Wednesday, May 11, 2011

Live For Who?

We know someone who is separated. She owns a large property in the country and has 3 grown kids.

The marital home (above) is in the midst of being sold for a nice sum. The dilemma is, should she buy or rent at this stage of life -- over 60 yrs old?

In order to buy, it would cost 50% of the proceeds of the sale. It is important for her to have enough room to house family when they visit.

Having come from a generation where RSPs were not as mainstream as it is for D and I, she has no significant retirement savings. Her own mother, when she passed on, left her $10000.

It is also important for her to leave money to her kids. Two of them are self sustaining. One is struggling still in their 40's. There is a chance they may have to move in with her.

I think she ought to rent first and decide later, rather than buy the first place that comes up. It is important to ensure there is enough money for her first as one never knows what health challenges may crop up.

What if there is need of assisted living? Those types of living arrangements do not come cheap. Elaborate family dinners can be held at someone else's home.

She has spent her life working around everyone else. I'm not sure she has it in her to start living for herself first. I'd hate to see her financial stability weakened because of this.


  1. Hi MiddleWay,

    Based on what you've written I'd say that she should go the "rent" route.

    As a rule I always opt for the simple (easy to revert) decision. She can rent (a big-sized place) and then depending on how that goes can *then* decide to buy a house if all.

    Just my two cents,

  2. Hi Ram;

    I believe so too, even though I know she will disagree.

    That's interesting that you always opt for the easy to revert decision. I've never considered that as I assume there is security and more control in owning.

    You've given me something to think about. Thank you!

  3. I think she should rent for now while she looks for the perfect place, not just choose from what is currently available.

    In the USA now, you can buy a house with a reverse mortgage. So you put half or so down, take a reverse mortgage for the other half, no monthly payments and hang on to the rest of your cash. Do you have that option available?

  4. Hi Ram;

    I agree with you but she isn't going to rent.

    Your viewpoint on opting for the simple, easy to revert decision given me a lot to think about.

    Never considered that from a big picture perspective as I have viewed ownership as security.

    Hi Petunia 100;

    We cannot get a reverse mortgage until one has a significant amount of equity. It's an interesting set up. I've not heard of it until now.