Renting in Retirement - Should You Do It?

Many retirees consider whether they should:

Continue owning a home
Downsize to owning smaller property
Rent

This blog post explores the ins and outs of renting in retirement.

How common is renting during retirement?

Renting in retirement is more common than many realise, with over 250,000 people over 60 renting in the UK.

The proportion of retiree renters has also grown over the past few decades. Rising house prices have put property ownership out of reach for more retirees.

Renting is often viewed as the only viable option.

There are a few reasons why renting might appeal during retirement:

Financial considerations

Renting frees up capital to spend during retirement. You can also avoid the costs of maintaining a property.

Lifestyle flexibility

Renting enables more freedom to relocate later in life. This might be to be closer to family, specialised care, or an area you like.

Lower responsibilities

Landlords handle tasks like property maintenance and repairs. This enables more time for leisure and relaxation.

So, renting in retirement is reasonably commonplace. This is true even if homeownership remains the norm for retirees who can afford it.

Rising house prices will likely make renting even more prevalent in the future.

Advantages of renting during retirement

Renting offers several advantages that make it an appealing housing option during retirement.

More disposable income

Renting can sometimes work out cheaper than owning on a month-to-month basis.

Mortgage payments disappear, and certain expenses are no longer your responsibility, including:

Property taxes
Insurance maintenance
Unexpected repairs.

This frees up more disposable income during your retirement years.

The rent vs. buy calculation depends on individual circumstances, of course.

However, renting does remove many of the more significant costs associated with homeownership.

Greater flexibility to relocate

One of the biggest perks of renting in retirement is flexibility. It’s much easier to relocate to a different country or area than if you own property.

Less stress

Owning your home brings many responsibilities, such as:

Arranging repairs
Property maintenance
Dealing with tax
Insurance issues.

Renting transfers these duties to landlords and property managers.

The reduction in responsibilities can make renting less stressful. This enables you to focus on enjoying retirement. You can spend time with loved ones and pursue hobbies.

Shared community living spaces enable social connections with neighbours of a similar age.

These interactions can help reduce isolation and loneliness. This is invaluable for mental health and well-being during retirement. Ties formed through community activities often persist even if individuals relocate.

Accessibility

Modern rental homes for retirees tend to offer accessible design features, such as:

Step-free showers
Wider doorways for wheelchairs.

Converting an owned home to improve accessibility can be expensive. The costs of this work can eat into retirement savings set aside for other purposes.

Disadvantages of Renting During Retirement

Renting isn’t perfect, however. There are a few potential costs to weigh up:

You don’t own the property

An emotional aspect for some making the rent vs buy decision is not owning your home outright.

After years of working to pay off a mortgage, some may wish to own where they live at the end of that journey.

Renting means you have no property assets accrued.

Remember to rethink your will if renting in retirement rather than owning.

Exposure to rising rents

As rents increase, more of your retirement income covers housing costs. This could restrict spending power for other aspects of retirement.

Look for rental contracts that offer longer-term leases or capped annual rent increases. This minimises this risk of high rent rises squeezing your finances.

Relocating could still involve costs

While renting makes relocation easier than selling a home, it’s not always accessible.

You may need to pay fees to end tenancy agreements early. Or cover expenses to transfer furnishings to a new property.

Restrictions on property customisation

Owning your own home means you can redecorate and reconfigure the property.

Renting means accepting the property primarily as is.

Some landlords allow minor customisations, like wallpapering or repainting. But extensive personalisation is often restricted.

If having a home tailored to your aesthetic tastes is essential, renting may not fulfil that need.

Check what customisations you can make before signing a long-term tenancy agreement.

What is a retirement village?

We’ve mainly discussed renting residential homes.

Another option is to rent accommodation specifically designed for retirement. This includes retirement flats part of a wider retirement village.

Retirement villages and communities provide housing for older adults. These include facilities like:

Restaurants
Activity rooms
Gardens
Health services.

Many villages also organise social activities. These reduce isolation and encourage a community spirit.

Additional fees cover expenses like property maintenance, community facilities and activities.

Retirement village units are purpose-built for older adults’ needs. Step-free showers, grab rails, and alert buttons enable residents to live independently.

Understanding contractual obligations is essential when considering a retirement village.

Factor requirements to refurbish the unit and deferred management fees.

Should I rent during retirement?

There are good arguments on both sides of renting vs buying a home for your retirement years.

Here are a few key questions to help you decide which better aligns with your circumstances:

What are my financial circumstances?

If buying a home requires your entire savings, renting offers more disposable income. Ownership may suit you better if you have sufficient assets.

How necessary is home customisation?

If you want to customise a home during retirement, renting may be overly restrictive.

Could my needs change?

Consider future health and mobility changes. These could require moving closer to family or assisted living services. Renting makes relocating simpler if flexibility is a priority.