Should I Sell My House and Rent When I Retire? 9 Questions to Ask
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Jacob Burdis, Contributing AuthorClose
Jacob Burdis Contributing AuthorJacob Burdis, PhD is a professional dabbler with experience in entrepreneurship, educational technology, digital language learning, product management, and real estate investing.
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Richard Haddad, Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
Retirement’s around the corner, and with it comes a host of questions about how to transition into your new way of life. One of the more common sets of questions facing soon-to-be retirees revolves around your living situation and what to do with your home.
Your home is likely full of untapped equity, continual maintenance demands, stairs, special memories, and painfully recognizable empty spaces. It’s time to downsize, but what’s the right approach? You may be asking yourself:
“Should I sell my home and rent when I retire?”
Certainly, selling your home to rent when you retire is a major life upheaval fraught with potential benefits and inherent risks to your financial future.
In this guide, we’ve compiled a list of questions to ask yourself to help decide if this is the right decision for you. We’ve also infused guidance from Kelly Boulton, a top-selling real estate agent in Dallas with more than 22 years of experience, to offer an objective and informed perspective.
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If you’re considering selling your home when you retire, ask yourself these 9 questions
These questions are designed to help you take some time to review the benefits and drawbacks of this decision carefully. If you find yourself answering “yes” more often than not, this may be a legitimate course of action to help you flourish in your retirement years.
1. Do I need an influx of cash?
Most Americans of retirement age have more of their wealth tied up in home equity than any other asset.
An article from USA Today shows the net worth in home equity for homeowners in the following age brackets:
| Homeowner Age | Home Equity | Average Net Worth |
| 45-54 | $167,900 | $571,300 |
| 55-64 | $186,600 | $743,100 |
| 65-69 | $211,400 | $804,600 |
| 70-74 | $228,000 | $821,000 |
| 75 and older | $241,700 | $761,000 |
You may need to convert some of this equity into cash to handle any of the following typical financial needs that commonly arise for those in retirement:
- Increased healthcare expenses and medicare premiums
- Tax payments for tax-deferred retirement savings accounts
- Increased food budget to accommodate dietary adjustments
- Entertainment and travel
- Family support and legacy planning
2. Are my monthly housing expenses increasing too much?
Even if your home is fully paid off, you can expect your housing expenses to continue to rise with increasing prices for home maintenance, and continual increases in property taxes and insurance.
According to a recent survey by USA Today, 54% of US homeowners report that home maintenance costs were higher than expected, and 28% said they’ve gone deeper into debt because of it.
In short, hanging onto your home may increase your housing expenses beyond your comfort limit.
3. Am I able to continue maintaining my home?
As you well know, homeownership brings with it a sizable amount of work to maintain the home, especially as time passes. Your ability to do maintenance tasks that you could do with ease when you were younger may become overwhelming and more time-consuming in retirement.
Maybe it’s time to enjoy your home, while letting someone else take care of the expense and hassle of home maintenance.
4. Do I have enough surplus in my fixed income to cover inflation?
Most retirees are on a fixed income, which presents a challenge in a world with continually rising living expenses.
According to the Bureau of Labor Statistics, overall inflation hit a 3.3% increase from May 2023 to May 2024 and continues to trend upward. You may be able to sell your home to invest in dividend-paying stocks or annuities.
Invested wisely, those dividends can help cover inflation-related living expenses.
5. Does my home fit my new lifestyle?
Your lifestyle will change in a lot of significant ways in retirement. You may benefit from asking yourself whether your current home can accommodate these changes.
Some examples of lifestyle changes include:
- Spending significantly more time in your home because you aren’t working.
- Increasing difficulty navigating stairs, steep driveways, etc.
- Picking up new hobbies both inside and outside of your home.
- Hosting more family get-togethers, reading groups, etc.
- Different hygiene routines that come with age and other health factors.
- More time for staying active through activities like walking the neighborhood.
You may find an increase in enjoying your new retiree lifestyle by finding a home that is a better match.
6. Am I the oldest person in my neighborhood?
If you’ve lived in your home for a while, it’s likely you’ve witnessed a significant amount of homeownership changes in your neighborhood.
According to The Zebra, while the average length of homeownership is 8 years, more than 47% of homeowners have lived in their home fewer than 10 years.
You may be feeling like there are fewer neighbors that share your new retiree lifestyle, and it’s natural to want to be in a neighborhood where more people share the same lifestyle as you.
7. Do I have unused rooms or spaces — indoors or outside?
We’ve hit on this a bit earlier, but your lifestyle is changing. This means that your current home may have rooms or areas that go unused and take up empty space. Unused spaces may feel like a waste and create extra burdens for maintenance and cleaning.
Examples of rooms or areas that may become obsolete in your retirement years include:
- Game rooms
- Theater rooms
- Home offices
- Exercise areas and equipment
- Swimming pools
- Mechanical areas in your garage
With a properly-timed home sale, you can turn these unused areas into cash in your account to better enjoy your retirement.
8. Do I have an emotional or psychological need to sell my home?
While this may not be a material question, it’s still significant to consider. Your home is full of memories. Will encountering these reminders regularly help you enjoy your retirement, or will it keep you nostalgic for the past?
Selling your home doesn’t mean abandoning its sentimental value; rather, it can be a cathartic way to find closure for one chapter of life and welcome the next.
9. Do I feel uncertainty about being tied down to one spot during retirement?
A significant number, 57% of retirees, plan on increasing their travel after they retire, according to data collected by The News Market.
Reasons for travel include visiting friends and family scattered across the globe, crossing destinations off the bucket list, or following pleasantly warm weather.
For any of these scenarios, being tied to a home mortgage may make it more difficult to make this type of travel happen.
