Does it make more sense to buy or rent when downsizing for retirement?

jacobsonbob - thank you! Yes, I am finding out very quickly that I definitely do not care to be a homeowner. I'd be perfectly happy in my little rented cabin by the lake, as long as I have wifi so I can work and a big window to watch the lake whilst doing it. Maybe a nice porch or deck so I can drink coffee and look out at the lake in the mornings.

No taxes. No insurance expense (except renter's). No maintenance or repairs.

SusanA43, that looks reasonable. Quite often people forget about the hassle and expenses of maintenance and repairs, and some people are essentially slaves to their houses. Owning a house isn't for everyone, and it's important to consider the pros and cons of renting vs owning. Renting has worked out very well for me, but it might not for many others due to both financial, practical and personal preferences.

My plan is to rent for the rest of my life, once I get through this MERP nightmare with my parents' home.

I don't want this house, never have and never will. I may end up staying here out of necessity, but I won't be happy here. I'm tired of dealing with the repairs on a home that has had essentially no maintenance for almost 30 years, other than absolutely necessary things when something stopped working or broke (like the water heater). Roofing, yard maintenance, etc - all was let go, other than weekly mowing.

I'd love to just rent a little house or cabin on a lake somewhere. Then no one else will be burdened with dealing with MERP, repairs, selling or anything else.

Thank you all so much for the info. We've felt rather tied to our location, due to jobs. Now with retirement, we'd like to live somewhere else--a different part of the country. The medicaid and look-back info was really what I needed. Owning sounded like the answer I needed confirmation with--allowed one home, one car. We're not nomads, and have renovated our 100-year old house with aging in mind, with fewer trip hazards, modified steps that aren't as steep, with sturdy, yet beautiful iron rails.

Life is about options, and we want to option to stay--or go. Right now a relocation sounds like a great adventure, and a more metro area--with all it has to offer in public transportation (being a great consideration as we age) museums, walkways, etc, sounds pretty darned good. 😉

SuzyQB: Yes, I am very familiar with all of the pitfalls of aging, having just gone through it with my mother. YEARS BEFORE, we had "tried" to prepare for her eventual inability to live alone in her home  in Massachusetts. I live in Maryland and my brother in California with our families. However, she said "I'm glad I stayed in my home." Our responses of course were polar opposites since now we had to figure out a way to assist her, as her "keeping house" abilities were a bad joke. So I had to uproot my life and move there. For my husband and myself, we have thought ahead and have put in place long-term care for ourselves so that our sole heir doesn't have to go through the NIGHTMARE MY MOTHER PUT US THROUGH!

I believe it depends on the person and the individual circumstances, as there are pros and cons with either choice. Renting allows one to move across town, out of state or overseas if one wants while owning is somewhat of a ball-and-chain. Whether one is married or single (due to one of three possibilities) will be a factor, and whether or not one has heirs is another consideration. If your financial resources are large, then contemplating Medicaid shouldn't be a factor. In my case, I've always rented (which worked out very favorably financially for me but wouldn't for many others) and at almost 65 (and retired 4 years) I don't feel any urge to own unless I could design and build specifically what and where I wanted. Perhaps "downsizing" doesn't have to mean moving immediately to your final residence. It appears that various "communities" expect that you will spend the rest of your life there, so that must be considered, too.

Llamalover47, we chose to not "live in place" although our home was comfortable and accessible. However, I have worked in long term care and served as an ombudsman in LTC, and the biggest/scariest issue is that often older adults suffer a serious irreversible event such as a fall or a stroke, go to the hospital for treatment and cannot live independently after they are released. So they and their relatives/friends have to find a place for them in a very short time frame. That means, on a very practical level, that they often "settle" for a place that may not give good care because they don't have time to do enough due diligence, i.e., checking out the quality of nursing homes with available beds. So there is the risk that the elder will be placed in a facility where they may not get the quality care they need, and unfortunately, there are way too many of that type around. So they end up unbathed, or lying in their own waste because they could not get help to get to the bathroom, or they get bedsores. Some are so bad that they abuse the residents. Even in the best skilled nursing facilities, sometimes they have to wait because all the staff is busy helping others. It happens. But in the best facilities, it happens rarely, while in others who don't care about the quality of care they provide, you will find lights and bells on for most of the rooms, and residents crying or yelling for help that doesn't come. Is that the kind of place you would want your parent (or yourself) to have to live in? Old people get to the point where they are no longer able to care for themselves. That is the reality. And sometimes family can't care for the (it's a very difficult job) and sometimes they want to protect their children from having to make those difficult rushed decisions. That's why WE moved to a continuing care retirement community, with a stellar reputation for quality care, so our children would not be forced to deal with it should an emergency arise.

