Renting as a retirement strategy: Freedom from homeownership

Retirement—or the idea of it—often comes with big lifestyle decisions. Housing is among the biggest and may involve considering whether to continue to own a home or switch to renting. Some seniors envision staying put and outsourcing some or all of the maintenance, while others picture selling, unlocking equity, and letting a landlord handle the upkeep.

Still, not everyone enters retirement as a homeowner. Many older adults are lifelong renters or may have only modest home equity, which may make the decision to rent less straightforward. The right choice depends not just on your preferences, but also on financial realities.

Owning a home in retirement

For many homeowners pondering retirement, buying a house once felt like a milestone. Decorating each room, tackling improvement projects, and adding personal touches brought a real sense of pride. Over time, though, those same projects can start to feel more like chores. Painting walls, hauling mulch, or climbing ladders may no longer be enjoyable or even practical. That shift often sparks the question: Should you continue owning the home you’ve invested in, or explore the flexibility and ease of renting?

Owning a home can still be a solid financial investment. Although the housing market has its ups and downs, historically, U.S. home prices have appreciated an average 3.8% a year. That means a property you’ve held for decades may be worth significantly more today. A home can also be passed on to your heirs or tapped for a reverse mortgage if you need extra funds in retirement.

Of course, continuing to own your home also comes with ongoing responsibilities. You’re on the hook for paying property taxes, homeowner’s insurance, and possibly homeowners association (HOA) fees. Maintenance and repairs—whether it’s a new roof or routine landscaping—are your responsibility, too.

The upside is control. As a homeowner, you can decorate, remodel, or make improvements as you see fit (within HOA rules, if you have them). You also won’t be subject to monthly rent increases, although you may need to factor other increasing expenses into your retirement budget.

Finally, owning a home can play a role in your long-term financial security. In most states, your primary residence isn’t counted as an asset when applying for Medicaid (the government health insurance program for those with limited income and resources), which may make it easier to qualify for benefits if you need help covering medical expenses later on.

But the benefits of ownership also depend on location, housing market trends, and whether you have the resources to keep up with ongoing costs.

Renting in retirement

If you own your home, selling it is the first step if you decide to switch to renting. That process often involves hiring a real estate agent, hosting showings or open houses, negotiating with buyers, and paying commissions and closing costs. Some homeowners opt to sell on their own, but managing listings, showings, and paperwork without professional help can be stressful and time-consuming. Either way, the sale unlocks the equity in your home. After closing, you’ll have cash in hand that you can invest or use for ongoing expenses such as rent.

For those who already rent, the decision may look different. Your options may include staying in your current place, moving to a community with more support, or relocating closer to family or friends.

Renting shifts many of the burdens of ownership off your shoulders. You won’t be responsible for property taxes, insurance on the structure, or large repair bills, which typically fall to the landlord. One of the biggest perks of renting is flexibility. When a lease ends, you can choose to stay put or move.

But landlord maintenance isn’t always as simple as it sounds. If an appliance breaks, the landlord decides whether to repair or replace it, and you may have little say in the matter. And depending on your lease, you could even be responsible for certain repairs yourself. Understanding what’s stipulated in your lease can help you know what to expect.

Budgeting as a renter can be more straightforward, but there are trade-offs. Although you’ll likely need renter’s insurance, you won’t face property tax bills or surprise maintenance costs. On the other hand, rent payments are ongoing and typically rise over time as landlords adjust for expenses or market conditions.

Another factor to consider is how renting could later affect your eligibility for Medicaid, which could provide additional health insurance coverage if you run out of money in retirement. A primary residence is usually excluded from asset calculations to determine eligibility, but proceeds from the sale of a home aren’t. That means the money you gained from selling your home may have to be spent before you can qualify.

Mixing ownership and renting

Some retirees pursue a middle ground that blends the advantages of both approaches. One option is downsizing by selling your current home and buying a condo or smaller property. In a development where the HOA is responsible for outdoor maintenance, you can focus on the interior, which you may wish to decorate or remodel. You’ll also free up some cash if the new home costs less than the one you sold.

Another option is to keep your home and rent when you want a change of scene. This alternative can work well for snowbirds who want winters to spend in the south and summers in the north. Short- or medium-term rentals may offer amenities like pools, clubs, or organized activities that your own home may not provide without the burden of upkeep.

Blending approaches doesn’t always mean seasonal moves or condos. It can also mean finding a smaller, more manageable place to own while keeping the option to rent short-term when travel or family needs arise.

Some retirees take yet another path: moving into an age-restricted community, whether they rent or buy. These developments are designed for older adults and typically handle maintenance while offering organized activities, clubs, and shared spaces.

Owning vs. renting: Key differences

Pros of owning

Owning a home allows you to:

• Build equity over time and leave a tangible asset to your heirs
• Personalize, remodel, and maintain your home to your tastes
• Stay rooted in a familiar community and long-term neighborhood ties
• Protect your eligibility for Medicaid, since a primary residence is usually excluded from asset calculations

Cons of owning

But owning a home also means you must:

• Cover ongoing costs for property taxes, insurance, and maintenance
• Manage larger or older homes, which can become difficult with age
• Access your equity only by selling, or by taking out a reverse mortgage or home equity loan
• Plan and pay for your own social and recreational activities (unless you live in a 55-plus community)

Pros of renting

Renting a home allows you to:

• Unlock home equity and free up cash for everyday or unexpected expenses
• Rely on a landlord to handle most repairs, maintenance, and upkeep
• Move more easily when a lease ends or your needs change
• Enjoy amenities and organized activities in many rental communities
• Choose housing designed with accessibility features, such as elevators and walk-in showers

Cons of renting

But renting a home also means you may:

• Continue making rent payments indefinitely, typically with increases over time
• Give up control over decor, upgrades, and major improvements
• Pay for certain repairs yourself, depending on the lease terms
• Count sale proceeds as assets for Medicaid eligibility, which may affect coverage
• Leave only unspent cash—not property—to your heirs

The bottom line

Housing is one of the biggest choices you’ll face in retirement. You may decide to sell and use the equity for living expenses, or you may prefer the stability of staying in a home you already own. Both paths come with trade-offs, and the right answer depends on your health, finances, and lifestyle goals.

Whether you elect to own or rent, choosing a housing plan that fits your resources and stage of life can help you live more comfortably and with greater peace of mind.

References

• [PDF] Publication 523: Selling Your Home | irs.gov