Maintenance costs and tax implications could impact the decision for retirees whether to own or rent their home.
Downsizing in retirement can mean more than living in a smaller space. Downsizing can mean reducing responsibilities as well.
When adults retire, their lives change in many ways, and one of those ways is in living conditions. Many times, retirees who are also parents have seen their children leave the nest, and they consider the possibility of changing their “nest’’ in terms of size or location.
In terms of downsizing, one consideration for retirees is renting rather than owning their home. There are many upsides for retirees who decide to rent.
There are also financial aspects to consider, and it would be wise to consult a financial advisor to go through the positives and negatives from a financial standpoint. Tax implications and using the home as an investment property are key considerations.
Outside of financial considerations, there are numerous reasons why renting makes sense over owning for a retired individual.
If a retiree owns their current home, they can sell it, rent a smaller place and use the funds from the sale of the home for other purposes, such as travel. The money can also be used for investment purposes to create more income.
For financial purposes, renting can cost much less than owning. Maintenance costs and property taxes disappear, and sometimes utility costs are included in the rent.
Maintenance is a big factor in the decision to rent or own. Unless doing your own repairs has value to you, renters have access to free home repair and replacement of included appliances. There might be problems with scheduling, since a renter must wait for the landlord to schedule repair work, but maintenance is something to take into consideration.
Location, location, location. Homes are often removed by distance from facilities and services located in the downtown areas of a municipality, whereas apartments are often located closer to banks, grocery stores, post offices, restaurants, parks and public transportation.
If a retiree is relocating, renting initially makes sense so that he can get accustomed to the new town before deciding where he wants to live long-term.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.