By Scott Burns

Q. In several columns you have advocated renting rather than owning a house. I would like to ask you: Under what circumstances is renting more feasible? I am single, female and 69 years old. I own a house with no mortgage. It’s worth about $210,000. I also have stocks and bonds worth about $700,000. I have no debts and pay off my credit cards every month. I would like to rent, but, with the massive federal debt looming, I am concerned that rents will rise dramatically. In that scenario, my house also might increase in value— so I would lose two ways. What would you recommend? —B. F., by email

A. The circumstances where it is better to rent than own probably don’t apply to you. Your financial assets are significantly larger than the value of your mortgage-free house, so you can’t be described as “house poor.” Here are three different conditions where renting is likely to be better than owning:

• Young and mobile. If you are young and likely to change jobs and locations in the near future, owning a house doesn’t make sense simply because the transaction costs for buying and selling are likely to wipe out any gains you might make from near-term price appreciation. It’s better to focus on building your cash reserves so you can negotiate your salary from strength rather than weakness.
• Older and short both income and savings. Many couples celebrate their last tuition payment by buying a larger and more expensive house, reducing their ability to save and invest in the years when it is easiest. That’s the opposite of what they should be doing. Others discover that their home equity is the bulk of their net worth. By downsizing or becoming renters, they can reduce their cost of shelter and increase the amount of money they have in financial assets. That, in turn, can help them have a far more secure retirement.
• People who live in cities where owning costs much more than renting. When owning versus renting is a wash, the choice is entirely a matter of personal preference. But there are places where the cost of owning is wildly higher than the cost of renting comparable shelter. The ownership premium may remain forever, but you need to understand that owning means you are willing to spend more for your shelter and less for other things.

Q. At age 64 and 63 my wife and I seem to receive a lot of solicitations for life insurance. We are both in good health. I plan on working 3 or 4 more years. She does not work. Many of these offers tout their relationship with the AARP. My wife received one offer of a $10,000 life insurance policy which would end at age 100 when, I believe, she would receive the $10,000 face amount and perhaps some earnings–the premium would be $50 a month. However, it looks to me that she would be better off putting $50 a month in a bond fund or some other investment, especially if she expected to live another 10 years or so. Are these offers ever worth taking a look at— or are they just generating income for the companies selling them? —P.R., by email

A. The more important question is whether you need life insurance at all. By the time you retire you are likely to have income from Social Security, perhaps a pension, and income from your retirement savings. You may have no need to work.

This means your surviving spouse isn’t likely to suffer a drop in her standard of living when you die. Protecting the living standard of your survivors is the main purpose of life insurance. Once your living standard no longer depends on your earning power, you no longer need life insurance.

Many of the insurance policies offered to older people are “burial” policies. The basic assumption is that you don’t have any other assets, so you’ll be sticking someone else with the cost of your funeral and burial— unless you have a life insurance policy. If those are your circumstances, then a burial policy is expensive, but it will do the trick. Trying to save $50 a month toward a funeral doesn’t work because you may die well before you have accumulated enough money to pay your last costs.