Rent or Buy? Some Suggestions – and Cautions – for Retirees
We all know that baby boomers are approaching – or have already reached – their retirement years. And just like their younger counterparts, many of these aging boomers are starting to grapple with a perplexing housing dilemma: is it better to rent a home or to buy one? There’s no one right answer, but there are some important things to consider, according to this recent article on the website of the Wall Street Journal.
As the article points out, more baby boomers are starting to sell their homes in order to take advantage of the equity they’ve accumulated. “Home-sales data and anecdotal evidence suggest that more baby boomers are putting for-sale signs on their homes this year,” says the Wall Street Journal, “seeking to unlock the equity they have regained since the housing downturn.” According to the National Association of Realtors, the median age of home sellers has risen from 46 to 54 just since 2009, suggesting that more boomers are jumping into the market as sellers.
But this brings up a question: after they’ve sold their home and pocketed the equity, what should these boomers do next? What’s the smart decision concerning what to do with that newly freed-up cash? Should they rent a place or buy another?
The article suggests that either choice can lead boomers to make poor decisions. Boomers who decide to rent may feel they’re flush with cash, choosing to fritter away savings they’re going to need, especially later in their retirement. On the other hand, too many boomers sell one residence only to turn around and purchase another one just as pricey – or even more so. In the words of the Journal, “Instead of downsizing to something cheaper, many [boomers] are buying homes at the same price point or higher than the one they just sold, a trend that concerns some financial planners.”
The article suggests several helpful guidelines on how much retirees should spend on their housing costs, whether they rent or buy. The best choice for those who opt to buy is probably to take the equity freed up from the sale of their home and buy something smaller that they can own outright. Renters need to take into account that, in many prime markets, rents keep rising, so a financial plan needs to take this added exposure into account. Still, there’s no denying the benefit renters enjoy of having someone else handle maintenance and upkeep, especially if you love to travel and plan to be away from home for long periods of time.
So one of the questions you may have to answer in planning for retirement is, do you stay in your home, or do you sell it and buy another – or do you sell and rent? Again, there’s no single right choice. But as with every other aspect of retirement, making the decision that’s right for you starts with a plan, and that’s where the professional team at Aging Options stands ready to help. We’ll work with you to develop what we call a LifePlan, a blueprint designed to guide you in preparing for a fruitful retirement. Besides assisting you with housing choices, your LifePlan will help ensure that your legal affairs are in order, your health care coverage is assured, your family is fully informed and understands your wishes, and your financial plans are firmly in place.
The best way to start: attend a free LifePlanning Seminar, held in locations throughout the area. Space at these popular seminars is limited, so why not plan now to attend? Click on the Upcoming Events tab on this website, sign up for the seminar of your choice, and start the process of building a comprehensive retirement plan, with us as your guide.
(originally reported at www.wsj.com)