The kids have left the nest. Your Social Security benefits are coming in. Now is the time to enjoy your retirement! Once you have reached this big milestone, (or maybe you’re just planning ahead,) you may be asking yourself, “Should I sell my house and rent in retirement?”
A lot of seniors take this route, but it’s not always the best financial option for you and your estate. Take the following factors into consideration before you put your house up on the market.
What to Consider Before You Sell Your House and Rent in Retirement
The Value of Your House
One of the most important (if not the most important) factors is the value of your home. How much money will you be able to get for your house and what do you plan on doing with it?
Also consider how the value of your house has changed since you originally bought the property. If you are at a peak high, you may have more reasons to sell your house and use that money to rent, invest, or downsize. If the value of your property has not appreciated much and your market is in a slump, you may want to wait things out or stay where you are.
Monthly Payments and Retirement Income
Renting can seriously reduce the amount of expenses that you have to pay each month. Consider how much you are paying in property taxes, HOA fees, and repairs around the house. (When you sell your house, you may also be able to sell your lawn mower and your snow shovel; that might be enough to have you looking for a real estate agent!)
In some markets, it is certainly cheaper to rent than to buy a house. Check out these markets and see where your area fits in. You may be better off downsizing instead of renting.
For some seniors, their monthly payments may stay the same but their income decreases. Know how much you will be getting from Social Security and your retirement accounts when you budget. If you are willing to put in some extra effort, you could rent out your current house and use it for supplementary income. This is the best of both worlds; you get to rent a new apartment but still keep your house!
Maintenance and Cleaning
Renting out your current house may seem like a great idea for supplemental income. For seniors who don’t want to deal with any sort of maintenance or cleaning, this option is out of the question.
Many seniors move out of their house because they simply want to downsize. When you don’t have kids running around the house, a two-story house may be more of a pain than a joy. Smaller apartments require less maintenance and cleaning. One-floor units will also make it easier to get around if you start having mobility issues.
Maintenance might not add too many costs to your overall budget, but it will certainly make your life in retirement a lot more peaceful.
Your Plans For Retirement
Now that you are retired, do you want to travel abroad? Take a big road trip throughout the country? Or just spend your years in peace and quiet with your family? All of these next steps come with costs that may affect your decision to sell your home and rent in retirement.
If you want to pack up and travel for a long period of time, selling your house can give you the money to do so. You may not need to find a place to rent until you get back but you may want to pay monthly fees for a storage unit.
If your plans involve moving into a retirement community, you should consider the monthly costs of the community and when you and your partner are ready to move.
At the end of the day, finances are not the only factors in selling your house. You may have watched your children grow up in this home. You may not want to let go. Moving may just sound like a headache!
Don’t rely on your personal feelings alone, but do not feel forced to sell your house just because it would save you a few hundred dollars each year. Make sure to do the math - it may influence your decision - but your monthly payments aren’t the end-all-be-all factors at play. It may make sense financially to keep the house so you can pass it on to your children after you pass away. The housing market may change. You may still have a few thousand dollars left on your mortgage.
All of these factors can feel overwhelming. Still asking yourself, “Should I sell my house and rent in retirement?” If you feel stuck, talk to a financial advisor and get a second opinion on what the best decisions are for you and your family.