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Retirement Planning: Should You Buy or Rent?

December 8th, 2023 | 6 min. read

By Advance Capital Team

retired couple home

As you plan your ideal retirement, you might be grappling with a crucial question: “Should I buy or rent?”

This decision is monumental. It goes beyond simply choosing between a lease or a mortgage. It’s at the very core of your retirement plans. Why? Because it impacts not only your finances but also your lifestyle, your peace of mind and ultimately, your freedom to enjoy those well-deserved retirement years.

This type of decision-making is a key part of the personalized retirement planning services we offer at Advance Capital Management. We know that it’s about much more than just numbers.

And the rent-or-buy dilemma is a complex one, influenced by a variety of factors, such as local property taxes, housing market trends and cultural richness of the area you’re considering. Whether it’s a bustling city or a tranquil suburb, each setting offers its own unique advantages and challenges.

So, let’s dive in and explore the pros and cons of renting versus buying in retirement.

Key considerations when evaluating a housing market for retirement

When scouting for the perfect retirement location, here are some key housing market factors to consider:

  • Property Values: Research the trends in home values in the area. Are they appreciating, stable, or declining? This can impact your investment in the long term.
  • Cost of Living: Look at the median home prices and rents. How do they compare with the national average and your retirement budget?
  • Property Taxes: Different areas have varying property tax rates. High property taxes can significantly affect your annual expenses.
  • Housing Supply: Understand the availability of housing. Is there a diverse range of options, from single-family homes to condos and apartments?
  • Rent Prices: If considering renting, check the median rent prices. Are they subject to frequent increases?
  • Local Amenities: Consider proximity to healthcare, entertainment, shopping, and recreational facilities.
  • Neighborhood Characteristics: Each neighborhood has its own vibe and community feel. Choose one that aligns with your lifestyle preferences.
  • Maintenance and Upkeep Costs: For potential homeowners, assess the typical maintenance requirements and costs in the area.

These factors collectively influence the suitability of a location for retirement living. Balancing them with your personal preferences and financial situation will help you make an informed decision.

Pros of buying in retirement

Owning a home during retirement brings several advantages that can greatly enhance your post-working years:

  • Long-Term Investment & Potential Appreciation: Your property may increase in value over time, offering a significant financial cushion and potential for capital gains in the future.
  • Stability & Predictability: Homeownership frees you from the unpredictability of rent increases. Having a fixed mortgage (or no mortgage at all, if it's paid off) means more predictable monthly expenses, which is essential for budgeting in retirement.
  • Potential Tax Advantages: Depending on your location, owning a home can offer tax benefits. These might include deductions on property taxes and mortgage interest, potentially reducing your annual tax burden.
  • Flexibility to Renovate: As a homeowner, you have the freedom to modify your home to suit your evolving needs as you age. This could involve making accessibility improvements or other modifications to enhance comfort and safety.

Owning a home in retirement can provide a blend of financial security and personal autonomy, allowing you to shape your living space to match your lifestyle and preferences.

Cons of buying in retirement

While buying a home in retirement has its perks, it's important to consider the potential downsides:

  • Upfront Costs: The initial investment can be substantial. This includes the down payment, closing costs, and other associated fees, which can significantly impact your savings.
  • Ongoing Maintenance and Repairs: As a homeowner, you're responsible for all the maintenance and repairs. This not only includes the financial costs but also the time and effort involved in keeping the property in good shape.
  • Less Flexibility: Owning a home can limit your mobility. If you decide later that you want to move – perhaps to be closer to family or to experience a new environment – selling a house can be a more complex and time-consuming process than simply ending a rental lease.

It's crucial to weigh these factors carefully. While owning a home can offer stability and investment potential, it also brings with it a set of responsibilities and limitations that might impact your retirement lifestyle.

Pros of renting in retirement

Renting in retirement can offer a degree of flexibility and ease that aligns well with many retirement lifestyles. Here are some of the key benefits:

  • Flexibility to Move: Renting gives you the freedom to change your living situation with relative ease. Whether it’s a desire to experience a new neighborhood or a need to relocate for any reason, you can do so without the complexities involved in selling a house.
  • No Maintenance Worries: One of the major advantages of renting is that the responsibility for repairs and maintenance falls to the landlord. This means less stress and potentially lower out-of-pocket costs for you, allowing you to focus more on enjoying your retirement.
  • Potentially Lower Upfront Costs: When it comes to initial expenses, renting typically requires less financial commitment than buying. Usually, you'll only need to cover the first month's rent and a security deposit, which can be significantly lower than the down payment and closing costs associated with purchasing a home.

