Advertisement

Header Utility Menu

  • Subscribe
  • Advertise
  • Contact Us
  • Events

LinkedIn Facebook Twitter Instagram Get Our App

  • Login

Virginia Business

Mobile Menu

  • Issues
  • Industries
    • Banking/Finances
    • Law
    • Real Estate
    • Economic Development
    • Education
    • Energy/Green
    • Federal Contracting
    • Government
    • Healthcare
    • Hotels/Tourism
    • Insurance
    • Ports/Trade
    • Small Business
    • Startups
    • Technology
    • Transportation
  • Regions
    • Central Virginia
    • Eastern Virginia
    • Northern Virginia
    • Roanoke/New River Valley
    • Shenandoah Valley
    • Southern Virginia
    • Southwest Virginia
  • Reports
    • Best Places to Work
    • Business Person of the Year
    • CEO Pay
    • COVID-19
    • Generous Virginians Project
    • Legal Elite
    • Most Influential Virginians
    • Maritime Guide
    • Site Locator
    • The Big Book
    • Virginia CFO Awards
  • Company News
    • For the Record
    • People
  • Opinion
  • Lists
  • Awards/Events
    • 2022 Virginia Business Political Roundtable
    • Women in Leadership
    • Diversity Leadership Series
    • Virginia 500
    • Legal Elite
    • CFO Awards
    • Big Book of Lists
    • 100 People To Meet
    • Best Places To Work
  • Virginia 500
    • Read The Issue
    • Power Up Virginia 500
    • Buy an award plaque
    • Suggest execs for 2023

Advertisement

Header Primary Menu

  • Issues
    • January 2023
    • December 2022
    • November 2022
    • October 2022
    • September 2022
    • Issues Archive
  • Industries
    • Banking/Finances
    • Law
    • Real Estate
    • Economic Development
    • Education
    • Energy/Green
    • Federal Contracting
    • Government
    • Healthcare
    • Hotels/Tourism
    • Insurance
    • Ports/Trade
    • Small Business
    • Startups
    • Technology
    • Transportation
  • Regions
    • Central Virginia
    • Eastern Virginia
    • Northern Virginia
    • Roanoke/New River Valley
    • Shenandoah Valley
    • Southern Virginia
    • Southwest Virginia
  • Reports
    • Best Places to Work
    • Business Person of the Year
    • CEO Pay
    • COVID-19
    • Generous Virginians Project
    • Legal Elite
    • Most Influential Virginians
    • Maritime Guide
    • Site Locator
    • The Big Book
    • Virginia CFO Awards
  • Company News
    • For the Record
    • People
  • Opinion
  • Lists
  • Awards/Events
    • 2022 Virginia Business Political Roundtable
    • Women in Leadership
    • Diversity Leadership Series
    • Virginia 500
    • Legal Elite
    • CFO Awards
    • Big Book of Lists
    • 100 People To Meet
    • Best Places To Work
  • Virginia 500
    • Read The Issue
    • Power Up Virginia 500
    • Buy an award plaque
    • Suggest execs for 2023

Home Opinion Could renting in retirement be the new American Dream?

Could renting in retirement be the new American Dream?

Published May 1, 2018 by Drew Malay

Work hard, save diligently, buy a home (maybe even with a white picket fence), have kids, retire. This is the quintessential American Dream.

This classic vision of the American Dream clearly doesn’t take into consideration the outrageous housing prices that exist in the DC metro area.

As a Maryland native and financial adviser in the Beltway, I can assure you that the exorbitant housing prices are not a new phenomenon. Nor are the conversations I have with individuals who want to pay off their home before retirement, but then mention they have no intention of staying in the area. Like the American Dream, retirement conjures up a common image as well, where post-work life involves warmer climates, relaxing, traveling, perfecting golf games and spending time with kids and grandkids. Unfortunately, there’s often a struggle of trying to strike a balance between wanting to move to a lower cost — not to mention warmer — area, while also staying close to family. A possible solution to these retirement woes? Renting.

The decision to rent or own in retirement comes down to two major factors: financial freedom and lifestyle flexibility. If you rid yourself of homeownership in your golden years, you could travel freely to spend more time with your kids and grandkids without incurring the continuous cost burdens when owning a property.

