While many young people must decide whether to continue renting or to buy their first home, many senior homeowners face the opposite choice: whether to hold on to the home they own or to sell and downsize into a rental.
Part of this decision is emotional: Some seniors prefer to stay in a home with happy memories, friends and family nearby while staying in a familiar neighborhood. Other seniors love the idea of shedding the responsibilities of homeownership.
The decision to rent or own as a senior depends not only on your current finances but also on your overall retirement budget and your health.
While your finances will certainly drive your ultimate choice, before you begin to delve into what makes the most sense for you, it's wise to think about your long-term plan for your retirement years.
If you plan to stay in the area where you own a home now, you'll need to think about the practicality of that home as you age. Regardless of your current physical strength, you need to consider where you want to live as you age and how potential health issues can be handled.
Think carefully about how much downsizing appeals to you. Some seniors would rather keep their larger home so they have space for children and grandchildren to visit, in spite of the inconvenience of maintaining a larger home.
Some seniors opt to move into senior housing where any future physical problems can be addressed onsite; others choose to stay in their homes, which could require some remodeling.
If you plan to move to a different region, selling your home and using the equity to finance the move (and then rent) is typically the better option--particularly if you're not certain of where you want to be for the long term. Some seniors sell and move to a warmer climate, only to find that they would rather be closer to friends and family.
Once you've got an idea of your housing preferences, you can move onto the financial angles.
When you're making the decision about renting or owning as a senior, there are multiple economic and personal financial factors to discuss with a REALTOR(r) (particularly a Seniors Real Estate Specialist(r)), a lender and your financial advisor:
A REALTOR(r) can help you evaluate how much equity you have in your home and can share information about the local rental market so you can make an informed decision about which choice makes the most sense for your individual needs.