Exploring the 4 major factors that need to be considered when deciding whether to buy your vacation home in retirement or continue renting.

The warm weather. The beachside views. Or perhaps a winter escape. Retirement opens the door for many people to make that vacation escape a fixture in their lives. However, once you’ve narrowed down the dream destination, a new question arises—should you buy your vacation home or just keep renting?

This is something I’ve been getting asked more and more often—especially over the winter months. When I came across this article in Kiplinger’s Retirement Planning 2025 I thought it would be a good idea to put together a podcast on how you can decide whether you should rent or buy your vacation home.

If you’re a snowbird (or aspiring one), here are the four big things you need to think about before deciding whether to buy or rent that dream retirement getaway.

Before even considering whether to rent or buy, ask yourself: “How will my health insurance work where I want to live?”

If you’re on Medicare, you need to know how your plan works in your potential winter home. Medicare Supplement usually works nationwide as long as the doctor accepts Medicare. That’s a huge plus if you’re living in different places throughout the year.

However, if you’re on Medicare Advantage, it gets trickier. Many of those plans are local and might not provide the same coverage in other states. Before making a move—or even booking your rental—talk to your health insurance broker about your options. Some Medicare Advantage plans offer national networks, but not all. It’s worth checking.

One of the big draws to states like Florida, Texas, or Nevada is the promise of “no income tax.” But here’s the thing: you may already be living in a state that gives you a sweet deal on taxes in retirement—and you didn’t even realize it.

In Wisconsin, for example, Social Security is already tax-free. Same goes for retirement income in Illinois. Even clients earning six figures (and more) often owe little to no state tax. Moving for tax purposes alone might not actually save you that much. On the other hand, for retirees in high-tax states like Minnesota, a move might make more financial sense.

Bottom line: Run your numbers first. Don’t just look at a state’s tax rate—understand how your income will be taxed in your specific situation.

Owning property out of state adds complexity to your estate plan. When you pass away, your executor might need to handle probate in multiple states—something that can be time-consuming, expensive, and stressful for your loved ones.

If you’re thinking about buying that dream vacation home, consider doing so through a trust. This can make things much smoother down the road. But if you want to keep things simple, renting might be the better option.

Let’s talk numbers. The big question: does it cost more to buy or to rent?

According to CBRE, a leading real estate research group, buying a home is currently 35% more expensive than renting (as of December 2024). A year earlier, that figure was a whopping 50%. Even if your own spreadsheet says buying is better, national trends suggest that renting might give you more bang for your buck right now.

(chart credit: CBRE.com https://www.cbre.com/insights/briefs/renting-will-likely-be-less-expensive-than-buying-a-home-for-some-time) 

But here’s the thing I told both of the clients who asked me about this recently: this is more than just a financial decision. It’s a lifestyle choice.

Ask yourself:

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• Do you love the flexibility of renting and the freedom to try new places?
  
• Or do you love the pride of ownership and having your own space you can return to each year?
  

If you’ve already rented in the area, lived in the neighborhood for a few seasons, and know what to expect, great—you’re in a good position to decide. But if you’ve only visited for a week or stayed at a hotel, consider renting for a month before making any big purchases.

The Kiplinger article listed some unexpected gems for snowbirds—places like Florence, SC, Brunswick, GA, and Apache Junction, AZ. These aren’t the usual suspects, and they offer lower costs of living, access to healthcare, and a laid-back lifestyle. They also include some interesting categories to compare each destination by. All of these locations were new to me, but if you’ve had any experience in these places email me and let me know what you think!

If you’re wondering whether to buy or rent your vacation home, make sure you look beyond just the price tag. Your health coverage, estate plan, tax implications, and personal lifestyle all play a role in this major decision.

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Additional Links:

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• 8 Great Places for Snowbirds to Land – Kiplinger Magazine
  
• Renting Will Likely Be Less Expensive Than Buying a Home for Some Time – CBRE.com
  
• Are you better off renting or buying a home in retirement? – Mr. Retirement YouTube Channel
  

Connect With Jeremy Keil:

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