Maybe the biggest decision we make is where to live. As we move into later phases in life, we have to ask ourselves if it’s better to rent or to buy? To move or to stay put?
The answer to these questions generally comes down to math: What’s your overhead and how much do you have saved? How much will it cost to live once you retire?
Surprisingly, renting is on the rise and the main reason is because people in their 50s and 60s are now opting for downsizing into a rental. The benefits of renting include flexibility, that is, moving is a simple option at the end of a lease, which is nice if you’re thinking of trying a new city out. The luxury of a landlord and management company means renters don’t have to organize or spend money on repairs, which can be helpful not just from a time management and physical stand point, but budgeting as well. Taxes and home owners’ insurance are no longer are an issue if you rent, and the money you could save on rent verses mortgage can be invested in the stock market, which often has a greater rewards percentage than home ownership, and this invested savings can be passed down to your heirs.
But saving on rent depends on your metro area. Many cities are seeing spikes in rental prices, which means it may be better to buy and pay a fixed mortgage, which won’t go up over time. Also of note, 70% of seniors have paid off their mortgage by the time they retire, in which case paying rent could be a poor financial decision, especially since rents can raise each time the lease expires.
If you can still care for your home, or it’s in good physical condition, maintenance might not be a major expense for owners, though you should be prepared just in case. Owning also gives you equity, which can come in handy. Plus, you’ll be able to leave the home to your heirs, which they can even live in themselves if they’d like, or rent for a profit, or sell.
The cost of mortgage and maintenance versus rent and savings, and how you’ll use those savings, is the primary tool to use when deciding on renting or owning. Lifestyle, flexibility, and ease of living are other important considerations. Make sure to weigh your finances and the life you plan to live before making a movie.