Own or rent in retirement? Insights from Suze Orman

As retirees ponder their next move, a common dilemma arises: is it better to own a home with its unpredictable costs, or rent a senior community condo with fixed monthly expenses?

This question often hinges on the transition from the stability required during working years and raising children, to the flexibility and ease needed in retirement. With careers concluded and kids grown, many retirees are rethinking the demands of homeownership.

During an episode of financial adviser Suze Orman’s Women & Money podcast, retiree Jean sought advice on this very issue. Jean’s husband favoured moving to a more senior-friendly state to buy a home, while she preferred downsizing to a luxury senior community apartment.

Jean’s dilemma

With around $1 million in savings—$850,000 in an individual retirement account (IRA), Roth IRA, and annuities, plus an additional $100,000 in savings—they also plan to sell their current home for $450,000 to $500,000 without facing capital gains tax. Their combined financial picture includes a generous monthly Social Security and pension income, with Jean’s husband alone receiving $9,000 per month.

However, Jean doubts her husband’s ability to maintain a new home, worrying about tasks like mowing the lawn and handling repairs. She’s also wary of traditional condo ownership due to escalating homeowners’ association (HOA) fees and potential assessments. Instead, she dreams of a more relaxed lifestyle in a senior community, using the proceeds from their home sale to travel and enjoy life.

Suze Orman’s take

Orman emphasized that there isn’t a definitive right or wrong answer; the decision isn’t purely financial. With adequate funds for either option, the choice boils down to which lifestyle is less stressful in retirement.

Orman advised in favour of renting a luxury senior community apartment. She highlighted the increasing difficulty of home maintenance with age, suggesting that a senior community could offer a more carefree lifestyle. Moreover, Orman noted the importance of moving into such communities while still in good health, as many have health-related entry requirements.

“Listen to your wife here because, in the long run, you’re going to be so happy that you did,” Orman advised Jean’s husband, pointing out the significant difference in handling home maintenance between ages 62 and 73.

Own or rent during retirement

If you’re in a similar situation, consider both the financial and realistic aspects before deciding. Owning a home carries the risk of surprise repairs, rising property taxes, and the physical toll of upkeep.

Conversely, renting offers the predictability of fixed monthly costs, which can be less stressful when living on a fixed income. This financial stability can be particularly appealing if your savings and income are limited.

Aligning with long-term goals

If you’re unsure about the best path, consulting a financial adviser can help tailor a plan to your retirement lifestyle. Whether you choose to own or rent, the key is to find a balance that offers peace of mind and aligns with your long-term goals.

Source: Retired couple with nearly $1M in savings asks Suze Orman if they should buy or rent their retirement home