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last updated 4 Nov 2018


Retirees, Should You Buy or Rent When Downsizing? | Kipplinger The idea of renting a house or apartment can be challenging for many longtime homeowners. Owning real estate "is hardwired" into the American psyche, says Rich Arzaga, chief executive officer of Cornerstone Wealth Management, in San Ramon, Cal. But, he says, "ownership is more expensive than people imagine." And it may be more important for many retirees to secure income from investments than to sink money into a new house.

Your decision will depend a lot on nonfinancial, emotional issues, as well. Do you love the idea of owning your own place and fixing it up the way you want? Or will it be a big relief after years of ownership not to worry about the lawn or a broken sump pump?

You can avoid some of the maintenance hassles by getting a townhouse and just paying home owner Association fees.

Scenario 2015:
65 year old couple in the 25% tax bracket sell their large house and clear $550,000. They have $100,000 in a IRA and $100,000 in a taxible account.
Comparison for renting at $1,250 plus utilities
vs. buy a $230,000 house with 20% down and a 30 year mortgage.
Assumption: Investments would grow at 6.9%
Total assets after 10 years:
Rent $576,202
Buy  $572,071 (home equity and investments)
They also ran it for a couple with $1 M with similar results.

Maintenance (repairs, painting, pest control, appliance replacement, Landscape maintenance, ...) 1-4% of value.
Utilities (electric & gas) 
Property Taxes
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