Rent or Buy
Retirees and the soon-to-retire sometimes find themselves with more living space than they actually need. With children grown and out on their own, a large house may require more work to maintain than many people are willing to handle. If you find yourself in this situation, you may consider selling the family home.
Alternatively, you may not be entirely confident that the savings you have set aside for your retirement will be sufficient to fund the type of lifestyle you want in retirement. You may consider unlocking the equity you have built up in your home by selling it.
Whatever the motivation for selling your home, you and others in a similar situation have a big decision to make. What type of living arrangement will you choose after you sell your current home? Will you rent a place or buy another home?
Renting has several potential advantages. You may have the choice of a wider range of housing options. Usually, you will have to commit to only a one-year lease at a time, giving you greater flexibility to move if you want to. But perhaps the biggest advantage to renting is that the property owner may handle landscaping, repairs, and any snow removal.
One big disadvantage with renting is that, over time, rising rents may consume a larger percentage of your income. That’s potentially a problem for anyone living on a fixed income.
Buying has its pros and cons also. One potential positive is that ownership typically gives you far greater flexibility than renting when it comes to redesigning your living space to suit your needs. You’ll still need to handle upkeep and repairs, but buying a small, less maintenance-intensive home, such as a condo or a townhome, can minimize the time and money you have to spend. You’ll also have to budget for property and school taxes — the amount will depend on where you choose to live. Last, buying a new place rather than renting can keep the door open to potential home price appreciation over time.
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