Renting a house during retirement can help to improve financial freedom

Some people rent in retirement because they do not have much choice – they cannot afford to own homes.

But financial planners believe renting can make more sense than owning a property in some circumstances, even for retirees who can afford the costs of home ownership.

Renting offers flexibility as well as freedom from all the chores and expenses of maintaining a home. People who are “house rich and cash poor” can sell their homes and use the equity to fund a more comfortable lifestyle.

“While retirees often don’t want to rent, it can be a smarter decision for a number of reasons,” says financial planner Lisa Kirchenbauer.

Consider becoming a tenant if you are in transition

If you are moving to a new area, financial planners often recommend renting first to have a better feel for the advantages and disadvantages of various districts.

You will need time to find new doctors, check out entertainment venues, locate favourite restaurants and set up your support services, says financial planner Delia Fernandez.

Renting is often smart if you expect to move again within a few years.

Buying and selling homes is expensive, and your home may not rise in value fast enough to offset those costs. Selling a home also may take longer than you expect, especially during a property downturn, which could add stress, delays and additional costs to your move.

Renting offers more options that keep you safe as you age

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, lifts, onefloor living and other amenities to keep you safe as you age.

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

Apartments can provide a community of people who can watch out for each other.

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

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

Retirees are able to tap into more equity

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

Two common ways of tapping into equity – selling a home and buying a less expensive one, or using a reverse mortgage – may not free up enough cash to substantially improve their situations, he says.

Leasing a home could help in reducing uncertainty

Many retirees understandably fear the possibility of big rent increases when they are on a fixed income. But they should keep in mind that rent will not be the only housing cost subject to inflation.

Even when you have a fixedrate mortgage, chances are good that your property taxes, homeowners insurance and costs to maintain and repair your property increase every year as well, says financial planner Crystal Cox.

Mr Bunio says tenants can reduce the risk of rent increases by opting for longer leases.

Another potential worry is the possibility of eviction. Even if you can keep up with the rent, a landlord could end your tenancy by selling the building.

But homeowners are not immune to potential dislocations, says Ms DeSantis.

Many older people must move into assisted living centres because they are no longer safe in their homes.

She recommends that people consider moving to more supportive housing while they still have the health and energy to manage the transition.