Retiring as a lifetime renter?

[movaly1]

Hello everyone. I'm a federal employee that has moved around a lot, including overseas, and so I have never owned a home. I really don't want to be tied down in one location, and I have no interest in all of the work associated with owning your own home. I'm a single parent with two kids (now 11 and 13) and already feel like I am juggling a lot.

If I luck out and get VERA, I could possibly retire in the next 6+ years, but that is very unlikely. It is more likely that I have 13 more years. Anybody else retire without owning a home? Lifetime renters? How has that worked out for you?

 

[Onward]

As a single guy I rented for most of my pre-FIRE life, and all of my eight years post-FIRE.

Rent vs. own is an eternal debate on this forum. I'm in the "rent" camp and feel it gives me flexibility and and a certain lightness of being that I value highly.

There are some disadvantages to renting, too, which I'm sure you're aware of.

But for me renting is working out just fine, and I have no plans to change.

 

[aja8888]

If I luck out and get VERA, I could possibly retire in the next 6+ years, but that is very unlikely.

what's VERA?

 

[powerplay]

what's VERA?

Voluntary Early Retirement Authority

 

[Brat]

I did an early retirement before the age of 50 (CSRS) and took the expected actuarial hit. If you are FERS and have socked away a lot in the Fed version of IRA it may work out well for you provided you don't need to tap tax protected savings too early.

Once your children are out of the nest you may want to look at a co-op if you are in DC metro.

 

[RetiredGypsy]

I've spent the last decade renting across three states after retirement, in middle to upper class apartments for the area. Consistently prices have been going up about $1,200/year when renewing a lease, a little more if I rent a garage for the motorcycle.

The plan was to rent forever and uproot ever so often, but this broken body just can't handle packing, unpacking, and moving, let alone getting out on adventures often. Staying rooted now, it makes more sense to buy a house financially (by at least $300,000 over a lifetime of renting versus buying even taking into account major house repairs and upkeep, taxes, etc.). Even so, if I could still travel, that cost could easily be absorbed, and I wouldn't have minded renting forever.

 

[mystang52]

I'm a homeowner, but I don't see why being a renter has any real impact on retirement plans. It comes down to retirement income vs retirement spending. And having a home is by no means a "freebie."
Sure, I don't pay rent. But I have the pleasure of paying real estate taxes instead, and of course all of the maintenance costs of owning a home. So I don't see where being a renter or homeowner is any substantial (or, any) factor in assessing retirement finances.

 

[Chuckanut]

For many owning a paid-up home is an important factor in being able to retire, early or later. This is especially true if one lives in an area where home prices well above average and going up, with rents not far behind. OTOH, the ability to rent and move about the country and/or the world does seem very tempting at times.

 

[Teacher Terry]

We own because rents in our area are rising every year by a lot. Plus we have 3 dogs. I also like to decorate the way I want with paint, flooring, etc. When you rent you are not in control of moving if the landlord wants to sell, etc. My sister has been a lifelong renter but her circumstances are different.

 

[Walt34]

Rent vs. own is an eternal debate on this forum. I'm in the "rent" camp and feel it gives me flexibility and and a certain lightness of being that I value highly.

Exactly. There are so many variables to each person's circumstances that there is no "one size fits all" answer. Either way you're still going to pay for that roof overhead.

We choose to live in a paid off SF house, but if say, DW ran off with the pool boy (highly unlikely but stranger things have happened) then I would give serious consideration to renting. Somewhere warm too!

 

[Mdlerth]

I can envision it making a difference in situations where the retiree wants to limit income for means-tested benefits like ACA subsidies or MC Part B.

If your assets rest in tax-deferred accounts which you have to tap to pay the rent it could have highly leveraged side effects. If the assets already rest in the form of owning the house, it won't.

 

[Red Badger]

Like others stated, there's no wrong answer in most cases (same with mortgage / no mortgage in retirement) . We'll probably stay in our home until we no longer want to fool with ownership chores. After that, probably modest rentals on some sort of snow bird arrangement.

 

[Sunset]

I'm a homeowner, but I don't see why being a renter has any real impact on retirement plans. It comes down to retirement income vs retirement spending. And having a home is by no means a "freebie."
Sure, I don't pay rent. But I have the pleasure of paying real estate taxes instead, and of course all of the maintenance costs of owning a home. So I don't see where being a renter or homeowner is any substantial (or, any) factor in assessing retirement finances.

