Ought to You Tackle a Roommate in Retirement?

You’ve got bought an additional room and will use the additional money. Must you tackle a roommate in retirement? With the median rental value of a two-bedroom unit within the U.S. costing $1,887 in February 2025, it may be tempting to think about.

In the event you do select to open your own home to a roommate, you will not be alone in making that selection. Individuals over 65 are the fastest-growing age group taking in roommates of their properties, based on SpareRoom, an internet platform for individuals to seek out roommates.

Listed below are a couple of factors to think about earlier than taking the step of dwelling with somebody.

Benefits of Having a Roommate

Having a roommate (or a number of roommates) might be a straightforward option to scale back your price of dwelling—for many individuals, housing is considered one of their largest month-to-month bills.

“Even a couple of hundred {dollars} a month can have a huge impact and which may permit you to retire a bit earlier or spend extra on stuff you take pleasure in,” advises Justin Pritchard, a licensed monetary planner at Method Monetary.

However you will have to pay taxes on that cash.

“The largest factor to recollect is that you must report the hire as earnings. You possibly can take deductions to scale back some or the entire earnings from being taxed, however irrespective of what, it provides a layer of complication to your tax return,” says Tara Unverzagt, president and senior monetary planner at South Bay Monetary Companions. “In the event you file your self, it’s possible you’ll want an expert to do it appropriately.”

Along with the cash, having a roommate could also be a great way to extend social interplay as a result of many seniors report fighting loneliness.

A 2023 College of Michigan survey discovered that greater than one-third of adults ages 50 to 80 reported feeling remoted over the previous 12 months. Moreover, one-third stated that they had rare contact, which was outlined as as soon as every week or much less, with individuals from exterior their house in 2023.

Having a roommate might assist some seniors stave of emotions of isolation and loneliness because of dwelling alone.

Disadvantages of Having a Roommate

You will not have as a lot privateness while you invite a roommate to dwell with you.

“Is privateness essential to you? In that case, you most likely need to keep away from going the roommate route,” advises Eric Maldonado, a licensed monetary planner and proprietor of Aquila Wealth Advisors.

There could also be disagreements with a roommate, one thing you do not have to fret about should you dwell alone.

“In any shared dwelling area, there could also be conflicts concerning cleanliness and the way in which the area is utilized. And one of many largest downsides is that if it does not work out and also you need to get the tenant out of the house, it might be very uncomfortable throughout the course of, which might drag on for fairly a while,” says Sebastian Frey, a dealer affiliate at Compass Actual Property.

Discovering a Roommate

Begin by reaching out to those that and allow them to know you’re searching for a roommate.

“When you’ve got household or mates native you may attempt letting them know you’re searching for a roommate. In case you are a member at a church or social membership you may let individuals know you’re searching for a roommate and will even ask to put up an announcement,” Maldonado says.

You could want to place an internet advert detailing the room you may have for hire.  

“You possibly can put up your room on Craigslist or different native lodging search web sites. In case you are searching for somebody of a sure age or stage of life, there are most likely civic golf equipment or boards you’ll be able to put up in on-line that cater to these age teams,” Maldonado advises.

Vetting a Roommate

You will need to try the background of a possible roommate to verify they’re an excellent match for you.

“You’d need to have an excellent vetting course of. Persistence and taking your time [are] key right here. Do a background examine, observe up with references, and have a pair conversations first,” Maldonado says.

Focus on with a possible roommate your schedule and what you count on from somebody dwelling in your house.

“Ensure you clearly define your dwelling preparations, your schedule, and your expectations earlier than committing to renting out a room. Take the time to decide on a roommate who you suppose you will get alongside properly with,” Hutchinson says.

Making ready for a Roommate

You will have to get the room you’re renting out prepared for a roommate and write up a rental settlement.

“There’s some administrative setup you’ll have to do, together with making a written settlement, getting ready your room, and ensuring you’ve learn up on the state and native legal guidelines and tax guidelines. However the monetary reward is properly value your time,” Hutchinson says.

Undecided how a lot to cost? SpareRoom supplies a listing of common rents in metro areas round america.

“Check out different room listings in your space or common rents to see how a lot you may cost to your room,” Hutchinson advises.

The Backside Line

In the event you like firm and have a spare room in your house, you might be able to complement your retirement earnings by renting a room. Do a background examine on all potential renters and ask for references.

Seek for renters on-line, inquire with family and friends, and ask round at social golf equipment. You are searching for somebody who can be an excellent match to your house. Do not rush the method. Be sure that to wash and prep the room and put together a rental settlement. As soon as you discover the appropriate individual, the room is theirs and the month-to-month hire examine is yours.