July 13, 2019

A Soon-to-Retire Reader Asks: Rent or Buy?



A month or so ago a reader emailed me a question that pops up with some regularity. His retirement is coming up early next year. After work ends, he and his partner have discussed moving to an area they both love. But, he wondered, should they buy their next home in the new location, or should they rent? He expressed uncertainty.

Reading between the lines, I think he was concerned about  two things:
  1.  What if one partner didn't like the area as much as the other one does?
  2.  Should they tie up all that money in a house?
Those two questions are good ones to ask well before retirement and certainly before the moving van pulls up to your front door. I applaud his openness in asking the question and wondering about an important decision.

For many years my suggestion has been to not move anywhere for at least one year after retirement. During those 365 days, you body (and that of your significant other) will be shedding years of stress. Your mind will be reorienting itself to a new view of commitments, requirements, and options. Your family and friends will interact with you differently. Adding the uncertainty, expense, and unease of a move is too big a risk. 

One or two years into your new routine, then you are best able to assess all that is involved in changing your address. You will have established a basic routine. Bills are being paid, medical care has settled into some sort of pattern. Your daily routine fits you, for now. Your body and mind will have settled into a new normal. The question this reader asks is now more safely addressed. There are a few things to consider. 

Is the new area one you are familiar with? Have you vacationed or spent time there? Have you experienced the climate in more than one season? Or, is the potential move one based on your internal driver that has always called you to the ocean, or mountains, or desert, or lake, or whatever?

If you are moving with another person it is easy to get caught up in the potential of a move, without insuring that both people are on the same page. Where you live has huge impacts on your overall health, happiness, and satisfaction. If one person is even a little hesitant, I strongly suggest those issues be resolved before ordering the moving van. 

Assuming both of you are excited about what lies ahead, your experiences in your move-to-area are very important. At the very least experience a week or two in each of the seasons. The call of the ocean may be strong, but the humidity may be more than you can handle. An ocean side town can be somewhat claustrophobic in the winter when most of the people have left and stores are shuttered for the season.

Green and moist usually comes with grey and cloudy for long stretches of time. 330 days of sunshine and very few natural disasters can be very appealing...if you can handle four or 5 months of 100 degree days. Those beautiful mountains can become a barrier in the winter when several feet of snow block any exits. 

The point is, even your dream destination has times when things aren't so dreamy. Move with your eyes wide open and an awareness of all the effects a new climate might have on you.


Tying up a big chunk of your retirement money in a home or condo you purchase is not to be taken lightly. At some point you will need (or want) to sell. Housing is an inflexible asset, meaning you must find a buyer who wants what you have to offer, at a price you both can live with. Typically, plan on a minimum of 60 days to sell a piece of property. In a slower economic environment, a listing can linger for months.

If you think you will need to sell quickly in all economic conditions, understand a property purchase comes with that risk. Just think back to 2008 when housing lost 50% of its value in less than a year. Can you afford to weather such a situation?

Of course, owning a home or condo means it is yours to do with what you wish. Owning something comes with a very different mindset than renting or leasing. There is a permanence that just doesn't exist with monthly rent payments.

With all that said, I sense a growing movement of retirees deciding to rent instead of locking up a good portion of their investments in a home. Letting someone else worry about maintenance and repairs, locking the door and leaving on an extended vacation, enjoying the amenities without having to fix them and pay for them all on your own, or even deciding to try a different lifestyle in a different place all support a rent-versus-buy decision.

All of this comes down to two key factors: doing your homework before making a decision and deciding whether owning a piece of property is important to you. Frankly, I don't believe there are right or wrong answers in this situation. The only mistake would be rushing a final choice.

Best of luck to this reader, and let us all know what you and your partner decide.

24 comments:

  1. Good advice Bob, especially "not move anywhere for at least one year after retirement".

    Perhaps I can also suggest to rent in the new location for a year or two before selling their current residence, they could even rent their current residence out while they are away to balance out the costs.

    I know of several people that at retirement sold up everything and moved to a new location (even a new country) only to find that vacationing somewhere is not like living somewhere and after a couple of years sold and moved back. And all that buying, selling, and moving around doesn't come cheap in dollars or stress.

    One other thing: The pull of the familiar, of family and friends, can be a lot stronger than you imagine. If grandchildren come into the mix that increases the pull exponentially. Take your time deciding, you are retired now, there's no need to rush.

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    1. I certainly agree with all you say, David.

