Rosalind Evans
In an era of soaring house prices and escalating mortgage rates, examining the best retirement locations for those considering a rented lifestyle could be beneficial. The main factors that retirees generally look for include access to quality healthcare, closeness to their family, and an affordable cost of living, which considers taxes and home ownership costs.
However, the steep rise in average home prices, now up nearly 24% since 2020, coupled with mortgage rates over 6.5%, makes renting a more viable option for many retirees wishing to relocate.
Critical Criteria for Ideal Retirement Locations for Renters
For a long time, Kiplinger has advised retirees to try renting in a prospective retirement location before purchasing a property. This suggestion is even more pertinent today. We’ve identified eight cities that offer appealing options for renters, such as quality healthcare providers, green spaces, and attractive features like free local college and university classes.
Given that many retirees prioritize relocating close to their families, we’ve chosen locations across the U.S., ensuring our list includes cities that may not necessarily be in warmer climates or tax-friendly states.
Renting vs. Buying
Even if purchasing a home is within your financial reach, perhaps from the proceeds of selling your current home, finding one that meets your needs could be challenging. Many homeowners with fixed-rate mortgages at 3% or less are reluctant to sell, despite outgrowing their homes. This reluctance has contributed to a shortage of houses on the market, especially smaller ones that appeal to retirees looking to downsize.
The surge in housing prices has also driven up rental costs. However, rental rates have started to stabilize. Data suggests that the median price for a two-bedroom apartment has increased only half a percentage point to $1,842.
The Flexibility of Renting
The primary advantage of renting, at least initially, is its flexibility. Even the most coveted cities can have less appealing areas. Instead of buying a new home and bearing all the upfront costs, renting allows you to easily change your living situation if the site doesn’t meet your expectations.
Living in an apartment offers several advantages for retirees, including proximity to community centers, restaurants, and other attractions. Many also provide appealing amenities such as swimming pools and fitness centers. If you prefer a house, Airbnb, VRBO, and other short-term rental platforms offer numerous options, and some owners may be willing to negotiate long-term rental agreements.
Financial Considerations
Owning a home, especially with a paid-off mortgage, offers retirees a certain level of financial security. However, home ownership also comes with additional costs, including homeowners insurance, property taxes, and maintenance costs, which are subject to increase. In some cases, renting can also provide tax benefits.
Where to Rent
The cost of renting, like buying, varies significantly across the U.S. For example, $1,500 a month would only get you 243 square feet in Manhattan, whereas in the Midwest or the South, the same amount could secure more than 1,460 square feet.
Our top eight cities for retirees who wish to rent vary from an average monthly rent of $1,194 (in Birmingham) to $2,197 (in Ann Arbor), according to data from Zillow.
While purchasing a home is still a wise choice for those intending to stay long-term, retirees uncertain about their location preferences could benefit immensely from the flexibility of renting.
Tallahassee, FL
Home to 201,731 residents, Tallahassee is Florida’s capital and a haven for retirees looking for sunny weather and low taxes. The city is strategically positioned midway between the Georgia border and the panhandle’s Gulf of Mexico coast. Apart from the welcoming climate, retirees love visiting St. Marks National Wildlife Refuge, a vast habitat with estuaries, coastal marshes, and islands. Active retirees can enjoy biking on the trails of Munson Hills Mountain Bike Trail System. There are three hospitals within a 25-mile radius, ensuring healthcare access. The living cost index is 95.6, with a typical monthly mortgage payment of around $1,354 and average rent at $1,385. Florida’s tax structure favours retirees, with no state income tax, making pensions, Social Security, and retirement plans tax-free.
Birmingham, AL
With 197,575 inhabitants, Birmingham, centrally situated in America’s Southeast, is a city teeming with culture and history. A popular attraction for retirees is the Pepper Place Farmers Market. The city hosts numerous festivals and offers diverse entertainment options, from basketball games at the newly developed Legacy Arena to free shows by the Alabama Symphony Orchestra. Red Mountain Park, Ruffner Mountain, and Oak Mountain State Park offer excellent trails for those keen on outdoor activities. The cost of living is affordable, indexed at 91.9, with the typical mortgage payment being $504 and the average rent of $1,194 monthly. There are 13 hospitals within 25 miles of the city, ensuring medical access. Alabama’s tax policy is retiree-friendly, with no estate or inheritance tax and tax exemptions for several types of retirement incomes.
