Retirement is one of the biggest life changes for many
Americans. Its repercussions ripple across your finances, social life, mental
health, and physical well-being. As you set your retirement plan in motion,
should it include buying a home, keeping your current one, or renting something
else?
While many retirees automatically think that they should
live in a home they paid for during their post-career years, renting may be a
better choice. Why? Discover a few great reasons to reconsider being a
homeowner at this particular juncture.
1. You Can Easily Change
Because early retirement is a time of upheaval, you might
not want to make large-scale commitments right now. And certainly, buying real
estate is one of the biggest commitments. In order to rethink your plan and
move again, you will have to prep the property for sale, list it and show it,
wait on the market, deal with contingencies, and find a new house to buy at the
same time.
When you rent, you just give your landlord the required
notice and put down a new security deposit where you want to go next.
2. You Free Up Liquid Cash
How much of your overall net worth is tied up in your
primary home? For many homeowners, that property represents a big chunk of
money that's difficult to access. What might you be doing with that money rather
than (literally) sitting on it? Could you do better by investing it? Do you
need to draw down on it before you qualify for Social Security or Medicare? Do
you simply need a bigger emergency savings fund?
Both continuing to be a homeowner and buying a different
property create the same cash management problems for retirees. Only renting
lets you actually use that home value for anything other than putting a roof
over your head.
3. You Have Fewer Costs
There are advantages to both home ownership and being a
renter, but one comes with many more surprising costs. Renters pay rent each
month and some (but usually not all) of the utilities. The property owner deals
with everything else. As a homeowner, you pay any mortgage, property taxes,
insurance, utilities, HOA fees, maintenance, and major repairs.
These costs may not have been an issue for you during your
working years, but could they stretch your new retirement budget? If you're
adjusting to a fixed income, it's often best to be conservative until you're
used to it and have the rest of your financial life well in hand.
4. You May Not Know What You Need
Many new retirees downsize their home to save money. Others
move closer to friends or family. Still others move somewhere with a better
climate or a more relaxed atmosphere. But are these the right choices
permanently? What if you hate the downsized life? Maybe you decide not to live
quite so close to your kids or you discover you really like life in a ski town
more than a relaxing coastal getaway.
Take the time to explore what a good retirement looks like
to you. It may not look like what you expected it to when dreaming or planning.
And if your vision has changed, find out now and make adjustments before you've
committed too much money, time, and energy on one single housing plan.
Where Should You Start?
If
you haven't adequately considered renting as you approach retirement, learn
about today's options in your area.
Montgomery Realtors
offers a wide
range of rentals, including large and small apartment communities and
single-family homes. Let us help you find out if this one choice could make you
happier and your finances more stable as you start the next chapter in life.
