This idea is more for those planning on a more traditional retirement age with the mortgage paid off, not early retirement with kids still at home. Did a spreadsheet (attached) comparing the eventual sale of a home (going into a nursing community or living with children) vs selling and renting instead (with the after-tax sale price invested in a taxable account). The results depend on a wide variety of assumptions, but from a strictly financial perspective there are many instances where I found renting to be superior. Other reasons renting might be superior to owning in one's 70's-80's (and beyond):
1. Renting allows for you to be dynamic - can move easily if you want depending on future developments/costs and possible estate tax
2. Renting involves a LOT less hassle/time as compared to buying/owning a place not shown in obvious costs
3. It might be easier to find a reasonable rental in your area than a smaller home to buy if in a HCOL area and you want to stay there.
4. Allows you to turn your assets from illiquid to liquid to allow for the reduction of the size of your estate in a tax efficient manner (gifting, etc.) with less hassle for the people who have to manage the estate on passing (provided you are affected by federal and/or state estate tax)
Downsides:
1. Emotional nature of leaving a home you've been in for many years.
2. Possibly being forced to move when you don't want to w/ added moving costs
Have people given thought to this concept rather than downsizing to a smaller home? Thoughts otherwise?
1. Renting allows for you to be dynamic - can move easily if you want depending on future developments/costs and possible estate tax
2. Renting involves a LOT less hassle/time as compared to buying/owning a place not shown in obvious costs
3. It might be easier to find a reasonable rental in your area than a smaller home to buy if in a HCOL area and you want to stay there.
4. Allows you to turn your assets from illiquid to liquid to allow for the reduction of the size of your estate in a tax efficient manner (gifting, etc.) with less hassle for the people who have to manage the estate on passing (provided you are affected by federal and/or state estate tax)
Downsides:
1. Emotional nature of leaving a home you've been in for many years.
2. Possibly being forced to move when you don't want to w/ added moving costs
Have people given thought to this concept rather than downsizing to a smaller home? Thoughts otherwise?
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