There’s a lot of factors at play when you decide where to spend your retirement years. One Reddit poster highlighted this recently when he posted a question about possibly relocating. The Redditor said that he and his wife currently own their home and have enough retirement income to cover their expenses. However, they live in a small town far from their two children and without good healthcare services. 

His hope is to move to a larger city where he would be closer to an airport and to one of his children, but he’s not sure what to do when he gets there. He’s going to sell his current house, but wants to know whether he should rent or buy upon arrival — especially since homes are more expensive in the new place and he’d be unlikely to be able to pay cash for a new home from the proceeds of his sale.

So, what should the poster do?

Rent vs. buy when relocating as a retiree

The question of whether to rent vs. buy after relocating isn’t so simple, because there may be a different answer in the short term vs. the long term.

The short-term answer is that it makes good sense to rent right now for a few reasons:

• Mortgage rates remain stubbornly high, so buying now would mean paying a lot of money for a home loan. 
• It doesn’t make sense to buy until you’ve tested out the area

If the Redditor bought a property and it turned out he didn’t like the larger city, or if the child he moved to be near had to relocate, then he’d be stuck with a home he’d have to sell — and he’d have to pay the costs that go along with that, which could be quite substantial.

Rather than jumping in to buy at an inopportune time, his best bet is to rent at least until he decides whether to settle down for good and hopefully until mortgage rates drop as most experts do predict they will start slowly coming down. 

Rent vs. buy over the long-term

Now, if the Redditor gets settled, loves the new place, and wants to stay put for good, he will need to do a little more thinking on whether to rent or buy. Specifically, he should look at the cost of each option to see which will be the most affordable.

In some areas, you can rent a property for much less money than you can buy a comparable one. In others, that’s not the case and there may be a limited stock of rental properties.

If it’s cheaper to rent than to buy, it makes good sense to keep doing that. That’s especially true for a retiree who doesn’t have as much time as a younger person to build equity and benefit from property appreciation, which can make owning a home more worth it. 

If the poster can rent for less than the cost of buying, he can invest the proceeds from his home sale. Depending on how much he makes, this could potentially generate enough income to cover the cost of rent for a long time to come. 

Of course, on the other hand, if it’s much cheaper to buy a home, the Redditor may want to look into doing that — as long as he’s sure he’ll stay put for at least a few years and he doesn’t have to drain his retirement savings too quickly to make that happen. 

Working with a financial advisor to run the numbers can be helpful in this situation, as the choice has big financial and lifestyle implications that are worth discussing with a professional. 

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