Should You Rent or Buy Your Next Home in Retirement?

If you’re thinking about renting your next home instead of buying, consider the pros and cons of the decision.

A welcome mat, surrounded by boxes and shoes, says home sweet home.
(Image credit: Getty Images)

The housing market is hot, and it’s a great time to sell your home. Still, if you’re thinking about renting your next one, consider the tradeoffs. Renting temporarily is fine if you want to try a new location or if you anticipate moving frequently early in retirement. But the longer you rent in retirement, the riskier it becomes. Buying a home usually makes more sense if you plan to stay put at least five to seven years—long enough to recoup the costs of buying and selling the property.

The temptation to rent now is understandable. In January, renting was cheaper than buying in 34 of the largest 50 U.S. cities, according to Realtor.com, where you’ll find sale and rental listings. In those cities, the median monthly rent of $1,727 was $261 less than the monthly mortgage payment of $1,988 for the median-priced home. Over the past 20 years, rent has increased an average of 3% annually, according to the Bureau of Labor Statistics.

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Patricia Mertz Esswein
Contributing Writer, Kiplinger's Personal Finance
Esswein joined Kiplinger in May 1984 as director of special publications and managing editor of Kiplinger Books. In 2004, she began covering real estate for Kiplinger's Personal Finance, writing about the housing market, buying and selling a home, getting a mortgage, and home improvement. Prior to joining Kiplinger, Esswein wrote and edited for Empire Sports, a monthly magazine covering sports and recreation in upstate New York. She holds a BA degree from Gustavus Adolphus College, in St. Peter, Minn., and an MA in magazine journalism from the S.I. Newhouse School at Syracuse University.