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Pros and cons of renting in retirement

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When home prices are rising, rents generally increase as well, Bland adds, saying, "Higher rents will decrease the overall purchasing power of renter's incomes whereas higher home values accrue to the homeowner or his or her heirs. The imputed rent rises, but the homeowner doesn't have to pay it or taxes on it."

Freddie Mac, the government agency that guarantees mortgages, provides a guide to owning and keeping a home and work sheets for budgeting homeowner costs, maintaining and repairing appliances and hiring a contractor for renovations.

"Renting is generally cheaper in the short run, but there is a point a certain number of years out where it gets more expensive to rent and less expensive to own," says Dorula.

"Homeowners can tap into their equity in a number of ways, and that option isn't open if you rent."

Emotions of owning vs. renting
While the emotional aspects of renting are less concrete than the financial aspects, they are an important part of the equation. Carefully exploring your attitudes and your ability to adapt to changes going forward is a must.

"There is no one-size-fits-all," Marion says. "I recommend that seniors talk to their friends who have been through the experiences of staying in their present home, downsizing or renting to get an idea of what it's like. You also need to think about your needs going forward -- do you want freedom from responsibility, do you want to travel? That gives you a baseline to make these types of big decisions."

Renting provides more freedom, but owning provides more security. "Owning provides more control," says Dorula. "When you rent, there is always a chance that ownership of the building where you live could change hands or the property could go condo and you'd have to move. If I decided to rent, I would insist on a long-term lease."

On the other hand, if your health or your spouse's health fails, you may need to move to an assisted living or nursing care facility on short notice. "In a down market, it can be very difficult to sell a house," says Marion.

While owning a home can provide a lot of emotional security, a house isn't a liquid asset.'s corrections policy -- Updated: Oct. 1, 2007
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