Should I rent or own in retirement?

As you approach retirement, you’ll face several important financial decisions, from choosing healthcare coverage to deciding when to start taking Social Security. For many retirees, housing is another big piece of the puzzle.

Homeownership has long been seen as a pillar of financial stability, with 56% of boomers never planning to sell their homes, according to a survey from Fannie Mae. But 84% do have at least some level of concern about homeownership as they age, especially around maintenance, upkeep, and unexpected costs.

If you’re trying to decide whether it’s better to rent or own in retirement, know that the decision is nuanced. While lifestyle goals may influence your decision, many other factors—including your finances, health, and need for stability—play a crucial role.

Pros and cons of owning a home in retirement

Owning a home can provide both financial and emotional stability, but the costs and responsibilities of homeownership may be challenging for some retirees.

Pro: Stable housing costs

“The big pro of owning your home is stability,” says Jeremy Keil, CFP^®, a financial advisor who hosts a podcast focused on retirement planning. “If you have a mortgage, you generally know your ongoing monthly cost and how long the mortgage will last.” If your mortgage is paid off, then staying in your home might make the most financial sense.

Con: Rising property taxes and insurance

Many of the tangential costs associated with homeownership, from insurance to property taxes to utilities, have skyrocketed recently. Case in point: U.S. homeowners saw their insurance premiums increase by an average of 24% over the past 3 years, according to a 2025 Consumer Federation of America report, with some states hit even harder. In hurricane-prone Florida, for example, homeowners pay nearly 140% above the national average, per Bankrate. Those committed to owning a home in retirement may need to reassess their budgets, especially if they live in a state that’s vulnerable to natural disasters.  

Pro: Tax deductions

According to a report from the Joint Center for Housing Studies of Harvard University, older generations are carrying mortgages into retirement at an increasing rate. Between 1989 and 2022, the percentage of homeowners aged 65-79 still paying a mortgage increased from 24% to 41%, while median mortgage debt spiked more than 400%.

Against this backdrop, retirees may benefit from mortgage interest deductions. Per the IRS, married couples filing jointly can deduct interest paid on up to $750,000 of their mortgage principal if the loan was taken out on or after December 16, 2017. If the mortgage was taken out before that date, they can deduct interest on up to $1 million of the principal.

Additionally, some home modifications, such as medically necessary improvements, may be tax deductible under current IRS guidelines. Unless Congress extends the 2017 Tax Cuts and Jobs Act, however, the mortgage interest deduction threshold is set to revert to $1 million (from $750,000) at the end of 2025, according to the IRS.

Con: Maintenance and upkeep

Home maintenance can be both labor-intensive and expensive and may become increasingly burdensome as you age. Plus, the longer you’ve lived in your home, the more likely you’ll face major expected repairs in the coming years. “New roof, new siding, new windows, new HVAC, new furnace—if you’ve been living in your home for 10 to 20 years, those expenses may be coming up soon,” Keil says.

Pro: Building equity

Owning a home—even in retirement—allows you to build wealth as your property appreciates. Staying put in a strong housing market may be a smart financial move, as growing your equity can provide additional financial security. In turn, your home can become a valuable asset to your heirs.

Con: Liquidity concerns

Having a significant portion of your net worth tied up in real estate can be limiting. “You can’t just sell a couple of shares like you can with investments—someone has to buy the entire house for you to cash out,” Keil explains. “A lot of people think of a house as an investment. It’s an investment in that it gives you a stable living environment, but in terms of returns, you may see more growth in stocks or retirement accounts.” While options such as home equity loans and reverse mortgages exist, they may not be suitable for everyone.

Pro: Familiarity and security

Many retirees experience an emotional and financial “lock-in” effect with their home. According to the Fannie Mae survey, the top reasons they choose to stay put are a love of their home, a comfort with the area, and the fact that their home is fully or nearly paid off. “It’s hard to remove emotion from the decision of whether to sell your home,” Keil says.

Selling your home in retirement?

If you’re thinking of selling your current home, there’s another essential factor to take into account: capital gains. Long-term capital gains are taxed at 0%, 15%, or 20%, per the IRS. If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse.

If your gains exceed these limits, you may face a hefty tax bill—but that’s not all. Significant gains can also increase your Income-Related Monthly Adjustment Amount (IRMAA). “An increase in your IRMAA can impact many things, including the amount you pay for health insurance through the Affordable Care Act and Medicare premiums,” Keil explains. In more complex cases, it’s a good idea to contact a financial advisor or tax specialist before proceeding with a home sale.  

Pros and cons of renting in retirement

For retirees looking to downsize or eliminate homeownership responsibilities, renting in retirement can be appealing—but it may not be the right option for everyone.

Pro: Affordability compared to buying

According to a study from Bankrate, an average mortgage payment in the United States costs nearly 38% more per month than the average rent. If your goal is to downsize or relocate, renting in retirement may ultimately be more affordable—at least in the short term.

Con: Rising rent payments

While rent may be cheaper than ownership in the short term, it’s subject to increases, which can make it difficult to create a long-term retirement budget. Keil notes that several of his clients have faced hefty rent increases in recent years. “There’s less control because your landlord can raise your rent at renewal,” he explains. “It’s stable for a year, but you don’t know how much it will go up.” Another challenge? Uncertainty. “You don’t know when the landlord might decide to sell the property,” he adds.

Pro: Reduced maintenance worries (and costs)

When you’re renting, home repairs are typically the landlord’s responsibility. However, the level of service can vary greatly. For example, apartment buildings with on-site management may offer full-service maintenance, whereas individual landlords may only handle major repairs. It’s important to clarify these details and set expectations before signing a lease agreement.

Con: Limited home modifications

Over time, some retirees may need to improve the accessibility and safety of their home. As a renter, you may face restrictions on making home modifications, which could make aging-in-place a challenge.

Pro: Flexibility

Renting can provide flexibility, Keil says. If you’re thinking of relocating, consider renting for a year or two. “It gives you time to figure out retirement, see where your kids and grandkids might settle, and explore different parts of the country.” Plus, renting can provide the flexibility to adjust living arrangements based on changing health needs.

Deciding to rent vs. own in retirement

Choosing between renting and owning depends on several factors, including your financial security, lifestyle, and long-term goals. The following steps can help you make a more informed decision. 

• Weigh the pros and cons. Be sure to take your age, health, and finances into account. You should consider whether you’re in a transition phase or planning what you hope to be a permanent move.
• Assess your lifestyle goals. Do you plan to travel, work part-time, or move closer to family? Do you want to remain a part of your current community? Your housing choice should align with your priorities.
• Evaluate your finances. Factor in your savings, pension, Social Security income, and any outstanding debt.
• Research the housing and rental markets. The cost of housing, utilities, and insurance can vary greatly by location.  
• Check in with your emotions. In many cases, you should go with your gut. Even if a decision makes sense on paper, it may not align with your retirement goals and aspirations.

As you navigate the decision to rent vs. own in retirement, take steps to optimize your cash savings. High-yield savings accounts and money market accounts provide liquidity, while Discover^® certificates of deposit CDs can help you earn a higher interest rate if you don’t need immediate access to your funds.

While there’s no one-size-fits-all answer, carefully weighing the pros and cons of renting or owning will help you make the choice that best fits your situation.

Maintaining a careful spending plan is key to making your savings last in retirement. Learn how to avoid running out of money in retirement.

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The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover, a division of Capital One, N.A., or its affiliates.