There’s only one situation where it’s cheaper to rent than buy once you retire

Retired river arkansas

In general, it’s a much better deal to buy a home in retirement.

Real estate site Trulia compared the costs of buying and renting in the 100 US cities with the largest share of residents over 65. It turns out, it’s cheaper to buy in every single one — and in a handful of Floridian cities, it’s over 60% cheaper to buy than rent.

In its 2016 report “Best Places for Retirees to Rent or Buy,” the real estate site looked at median home value and rent, and factored in the initial, future, and one-time costs of owning and renting. It also assumed retirees move every 15 years, using data from the United States Census Bureau.

“If you enter retirement and move every 15 years, it is an overwhelmingly better deal to buy than rent,” Trulia’s chief economist Ralph McLaughlin tells Business Insider.

There’s one exception, he notes: If retirees don’t care about leaving an inheritance, renting becomes the better option.

As McLaughlin explains in the report:

Our rent versus buy equation takes into account the value of the equity in your home when you sell, which is important if you need to buy another home.

The grim reality for most retirees is that their retirement home will likely be the last home they will purchase, so any remaining equity in the house will be passed on to heirs. But what if you don’t have any, or don’t care to pass on anything to the ones you do have?

When Trulia removed the value of home equity from the rent versus buy equation, it became more expensive to buy than rent in 98 of the 100 cities.

Bottom line: If you care about the equity in your home — if you’re planning on leaving it to heirs, for instance — buy a home for your retirement. If you don’t care to leave an inheritance, renting is the better deal.

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