      In our case, if the family hadn't all settled in the Phoenix area (and now within 5 minutes of each other) I am pretty sure Betty and I would be in a different place. But, the importance of family ties and being part of the grandkids growing up makes leaving, even for 3 months during summer, not a choice we would make.

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  2. Waiting a year after retirement to make a decision like moving is the best advice anyone can give. Same advice holds true of recently widowed people.

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    1. Your point about recently widowed moving opens up an important consideration. The natural tendency is probably to move quickly to be near some family members. But, that means leaving behind all the ties and relationships that could help during the grieving and adjustment period.

      I'd certainly welcome additional comments on this aspect of a move and renting versus buying.

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  3. As Bob knows, we did make a move to the mountains within first 6 months of retirement and it was not a good move.We spent some money moving up and back again and it was very very exhausting. I could not acclimate to the new area at all.I missed EVERYTHING about my “old life.” The climate did not agree with me. Hindsight is always 20/20 but I would HIGHLY suggest renting for a year in your “ideal” new place and see if a whole year of living there shows you how it would work out long term.LUCKILY we did not sell my home, we rented it out and I was able to return without much trouble.If we had SOLD THE HOUSE wow, we would have had to find another house before coming back. Orr..who knows what??!!..I cringe to think of all that..Just stay put a year and chill!! Then,maybe rent in a new area or explore living there for at least 6months before making the big move.. that’s my advice..that would have saved us a lot of $$ and stress. All’s well that ends well..we learned a lesson.. but whoa, what a year that was!!

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    1. Moving on an emotional high is always risky. Sometimes, it could turn really sour as your experience shows. You vacationed in the location you moved to, so you figured you knew the area and liked it.

      Well, as you learned, the lack of support systems, options in health care, rugged winter weather, and the separation from friends and family didn't produce the results you hoped for.

      To the person who emailed me, Madeline's tale is a powerful vote for not moving right after retirement, and renting for a period of time before committing to a fulltime move.

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  4. Hi Bob! You've offered some great advice on a topic that is very popular on my blog as well. I suppose your recommendation of waiting a year after retirement to consider any move is good--but I'm not retired yet so can't say for sure. But as a former real estate broker (for over 30 years) I certainly agree with the decision to DO YOUR HOMEWORK! It is so easy to get romanced into moving to a new place .--especially when you are there during the best part of the year weather-wise. Living somewhere is far different than vacationing but people often buy on emotion and then regret it later. I agree with those who say you should rent a while--at LEAST six months before deciding whether you should buy or not. Thinking and planning ahead can save both money and frustration. ~Kathy

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    1. We have lived in the Phoenix area for almost 35 years, so when we have moved between four different houses the familiarization process has been quick. We are used to what living in the desert means.

      But, if someone is moving here because they love the winter weather, I'd strongly suggest a full summer (which last from May through October). As I type this it is 112 degrees. Yes, 72 is very nice in January, but 112 takes some serious getting used to.

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  5. ent for a year in the new place excellent idea. I assume you will have to downsize your living space and. even if you store stuff before the final move, it will help you figure out what you can now live without should you decide to stay renting which will probably require significant possession downsizing since renting you will typically end up with much less space than a house.

    So the after the decision is made that moving to the new location is the right idea and you are ready to make a commitment there - should you rent or buy. (which I think is the real original question)

    (Disclaimer- we moved when we retired and bought a home as part of the move. Main reason was the spouses were not ready to make the downsize decision at 65 and 67. Still wanted the space a house provides).

    First I do not recommend renting a house, as these are typically short term rentals (short term by the people offering the house for rent) as they probably either intend to move back someday or are only renting with the idea of selling it when the market is better. Which might either be an indication it is a good time to buy or if the location is becoming long term less desirable a time not to buy and may be an indication this is not a good place to retire. I did offer a home for rent for awhile - it was a major hassle and sold it after a few years.

    So assuming the rental is an apartment of some sort with long term living there potential here are some considerations (random thoughts)
    (condo has similar questions along with HOA fee increases, shared maintenence assessments, and HOA living hassels):

    Does the smaller space work for you now? Do you expect frequent visitors, kids and/or grandkids? is there room for them to stay comfortably?
    Are you ready to downsize to an apartment or do you miss your "stuff" (that is in storage).

    Do you have hobbies than need room? If you like woodworking an apartment is not the best choise as an example.

    Do you have or intend to have furry pets? Apartments will have restrictions on this.

    Rents will increase (and so might taxes but they are often frozen or capped for seniors).

    Assuming you pay the mortgage you can't be evicted or have a lease not renewed.

    Do you prefer more privacy?

