More Boomers Are Opting To Rent Than Ever Before — but Is This a Wise Financial Choice?
Written by
Gabrielle Olya
Edited by
Levi Leidy
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Although one-third of renters are under age 35, nearly as many renters are now age 50 and older, according to a 2022 report by the Joint Center for Housing Studies of Harvard University. Older Americans are the fastest-growing age group among renters, with a 43% year-over-year increase in renters ages 50-plus.
Here’s a look at why baby boomers are now opting to rent, plus, the financial repercussions of making this lifestyle choice.
Why Are Boomers Flooding the Rental Market?
There are a number of reasons why older Americans may now be renting.
“Some boomers have sold their homes in recent years because they wanted to get top-dollar for their properties. But now they’re having difficulty finding new homes to purchase, given the lack of homes for sale and the competition in the market,” said Clare Trapasso, executive news editor at Realtor.com. As a result, “they’re renting for longer than they might have expected.”
Other boomers are renting by choice.
“They don’t want to deal with the maintenance and repairs that owning a home requires,” Trapasso said. “They would rather have someone else fix the drain, cut the grass and take care of anything that goes wrong.”
In addition to the convenience factor, some boomers are drawn to renting because of the additional amenities they can gain access to.
“Wealthier boomers are being lured by some of the newer rental buildings that have been coming online recently,” Trapasso said. “They want the convenience and amenities these buildings offer, such as smart home technology, rooftop gardens and pools and prime locations. Many are located in desirable downtowns in popular suburbs and cities.”
The Financial Implications of Renting During or Near Retirement
Whether or not renting makes financial sense when you are retired or nearing retirement will depend on your unique circumstances.
“In some instances, renting may be part of someone’s retirement strategy,” Trapasso said. “It really depends on the individual, their goals, their financial situation and where they live. If they’re able to sell their homes for a large profit, it may be cheaper to rent than to stay in the home or downsize into a smaller one.”
Renting may also make financial sense if it fits in with their overall retirement lifestyle goals.
“If they want to travel, live abroad or experience a community before committing to it, then renting may make financial sense for them,” Trapasso said. “They may not be able to afford the high upfront costs of buying a home in a popular 55-plus community, but may be able to swing renting in one.”
It’s also important to note that the home a boomer bought decades ago may no longer be a good fit for their needs.
“Their homes may not be equipped for aging in place or their physical challenges,” Trapasso said. “In some circumstances, it may be cheaper to rent a home that is outfitted for their needs than to retrofit their existing one. That may be especially true if they sell their homes and are able to use the proceeds to rent in an assisted living community.”
However, there are circumstances when owning a home may be a better financial choice.
“If their home doesn’t need a lot of expensive repairs and has low property taxes, it may make more financial sense to stay put,” Trapasso said. “Someone’s mortgage may be much lower than what they would pay to rent a home. If their home is already paid off, it may cost them substantially more to rent even a small apartment. And without a home, they can’t take out a home equity loan or a reverse mortgage if they need money in the future.”
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