As retirement approaches, homeowners often weigh whether to keep their current home or sell it and move to a rental. A couple I met in Columbia was facing the same dilemma. They had a strong attachment to their long-time home, but considering the cost of living after retirement, it wasn't a decision to be made solely based on emotions. In this area, it's important to look at the numbers to see which way the scale tips.

According to Zillow, the average home value in Columbia is $231,363. This represents a modest increase of 1.4 percent over the past year, which is favorable. Since a large amount of money isn't tied up in the property and home values aren't experiencing wild fluctuations, there's less urgency in choosing when to sell. However, it's also important to note that the asset value isn't growing rapidly.

Rent prices tell a different story. According to Zumper, the average rent across Columbia is $1,549, which is a 3 percent increase from a year ago. For a one-bedroom, the average is around $1,100. The fact that rent is rising faster than home prices could be a concern. While this is a disadvantage, it's also worth noting that home sale prices remain relatively stable.

When calculating the price-to-rent ratio using these two figures, dividing $231,363 by the annual rent of $18,588 gives a ratio of about 12.5. This is considered low on a national scale. While this number is often interpreted as a signal that buying is relatively favorable, the situation is a bit different for those approaching retirement.

When looking at monthly expenses, this point becomes clearer. If a homeowner puts down 20 percent, or about $46,000, and takes out a 30-year fixed-rate mortgage, the principal and interest payment would be around $1,170 per month. South Carolina has a relatively low property tax rate, so even with taxes and insurance, the actual monthly burden would be around $1,370, which is lower than the current rent of $1,549. However, for retirees, the question remains whether having lower monthly payments or having a large sum of money tied up in real estate is more important.

Keeping the home means lower or no monthly payments, which is advantageous, but property taxes, homeowners insurance, and maintenance costs still need to be covered. South Carolina has a system that offers lower property taxes for homeowners, commonly referred to as the Homestead Exemption. If you plan to continue living in this home after retirement, it's helpful to check this aspect.

On the other hand, selling the home and moving to a rental would create monthly expenses, but it would allow for cashing out a large sum and relieve the burden of maintenance. However, in areas like Columbia, where the price-to-rent ratio is low, moving to rent a similar home after selling could lead to higher monthly expenses than expected.

If the area is of interest to Korean families, checking school district ratings is also important. However, for families whose children have become independent after retirement, accessibility to hospitals and convenience facilities may take precedence over school districts.

There are pros and cons to both choices, such as how one option may be advantageous while the other may pose a burden. Keeping the home allows for maintaining familiar neighborhoods and neighborly relationships, and there's less urgency to come up with a large sum of money. However, as one ages, it may become more challenging to manage maintenance, which is something to consider in advance. Conversely, moving to a rental alleviates management burdens, but one must accept the possibility of rent increases with each lease renewal. Ultimately, which option is better will depend on the couple's health status, distance from their children, and cash flow plans.

This article is not investment or legal advice, and it is recommended to consult with real estate and tax professionals before making any decisions.