    Just because you dislike "yard work" is not a reason to rent. You can always pay somebody to do the yard work.

    You are at the mercy of the landlord for upgrades and fixes.

    What do you do if you or your partner need disabiliy modifications and landlord will not allow them?

    Are you "really" ready for "apartment living"?

    Sometimes you can buy for less than renting - do the math.

    Do you want to leave a potential asset to your kids?

    What did I miss? - either way.

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    1. I don't think you missed much of anything. Your point about renting a house is a consideration I would not have thought of. What happens if you get all settled and the owner wants to move back in or sell it? Excellent point, Bob.

      I rented when I was young and before marriage, but not since my mid 20's. Mentally, both Betty and I would have to change our attitudes toward ownership versus renting.

      You are right: don't rent because you dislike maintenance, yard work, or whatever. Those jobs can be done by others.

      Since our long range plan is to move into a continuing care community we will, in a sense, be renting at that point. But, many of the problems you mentioned don't exist in that environment (if you do your homework first!).

      Thanks for the very detailed overview.

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  6. As full-time renters for the past 5+ years, I'm not sure we'll ever go back to owning a place ever again. While renting is not a perfect solution, there's lots about owning a home that we don't miss at all.

    Maintenance. We don't miss having to do appliance repairs, painting, roofing, yard work, and all those other issues that can (and did) cost thousands each year. You can find examples over and over of seniors who are no longer able financially and physically to take care of maintenance issues or upgrades on their homes, making these homes difficult to sell (think of a house with an avocado green and harvest gold kitchen, or one with flaking exterior paint or a moss-covered roof), The houses often become hazardous to live in. Maybe we've been lucky, but our landlords have almost always quickly taken care of maintenance issues. It is very nice to know that these issues are someone else's responsibility, and we can use our money for other things.

    Not being tied down: As renters we can live wherever we want these days, and pretty much get up and leave when ever we want to as well. Renting allows us to travel full time, something that wouldn't be possible if we still owned a home. Not everyone is as restless as we are, but for many retirement is the first time they can finally go somewhere else, and are not tied to a job or a location that doesn't work for them any more (the climate, children have relocated for their jobs, lack of activities, etc.). The grass isn't always greener someplace else, so the advice to rent for at least a year in a new location is sound, but renting gives the option of moving on a bit easier if it doesn't work out.

    Downsizing: Unless you're renting a huge place, for a variety of reasons renting usually requires one to carefully consider the space they (will) live in and what they (will) need to maintain a comfortable life. Renters often move more than once, and moving 8,000 to 12,000 pounds of stuff - typical weight range for a 3-bedroom home - can be expensive and a hassle. Of all the advantages to renting, this one has been the most beneficial for us. We've lived a pretty stripped down life since we began renting and have enjoyed it immensely all while wanting for nothing.

    There are advantages and disadvantages to both owning and renting, but whether one or the other is going to work for someone requires them to honestly assess those factors and not dismiss either of them out of hand. A house is no longer always the good investment it once was, but there are intangible benefits outside of monetary ones. Renting doesn't mean having to live in a cramped, tiny apartment, an apartment or condo complex can provide meaningful community, and renting can free up income for things that might otherwise be unaffordable.

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    1. I am so glad you added your thoughts, Laura. After your rental experience on Kauai and then traveling around the world for the past year, you are an excellent source of insight on this topic.

      I do want to emphasize your point about maintenance and living with disabilities. In a home you can modify doorways or cabinet heights, or other design features to make your home safer. Those are hard to pull off in an apartment or condo rental.

      Of course, there are newer complexes that offer units already modified for older folks. But, this is one area where renting would cause me concern.

      As you note, some seniors (elders!) don't have the budget to fix up, modify, and maintain a house. Then, a rented apartment would be safer just because basic maintenance is taken care of by someone else.

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  7. I also follow Laura and I agree the freedom to move and not having to do maintenance might be a plus - but I seem to remember you had sort of the landlord from H_ll in Hawaii.

    I was answering from the view point that the couple were looking for the best long term, more less permanent, living situation. Otherwise the question did not make sense. If they wanted the freedom to easily relocate if needed/desired then renting would seem the best choice.

    I was going to add that if I bought a home I'd would consider a new build or very recently build home - less than 5 years old. That way most of the expensive maintenance would be 10-15 years in the future - maybe even about the time to go to apartment living. I would not be buying a fixer upper on the way to retirement unless you got it cheap and have the resources to have it modernized. Don't count on doing it all yourself at retirement age - energy goes fast and dragging out a remodel makes for less that happy times (my experience). We had a home built as we retired and moved and kept the mortgage plus insurance and taxes the same as we were currently paying which is about $500 less than we could rent a similar sized apartment or house. You have to do the math.

