Many Baby Boomers,nearing or just entering retirement, begin to look at ahouse that’s too big and no longer meets their needs: The kids have moved out, often live in a different city, and the yard and maintenance on the home become more than is manageable on a regular basis. Before finalizing a change in residence consider the following benefits to renting your next home.

Advantages of Renting in Retirement

Lack of maintenance and upkeep costs.Because you may not want the spend the time and financial investment involved in maintaining a home, renting is a terrific option.Renting eliminates maintenance costs, homeowner’s association fees, and other costs related to home ownership.You never have to worry about major expenses such as replacing a broken appliance or roof.

No long-term commitment. Aging changes your priorities and needs. You could retire and move to the tropics, only to discover you want to be close to children and grandchildren. You might live in a two-story home and after knee replacement surgery decide you no longer want to deal with stairs. Renting a home allows you to adjust to life changes and events quickly, at little cost.

Access to cash. Selling your home and moving into an apartment frees up the equity in your home for investments and living expenses. You can take the profits from the sale and, instead of turning it into another down payment or paying cash for a new home, you can put the moneyin more liquid investments potentially improving cash flow.However, spending the proceeds from the sale of the home too early in retirement may leave you vulnerable to running out of money.While real estate does offer tax-free growth for most couples, it only averages 5.4% per year, according to the National Association of Realtors. Market investments, on the other hand, could grow faster than that, depending on the investments you choose.

Eliminate yard work. Lawn care gets harder as you age. If you choose to move into a rental apartment, instead of a house you can eliminate the cost and effort of maintaining a yard.Those renting a single-family home may not get this benefit, depending on the size of the yard.

Easier to adjust your cost of living. As you age, your priorities shift: you no longer need to be near the best schools or closest transportation to work. This can free you up to move to a less expensive location lowering your housing and overall cost of living. You can move to a new home if your needs change or move to a more central location, eliminating the need for a vehicle, saving you even more.

More options for a smaller home. Houses by nature tend to be larger than apartments. One and two bedroom apartments arepretty standard, making it easier to find a smaller residence within the geographic area you want. The location of apartments also tends tobe more centralized around amenities, public transportation and other factors that can benefit seniors.

Disadvantages of Renting in Retirement

Rent can rise faster than the cost of living increases. When you live on a fixed income, you will feel the effects of rises in rent more sharply. The economy, regional markets, and demand for rentals impact how fast rates increase each year. Over time this factor could chip away at the benefits of renting.

Lose tax-free growth on your investment. Depending on the investments you choose, most market investments require you to pay taxes each year.. Appreciation of a house providestax-free growth at the time of the sale of up to $500,000 per couple. You can take advantage of this tax-free growth every two years if you gain enough equity.

Can never eliminate the cost of housing. Renting always requires a payment. Paying off the mortgage on a house can eliminate the principle and interest payment, leaving you with taxes and insurance on the home, which can significantly lower housing costs.

Cannot pass on your home as an inheritance to heirs. Leaving a legacy has both a financial and emotional attachment for many couples, making the decision to move a significant factor in that equation.

Conclusion

Deciding whether to rent or buy in retirement is a personal decision based on many factors. You can run a financial calculator to help you determine the monetary impact of renting. Real estate and rental rates vary widely across the country, and many times the location will tip the scale financially one way or another. From there, consider your personal needs and which option will offer the best lifestyle in retirement.

If you are burdened with high amounts of credit card debt and are struggling to make your payments, or you’re just not seeing your balances go down, call Timberline Financial today for a FREE financial analysis. Our team of highly skilled professionals will evaluate your current situation to see if you may qualify for one of our debt relief programs. You don’t have to struggle with high-interest credit card debt any longer. Call (855) 250-8329 or get in touch with us by sending a message through our website.