Why wouldn't you choose to "live in place," modifying the home to fit the needs of the aging couple?

The previous replies mentioning home/condo ownership are right on the money. It makes sense to have property if you can afford it, as it will provide one of you a continued place to live, that cannot be appropriated by Medicaid should one spouse have to enter LTC.

Beyond that - if you have any sort of assets that can be protected and/or can be left to heirs if you have any, put them into a trust ASAP. Elder care lawyers will suggest this and it's good advice.

My father-in-law passed away 3 1/2 years ago, unexpectedly, at age 70, and my mother-in-law, now almost 78, suffers from vascular dementia and still lives at home. They had nothing beyond wills and POA set up, and unbeknownst to my MIL and anyone else, my FIL had saved quite a considerable amount of money for retirement. After sorting everything out after his death, we set up a trust to protect for her (and thus for my only-child wife and only grandchild) what assets we could. However, we're only two years into the trust so if she needs to be moved to a facility in the near future, all those assets will be fair game to use before she would be Medicaid-eligible.

So, bottom line, having property is good, but having a plan to protect what you've worked so hard for is even better!

Here is my opinion. First, I'm 67 and my husband is 70. We own as home. We aren't selling at this point because we can't get what it is worth. We have talked about downsizing and renting an apartment. Mainly because of upkeep and here in NJ taxes. I have been dealing with my Mom's house for two years. I wish she had gone to an apartment when my Dad died. Because of Medicaid, the house is going to be abandoned. Once I filed for Medicaid I was told to stop paying taxes. Once she is on Medicaid, there will be no money for upkeep on a house I haven't been able to sell. So, it will go for unpaid taxes or Medicaid lean because I can't afford the taxes and upkeep. So what I'm saying is renting would be my choice. If you have children, downsizing will get rid of stuff you don't need. When you reach gone, all they need to do is clean out ur rental. Nothing to sell and just have utilities shut off. I like life as simple as possible for my girls too.

We live in ohio, thank god mom lived in an apt, it was easy for me to move her to assisted living. She is on medicaid and if she was still in the house her and dad owned medicaid would of went after that to.

It does depend on your age and health. You may feel in great shape at 70 and develop dementia the next year, as happened to my second husband. When the spouse dies, living alone and having total responsibility for everything can be lonely and exhausting. Leaving a house in horrible condition for your heirs won't be appreciated either! This happened when my mom died; I sold at a loss to a fixer-upper company, and recently my children have had to sell my ex's house at a loss to have money to pay for his nursing home care. I live in an apartment complex that caters to seniors (although not exclusively)--no meals, but there are bridge games and a party room so it is not lonely. I hire once a month maid service and do my own shopping and cooking, but don't have to worry about repairs, etc. When I can no longer drive, I will make the switch back to a retirement community. I have owned four houses in the past and found all of them more trouble than they were worth! But we are all different.

Jpatootie, a lot depends on how much money you and hubby had squirrel away as a nest egg. There are pros and cons to renting, and to home ownership as we age. I agree with the writers above, look at the 55+ retirement communities.

I know I am not going to do what my late parents did... remain in a single family house that was too big for them to maintain, lot of stairs, lot of maintenance. My Mom would give Dad a "honey-do" list but, good grief, Dad was in his 90's and shouldn't be climbing up ladders.

For myself, I am thinking ahead about downsizing. I know it isn't always easy to get rid of "stuff" [as comic George Carlin would say"]. We have many 55+ communities around here so I have been looking at them.

My main concern is the floorplan. If one has a second level for guest rooms, make sure the stairs aren't very steep... I crossed off one community because of that... those stairs were scary. Also the door from the garage, is the step somewhat high?... I saw my Dad struggling trying to get into their own house without falling backwards.

Every year my backyard feels like it doubles in size. Some of the 55+ places have workers who will mow your lawn and the rest of the homeowners... it's part of the community monthly fee.

If you have a lot of savings and own your own home, you may want to chat with an Elder Law Attorney about doing a Revocable Trust. If it sounds good, have all your bank accounts and stock accounts put into the trust. This way, you wouldn't need to deal with probate [which could tie up one's finances for many months and into a year].

My Dad, who had health issues and was a fall risk, moved into Independent Living, into a complex that also had Assisted living/Memory Care and he really liked the place. Oh how he wished my late Mom would have moved to such a place. The apartment was very nice, 2 bedrooms, large living room and full size kitchen. The rent included once a week housekeeping plus linen service, and one meal in the main dining room which resembled a restaurant.