Because of the high housing costs throughout the DC area, a large chunk of a couple’s net worth is likely tied up in their residences. Just a few weeks ago, The Washington Post reported that in McLean the median sales price of a single-family home was an eye-popping $1,025,000 in 2017. At that rate, if a family has lived in a similarly priced McLean property for the past 20 years and paid off their mortgage entirely, their cost of ownership is nearly $20,000 per year on average after taxes, insurance and upkeep.

On the other hand, if the family in McLean sells their million-dollar-plus house and invests the proceeds into a diversified portfolio that hypothetically earns an average of 7 percent each year, they could see their economics change for the better. The potential benefit, when properly managed, may produce enough cash flow to exceed the net cost of renting in many regions. In the popular retirement hubs — the Carolinas, Tennessee and Florida — it is not uncommon to find a beautiful three-bedroom house on a golf course available to rent for less than $3,000 per month. Gone are the high property tax bills, homeowner’s insurance costs and countless hours fixing broken appliances and painting the basement. Hello, financial independence!

Beyond the potential financial benefits, renting in retirement offers the flexibility to move when your personal needs change. When you rent, you are not tied to any one area of the country and will not be forced to sell a property at an inopportune time. If a child’s job takes him or her from DC to Denver, for instance, you may want to move to be closer to your kid and grandkids. This scenario is not a stretch. In the modern work environment, two-thirds of employees are actively looking or open to a new job. If your children are frequently moving, it may not make financial sense to keep buying and selling properties. Between broker fees and closing costs with each move, it often takes several years to break even on a property. Renting provides the freedom to make these kinds of changes without major financial ramifications.

Another benefit of renting is the ability to “test-drive” retirement locations. If you and your spouse can’t decide on a destination or community, renting provides the flexibility to shop around without the additional costs associated with purchasing a property.

There is no “one-size-fits all” retirement plan, and renting during retirement may not be for everyone. However, having conversations with your family and qualified professionals about this unconventional approach could bring you closer to a financially sound, fulfilling and carefree retirement. Because when it comes down to it, isn’t the most important aspect of the American Dream personal happiness?

Drew Malay, CFP, CMFC, is a vice president at Cassaday & Co. Inc., an award winning.  independent wealth management firm in McLean, managing $2.7 billion in assets (as of April 2018).

Related Stories

No related posts.

Trending

Dollar Tree CEO resigning; former Dollar General CEO to replace him

Rivers Casino Portsmouth opens to big crowds

Va. bill aims to reduce mental health stigma for health care workers

Framatome CEO retiring; CFO to be promoted

Former EAB buildings in Henrico sell for $5.35M

Sponsored Stories

In the New Year, Aim for Better Cybersecurity

4 innovative ways to create capacity

WHERE IS THE SUPPLY CHAIN WHEN YOU NEED IT?

P.A.I.N.T. Your Financial Mountain

5 Benefits of Treasury Management Services from Atlantic Union Bank

Blazing trails in the digital landscape

Advertisement

Advertisement

Trending

Dollar Tree CEO resigning; former Dollar General CEO to replace him

Rivers Casino Portsmouth opens to big crowds

Va. bill aims to reduce mental health stigma for health care workers

Framatome CEO retiring; CFO to be promoted

Former EAB buildings in Henrico sell for $5.35M

Sponsored Stories

In the New Year, Aim for Better Cybersecurity

4 innovative ways to create capacity

WHERE IS THE SUPPLY CHAIN WHEN YOU NEED IT?

P.A.I.N.T. Your Financial Mountain

5 Benefits of Treasury Management Services from Atlantic Union Bank

Blazing trails in the digital landscape

Get Virginia Business directly on your tablet or in your mailbox!

Subscribe to Virginia Business

Advertisement

Advertisement

Footer Primary Menu

  • virginiabusiness.com
  • Subscribe
  • Advertise
  • About Us
  • Contact Us

Footer Secondary Menu

  • Industries
  • Regions
  • Reports
  • Company News
  • Events

Sign Up For Our Newsletter

Sign Up

LinkedIn Facebook Twitter Instagram Get Our App

Privacy Policy Cookie Policy

Footer Utility Menu

Copyright © 2023 Virginia Business. All rights reserved.

Site Maintained by TechArk