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Older Americans make up the largest share of homeowners in the United States compared to other generations. However, many of them rent in their retirement years.
Most seniors, those at least 65 years old, own their homes, according to the Joint Center for Housing Studies at Harvard University. However, more than 1 in 5 senior households — 7 million — rent rather than own, according to JCHS's 2023 Housing for America's Seniors report.
Renting in retirement years can be a positive because seniors can avoid the costly upkeep associated with maintaining a home. Experts say renting also offers the flexibility to move versus the complexity of selling a home.
“Renting often provides more amenities, less maintenance, and greater accessibility,” said Jennifer Molinsky, director of the Aging Community Housing Program at the Joint Center for Housing Studies.
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However, older renters are subject to the same problem as younger renters: higher rent prices.
In 2022, half of renter households, 22.4 million people, were cost-burdened, or spent more than 30% of their income on housing and utilities, the center found in its 2024 State of the Country's Housing report.
Unlike younger renters, experts say adult renters in their retirement years may be particularly vulnerable to rising rents because they are on fixed incomes.
“As a retired renter, every month you're faced with housing expenses for the rest of your life. They're not fixed expenses, and they're variable depending on market trends,” said Lazita Renee Braxton, certified financial planner, CEO and president. Real Wealth Clique, Virtual Wealth Management and RIA.
Braxton is also a member of CNBC's Board of Financial Advisors.
Why are there fewer older homeowners?
In 2023, older baby boomers made up the largest share of home sellers at 45%, according to the National Association of Realtors. They were most likely to downsize their home. NAR defines the youngest baby boomers as being between 59 and 68 years old in 2023, while the oldest baby boomers are between 69 and 77 years old.
Meanwhile, in 2022, the homeownership rate among households 65 and older was 79.1%, slightly lower than 79.5% in 2021, the Joint Center for Housing Studies found. The record reached 81.1% in 2004 and 2012.
Likewise, homeownership for those ages 50 to 64 fell to 74.2% in 2022 from a two-decade high of 80.4% in 2004. This group was exposed to the Great Recession and suffered a loss of homeownership, according to Molinsky.
It can certainly be difficult to regain homeownership on the cusp of retirement, she said. The center found that a decline in the homeownership rate likely portends declines in ownership rates in the future.
Meanwhile, people who didn't buy a home in their 40s and 50s are now aging out, so “we're now seeing people who have always been renters reach old age,” says Teresa Ghilarducci, a labor economist and retirement and retirement specialist. Professor of Economics at the New School for Social Research.
Pros and cons of renting in retirement years
Ghilarducci explained that being a renter doesn't necessarily mean you're worse off than homeowners.
The cost of maintaining your home will vary. Experts recommend budgeting between 1% and 4% of your home's value annually to cover typical home maintenance costs, according to Homeguide.com. For example: If your home is worth $450,000, expect your budget to range from $4,500 to $18,000 to cover your home maintenance costs.
Experts point out that even if you've paid for your home's upkeep over the years, the items in your home don't stop deteriorating in your retirement years.
Capital improvements such as repairing or replacing roofs can be difficult, Molinsky said. Additionally, there are tasks you may not want to do yourself anymore, and hiring a professional can be expensive, she added.
Homeowners spent an average of $9,542 on home improvements in 2023, a 12% increase from the previous year, according to Angi's State of Home Spending report. Meanwhile, the number of projects fell to an average of 2.8 projects in 2023 from 3.2 in 2022. The survey included 6,400 consumers between October 22 and 23.
While a fair amount of attention is paid to providing a home for retirees, it's also important to consider what care and services you might need to stay in that home, Molinsky said.
