Home maintenance is a big expense that needs to be factored into your retirement plan.
When approaching retirement, most of us will try to calculate our future expenses and pad our nest egg to live comfortably in the coming years. Retirees often have a fixed income with little flexibility, and unforeseen expenses can often turn into crisis. Unexpected home repairs can throw a big wrench in your retirement budget and are one of the top challenges for retirees.
The Society of Actuaries, a trade organization, found that 20% of retirees cannot afford to spend $1,000 on an unexpected expense.
Regular home maintenance should be factored in to your monthly budget. Many experts recommend allocating 2% of your home’s value to maintenance costs per year. Some years you will use more funds, some years you will use less. The important thing is not to let any minor problems linger too long.
If you’re planning on staying in your home as long as physically possible, also estimate how much you might need for home modifications as your mobility declines. Consider a ramp or chair lift for stairs, wider doorways, and walk-in tubs.
To be even more precise, take regular inventory of your home and chart the lifespan of your roof, appliances, exterior paint, hot water heater, ventilation, a/c, furnace, carpet/flooring, and home furnishings including rugs, mattresses, furniture and window treatments. Include the cost and time for replacement, and allocate funds accordingly.
To get an idea of how long home components typically last, check out this study from the National Association of Home Builders.
Sweat The Small Stuff
Neglecting the little things will turn into costly repairs in the long run. Keep up on regular maintenance from servicing the furnace to annually cleaning the gutters so small problems don’t escalate into larger ones.
Keep in mind, too, that in retirement you may need to outsource some of the regular household upkeep, and that will need to be factored into your budget as well.