Should prospective retirees build, buy or rent?
The conversation went something like this:
‘Bill and I are thinking of selling this big, old house and buying a condo, now that the kids are gone.’
‘We were thinking the same thing, but now we think we’re gonna rent. It’s much cheaper.’
‘Rent? You’re gonna put out all that money and not even get something down the road to show for it?’
‘Well, Percy enjoys the house so much, he can’t imagine not having something to fix or move around. And to be quite honest my garden has replaced the kids for me. I can’t wait to get up in the morning to work on my garden. I would be lost if I couldn’t work on my garden.’
When asked whether I think new retirees should build, buy or rent, I shared the story of a couple my wife and I met on a cruise who lived onboard the ship. They found it less expensive to cruise forever. They had no mortgage or rent. Food, entertainment and travel were all taken care of. There was no housekeeping or maintenance, and there were very few security problems. And if they feel like spending some time on shore, they rent short term.
“It’s a matter of mindset,” I said.
I have found that there are about four mindsets for people preparing to retire.
“My home is my castle.”
This is perhaps the most common mindset. For these individuals, the home is an extension of who they are and how they believe their society sees them. It must therefore have the “right” features, be in the “right” neighborhood and be impressive when entertaining guests. Ownership is very important to this group, and the thought of downsizing would represent a loss of status.
“Home is my base of operation.”
More and more families have begun to think of their home as primarily just a base of operation. For them, the question of convenience is more important than cost, even if they can afford it. Moving from a large house to a smaller condo is simply a response to a change in their needs, and they have no trouble making that decision. Renting, instead of owning, therefore, is also simply a matter of convenience.
“My home is my hobby.”
Some homeowners look forward to retirement as a time when they can pursue their passion of fixing, repairing, adding on and otherwise tinkering with the house. This is especially true of tradesmen and the children of tradesmen whose self-worth is connected to the idea of ‘things properly done’, and of gardening fanatics. Ownership is important because it allows for undefined change.
“My home is an expense.”
This may be the smallest group. For them, the home is primarily the biggest asset on their balance sheet, whose value is threatened by rising maintenance and operational costs. On the other hand, the idea of paying rent and not developing equity makes absolutely no sense. So this group lives frugally in their house, builds or buys only to save money and makes use of every cost-saving gadget or device offered.
So, the question is, “Should people approaching retirement build, buy or rent?” The answer is, “It all depends.”
- Patrick Rahming & Associates is a full service design firm providing architectural, planning and design services throughout The Bahamas and the northern Caribbean. Visit its website at www.pradesigns.com and like its Facebook page. The firm’s mission is to help its clients turn their design problems into completed projects through a process of guided decision-making, responsible environmental advice and expert project administration.