Renting has become popular with older Americans.

In fact, according to the Joint Center for Housing Studies at Harvard University found that one in five older households, or about seven million, rent. After all, by renting they can avoid the maintenance costs that come with the upkeep of a home.

Key Points About This Article

• According to the Joint Center for Housing Studies at Harvard University found that one in five older households, or about seven million, rent.
• As with everything, there are positives and negatives to renting in retirement.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

While it’s a great idea for some, there is a hidden danger, according to Suze Orman.

That’s inflation.

“When you choose to rent, you need to plan for the fact that your landlord will raise your rent from time to time,” Orman said. “I know that may sound obvious, but it’s not human nature to carefully think through what things might cost five, 10 or 20 years from now. Yet when you make a decision to rent in retirement, that’s exactly what you must do.”

That’s because, over time, rents rise. The average increase at the moment is 3% in the U.S.

If we assume your rent is $1,000 and it increases by 3% per year:

• $1,000 per month rent over five years is $1,150
• $1,000 per month rent over 10 years is $1,300
• $1,000 per month rent over 15 years is $1,450
• $1,000 per month rent over 20 years is $1,600
• $1,000 per month rent over 25 years is $1,750

Of course, rents are typically higher with the average U.S. rental up to $1,631 per month.

When you own a home, housing costs are predictable with a mortgage or taxes. But when you rent, your overall cost rises over time with inflation.

Also, while there are plenty of negatives, there are positives.

For example, another risk with owning a home as compared to renting is the maintenance costs. As many of us learned the hard way, that can get costly. According to HomeGuide.com, average home maintenance costs range from $4,000 to $22,000 a year. To handle that, experts say you should budget between 1% and 4% of your home’s value every year for maintenance.

If you need to replace a water heater or even a roof, it can get costly. By renting, those maintenance issues are the responsibility of the rental owner.

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