Southern Agency | Electronic+ | Getty Images
The elderly make up the largest proportion of Americans homeowner in America compared to other generations. However, many people rent a house after retirement.
According to Harvard University’s Joint Center for Housing Studies, most seniors over the age of 65 own their own home. However, more than one in five older households (7 million) rent rather than own their home, according to Provided by JCHS to the 2023 Housing for America’s Seniors Initiative.
Renting after retirement can be a positive because seniors can avoid the costly maintenance costs associated with maintaining a home. Experts say renting also offers the flexibility of moving relative to the complexity of selling.
“Renting tends to offer more amenities, less maintenance and more convenience,” said Jennifer Molinsky, director of the Housing Aging Society Program at the Joint Center for Housing Studies.
More from Personal Finance:
Why your Roth IRA conversion may have ‘unintended’ tax consequences
Real estate fee settlement creates ‘new competitive game’
Investors can ‘capital gains harvest’ to avoid mutual fund expenses
However, older tenants face the same issues as younger tenants: Rising rental prices.
The center said that by 2022, half of all renter households (22.4 million) will be cost-burdened or spend more than 30% of their income on housing and utilities. established State of the Nation’s Housing 2024.
Experts say adult renters in retirement age may be particularly vulnerable to rising rents because their incomes are fixed, unlike younger renters.
“As a retired renter, you face housing costs every month for the rest of your life. It’s a fluid expense that changes based on market trends,” says Certified Financial Planner Lazetta Rainey BraxtonCEO and President of The Real Wealth Coterie, a virtual wealth management and RIA firm.
Braxton is also a member of the organization CNBC Financial Advisory Board.
Why there are fewer elderly homeowners
Older baby boomers will make up the largest share of home sellers in 2023, at 45%. according to National Association of Realtors. They are most likely to downsize their homes. NAR defines younger baby boomers in 2023 as being 59 to 68 years old, while older boomers are 69 to 77 years old.
Meanwhile, data from the Joint Center for Housing Studies show that the homeownership rate for households 65 and older will be 79.1% in 2022, down slightly from 79.5% in 2021 established. Record highs were reached in 2004 and 2012, both at 81.1%.
Similarly, the homeownership rate for people aged 50 to 64 fell from a two-decade high of 80.4% in 2004 to 74.2% in 2022. Homeownership.
To be sure, regaining home ownership as you approach retirement age can be difficult, she said. Their lower homeownership rates may portend lower ownership rates in the future center established.
At the same time, people who didn’t buy a home in their 40s and 50s are now aging, so “you’re now going to see people who have been renting going into old age,” says labor economist, retirement expert and New School for Social Research Professor of Economics.
The pros and cons of renting a house after retirement
However, Girarducci explained that being a renter doesn’t necessarily mean your life is worse than that of a homeowner.
The cost of maintaining your home will vary. According to Homeguide.com, experts recommend budgeting 1% to 4% of your home’s value each year to cover typical home maintenance costs. For example: If your home is worth $450,000, you can expect to budget $4,500 to $18,000 to maintain the home.
Experts point out that even if you’ve paid to maintain your home over the years, the elements in your home won’t stop deteriorating after you retire.
Capital improvements like repairing or replacing a roof can be difficult, Molinski said. Additionally, there are some tasks you may no longer want to do yourself, and hiring a professional can be expensive, she adds.
Homeowner expenses Average $9,542 Home decoration According to Angi’s The State of Household Spending, this number will increase by 12% by 2023 from the previous year. At the same time, the number of projects will decrease from an average of 3.2 in 2022 to an average of 2.8 in 2023.
While considerable attention is given to buying a home after retirement, it is also important to consider Care and services you may need “To stay in that house,” Molinski said.
