Retirement Housing Choices: Mortgage vs. Rent Considerations

Big Mo must determine his retirement living situation based on personal preferences and financial flexibility.

### Retirement Living Decisions: Renting vs. Owning
* 🏡 Big Mo is contemplating whether to rent or buy a home as he approaches retirement in **7 to 9 years**, with **$1.2 million** in various retirement accounts.
* 🔍 It's crucial for him to consider where he wants to live, as many retirees **relocate to different states or areas that suit their lifestyle preferences**.
* 📊 The decision between renting and owning should be viewed as a **long-term commitment**, ideally a **seven-year decision**, especially given the fluctuations in housing prices.
* 💡 Renting offers flexibility, allowing retirees to **explore different locations** without the burdens of maintenance, while owning provides stability if one plans to **stay in a place for several years**.
* 🔄 Many retirees sell their homes and rent temporarily to find their **ideal living situation** before making a permanent purchase.
* 💰 Understanding how much of his retirement income will come from **pensions and Social Security** versus his investment portfolio is essential for Big Mo to assess his **financial needs**.
* 📋 The home-buying checklist can assist in clarifying his **living preferences and needs**, ensuring he makes **informed decisions** about his retirement living situation.
* 🔨 Ultimately, the choice between renting and owning should align with his **personal goals and financial circumstances**, emphasizing the importance of **thoughtful planning**.

[Music] All right, Big Mo had a question for you. He says, What's better in retirement, mortgage or rent? I'm 58, on step seven of the FU, but recently divorced. I have 1.2 million in my Roth IRA, in my IRA, Roth, and HSA, but need to figure out my living situation for retirement in 7 to 9 years. So, he's considering more mortgage versus rent. I have a big question, K go. Do you like where you live? 'Cause that's what somebody who's about to retire. 'Cause a lot of people, when I talk, one of the first things when we have people come into the office and talk to us is like, they're like, I have multiple clients that move to different states. They retire in different. I think about my own neighborhood, is people from all over the country, all over the world. I mean, I think of all the South Africans that live in my neighborhood. So, I'd ask Big Mo, Where do you want to live? 'Cause that is also timing. If you go to

money.com resources. We have our home buying checklist, and one of the first things you'll see on the home buying checklist is this: this needs to be a seven-year decision. And I would say, with where we've been, where housing prices went up, you know, in some parts of the market, 50, 60, 70%, um, I don't know that you can count on that housing is going to continue to run up at a super fast pace. We might actually sit pretty steady for a second. So, you need to take the time to do the math on what actually fits your life. Yeah, I think we've done people a disservice by making it seem—not we, not the money guy show—I just think society in general has done a disservice by making people think that when it comes to decisions like there, there like this, there is one right and one wrong answer, because I just don't believe that that's the case. Big Mo, you asked the question, What's better in retirement, renting or owning? And the being the good financial

advisers that we are our answer answer is it depends. It depends. It depends. A lot of people think that when I go rent, I'm just throwing money away, throwing money away, throwing money away. I disagree. When you rent, whether it's in retirement or at the very beginning of your financial journey, at the very beginning of your adult life, what you're really doing is you're buying yourself flexibility. You are paying for flexibility to be able to figure out where you want to end up being long-term. Well, if you're someone who's retired and you want to travel around and you want to see what it's like to live in different geographies, in different parts of the countries, and you don't want to have to have maintenance, and you don't have to have upkeep, and you don't want to have to take care of the yard, you don't have to do all these things, renting may be a fantastic solution for you. If, however, you want something that you can own and you are confident you're going to be there for

that 5 to seven-year period, and you do know that you want some certainty around your housing cost, then owning is a great solution. But it doesn't have to be one or the other, and a lot of times what we see our retirees do is they'll have their entire working life that they own a home, and then they'll decide they want to relocate. They're going to move down somewhere where it's warmer, and so they'll sell their primary residence, and they might rent for a couple of years. Hey, we're going to rent in this area and this area. In doing that, they find the place that they actually fall in love with, and when they find that place, then they make the decision, Okay, now is the time that we're going to own a home. Now is the time we're going to buy. It doesn't have to be all or nothing. It doesn't have to be a singular decision that you make at one point in time. It can be something that evolves and changes through time.

best decision for renting versus owning depends on you and less on the external factors affecting that. It depends more on what's the right situation based on what you're looking to accomplish in retirement. And so, I think you can have some freedom recognizing that and realizing, I get to be in control. That's what financial independence is, is being independent to choose what you do with your money. One of those choices you may make may be to pay rent as opposed to paying a mortgage. The other point I bring up, Big Mo, is that I need to know more about how your retirement life is structured. If you're quickly approaching retirement, how much of your future retirement is going to be funded through pensions, Social Security, and fixed cash flow inflow sources versus how much are you counting on from that $1.2 million? Because those two things are in somewhat in conflict with each other. If you know that you're going to be needing $50,000-$60,000 a year from your

Investment Portfolio, but then you're like, Can I go take $500,000 to pay cash for this house because I don't want to have debt in retirement? You know, you're Leisa asking about mortgages, but that's the dilemma I see people in: those assets have multiple purposes, and you have to figure out what's the best path that minimizes the risk but also maximizes your life. And that's some of the things that you have to balance when you're making these big life decisions. But I do like the fact of exactly everything Bo and I just talked about is go check out our home-buying checklist, and I think you're going to quickly get caught up in the fact that if you don't even know where you're going to retire or which even section of where even if you found the community, which neighborhood, you know, or which part of town do you want to live in, those things need to be kind of honed in on before

you you make those big decisions. It's definitely one of those measure twice, cut once moments.

Is Renting the Secret to Retirement?

Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life.

Subscribe today to stay up to date with our latest episodes, livestreams, and highlight videos: https://www.youtube.com/c/MoneyGuyShow?sub_confirmation=1

Are you ready to go beyond common sense when it comes to your money? Check out all the free resources The Money Guy Show provides: https://moneyguy.com/resources/



The Money Guy Show

Big Mo, at 58 and recently divorced, is considering his living situation for retirement in 7 to 9 years, with $1.

The speaker emphasizes the importance of choosing a location to live and suggests that housing decisions should be made with a long-term perspective.

There is no one-size-fits-all answer to whether renting or owning is better in retirement, and the speaker encourages Big Mo to do the math and consider what fits his life.

Renting provides flexibility, allowing individuals to navigate different living situations and geographies, which can be especially beneficial for retirees.

Owning a home offers stability and certainty in housing costs for those planning to stay long-term.

The decision between renting and owning doesn't have to be singular; it can evolve over time, with many retirees opting to rent after selling their primary residence before deciding to buy again.

Owning: Key Considerations for Retirement

The decision to rent or own a home in retirement depends more on personal goals than external factors.

It's important to evaluate the balance between income sources like pensions and Social Security and the need for cash from investments.

Making a choice between paying rent or buying a home requires careful consideration of the assets' multiple purposes and the overall impact on financial independence.

The Importance of Thoughtful Decision-Making

Making big decisions requires careful consideration and planning.

It's crucial to evaluate options thoroughly before taking action.

The phrase "measure twice, cut once" emphasizes the value of being deliberate and precise in decision-making.