Silver linings: The perks of renting in your golden years

___

Published Date 10/10/2024

Retirement. To many it means having earned the right to stop full time work; travel, relaxation, and more time to spend with grandkids. Perhaps the house is even paid off.

CNBC’s Ana Teresa Sola reports on how, while older Americans make up the largest share of homeowners in the U.S. compared to other generations, however, many are renting in their retirement years.

“Most older adults, those at least 65 years old, own their homes, according to the Joint Center for Housing Studies at Harvard University,” she says. “Yet, more than 1 in 5 older households — 7 million — rent instead of own, according to the 2023 Housing America’s Older Adults by the JCHS.

Renting during retirement can offer surprising benefits for older adults, allowing them to sidestep the costly maintenance associated with homeownership, says Sola. The flexibility to relocate without the complexities of selling a property is another advantage, according to experts.

Jennifer Molinsky, director of the housing and aging society program at the Joint Center for Housing Studies, notes that renting often provides more amenities, less maintenance, and improved accessibility. However, older renters face the same challenges as their younger counterparts, particularly when it comes to rent increases.

In 2022, half of all renter households were cost-burdened, spending over 30% of their income on housing and utilities. This issue can be particularly challenging for retirees on fixed incomes, as Lazetta Rainey Braxton, a certified financial planner, points out.

The landscape of homeownership among older adults is shifting. In 2023, older baby boomers constituted the largest share of home sellers at 45%, with many opting to downsize. Meanwhile, homeownership rates for those 65 and over, as well as those between 50 and 64, have seen a slight decline in recent years.

Teresa Ghilarducci, a labor economist and retirement specialist, emphasizes that being a renter doesn't necessarily mean you're worse off than homeowners. The costs of home maintenance can be substantial, with experts recommending an annual budget of 1% to 4% of a home's value for upkeep.

Homeowners spent an average of $9,542 on home improvements in 2023, a 12% increase from the previous year. This highlights the ongoing expenses that come with homeownership, even in retirement years.

While the decision to rent or own in retirement comes with its own set of challenges, it's important to consider the care and services needed to maintain your living situation. Sola admits renting can offer a simpler, more manageable lifestyle for many retirees, allowing them to focus on enjoying their golden years without the burden of property maintenance.

Ultimately, however, the key is to find a housing solution that aligns with your financial situation, lifestyle preferences, and long-term goals, ensuring a comfortable and fulfilling retirement.

CNBC, TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

First Priority Home Loans is a DBA of Anchor Funding, Inc. NMLS #236419 & 1626581. California Bureau of Real Estate, Real Estate Broker Number 01276087. Loans made or arranged pursuant to the California Department of Business Oversight. California Finance Lenders Law license number 603 L293.