There are no easy one-size-fits-all solutions for seniors weighing their retirement living options. Renting an apartment and owning a home both have drawbacks for older adults, and those are becoming even more dramatic with the current state of the apartment rental market.
Is It Better To Own or Rent in Retirement?
Many seniors feel it is better to rent in retirement. This is partly because of the responsibilities that come with home ownership. Older adults may be unable to mow the lawn and care for landscaping the way they once did, and the ongoing need for home repairs and maintenance can be a source of unwanted stress. Plus, seniors may no longer be able to navigate a large house on their own safely. Those who live on their own may also be paying to heat and cool rooms that go unused day after day.
Renting provides a solution for all these concerns, but increasing rental costs are now making it difficult for many seniors to find affordable housing.
The Rising Cost of Rent
In 2022, median rental rates rose above $2,000 for the first time in U.S. history. Rent rates have been gradually increasing for years, but since the COVID-19 pandemic, they have truly begun to skyrocket. Overall, rent across the country is 15% higher than a year ago. In some parts of the country, the spike is even more dramatic. Rents have increased 48% in Austin, Texas, and by 32% in Nashville, Tennessee; Seattle, Washington; and Cincinnati, Ohio. Unfortunately, there is no sign of this upward trend slowing anytime soon.
A Nationwide Housing Shortage
One reason for the dramatic rent increase is a major housing shortage in the U.S. It’s estimated that the U.S. has a housing deficit of 3.8 million homes, including apartments and houses. The strong demand for vacant units in desirable areas has pushed the cost of apartments higher, and with home prices now 30% more than they were just a few years ago, many people have no choice but to try and rent. This means that seniors who wish to relocate may not even be able to find apartments nearby.
The Cost of Living Has Increased
The annual inflation rate as of June 2022 was 9.1%, marking the highest cost of living increase in decades. Higher prices for gas and food are difficult for everyone, but inflation and retirement are a particularly devastating mix. Many seniors were already living on fixed incomes before prices began to rise, and some have not even fully recovered from financial losses in retirement accounts and pensions that occurred more than ten years ago when the housing market bubble burst.
Solutions for Seniors
For seniors who can’t afford to rent but can no longer continue to maintain their houses, there are some options available:
- Downsize your home: Seniors who want to sell their house and rent in retirement may wish to rethink that strategy. If you downsize your home by selling your current one and buying a smaller one, you may spend less on a monthly mortgage payment than you do for rent in the current market. Downsizing homes could also mean renting out a portion of your house to someone else. To get help with household tasks that prove challenging, you could offer reduced rent in exchange for assistance with cutting the grass and making minor home repairs. Just make sure everything is spelled out in your lease agreement.
- Reach out for help: All states have some agency or authority that provides services for seniors. Contact the department of aging for your state to find out if there are any housing assistance programs for older adults that you may qualify for.
- Find a roommate: Check newspaper classifieds and Facebook groups to find seniors looking for roommates in your area. Having a roommate can make renting in retirement more affordable and allow both you and your roommate to benefit from each other’s company.
- Try for a long-term lease: Landlords may be willing to offer discounted rent if you sign a long-term lease that will last for more than one year. A lower rent rate could improve your rent-to-income ratio and make apartment living more affordable.
- Consider liquidating other assets: Seniors facing financial vulnerability may wish to consider liquidating other assets to get more money for rent. For example, if you’re 75 or older, you could sell your life insurance policy for cash.
