Q. My parents are looking for a house in the Dallas-Fort Worth area. They are retired. They are trying to decide if they should pay cash for the house. They have close to $620,000 in savings (CDs, 401(k)s, IRA) and are looking for a $200,000 house. They also have about $1,300 in Social Security income each month. Mom is 69; Dad is 73. Their combined monthly expenses are less than $1,900 (they currently have no house payment).

They prefer CDs and FDIC-insured accounts over bonds and stocks, but they are slowly warming up to the idea of a low-cost balanced fund. Does it make sense to pay cash for the house, or to finance it? ---A.H., by email from Dallas

A. The basic idea is a good one--- move to be near adult children and move to a city that attracts a surprising number of retirees. But given their caution and age, I wondered: What income could your parents get from an inflation-adjusted joint life annuity, assuming a 75 percent benefit for the survivor?

Answer: $2,354 a month on a $420,000 commitment. (The figure comes from the Vanguard website, where such life annuities are offered.) Add their Social Security benefits of $1,300 a month and they would easily have enough to cover their living expenses and the operating expenses of a $200,000 house.

Putting all their money into a life annuity, however, wouldn’t be prudent. A better option would be to pay cash for the house. Then put about $240,000 into an inflation-adjusted joint life annuity that would provide about $1,300 a month. And, finally, invest the remaining $180,000 in a low-cost balanced fund such as Vanguard Wellesley Admiral shares (current yield about 4.3 percent) or Vanguard Wellington Admiral shares (current yield about 3.2 percent).

They would have their basic expenses covered by Social Security and annuity income and a reserve fund that would add a bit more.

You might also have them consider a townhouse or condo where the maintenance costs would be less. In any case, following Ed McMahon and having a mortgage isn’t a good idea.

Q. My broker has told me, on numerous occasions, "Don't worry. You’ll never run out of money!” But I have lost a lot of money. At 85 years, with a mortgage and a wife, I’m worried. Here’s our story:

We were living in New Orleans when Katrina struck. We evacuated to San Antonio. When we returned and repaired the damage to our house, I decided it would be better to move to San Antonio. I sold our home for $288,000 free and clear. I also had $200,000 in a brokerage account.

In San Antonio, my new broker said: “Don’t pay cash for your house. It’s better to have a mortgage and put the money to work for you. You can pay the mortgage and still have more money to live on.” I put $30,000 down on a modest San Antonio home. In September I had $460,000 in my brokerage account. Now I have only $336,000---but I still have a mortgage balance of $112,000.

My investments are in mutual funds like Mutual A shares and Franklin Income A shares and I have lost over $70,000 since September. My concern is that my wife is 54, and I want to leave her the house free and clear, and something for her to live on. What should I do? ---R.T., by email from San Antonio, TX

A. It’s easy for a broker to suggest that your investment will earn more than you’ll pay on a mortgage because the broker will have more money to earn commissions on, even if the investments don’t work out. A mortgage can be reasonable for a young worker. But it’s dangerous for an 85-year-old whose income comes from investments.

Having a mortgage increases your risk. It may also increase your income taxes. In order to make the mortgage payments, you’ll need to take more withdrawals from your investments. This may trigger the taxation of Social Security benefits. While you’ll have an interest deduction to offset some of the investment income, you still may have to pay income taxes on a portion of your Social Security benefits.

Your broker’s fund recommendations are reasonable in terms of expense and historical performance. But to invest most of your money in equities, while recommending a mortgage, is foolish. I suggest that you reduce your risk by redeeming some of your shares to pay off your mortgage.