Buy or Rent in Retirement?

Discussion in '401k, IRA and Retirement' started by My401K, Jan 8, 2015.

  1. My401K

    My401K Well-Known Member

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    Do you think when you retire that it is better to buy or rent a place to live? I go back and forth about this quite often in my own head. I own my house free and clear and often wonder if doing a reverse mortgage, holding a mortgage and selling or just outright selling and taking a rental might be the best financial move to make in retirement.

    Being older I know there will be limitations on what I can do to maintain a home, although I can always hire people I do not know if that would be a better deal then just letting a land lord handle it. Retirement only takes you so far financially so perhaps actually holding a mortgage for someone would be the best move providing they were straight up and actually paid on it. I would then have a steady income coming in, maybe if I did it right I could set it up as a trust to differ taxes?

    Just some of the thoughts I have about the future anyone else have feedback?
     
  2. dianethare

    dianethare Senior Investor

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    If i was to retire...i' d settle to buying a house rather than renting it out, unless am the landlord and the money is coming my way :), anything short of that, buying will be the way to go, but in my working years, renting is alright :).
     
  3. eagletal88

    eagletal88 Guest

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    I would also think that buying when be the wise choice. But there is one thing that does scare me a bit. How much will taxes continue to rise??? In the town I live in, taxes have already doubled in the last 3 years. A good example would be my parents house, their taxes are now almost $5000 a year. Or about 33% of their mortgage payment. My assumption is if your nest egg is on the weaker side, you could potentially become house poor. Even if your house is paid off! Depends on where you live I suppose.
     
  4. Beautyspin

    Beautyspin Member

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    Since you already own the house outright, I think it might be a better to sell the house if you are getting a good price only or else keep the house and wait for appreciation. Since you are retired you can afford to wait :). Maintaining a house is a problem and that alone is a reason for selling the house. The advantage with renting is that you could change the location of your stay anytime you do not like the location and that I think is a big plus.
     
  5. crimsonghost747

    crimsonghost747 Senior Investor

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    If you are planning on staying in one place, I'd buy. That being said, a lot of time people stay in the same place they have lived for most of their life so you should already have a house that is at least mostly paid by now.

    A reverse mortgage is a great option IF you need that money. You could also do it and use the money to help your children, they will need the money a lot more when they are young than later on.
     
  6. Onionman

    Onionman Senior Investor

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    In an ideal world you don't want to have excessive cash out flow to have to cater for. That's why most financial advisors would say having a property fully paid off by the time of retirement is an ideal scenario. Rental obviously gives you more flexibility, but you don't want the risk of being forced out of your home either. At the end of the day it's about the situation that provides you with the most security at that age.
     
  7. Gelsemium

    Gelsemium Senior Investor

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    In retirement it's not the best time to rent, but to buy. I mean, we should have bought it by retirement, so that we can enjoy retirement with no worries.
     
  8. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Hopefully in 15 years I can "retire" more or less if I choose to do so and not have to sacrifice anything, and be able to live as I'm accustomed to with everything as good or better than it is now. Time will tell - you never know what can happen.
     
  9. My401K

    My401K Well-Known Member

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    That is exactly what I worry about, the taxes. Right now mine are pretty close about $4200 a year which isn't bad but it isn't great either. I am feeling the best way to do this might be to get a few people to room with. My house has been paid off for many years so I am not worried about a mortgage, but I am concerned that the cost of living does not seem to be getting any better. I expected a few years downturn with the economy going bad, but now we are pushing seven years. making up three or four years is one thing making up a decade is a whole other kettle of fish.

    I don't think giving up part of the privacy of your own house is to bad, mine has always been in such a way that I can lock out parts of the house. The previous owner divided the house up already and used it like a rooming house. Maybe they knew things we forgot back in the 40's. If I chose a condo or an apartment I would lose a great deal of privacy being in closer quarters to my neighbors.
     
  10. tournique

    tournique Well-Known Member

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    Buying is much better if you also have kids or someone to pass it on. Rental can have it advantages if you travel a lot but take your life spam on the paper and see with how many years you could be left. 30+? Buying is good. 10+? A rent is probably a better choice.
     

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