In retirement, every dollar counts, and determining where you can best afford to live is critical. That decision comes down to either owning or renting a home. While income and lifestyle preferences are important factors, retirees should consider other key decision points.

• Mortgages offer price predictability.
• Renting offers flexibility when relocating.
• Renters aren't expected to handle home maintenance
• Homeownership builds equity.
• Rent may cost less in the short term
• Homeowners receive tax breaks.
• Renting offers a convenient lifestyle.

The Price Predictability of a Mortgage
Ownership has its advantages if stability is a priority. Standard 15- or 30-year mortgages have fixed interest rates and fixed monthly payments. If those payments are made on time, there’s no threat of losing a home.

That’s not always the case with rentals. Retirees could find that their landlords want to sell the home, often on short notice, which would mean looking for a new place to live.

Additionally, owners may opt to raise the monthly rent, reducing pricing stability for retired renters. “Many retirees who were renting during the pandemic in my area had to relocate because they didn't have equity in a home and prices jumped 30% and higher,” says Jeff Lichtenstein, a real estate agent and owner of Echo Fine Properties in Palm Beach Gardens, Florida. “Homesteading and owning would have protected against that occurring.”

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Renting Offers Flexibility When Relocating
Renting makes sense when retirees move, allowing for less commitment and more flexibility before purchasing a home. In general, the farther away you move, the better it is to rent first and see if you like your new location. This is especially true when relocating outside the U.S. to popular retirement destinations such as Portugal or Costa Rica.

That gives you time to get to know the community and assess its fit to your lifestyle without the burden of long-term ownership. Renting also spares you the expense and complication of purchasing a home in an unfamiliar area.