Renting forever

Renting forever can work only if you invest the cash you would otherwise use on a house. Our model covers 813 large US cities. Renting beats owning in 134 of them even after 30 years. By skipping a typical purchase, you keep $78,185 in upfront cash immediately. At an annual return of 8.3%, the amount grows over 30 years to $855,000. This plan works only if you invest the savings and prepare to pay rent in old age.

Is it bad to rent forever?

Lifelong renting harms your finances only if you spend the cash left over instead of investing it. Your net wealth equals the total you own minus the total you owe. Owners have $396,500 in net wealth, compared with $10,400 for the typical renter, who holds just $1,800 in cash, according to Harvard's Joint Center for Housing Studies.

A mortgage requires homeowners to save, which is how they build that cushion. Every payment adds to your equity, which is the portion of the home's value that you own outright. No one makes a renter contribute to an investment account. Without investing the difference, you'll have very little when you reach old age. The plan succeeds only if you actually invest the money; this wealth gap explains why. See where both budgets go in our guide on whether renting wastes money.

Ways a lifelong renter builds wealth

Putting the house money you don't spend into stocks and bonds builds wealth for you as a renter. A typical $332,700 US home in the Census survey requires $66,540 down, equal to 20%, plus $11,645 in closing costs. These closing costs cover the lender and legal fees required to establish a mortgage. In total, buyers pay $78,185 upfront.

The $78,185 stays with you as a renter, and you can invest it right away. Since 1928, stocks and bonds together have earned 8.3% a year, according to NYU Stern data. Past returns don't guarantee future results. Market values fall during poor years. With an annual return of 8.3%, your upfront cash becomes $137,000 after 7 years, $259,000 after 15 years and $855,000 after 30 years.

Savings each month also help. For a typical owner, the loan, tax, insurance and 1% upkeep total $2,461 each month. The median rent across the US is $1,413. Use rent and invest vs buy to compare both paths and review the full cost of owning a home.

Cities where renting forever beats buying

Expensive markets make renting hard to beat because prices are high and the Freddie Mac mortgage rate is 7.24%. Owning catches up with renting after a median of 10 years in our 813-city model. Renting comes out ahead in 580 cities over 7 years. Homeownership never catches up with renting within 30 years in 134 cities. The math never flips in those 134 cities, so lifelong renting is safest there. In other places, renting forever means betting on a move or on investments performing well enough to remain ahead after year 10. Use the rent vs buy by city guide to check your own area.

Rent increases and landlord risks

Your greatest risk is rising rent costs while a fixed mortgage payment stays the same. According to the Bureau of Labor Statistics index, US rents have increased 3.5% each year since 2006. Between 2001 and 2024, median rent increased 30% after inflation, while renter income rose only 9%, according to Harvard's Joint Center for Housing Studies. In 2024, the typical renter paid 31% of income for rent and utilities, according to Harvard's data.

You also follow a landlord's schedule. A building owner can sell it, end your lease or raise the price when your lease renews. Just a few states limit yearly rent increases. California allows annual increases of 5% plus local inflation, with a 10% maximum. Oregon limits increases to whichever is lower, 10% or 7% plus inflation, and caps the rate at 10% for 2027.

Some moves are also forced. The Federal Reserve survey found that 2% of renters moved because of eviction or its threat in 2024, equal to 14% of movers. You can limit rent hikes at renewal by learning how to negotiate rent.

Can you afford retirement if you rent for life?

Your savings must cover rent for decades if retirement is to work without a paid off house. Older renters have a median net worth equal to just 2% of that held by older owners, reports Harvard's study on older adults. Cost burden affects at least half of older renters in 88 of the 100 largest metros, according to the Harvard report. When rent and utilities use more than 30% of household income, that household is cost burdened.

When paychecks stop after retirement, owners who paid off their loans beforehand no longer have their largest monthly bill. Your rent bill doesn't end, so your nest egg must also cover rent increases. Use the rent vs buy calculator to test your plan, and read renting or owning in retirement.