Here are the pros and cons of renting versus owning a home in those retirement years

Older Americans make up the largest share of homeowners in the U.S. compared to other generations. However, many are renting in their retirement years. 

Most older adults, those at least 65 years old, own their homes, according to the Joint Center for Housing Studies at Harvard University. Yet, more than 1 in 5 older households — 7 million — rent instead of own, according to the 2023 Housing America's Older Adults by the JCHS.

Renting in retirement years can be a positive because older people can avoid costly maintenance associated with the upkeep of a home. Renting also offers the flexibility to move vs. the complexity of selling a home, experts say.

"Renting often offers more amenities, less maintenance, more accessibility," said Jennifer Molinsky, director of the housing an aging society program at the Joint Center for Housing Studies.

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However, older renters are subject to the same issue younger tenants face: rent price increases.

In 2022, half of all renter households, 22.4 million, were cost burdened, or spent more than 30% of their income on housing and utilities, the Center found in the 2024 State of the Nation's Housing.

And unlike younger renters, adult renters in retirement years could be especially vulnerable to rent hikes because they are on fixed income, experts say.

"As a retired renter, you are faced each month with a housing expense for the rest of your life. It's an expense that is not fixed, it is variable by market trends," said certified financial planner Lazetta Rainey Braxton, CEO and president of The Real Wealth Coterie, a virtual wealth management and RIA firm.

 Braxton is also a member of the CNBC Financial Advisor Council.

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 defined younger baby boomers to have been 59 to 68 years old in 2023, and older boomers, are ages 69 to 77.

Meanwhile in 2022, the homeownership rate among households ages 65 and over was 79.1%, slightly lower from 79.5% in 2021, the Joint Center for Housing Studies found. The record high was 81.1% in both 2004 and 2012.

Similarly, homeownership for those between the ages of 50 and 64 dropped to 74.2% in 2022 from the two-decade high of 80.4% in 2004. This group was hit by the Great Recession and suffered a loss of homeownership, according to Molinsky.

To be sure, it can be hard to regain homeownership at the cusp of retirement age, she said. Their lower homeownership rate will likely foreshadow lower ownership rates in the future, the Center found.

Meanwhile, people who didn't buy a home in their 40s and 50s are now aging, so "you're now seeing people who have always been renters coming into their old age," said Teresa Ghilarducci, a labor economist, retirement specialist and professor of economics at The New School for Social Research. 

Being a renter, however, doesn't necessarily mean you're worse off than homeowners, Ghilarducci explained.

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 house is valued at $450,000, expect to budget from $4,500 to $18,000 for costs to upkeep your home.

Even if you've paid for the upkeep of your home over the years, elements in your house don't stop deteriorating in your retirement years, experts point out.

Capital improvements like fixing or replacing the roofs can be difficult, said Molinsky. Additionally, there are tasks you may not want to do yourself anymore, and it can be expensive to hire a professional, she added.

Homeowners spent an average $9,542 on home improvements in 2023, a 12% increase from a year prior, according to the State of Home Spending by Angi. At the same time, the amount of projects decreased to an average of 2.8 projects in 2023 from 3.2 in 2022. The survey polled 6,400 consumers between Oct. 22 and Oct. 23.