We are now 85 and searching for independent living in a retirement community that also has assisted living and nursing care. My advice is not to wait too long. Wish we had made a move when we were younger. It takes a lot of physical energy to downsize, plus it is stressful. We did build a new home thirteen years ago and now I wish we had gone to a retirement community. I look forward to no maintenance and the choice of cooking or going to the dining room.

I saw a programme on CNN several years ago - they said 5 years was cut off time period - that was when the expense of buying would be worthwhile - real estate fees, lawyers fees, land transfer tax etc was the factor that was divided by the 60 months - the interest on money paid rent but there was income tax to deal with too

Interest rates were different then so ask a financial planner/ accountant/ other professional to crunch the numbers whether rent/owning is best & how to protect your assets - if renting divide $$ in 1/2 then have in separate accounts for each of you & transfer 1/2 rent money + 1/2 other fixed expenses into your joint bill paying account monthly

You are young enough that owning might be best but that depends where you are living & what the real estate market is like there - take the time to get all your facts before you make any move & talk to professionals that will not benefit from you choice - this will cost a few dollars but could be money well spent if it saves you thousands in the long run

Pete McGill, that was a good call. We have lived in three states and had our wills and POAs updated in all three, and NONE of the attorneys asked about a list of our assets. They charged us a flat rate to update our wills, trusts and all associated documents.

On another note, RayLin Stevens mentioned moving to a retirement community. This is something we did about 8 months ago, when we moved to a NON-PROFIT CONTINUING CARE RETIREMENT COMMUNITY (CCRC). However, if and when you plan to do that, check their reputations and quality of care at both your state level and at Medicare.gov. Make sure that the care in their skilled nursing facility is top notch. You don't need problems when you reach the point of not being able to care for yourself and it's too hard to fight the system. Look at non-profits....they often have funds in case you run out of money so that you will not be forced to move out. For-profit CCRCs will ask you to move if you run out of funds, and who needs that at 95? I am 80, my husband is 75 and we are among the youngest residents here. On the other hand, they will accept new residents at age 60. It's time to consider this kind of lifestyle if you either really want it or when owning a home becomes too much for you to handle comfortably. Keep in mind that there is a sizable entrance fee and the monthly fees rise each year, but there is also a great tax break. Personally, I would not move into a retirement community that does not provide skilled nursing care (AKA a nursing home) if and when you need it. It's horrible to suddenly have a health emergency and have to find a nursing home on short notice. There are a lot of nasty nursing homes out there, and this is the MAIN reason we chose to select our final home in a CCRC with an excellent reputation for quality care. We are very happy with our choice and knowing we will have the security of good care when that time comes.

Just something to think about. Good luck finding and making the right choice for you.

I agree that rent is a good option. When we retired, my husband and I bought a house in a gated community with a clubhouse. The year he died was a poor one for home sales and for various reasons, I ended up giving the lending bank a deed in lieu of foreclosure.

I'd say buy the new place so you'll be investing in your own place rather than paying rent to pay the investment for somebody else. You'll gain equity this way. By all means keep scrupulous records on what you spend as you will have to account for every cent should you eventually apply to Medicaid for help. Veronica is correct in that the home and one vehicle along with a few thousand dollars and personal things are exempt from the asset list. As for lawyers be careful who you pick. I went to a two hour meeting where the lawyer asked for a list of all the assets up front. Then after the speil he wanted an amount of money up front that suspiciously corresponded to the amount of cash in one listed account. Alarm bells rang and red flags were flying when that happened and turns out we left and that was the right thing to do. Hire the lawyer for an agreed amount of money to do specific things for you and go from there.

I totally agree about an Elder Care Lawyer.

If I had to move today, I would go to a Retirement Community just for the services available. Other than that, OldBob made a good comment RE: Veronica - she covered all the bases, even the "look back period" of 5 years.

Veronica made a very astute statement...

Grace + Peace,
Bob

I think you are making the correct decision. If one spouse needs Medicaid the house will be excluded from the asset evaluation as will one car and furniture personal effects etc. if you are renting all your savings will be fair game. If you move make sure all upgrades have been made to the house and nothing expensive is hanging over you head like a new roof or furnace. keep all receipts for any work done so you can show Medicaid how the money was spent. Do not give large sums of money to family or friends within the five year look back period which of course at this stage you have no idea when that will start if ever. This would be a good time to visit an elder care lawyer for advice and get things like POA in order and healthcare proxy. Make sure there is a second person named as proxy who you trust as well as your spouse.