Renting in retirement provides a hassle-free living option, freeing you from the responsibilities of homeownership and offering more liquidity and adaptability in your retirement years.

Cons of renting in retirement

While renting in retirement offers certain advantages, it's important to be aware of the potential downsides:

  • Rent Increases: One of the main drawbacks of renting is the lack of control over rent costs. Unlike a fixed-rate mortgage, your rent could increase over time, and these increases can often be unpredictable.
  • No Equity Building: While renting provides convenience and flexibility, it doesn't allow you to build equity. In contrast, owning a home means investing in an asset that may appreciate in value over time.
  • Less Control Over Your Living Space: As a renter, you typically have less freedom to alter or personalize your living space. Restrictions on decorating, remodeling, or even pet ownership can limit how much you can make the space feel like your own.

While renting can provide flexibility and ease, especially in the short term, it lacks the long-term financial benefits and stability that come with homeownership. Balancing these factors is crucial in determining the best fit for your retirement lifestyle.

Financial considerations for buying or renting in retirement

When planning for retirement, the decision to buy or rent is a significant one with various financial implications. Here's how each option might impact your financial plan:

Cash flow

Opting for homeownership typically involves a stable mortgage payment, which can aid in financial planning. However, you must also account for maintenance costs and property taxes, which can fluctuate.

Renting, on the other hand, provides a predictable monthly expense, but be prepared for potential rent increases. Unlike a mortgage, rent is an ongoing expense without the prospect of paying it off.


Owning a home is a major investment and can be a key part of your asset portfolio. Over time, your property may appreciate in value, offering the possibility of capital gains. This equity can be a valuable resource in your overall retirement strategy. Learn more about using your home for retirement income by reading this article.

Emergency fund

An emergency fund is crucial, regardless of whether you rent or own. Homeowners should be prepared for unexpected repairs and maintenance costs, while renters need a safety net for rent hikes or the costs associated with moving.

Incorporating your retirement income sources, such as pensions, Social Security, and personal savings, is also critical. A well-balanced income strategy is essential for a secure and enjoyable retirement, whether you choose to buy or rent.

Lifestyle considerations for buying vs. renting in retirement

The decision to rent or buy in retirement goes beyond finances; it's also about aligning with your desired lifestyle. Here's how different preferences might influence your choice:

  • Proximity to Amenities: If you're looking to live close to cultural, culinary, or entertainment hotspots, renting might offer more flexibility to stay in vibrant urban areas. On the other hand, if you prefer a quieter, more residential setting, buying might better suit your needs.
  • Access to Healthcare: For retirees, easy access to healthcare is crucial. When choosing your retirement home, consider the proximity and quality of local healthcare facilities. This is important for both renters and buyers, as it ensures that essential medical care is readily available.
  • Community and Social Life: Depending on the type of social environment you prefer, your choice might differ. Some areas, particularly those with a high percentage of homeowners, might offer a stronger sense of community and neighborliness.
  • Flexibility vs. Stability: If you value the ability to travel frequently or move on a whim, renting provides more flexibility. Buying, in contrast, offers stability and a long-term sense of belonging in your chosen community.
  • Personal Space and Privacy: Homeownership often allows for more personal space, including outdoor areas like gardens, which can be important for some retirees. Renters might have to trade off some space and privacy for the convenience and location advantages of certain rental properties.

Ultimately, your retirement lifestyle should reflect your personal preferences and priorities, whether that means the freedom and flexibility of renting or the stability and space that comes with homeownership.

Bottom line

Your retirement lifestyle should be a perfect fit for you, whether it's the flexibility and convenience of renting or the stability and spaciousness of homeownership. There's no universal answer. It's about what best suits your needs, preferences and dreams for your retirement years.

If you're looking for guidance in making these important decisions, a financial adviser can be an invaluable resource.

Consider scheduling a free consultation with an adviser at Advance Capital Management. We can help you navigate the complexities of the housing market, assist in balancing your finances, and tailor a retirement plan that aligns with your goals. Whether it's understanding the specifics of your chosen location or managing your assets and income for a comfortable retirement, a skilled advisor is there to support you at every step.

Advance Capital Team

Advance Capital Management is a fee-only RIA serving clients across the country. The Advance Capital Team includes financial advisers, investment managers, client service professionals and more -- all dedicated to helping people pursue their financial goals.