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You are empty nesters and you are thinking: Our five-bedroom family home sure seems a bit, well, large, not to mention a money drain. It’s time to move to a smaller place. But now you need to decide whether to buy or rent.

The idea of renting a house or apartment can be challenging for many longtime homeowners. Owning real estate “is hardwired” into the American psyche, says Rich Arzaga, chief executive officer of Cornerstone Wealth Management, in San Ramon, Cal. But, he says, “ownership is more expensive than people imagine.” And it may be more important for many retirees to secure income from investments than to sink money into a new house.

Deciding whether to buy or rent when downsizing depends on many factors. You should estimate your cash-flow needs, and assess the relative costs of home prices and yearly rents for comparable properties in a community. You also need to make certain assumptions, such as for investment growth, annual rent hikes, and the costs of home maintenance, property taxes, and homeowners and renters insurance.

Your decision will depend a lot on nonfinancial, emotional issues, as well. Do you love the idea of owning your own place and fixing it up the way you want? Or will it be a big relief after years of ownership not to worry about the lawn or a broken sump pump?

Darrow Kirkpatrick, 54, ran the numbers and decided that renting was a better option than buying when he downsized two years ago. Kirkpatrick, who retired as a software development manager four years ago, and his wife, Caroline, now 56 and a retired school teacher, sold their four-bedroom house in Chattanooga, Tenn., for $245,000. After traveling for six months, they moved to Santa Fe, N.M., to be near their son.

They rent a two-bedroom house for $1,450 a month and pay little in maintenance. Renting “makes our monthly expenses predictable,” says Kirkpatrick, who writes a blog, “Can I Retire Yet?” (www.caniretireyet.com). “We don’t get blindsided with roof repairs.”

Renting also fits into their new lifestyle. The Kirkpatricks don’t know if they’re going to stay in Santa Fe for the long haul. “If it doesn’t turn out right, it’s relatively easy to leave,” he says. Also, Darrow and Caroline drive around the Southwest often. They’re not as worried when they leave the home for long stretches as they would be if they owned. “I have more peace of mind locking up and leaving,” he says.

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