- Federal Wealth Retirement Newsletter
- Posts
- The $1,200-a-Month Retirement Question: Rent, Own, or Relocate?
The $1,200-a-Month Retirement Question: Rent, Own, or Relocate?
Every federal retiree worries about healthcare and taxes.
But there’s another expense that quietly shapes your entire retirement — and most people underestimate it.
I call it “The $1,200-a-Month Question.”
Not because that’s what housing really costs today (in many places it’s $2,000–$3,000+).
But because it captures the point: your monthly living costs are more than a bill — they’re a retirement strategy.
The Housing Fork in the Road
At some point, every federal retiree faces a decision:
Rent → Flexibility and no maintenance headaches, but annual increases that outpace your COLA.
Own (Mortgage-Free) → Stability, but taxes, insurance, and repairs that quietly rival a rent check.
Relocate → Downsizing or moving to a lower-cost state can free up thousands, but may bring trade-offs in healthcare access, family proximity, and state taxes.
A Tale of Two Retirees
Let’s make this real.
Carla kept her Maryland home, mortgage-free. Her monthly housing costs average $900 (property tax, insurance, upkeep). She uses her pension to cover it, leaving her TSP largely intact for travel and extras.
Mike sold his house and now rents for $2,100 in Florida. Sunshine is great, but higher rent plus Medicare surcharges in his new zip code mean he’s withdrawing nearly $18,000 more each year from his TSP than Carla. Over 20 years, that’s more than $360,000 gone—mostly just to pay for a roof.
Housing isn’t just shelter. It’s the leverage point of your retirement math.
The Retirement Math Behind Housing
A retiree paying $1,200/month in rent might need 30% more from their TSP than someone with a paid-off home.
And because withdrawals are taxed, you may need to pull even more just to cover that bill.
Meanwhile, relocating may lower housing costs — but in some states, pension or TSP withdrawals are taxed more heavily.
What you save on rent can be erased by state tax codes or higher FEHB premiums.
4 Steps Before You Decide
Run the numbers. Housing should be no more than 25–30% of your retirement income.
Compare state taxes. Some states tax your FERS pension, others don’t. Your decision could swing thousands annually.
Check FEHB coverage. Relocating can limit networks or raise premiums. Don’t assume it’s the same everywhere.
Stress-test your TSP. Model withdrawals with your actual housing costs — not averages.
Your house isn’t just a roof. It’s the foundation of your retirement math.
And choosing wrong could quietly cost more than any market downturn.
—FWR