Senior Citizens: Should You Buy or Rent a Home After Retirement?

In response to my recent real estate articles, an AC reader sent me a message to ask about the benefits and drawbacks to buying a home after retirement. Senior citizens are in a unique position once they've retired from their jobs, and arguably have more freedom than those of us still tied to the world of employment. So should senior citizens buy or rent a home after retirement?

The answer to this question lies largely in the examination of three different factors: age, lifestyle, and financial situation.

You Aren't Over the Hill Yet

When senior citizens must decide if they should buy or rent a home after retirement, it's important to consider age and health before moving forward. There are plenty of octogenarian senior citizens who run three miles in the morning and experience very few health problems; age doesn't necessarily draw the line between renting and buying. However, if you consider your health, the line becomes a little less blurry.

When you rent a home or apartment, you don't have to worry about conducting routine maintenance yourself, and your landlord is responsible for taking care of problems. In apartments and condominiums, the yard care is usually included in the rent, which means that you don't have to worry about that either. Renting is often easier on senior citizens who are in poor health because it reduces stress and increases security in the home.

Of course, if you choose to buy a home after retirement, you'll have the equity you build with your mortgage payments (or if you purchase the house outright), and you can hire people to take care of maintenance and repairs. It all depends on your financial status and your ability to meet financial obligations.

Life on a Fixed Income

Most senior citizens are living on a fixed income from social security, 401(k)s and other retirement benefits. When you have a fixed income, budgeting your money can become difficult, and a mortgage might be out of the question. When you rent, you can move to compensate for added expenses and to lower your monthly payments. A mortgage binds you to a specific amount each month unless you intend to sell.