There are plenty of good reasons to rent.
However if a person stays in the same house for 20 or more years, it's probably more cost effective to own.

After all landlords rent to someone, and they make a profit on the situation.

I am a small landlord.

 

[brett]

I think that the decision is a function of your personal preferences, the housing market/rental market where you live, and the return on investment funds that you would otherwise commit to a home purchase. And your time horizon of course.

We have done both. We recently rented a condo for four plus years. Financially renting turned out to be a much better option for us since our RE market was negative.

 

[marko]

If you own your house outright and only need to pay taxes and upkeep I don't see how renting is a financial positive.
Rents in my area run about $3K per month ($36K annually) for a decent place; that's a big chunk of one's WR.

 

[kcowan]

Home ownership has a tax implication (mostly positive) and a lifestyle implication (often positive) and has to be evaluated based on individual circumstances.

In our case, we rent in one location and own in the other.

 

[Totoro]

If you own your house outright and only need to pay taxes and upkeep I don't see how renting is a financial positive.
Rents in my area run about $3K per month ($36K annually) for a decent place; that's a big chunk of one's WR.

Real options. Some factors:

• Renting frees up capital I can deploy elsewhere
• Risk concentration: own part of 1000 companies, or 1 house in a specific street?
• Broker fees if you move frequently
• I always rent exactly what I need

The best trade-off is highly situational, both in geography as in individual circumstances.

 

[ShokWaveRider]

In our case, we rent in one location and own in the other.

Do you own or Rent the PV Property? Just curious. You can PM me with the answer so as not to Hijack the thread. If you Own there, what gyrations with the government did you have to go through, if you are close to the beach?

 

[ShokWaveRider]

This is has been a question I have asked myself for years. I have always found that to rent an equitable property in a comparable area that we live would cost a lot more than the upkeep of owning. Renting almost always forces you to settle for a less desirable home in a less desirable area. If you do not care, that is all good. In our retirement years we want to live in a nice home in a good area.

Our Home is worth about $800k give or take. It is in a private community. Homes in the community vary from $450k to $3m.

Total costs all in were $1,738.14pm for 2017. To rent a comparable home would be $3,500 - $4,500pm.

Now, of course this is based on owning your home without encumbrances.

 

[kcowan]

Do you own or Rent the PV Property? Just curious. You can PM me with the answer so as not to Hijack the thread. If you Own there, what gyrations with the government did you have to go through, if you are close to the beach?

We own in PV by paying for a bank trust ($400/yr plus IVA). So far we have not rented it because we are there Nov-Apr. That may change next year.

 

[ShokWaveRider]

This actually brings up a good point. for Snowbirds. Rent in Both Locals or as Kcowan does 50:50?

 

[Yarnstormer]

In your situation I would retire to an RV and travel for as long as my body would allow. But perhaps you have had enough travel?

 

[Sunset]

This actually brings up a good point. for Snowbirds. Rent in Both Locals or as Kcowan does 50:50?

It could be hard to find a place to rent 1/2 the year in each place, which would be ideal.

Renting in both locals (all year for each) would allow a person to snowbird if they cannot afford to buy in both locals, and as long as it was within their normal yearly expenditure rate, it would be fine.

 

[pj.mask]

In ShokWaveRider’s case, Call the difference $2k/mo = 24k/yr = 3% of the 800k House value. I can’t say that’s a big value one way or the other.

You have more variability but I find the advantage to renting is typically you can get smaller sq ft and forces you to accumulate less things. It also allows you to need less annual income as the principal was paid out over the last ~30 years.

However you want to budget it, so long as it fits. Do a cost analysis to be informed but just like driving fancy cars - sometimes people prefer the more expensive option.

 

[kimcdougc]

We owned our home for 20 years and sold to DD and her partner a year and a half ago. We are now renting our DD 800 square foot house (2 bdr and 1 bath) in town for her monthly payment. We have them a lot of free equity so the deal is we get to live in this totally remodeled Craftsman house as long as we want and our rent never goes up.

We thought we would just be here till we found something else, but we like it so well I think we may just stay here a while since we know what we will be paying for rent as long as we live.

Small yard but then that makes for a lock and leave place.

So far, so good.