Why Renting in Your Retirement Years Makes Sense
This article is part of our ongoing series on renting in your retirement years and how it can potentially be a better option to owning your home. The series includes the following articles:
- Article 1: Why Renting in Your Retirement Years Makes Sense
- Article 2: 8 Things to Consider When Downsizing
- Article 3: Own or Rent in Your Retirement Years?
- Article 4: You Can’t Take it (all) With You
- Article 5: Life After 55 - How to Stay Active
Why Renting in Your Retirement Years Makes Sense
So you’re considering downsizing. Maybe you’ve recently retired, or the possibility of retirement is on the horizon. Maybe you have children who have grown up, moved out, and you’ve realized that big family dwelling is just too much house. Or maybe you’re just looking for a change in lifestyle - something with less responsibility and more freedom for things like travel. If so, a rental property might be the solution for you.
That First Hurdle
The first challenge in this process is answering the question, “Why rent?” After all, you’ve spent most of your adult life building equity with your current home. It’s probably been 30 years or more since you last rented, if ever. The traditional wisdom for generations has been to own your home, and buy a smaller one when you are ready. For many, the concept of paying rent to someone seems like a step backwards. But it doesn’t have to be. With a little planning, research and forethought, renting can be the optimal solution to your housing needs.
Advantages of Renting
There are several advantages to renting, including:
No matter how well built, structures degrade over time. Maybe that 25 year roof is reaching the end of its intended lifespan. Maybe you have plumbing, electrical or structural issues. In a rental property, those aren’t your responsibility anymore.
It doesn’t have to be the big stuff, either. Stuck windows, a leaky faucet, wasps nesting near the patio - these are all issues for the landlord to handle. No more clambering under sinks or climbing up ladders for you.
Renting affords a certain flexibility in where you reside. Say you want to move closer to family, or to a favourite locale, but the housing market in that area is a little more expensive than you feel comfortable with. In those cases, renting is often the more affordable option.
That same flexibility extends to the type of dwelling, too. Renting doesn’t just mean apartments. Condos, townhouses, single and semi-detached homes - every type of residence you could hope for is available for rent today.
With a rental, you are much more likely to be able to drop things at a moment's notice and jet off somewhere. Fancy the snowbird life? With a rental property, there’s one less thing to worry about when heading south. In most cases, there’s no need to winterize; just turn off the lights, lock the door and go. You can enjoy your months-long escape to warmer climes, secure in the knowledge that your northern residence is in good hands.
And if, for any reason you feel the need to change locations, transitioning from one rental to another is far simpler than between owned properties.
As a renter, there are several cost saving measures that come into play. No property taxes, for starters. Lower insurance rates as well. In fact, depending on your choices, you might not need a vehicle anymore, either. The right building in the right location can keep you hooked into all manner of public transportation.
In addition, rental costs are fixed and predictable for the life of the lease, making budgeting a snap.
Related Post: Life After 55 - How to Stay Active
Another thing to keep in mind is that after the sale of your home, you will have a pile of cash that you need to do something with. And pouring it back into another purchase isn’t your only option. Investment opportunities abound that can make your money work for you, instead of the other way around. Even a conservative, 4 or 5 percent return on that million dollar home will give you the income you need to cover not only your rent, but many of your monthly expenses as well.
Related Post: Own or Rent in Your Retirement Years?
Where to Start
As with any project, it’s good to start with a list. Decide on your goals for downsizing - location, travel, simplicity, amenities, closeness to family, etc.
Then, prioritize. Write down everything you consider to be a ‘must have’ in a rental property. Do the same for things you think are deal breakers; everything else lies somewhere in between.
After that, it’s simply a matter of searching. Thanks to sites like Rentboard, that process is easier than ever. Choose your city, size, number (and types) of rooms and amenities and we’ll do the rest, giving you the power to really hone in on your preferred properties and make an informed decision.