Q: I am a 65-year-old female, retired. I have about $50,000 in investments. I am selling a house as part of a divorce. I can purchase a house on my own for around $125,000, paying for it with the money from the sale of the house in the divorce. Should I buy a house and pay it off or try to rent? Rents are $800 to $1,100 a month in my area.

Angela

A: There are no easy answers when it comes to housing decisions in the current market. Home prices are up sharply. Rents are also high despite a rash of new construction. 

Many factors go into the buy vs. rent decision. What I can offer is a framework for thinking through the decision rather than a specific recommendation.

To make my personal finance bias clear, I always worry about the downside — what could go wrong.

The key question is, how deep is your financial cushion? What income do you have, such as pension, Social Security, alimony and so on (in addition to the $50,000 in investments)? What are your living expenses, including food and health insurance? Once you look at the difference between the two, how much of a cash cushion is there?

If the answer to the equation is that your finances are comfortable, then I would consider buying. There are many benefits to homeownership, from favorable tax treatment to the ability to decorate the place the way you want. I would make sure any place you might buy is one that you can age in comfortably. Steer clear of a home with lots of stairs and narrow doorways. I would also pay attention the surrounding neighborhood. Is there a grocery store?

However, if the cash cushion is thin (as I suspect), consider renting, at least for now. There are many ongoing and unexpected expenses that go with homeownership. Among them are repairs around the home, routine maintenance, home insurance and property taxes. I wouldn’t want you to be house poor. The landlord is responsible for maintenance and repairs if you rent.

The other reason to consider renting is it buys you time to come up with a financial and lifestyle plan, including figuring out your finances and looking into going back to work. “Divorce at age 65 requires a new financial plan that will incorporate her goals, resources and health conditions,” says financial planner Echo Huang, founder of Echo Wealth Management in Plymouth. “If she is relatively healthy and has longevity genes, consider learning new skills to start new life while earning some income.”

 

Chris Farrell is senior economics contributor, “Marketplace,” commentator, Minnesota Public Radio.