Should You Rent in Retirement?

Now that the kids are gone, you no longer need a five-bedroom home with a big backyard and swing set. When it's time to downsize, you need to make an important decision: Should you rent in retirement?

Is it better to rent in retirement?

While many long-time homeowners might resist the idea of renting, don’t dismiss it outright. Instead of sinking money into a new house (which averages about $357,138 as of early 2025), you might be better off putting it in your investment portfolio.

For example, suppose you sell your five-bedroom home and net $300,000 in cash. If you invest that money and earn 6% annually, you’ll generate an extra $18,000 in the first year. Even after taxes, you’ll have a good amount left to put toward rent. Plus, the cost of homeownership will drop sharply or disappear altogether.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

You should also think about how long you expect to stay in your new place. Renting might be the better choice if you’re not sure where you want to settle down for good in retirement. This is especially true if you think you might move within three to five years. (See The 8 Best Places to Retire for Renters for ideas).

Otherwise, your home might not increase enough in value to offset your initial expenditures on such things as real estate commissions and closing costs.

How do you decide if you should buy or rent in retirement?

When deciding whether to buy or rent, estimate how much income you’ll need to pay bills and for other necessities. You should also look at the costs of home prices vs yearly rent for comparable homes in your community. You could do some comparisons by using NerdWallet’s Rent vs Buy calculator.

Should you have a mortgage in retirement?

If you decide to buy, don’t automatically assume that a mortgage is a bad idea in retirement.

Keep in mind that the market has changed dramatically in the last few years. Mortgage rates and payments are up, tax deductions for mortgage interest have been reduced, and home inventory is scarce.

However, mortgage rates haven't come down after recent Fed rate cuts interest rates. There are many factors that can impact mortgage rates including the unemployment rate, the inflation rate and the 10-year Treasury yield.

If you do buy, you might be better off taking a mortgage for part of the purchase and investing the rest of your money in a portfolio of stocks and bonds. Your investments might grow faster than your home appreciates, and you’ll also have money available for health care and other needs.

Be aware that the market has experienced weeks of sharp and scary swings. so if you're a bit averse to risk, you might want to speak with a financial expert who can help guide your decisions.

Does it make sense to rent in retirement?

Don’t discount emotional issues when making an important decision between renting or buying.

Do you love the idea of owning your own place and fixing it up the way you want?

Will it be a big relief after years of ownership to find the right retirement community and not worry about the lawn or a broken sump pump?

Mortgage interest rates (currently at about 6.81%) make buying an expensive option. Coupled with inventory shortages, the process of finding and buying a home is more stressful than normal.

Nationally, the median rent sought in the 50 largest metros was $1,699 in April 2025 (the most recently available data), down $29 from a year ago, but up by about $5 from the previous month, according to Realtor.com.

While your decision needs to be financially sound, make the decision that makes the most sense for you. Not being a homeowner can be freeing, scary or both. Your home, its location and amenities should fit the life you lead now.

Related Content

• The Odd Couple: Renting Out a Room in Retirement
• Top 10 Cities for Renters
• Where to Rent: These Are the Most In-Demand Cities in the US
• The 15 Most Expensive Housing Markets in the US: Cities with the Highest Average Home Prices