Get Expert Advice About Downsizing Your Home
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What are the pros and cons of renting vs. owning in retirement?
If you’ve answered yes to any of the questions above, then downsizing in retirement may be the right move for you. But now, the question comes down to whether it makes more sense to purchase a smaller home or find one to rent.
There are several financial, lifestyle, market, and timing factors to consider when making this decision. Here’s a high-level list of pros and cons to consider:
Pros to selling your home and renting after retirement:
- You’re no longer tied to a house and a mortgage.
- Not having a mortgage frees you up to travel for longer periods of time.
- You’re able to test out potential retirement locales through short-term leases.
- The burden of home maintenance is no longer weighing on you.
- Having flexibility in housing options: townhouse, one-level single-family home, or condo.
- You’ll have more funds to fulfill your retirement bucket list.
- You can transfer equity into dividend-paying investments to increase your income.
Cons to selling your home and renting after retirement:
- Being dependent on a landlord for repairs and maintenance can be frustrating.
- Rental costs can be unpredictable and generally will increase over time.
- The money you spend on housing no longer applies toward an appreciating asset.
- You may have less space, which limits your ability to host family.
- Your home will no longer be a part of your legacy to pass on to family.
- It may be more difficult to have pets living with you in your home.
No one has a crystal ball, but I think we’ve reached a peak in the market in terms of appreciation, and now would be a good opportunity to maximize on the equity of your home and to cash out and downsize and not take on any more tax liability and maintenance costs.
Kelly Boulton Real Estate AgentClose
Kelly Boulton Real Estate Agent at Better Homes & Gardens Winans Real Estate5.0Currently accepting new clients
- Years of Experience 22
- Transactions 918
- Average Price Point $192k
- Single Family Homes 810
What are the financial implications of renting vs. owning in retirement?
There are plenty of benefits to renting, but there are significant financial implications to consider that accompany this decision. Detailed planning to estimate your retirement expenses is an essential first step. For starters, you should get an idea of how much money you’ll need to comfortably retire. The experts at AARP advise saving about 10% to 12% of your current income.
Market dynamics and timing the sale of your home
Once you have a good understanding of where you are in terms of your retirement savings goals, it’s important to understand the current real estate market. According to Nile Lundgren, a top New York agent and host of The Broker that Never Sleeps podcast:
“It all depends on timing. If you sell too soon, you could be missing out on more appreciation. Let’s say your house is in a rapidly gentrifying area; if you hold on for another two years, then you might increase your value by 10%. But that could be speculation. You could be leaving money on the table.”
But on the flip side, if the market has peaked, selling sooner rather than later could have big implications. Boulton cautions, “No one has a crystal ball, but I think we’ve reached a peak in the market in terms of appreciation, and now would be a good opportunity to maximize on the equity of your home and to cash out and downsize and not take on any more tax liability and maintenance costs.”
Social security and tax implications
It’s important to look at how homeownership affects your Social Security benefits. True, maximum benefits are available whether you rent or own. What really matters is your income. If you pull equity out and invest it, those dividends may increase your income which may, in turn, reduce your benefits.
Boulton adds, “There could be some ramifications to Social Security and pension payouts. They may lose some supplemental Medicaid benefits but would need to talk with a CPA before they leaped into a final decision.”
Additionally, many people consider their homes one of the largest factors in estate planning for their family. While you’ll want to get professional advice from your legal team to facilitate your estate planning, it’s good to understand a few things about the process.
Unless your children are willing to move into your home for at least two years after inheriting it, they’ll be stuck paying a hefty capital gains tax. However, if you sell the property within your lifetime, according to the IRS, you’ll likely qualify to exclude up to $250,000 (or up to $500,000 on joint spousal filings) of the home sale price from your income.
Consider renting your home as an investment property
There are a variety of ways to modify the “sell and rent” scenario to fit your retirement needs.
For example, you might decide to travel with the tax-free equity and use the remainder to finance the purchase of a retirement home that can double as an investment property. Then, while you’re touring the world, you can temporarily lease the property to cover the mortgage.
With the help of an agent who also does leasing and basic property management, you can find tenants to rent your home at an amount that will cover living expenses in a retirement community.
Partner with a top agent and know your home’s worth
When considering whether to sell your house and rent during retirement, remember to weigh how this decision will affect all aspects of your life and financial situation, including your monthly income and lifestyle. With the right strategy, your home equity can help you achieve a relaxing, fully funded retirement.
Curious how much your home might be worth now? Try HomeLight’s free Home Value Estimator tool to get an estimate of your home’s worth so you can start penciling in your plans to reach your retirement goals.
While our free tool can give you an initial estimate, an experienced real estate agent can provide a comparative market analysis to show you what your home might sell for on the open market. In some cases, working with a designated Seniors Real Estate Specialist (SRES) may be the right move for you.
HomeLight’s Agent Match can connect you with a top-performing agent in your area who can help advise you on the right course of action and maximize your home’s value, whether you decide to sell or rent it out.
Curious how much you stand to make selling your home? HomeLight’s Simple Sale tool lets you compare instant cash offers from our network of pre-approved buyers along with an estimate of what a top real estate agent can sell for on the open market. Whether you’re more interested in selling quickly or for the highest possible price, it’s important to know your options.
Header Image Source: (Lightspring / Shutterstock)
- "Average net worth by age: See how you compare," USA Today (November 2023)
- "Current US Inflation Rates: 2000-2024," US Inflation Calculator
- "7 High-Return, Low-Risk Investments for Retirees," U.S. News (May 2024)
- "Average length of homeownership: Americans spend less than 15 years in one home," The Zebra (March 2024)
- "The Many Benefits of Retiring in the US," LCR Capital Partners (May 2024)
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