Should you rent or own a home in retirement?

Dear Money Lady,

I’ve owned a home throughout my whole adult life, and now that I’m in retirement, I’m wondering if it’s worth keeping my house since I really would like to stop carrying a mortgage. I always romanticized the idea of living in one home for my whole life, but now I’m not sure if it’s worth the stress. Do you think I should stay in my house, or sell and rent?

— Pat

Dear Pat,

“Home is a place you grow up wanting to leave, and grow old wanting to get back to.” — John Ed Pearce

I read this quote and was inspired by your question. You are right to wonder whether home ownership is necessary in retirement, Pat. As we age, we may not be able to keep our children’s family home. It is necessary to secure our futures and downsize our responsibilities and debt burden.

Is home ownership a good thing in retirement? The answer is maybe.

Many people now retiring may want to downsize or move to something more suitable with lower expenses and fewer chores. Some may even want to retire to a completely different place, somewhere that will enrich their retirement lifestyle.

We all know that it is great to own your home if you can afford it, but whether you stay in your family home or plan to downsize, this must be done without any debt, such as a mortgage or line of credit.

Owning a home comes with many other expenses, such as property taxes, insurance, repairs, improvements and continuous maintenance. If these expenses are ones that can fit into your new budget, then I would encourage you to own a home in retirement. It will continuously go up in value and can be sold years later if needed to fund any assistedliving arrangement. It can be viewed as an investment asset but also as your plan for long-term care.

But what if you can’t afford to buy again after selling your home and paying off all your debt? Perhaps you need the sale proceeds to supplement your retirement and even though you would like to buy, you know it would be better to rent to keep your costs contained.

Remember that shelter is a necessity of life; and yes, I know you are not building equity year over year when you rent, but you also do not have the associated homeowner costs, headaches and decisions to attend to with property ownership. You can be as free as a bird. You are only responsible for the rent every month and can go anywhere you wish without the burden of looking after a property.

People say that you can only get an emotional connection to a home if you own it, but I would disagree. My grandmother lived in the same home for over 48 years and never owned it. She could never afford home ownership and always rented. I was very emotionally attached to her home because she was in it. Remember that “home” is where you are, where your family is, and how you make every day special for you and the ones you love.

Whether you rent or own, make sure you are debt free and have a longlasting income to maintain your lifestyle.

Good luck and best wishes,

Money Lady

Christine Ibbotson is the author of the bestselling book How to Retire Debt Free & Wealthy, and Don’t Panic–How to Manage your Finances and Financial Anxieties During and After the Coronavirus. If you have a money question, send it to askmoneylady@gmail.com.