Should You Buy or Rent in Early Widowhood?


Widowhood brings with it a lot of lifestyle changes that also include major decisions such as staying in the same city or buying or renting. Once you’re a widow, your budget and long-term planning needs will almost certainly change. Many widows choose to move to a new city and sell their homes and face the immediate decision of having to buy or rent. For widows staying in the same city – there is a similar decision to make – should I sell my home? Should I buy again or rent?

The Plan: Take stock of your spending needs because if the decision is made to buy another home whether in the same city or another one – this will automatically limit your available cash flow and your ability to finance other lifestyle needs. If you decide to move to a more expensive city then you need to think further about additional maintenance costs, higher property taxes and higher utility bills.  There’s also the lawn, snow removal and the endless repairs that go along with homeownership.

If renting is an option, that gives more wiggle room to finance your needs and have additional cash to continue socking away. It also provides a way of transitioning to a new city or new life with having to commit to a purchase. It gives that added flexibility of testing out a new city. There’s no guarantee that a move to a new city will work out so its best to keep your options wide open. Even if you once lived in that city before and liked it there’s no guarantee that you will like it 5 or 10 years later. This is especially true in the case of major cosmopolitan cities with complex transportation systems, heavy traffic and congestion.

If you sell your home and end up with a large lump-sum that’s investable, then you need to a good-long term plan that includes earning dividends and monitoring an investment portfolio to ensure that there are good long-term gains.

Rather than investing the proceeds from a sale, another option is taking out an annuity (or series of annuities) to provide a guaranteed stream of retirement income. Annuities remove the risk of outliving your retirement funds because the insurance company will guarantee a monthly income for as long as you live. It would eliminate market risk and the need to build and monitor an investment portfolio. However it has its disadvantages. They may have higher costs because you are paying for the guarantee. Your income payments also cannot be adjusted to reflect changing needs in retirement.

How will a move impact your social support system? This will also have an impact not only on your social life but also your personal finances. Not having any family or friends around to help support or provide needed help with young children, is also a consideration. Having a strong network of support is key in early widowhood when young kids are in the mix.



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