    Anyway all good comments especially since we did not have a lot of background on the questioner to work with.

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    1. I am guessing that the question was about a permanent relocation and whether renting at all made sense. I think the majority of comments would say that, yes, rent before you buy. But, if you want to put down roots and make a place your own, then buy at some point in the future.

      You are right about Laura. She and husband, Brett, had a bit of a tussle in extracting themselves from their Kauai rental. If I remember, in the end, the landlord did what was right. But, there was some stress in the process.

      Betty and I owned 4 rental homes in the mid 90's. I'd never do that again but it was a learning experience, to say the least.

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  8. I have chosen to rent, for both simliar and different reasons than Laura .

    First though, let me way that there are plenty of long term rental options out there. I am in a long term situation, I was a long term (ten year more or less) land lord and in fact was a long term renter overseas. Our experience says that while many landlords will start out with only a one year lease, you can ask at that time, if they are open to long term and what there personal time frame is without offense. We live in an upscale suburb of Denver and after renting for six years know local renters who have been in the same home twice as long. And if you are a slightly flexible renter things will be good. For example, my landlord still works. He came over to troubleshoot my barely working air conditioner with no success, and authorized me to call someone. I have no problem with doing the calling, knowing that he will be doing the approval and the spending.

    My personal choice for renting is primarily the effort and ability and ability required to maintain a home, as well as the financial cost. While the rent on this home may be simiar to my mortage, other than mowing thelawn or hiring someone to do so, every other expense and effort is the responsiblity or someone else, with the exception of situations like the one mentioned above. For those who enjoy the diy, fix it up maintenance things,this might not be the choice for them. In my retirement I have other things I wish to spend my time, effort, energy and money on.

    And or anyone who thinks rentals cannot be as homey or as individualist, do remember I now have a turqoise living room and a yellow bedroom, just for starts.

    So without knowing the OPs situation I would say renting is a very viable situation especially for retirement. But I agree, take your time about selling and try not to make any decision in that first year.

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    1. Like Laura's story from above, Barb is a long-term, happy renter. While I am sure she will admit that there is always the risk that at the end of whatever lease length you have moving may become a requirement. Her takeaway point, though, is that careful negotiation and planning can lessen the likelihood. She is just as settled in as any buyer.

      The variety of comments makes clear that the rent vs buy choice really comes down to personal preferences in several considerations.

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  9. I know where I would really like to retire to, it is (north) 20 miles away from where I currently live, and 45 minutes south of where my two youngest children live. BUT, I am still working an hour SOUTH of where I live, and if I sold and moved, that would add thirty minutes each way to my commute every.single. day. I am not willing to spend an extra hour a day on a commute. I have also considered retiring to family land near where my oldest son lives, in the northern part of this state. It is a little bit colder than here, and I loathe cold weather. My middle son would like to rent out my current house, when I retire. He does property rentals. To complicate matters, my daughter is expecting my first grandchild and lives 2000 miles away, in an expensive, not tax retirement friendly state. Life is always complicated by family, health, tax considerations, climate, job potential, resale value, etc. So, for now I work, and just enjoy the ride.

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    1. If I plotted all your choices on a spreadsheet I would need multiple columns! Because you are still gainfully employed, not adding to your commute is the logical decision.

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  10. My point to the OP is that no place is perfect. All you can do is try to make the best informed decision as possible. Also, will you be buying with the idea of leaving it to the kids? Potential rental income, if allowed because some condo associations frown on rentals, is a consideration.

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    1. Double thumbs up to that. No place is perfect, so the final decision comes down to a pro/con balance between things that are important to you.

      Our HOA allows rentals, though I believe it limits the percentage of houses in the community that are not owner occupied.

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  11. Good topic, good advice. I go back to the old saw: buy if you're sure you're going to be there for at least 5 years; otherwise, rent. If you've just moved to a new place you're probably not sure, so rent for a year, then buy if you're happy where you are ... 'cause in the long run it's still cheaper to buy than rent.

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    1. Rent to be sure, then buy. We can all agree that would be the best approach, if feasible.

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  12. My mortgage is $618. To rent a comparable property would be $1200 to $1750 and rates continue to rise. My mortgage is a fixed amount and will be paid off soon leaving me with with only property taxes, insurance and maintenance costs. It's all about the numbers for me.

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    1. In your case you seem to be in a good position.

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