Raleigh, NC
Raleigh, the capital of North Carolina, is home to 469,124 residents. The city, known as the “City of Oaks,” is part of the Triangle region, with Durham and Chapel Hill close by, offering the benefits of three major universities. The city is rich in arts, culture, entertainment, museums, and festivals. Retirees are especially fond of film screenings at the Gregg Museum of Art & Design. Raleigh’s moderate climate allows for year-round outdoor activities, with more than 100 miles of paved trails connecting neighbourhoods and attractions. The area’s healthcare is top-notch, with Duke University Hospital and UNC Hospitals being highly ranked. The cost of living index is 96.1, with an average monthly mortgage payment of $2,132 and typical rent costing $1,656. North Carolina’s tax rate is favourable for retirees, with Social Security benefits not taxed, and specific retirement plans’ income is also exempt.
Pittsfield, MA
With a population of 43,641, Pittsfield, nestled in the Berkshire Hills of western Massachusetts, provides residents access to exceptional music and theatre. The town boasts a lower cost of living than its affluent neighbours, with an index of 101.5. The typical mortgage payment is around $1,338, while rent usually costs around $1,433 per month.
One of the town’s gems is Tanglewood, the Boston Symphony Orchestra’s summer residence since the 1930s, just 15 minutes away. Tanglewood’s 500-acre campus is famous for its open-air Koussevitzky Music Shed and annual concert series, boasting over 75 performances.
Downtown Pittsfield is a cultural hub featuring the historic Colonial Theatre and the recently refurbished Berkshire Museum. For outdoor enthusiasts, there are numerous locations for activities like hiking, snowshoeing, fishing, swimming, and canoeing.
The town has two hospitals within a 25-mile radius, and retirees adore the summer concerts at Tanglewood. Massachusetts imposes a flat income tax rate of 5% of federal adjusted gross income, with an additional 4% tax on income over $1 million from 2023.
Columbus, OH
As Ohio’s capital city and the home of Ohio State University, Columbus has plenty to offer retirees, with a population of 905,748 and a cost of living index of 86.4. The typical mortgage payment is around $1,196, and the average rent is $1,423.
The university contributes to the city’s vibrant cultural scene, and there are numerous festivals throughout the year. Outdoor recreation opportunities are plentiful, including hiking at the Clear Creek Metro-park and exploring the Franklin Park Conservatory and Botanical Gardens.
Health care in Columbus is top-rated, with nine hospitals located within a 25-mile radius, including the highly ranked Ohio State University Wexner Medical Center. Ohio’s income tax ranges from 2.765% to 3.99%, and seniors receive various tax breaks.
Ann Arbor, MI
Despite its above-average cost of living index of 110.7, Ann Arbor, with a population of 123,851, offers retirees abundant activities. There is something for everyone, from university-sponsored classes to city-wide events like the summer jazz series and the Ann Arbor Art Fair.
Outdoor activities include ice skating, golfing, canoeing, and more. Ann Arbor also boasts a lively nightlife scene, numerous eateries, and world-class healthcare provided by the University of Michigan’s Medical Center. Michigan taxes income at a flat rate of 4.25%, with generous deductions for retirees.
Spokane, WA
With its population of 230,160, Spokane attracts retirees with its relatively affordable cost of living (103.1), outstanding healthcare, and high quality of life. The city offers various outdoor activities and a rich arts and culinary scene.
Healthcare options are numerous, with nine hospitals within a 25-mile radius. Washington doesn’t have an income tax, providing tax-free withdrawals from retirement plans, pension payments, and Social Security benefits.
San Antonio, TX
With a population of 1.45 million, San Antonio offers big-city amenities at an affordable cost of living (92.1). The city is famous for its diverse food scene, numerous entertainment options, and abundant outdoor activities.
It is home to one of the largest concentrations of military bases in the U.S., providing services to active servicemembers and retirees. The city offers world-class healthcare, with the U.S. Army Medical Command and Brooke Army Medical Center. Texas has no income tax, so all retirement income is tax-free.
Despite the traditional allure of home ownership, the current housing market and financial landscape present a compelling case for retirees to consider renting. The flexibility to relocate as desired, the lack of home maintenance responsibilities, and potential tax benefits add to the appeal. Moreover, the opportunity to live in locations that might otherwise be unaffordable can provide a vibrant, enriching retirement experience. Regardless of your long-term plans, it’s worth considering the numerous possibilities that renting in retirement can offer.
