In retirement, you don’t necessarily need a house with several bedrooms and a big yard. In fact, stairs to climb and a yard that needs mowing can become a significant liability as you age. Renters get to outsource emergency repairs and some home maintenance chores, which can make life easier as a retiree. Downsizing to a smaller apartment can also improve your retirement finances. Here are 10 reasons to become a renter in retirement.
Tap your home equity. When you sell your home and become a renter, you can add that home equity to your nest egg, which could significantly improve your retirement finances. “Selling the home and renting gives you capital that is able to produce and earn income,” says Neal Van Zutphen, a certified financial planner and president of Intrinsic Wealth Counsel in Mesa, Ariz. “It costs less to rent than it does to own. There’s no maintenance costs, there’s no property taxes and sometimes utilities are included.”
Downsize to a smaller place. Once your children move out of the house, you don’t need as much space or stuff. “Downsizing to a living space more appropriate for current needs can be additionally helpful if moving from a multi-story to single-story home, i.e., eliminating stairs,” says Andrew Carle, founding director of George Mason University’s Senior Housing Administration.
Lower your cost of living. Retirees no longer need to live in expensive areas near the office or in good school districts. Sometimes moving even a short distance can result in a drastically lower cost of living.