Retirement often marks the beginning of a new chapter, though this chapter unfolds uniquely for each individual. Consider the life of a 68-year-old retiree in Sarasota, Florida — single, childless and thoroughly enjoying their independence. With comfortable rental accommodations and sufficient retirement income to support an active lifestyle of travel, fine dining and regular rounds of golf, this retiree exemplifies how the golden years can truly shine with freedom and fulfillment.
While your vibrant social circle provides fulfillment, the absence of heirs has you wondering if property ownership is practical for your situation. The decision between buying and renting extends beyond the traditional homeownership dream — it’s fundamentally about financial viability.
Does investing in real estate make economic sense for you?
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Do the numbers add up?
Based on data from RentCafe, renting a two-bedroom condo in Sarasota costs approximately $2,079 monthly, totaling $24,948 annually. To purchase a similar property, you would need around $380,000, as reported by Sarasota Magazine.
If you make a 50% down payment of $190,000 and finance the remaining amount at the current average 30-year fixed mortgage rate of approximately 6.5% (according to Freddie Mac), your monthly payment would be around $1,200 for principal and interest. This calculation doesn’t include additional costs such as property taxes or condo fees.
At first glance, purchasing a home might seem like the more economical choice compared to renting – but let’s take a closer look. Before jumping to conclusions, we should examine the complete monthly financial picture to ensure we’re accounting for all costs:
- HOA fees range from $200 to $450 in Sarasota, so let’s meet in the middle and say you’re paying $300 a month.
- Monthly property taxes are about 0.74% across Florida according to Tax Foundation, which works out to roughly $235.
- Condo insurance will be roughly $52, based on the average yearly cost of $624 that Insurance.com lists for the area.
- Don’t forget to put aside money for maintenance and repairs. It’s recommended to save 1 to 4% of your home value each year — 1% for newer houses and closer to 4% for older homes. In this case, let’s say you’re looking at a new build, which comes to about $300 a month.
When calculating the total monthly expenditure, it amounts to approximately $887 in additional expenses. Combined with mortgage payments of $2,087, the overall cost is comparable to what one would spend on rent.
For retirees age 65 and older, the IRS standard deduction of $14,600 for single filers often eliminates the tax benefits of itemizing mortgage interest. Without this traditional tax advantage, maintaining liquidity may be more financially prudent than having capital tied up in real estate. Keeping your assets easily accessible provides greater financial flexibility in retirement compared to the diminishing tax advantages of homeownership.
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But homeownership provides a sense of stability and security, particularly for seniors.
According to the U.S. Census Bureau, approximately 79% of households with adults aged 65 and older own their homes, though many face challenges with maintenance costs and other homeownership expenses as they age.
Conversely, renting offers flexibility and freedom that homeownership cannot match.
Renters enjoy the ability to relocate with ease — whether to be closer to loved ones, explore new communities, or reduce their living space without navigating the complexities of the real estate market.
Pros of renting vs buying
Let’s break down the advantages of buying:
- Predictable payments. You’ll know what you’re paying for the foreseeable future if you lock in a fixed-rate mortgage.
- There’s potential for equity growth, if the market appreciates.
- You have freedom. It’s your home, so you don’t need a landlord’s approval before making changes or renovations.
And here are the pros of renting:
- No surprise repair bills. Major fixes such as HVAC or roofs can cost big bucks, but when you’re renting, that’s the landlord’s problem, not yours.
- Flexibility. It’s easier for you to pick up and move.
- You stay liquid. You’ll have easier access to funds for emergencies or investment.
- Lower risk. If the housing market cools, you’re not in the game, so it doesn’t impact you.
If your monthly homeownership costs won’t significantly undercut your rental expenses, renting may be the smarter financial choice. Renting offers flexibility, shields you from unexpected repair bills and keeps your capital liquid for other investments. Ultimately, the decision between renting and buying reflects your personal priorities — whether you value the stability and potential equity of homeownership or the freedom and financial flexibility that comes with renting.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.