associated with home buying and ownership, such as transfer duty and bond registration costs, and rates and taxes.

Renting for a while is a good idea if you are still undecided about where you want to settle in retirement.

However, there are also disadvantages in renting – the most significant being the uncertainty about how much rentals might rise in future, and how you would continue to make these monthly payments, especially if you’re on a fixed income.

If you have children, you may also worry that renting is just eating up their inheritance.

So, the best option for many new retirees is to buy a sectional title unit, especially if you can use the proceeds of your home sale.

In such complexes, there is of course a monthly levy to pay, but it gives you much the same freedom from maintenance chores as renting would.

Looking ahead, however, you may wish to combine your decision about where to live with planning for possible healthcare needs in the future, in which case you should be looking to buy an apartment or cottage in a retirement village with its own assisted-living and frail care facilities.

You will also be paying a monthly levy, but the trade-off will not only be lower maintenance but peace of mind about what will happen to you if you become ill or too frail.