Renting in retirement can offer advantages over owning

Some people rent in retirement because they don’t have much choice; they can’t afford to own homes. But financial planners say renting can make more sense than owning in some circumstances, even for retirees who can afford the costs of homeownership.

Renting offers flexibility and freedom from all of the chores and expenses of maintaining a home.

Consider renting in transition

If you’re moving to a new area, financial planners often recommend renting first to get a better feel for the advantages and disadvantages of various neighborhoods. You will need time to find new doctors, check out entertainment venues, locate favorite restaurants and otherwise set up your support services, says Delia Fernandez, a certified financial planner in Los Alamitos, California.

Renting is often smart if you expect to move again within a few years. Buying and selling homes is expensive, and your home might not rise in value fast enough to offset those costs.

Renting may help with aging safely

Few homes are truly accessible to people who have mobility problems or other age-related disabilities, and adapting your current house could be prohibitively expensive. Newer apartment buildings could offer ramps, elevators, one-floor living and other amenities to keep you safe as you age.

Social isolation and loneliness are other risks to consider, as these can have a huge negative impact on older people’s health, according to the Centers for Disease Control and Prevention.

Rental communities for older adults often offer organized activities and classes to help people connect, says Sara Desantis, a personal finance educator in Denver.

Another option, for those who can afford it, is a continuing care retirement community, which allows you to stay in one place even if you later need higher levels of care.

People typically move into one of these facilities when they’re healthy and can live independently, with the promise that they can access assisted living, skilled nursing and sometimes memory care services as they age. CCRCS typically charge a hefty one-time entrance fee — the average was $379,606 in the fourth quarter of 2022, according to the National Investment Center for Seniors Housing & Care.

Residents also pay monthly fees that typically increase with the level of care. The average monthly rent was $4,364, NIC found.

Renting could help with equity

Many people hit retirement age without enough savings and need to use their home equity to supplement their income, says certified financial planner Nicholas Bunio of Berwyn, Pennsylvania.

Two common ways of tapping equity — selling a home and buying a less expensive one, or using a reverse mortgage — may not free up enough cash to improve their situations, Bunio notes.

Coping with rent increases

Many retirees understandably fear the possibility of big rent increases when they’re on a fixed income. But retirees should keep in mind that rents aren’t the only housing costs that are subject to inflation.

Even when you have a fixed-rate mortgage, chances are good that your property taxes, homeowners insurance and costs to maintain and repair your property increase every year too, says Crystal Cox, a certified financial planner in Madison, Wisconsin.

Renters can ameliorate the risk of rent increases somewhat by opting for longer leases, Bunio says. So-called “mom and pop” landlords may be more amenable to negotiating rent than large corporations, and being a star tenant also can help, Fernandez notes.