Retirement Roommates - What Are They and Are They Right For You?
If you thought your life with roommates was over after college — think again. Having roommates in retirement has been showcased in shows like Golden Girls, however, the concept is not widely publicized. When you consider the 4.7 million adults ages 65 and older living in poverty,1 it’s no surprise that some seniors revert back to the college-age way of life once a stable paycheck stops coming in every month. When you retire, it doesn't mean that rent and mortgages don’t go away. If anything, for many retirees, they become even more of a concern. While you may think it’s time to lift up your feet and live a luxurious lifestyle, there are many payments that still have to be accounted for after you exit the workforce.
In case you thought your expenses decrease significantly after you’re retired: the Bureau of Labor Statistics reports that older households — those run by someone who is 65-years-old or older — spend an average of about $48,000 per year ($3,800 per month.2 This figure is only approximately $1,000 less than the monthly average of U.S. households combined!2 Before you sign away independent living for good, consider the advantages and disadvantages of having a roommate when you’re retired.
Pros of Living with a Roommate in Retirement
1. Additional Income
If you already have a house, renting out a room can help increase your cash flow, in turn providing you with the additional income you need to pay your mortgage and other bills. While you may lose some privacy, with the right roommate, you can gain some peace of mind knowing you don’t have to solely rely on your own income to cover the upcoming month’s expenses.
2. Less Responsibility
Having less responsibility on your plate is the result of living with a roommate who is capable of sharing household chores. From doing the dishes to mowing the grass, there are countless chores you and your new roommate can split, which, in a way, pays for the sacrifice in the currency of more free time. Having someone there to assume at least part of the responsibility can help you live a more enjoyable retirement.
Think about it: once you’re retired, you’re (most likely) not going to have an office to visit every day. It can get pretty lonely, especially if you’re an extrovert. A roommate can easily turn into a friend, therefore broadening your social circle. Plus, since you both will be retired, you can find interests that you share and make the most of your retirement years together. Retiring single can be difficult, but having a roommate can help you focus more on what you do have, rather than what you don’t.
Cons of Living with a Roommate in Retirement
1. Less Privacy
As with any shared living space, it can be difficult to have someone around you — all of the time. So, be sure to outline your needs and expectations from the very beginning so you are both on the same page. If you’re someone who has had bad roommate experiences in the past, familiarize yourself with their schedule and try to maximize your time while they’re away.
Even if you sign a contract, there’s no guarantee your roommate is going to stay the course. If you’re someone who doesn’t like surprises, it could be difficult to adjust to a sometimes unpredictable living situation. The best rule of thumb is to clearly explain your intentions with your roommate from the very beginning so you don’t suddenly have to pay rent for two.
Tying into unpredictability, it can be easy to become dependent on your roommate’s rent every month. However, as we all know, renters come and go, so it’s important to always have a back-up plan in case they are suddenly no longer able to live with you. Their financial support may help you feel more secure about paying your bills, but you never want to be 100 percent reliant on it. That’s why having savings and an emergency fund (that you can withdraw from at any moment) is a key way you can ensure you have a backup plan.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.