Guide to Downsizing During Retirement: Should I Rent, Buy or Enjoy the Benefits of Both in a Co-Op?

If you’re thinking about downsizing as retirement approaches, the decision of whether to rent or buy a home is a significant one that could have a big impact on how you spend your Golden Years. Both options present their own set of advantages: Renting offers more flexibility and less maintenance, while buying a smaller home provides better equity and personalization options.

But before you make the big move, you may want to consider a third option that merges the best of both worlds. Cooperative housing (co-ops) designed for active, older adults deliver a strong sense of community and potentially lower living expenses, giving retirees an innovative way to maintain pride of homeownership with a fraction the hassle.

Delve into the pros and cons of renting, buying and cooperative housing to help you make an informed decision about downsizing during retirement.

Renting During Retirement: Pros & Cons

Renting is a popular housing option for older adults that provides a range of benefits. From a shorter commitment and less maintenance to lower upfront costs, renting can give retirees a more stress-free living arrangement than owning would.

Advantages of Renting a Home in Retirement

• Flexibility: Renting offers the freedom to move without the burdens of selling a property, making it an ideal option for those who value adaptability, travel and no mortgage commitment in their retirement years.
• Lower Upfront Costs: Renting typically requires a smaller upfront investment compared to purchasing a home, allowing retirees to allocate their funds elsewhere. Deposits are usually your first months’ rent, whereas down payments are around 20% of total home cost. This option allows you to move in quicker and spend less in the short term.
• Reduced Maintenance & Responsibilities: Renters are often spared the responsibilities of home maintenance and repairs, as the landlord is largely responsible. This not only frees up time and energy for more enjoyable pursuits, but also takes less of a financial, physical and emotional toll on your well-being.

Potential Drawbacks of Renting

• Lack of Equity: Renting does not build equity, meaning the money spent on rent doesn’t contribute to ownership nor potential investment.
• Limited Control Over Property: Renters have less control over customization and modifications to the living space, as decisions are subject to landlord approval.
• Potential Rent Increases: Rent prices may rise over time, potentially impacting your budget and long-term financial planning. Your home’s value won’t appreciate over time — but current economic trends indicate that your monthly rent almost certainly will.

Downsizing & Buying a Smaller Home: Pros and Cons

Purchasing a smaller condo or home during retirement offers potential for long-term equity, along with the stability, control, customization and pride that come with homeownership. However, there are some key downsides to consider here, as well.

Advantages of Buying a Smaller Condo or Home in Retirement

• Long-Term Equity & Investment: Buying a property builds equity over time, offering a potential financial asset for the future and inheritance opportunities for loved ones.
• Predictability: Unlike rent, your fixed-rate mortgage payments won’t rise over time. In fact, your housing costs may actually decline the longer you own the home.
• Customization: Homeowners can tailor their living space to suit their preferences, providing freedom to renovate the space and create a truly personalized and comfortable retirement haven.

Potential Drawbacks of Homeownership

• Higher Upfront & Ongoing Costs: Purchasing a property typically requires a larger initial investment, including down payments, closing costs and potential renovations. Property taxes and home insurance rates will also likely increase over the years.
• Home Upkeep: Homeowners are responsible for maintenance and repairs, which can come with unexpected costs and efforts.
• Reduced Mobility: As age advances, homeownership may become more challenging due to mobility issues or the need for specialized care. From a broader lens, being set in a mortgage agreement could make it harder to relocate near the grandkids, travel the world or make other, on-a-whim decisions that support your freedom.

Exploring Cooperative Housing During Retirement: Pros & Cons

Cooperative housing involves a community of residents who collectively own and manage the property, sharing responsibilities and decisions. Co-ops offer a unique blend of homeownership and renting benefits, allowing you to enjoy maintenance-free, one-level living without sacrificing equity.

Advantages of Co-op Housing in Retirement

• Strong Sense of Community: Co-op living fosters a close-knit community, providing retirees with companionship, social opportunities and a supportive network.
• Potential for Lower Living Expenses: Co-ops often result in lower living costs compared to traditional homeownership, making them financially appealing for retirees.
• Shared Responsibilities and Costs: Co-op residents share maintenance and repair expenses, alleviating financial and practical burdens associated with homeownership.
• Location, Location, Location: The ideal co-op can offer the added advantage of being in walking proximity to shopping, dining and entertainment, as well as family members.

Potential Drawbacks of Co-Ops

• Decision-Making Responsibility: Members should be ready to actively participate in governance processes regarding co-op rules, regulations and policies.
• Not Quite Owning, But Not Quite Renting: While this lifestyle amplifies the benefits of both renting and owning, some co-ops could potentially bring a few of the aforementioned downsides of each with it — albeit, on a more minor scale.

Artessa Co-ops Offer a Unique Option for Downsizing During Retirement

Level up to one-level living: With more locations coming soon to the Midwest and Southwest, Artessa offers a distinctive approach to cooperative living for empty nesters, tailored to meet the needs of active adults aged 62 and better.

These communities provide abundant benefits to complement an active lifestyle, such as:

• Unmatched Walkability: Instant access to biking and hiking trails, as well as local shopping, dining music, arts and entertainment scenes.
• Ample Amenities: On-site pickleball courts, fitness and hobby centers, gardening beds, guest suites, indoor and outdoor entertainment spaces and much more.
• Flexible Equity: Artessa co-ops offer various equity options to accommodate different price points.
• Maintenance-Free Living: The maintenance-free aspect of Artessa co-ops grants retirees the freedom to savor their time without worrying about property upkeep. Convenient, single-level floor plans also ensure future mobility issues won’t be a concern.
• Home Personalization: Reserving your home before the community is built means you can work with the award-winning Artessa design team to choose your finishes, fixtures and customize your home to make it perfectly “you.”

Discover how Artessa has perfected the art of cooperative living and get in touch with us to secure your home in our up-and-coming retirement co-ops.