Budgeting for Retirement: The Long Term Costs of Maintaining a House Must Be Included

It’s easy to remember to budget for water, electricity, natural gas and/or heating fuel, telephones, house insurance, property taxes, internet access and cable TV when planning for retirement. It’s also a good idea to include some factor for inflation in those costs. However what many of us forget to budget for is the costs of keeping and maintaining a home.

Yes, if you’re renting you may be able to skip this article. It could give you a good idea of what to expect should you choose to buy a home in the future, though.

Planning for Long Term House Maintenance, Repairs and Replacements

People vaguely know that many things in their homes will need to be replaced over the long term. But many people don’t save the money in advance that they will need to pay for these repairs and replacements.

While they are working, they tend to rely on hope and maybe a bonus at work to pay the bills. Some, even worse, rely on their line of credit or credit card to bail them out. If they can’t pay that back at the end of the month, though, ouch.

In retirement, however, you are very unlikely to get any bonus or any raise. When these replacements and repairs roll around you need to have the money ready and waiting. But how much is realistic?

Estimated Costs and Required Annual Savings to Pay for Long Term House Repairs, Replacements and Maintenance

Everyone’s home is different. Mine, for example, houses a raging herd of dust rhinos. The following costs, therefore, are just an example to get you thinking. You may be able to come up with a more realistic set of numbers for your home from past bills, ads or based on chats with neighbours.

Amount to Save Per Year Number of Years to Save Total Cost of Item Item
$200 15 $3000 new furnace, installed
$133 15 $2000 new air conditioner (You may feel the heat more when you’re old.)
$100 10 $1000 new refrigerator, with taxes and delivery
$67 15 $1000 new dishwasher, installed
$50 20 $1000 new stove with oven
$50 15 $750 new washing machine
$37 20 $750 new clothes dryer
$100 10 $1000 new snowblower (Remember, you’re going to be old!)
$10 20 $200 new lawnmower
$214 35 $7500 new tub/shower bathroom (They do start to leak.)
$467 15 $7000 new roof for house (Yes, it might last longer. Yes, we have a lot of roof.)

This adds up to $1428 / year.

Did you notice I didn’t include the cost to replace a Central Vacuum system? I told you I had dust rhinos, remember? If you are averse to them, you may want to add more to your personal savings

Your Personal Home “Reserve Fund” Needs Funding

That means every year, even the years where you’re paying for an expensive item like a new furnace, you need to save $1428 from your pension and other retirement income. Those savings are your personal “reserve fund” just like one a condo might have. You’ll need this money saved, ready and waiting to pay the bills when needed.

Other Items to Repair or Replace to Maintain a Home

The above list does not include replacing any of the following. Most of these items, though, will also wear out in 10-35 years.

  • storm doors
  • windows (the seals go and they permanently fog up)
  • foundations (they can start to leak unexpectedly)
  • bricks (can need re-pointing)
  • chimney repair or replacement (including liners)
  • aluminum and vinyl siding
  • toilets
  • bathroom or kitchen exhaust fans
  • electrical upgrading (the knob and tube wiring crowd thought they were state of the art, too!)
  • carpets
  • vinyl flooring
  • drapes and blinds
  • couches, chairs and other upholstered furniture
  • linens
  • fireplaces
  • garage door openers or doors
  • fences (If your neighbor wants to put one up, you have to pay half in most municipalities.)
  • small appliances (These include microwaves, blenders, toasters, kettles, coffee makers, hair dryers, humidifiers, dehumidifiers etc.)
  • doorbells (Have you priced buzzers recently? You’d be surprised what 10 cents worth of plastic costs.)

Okay, you get the idea.

Now you can see why many people on “fixed incomes” are so vocal about rising costs.  They can sit on their couch with the spring digging into them, while not needing a TV because they can’t afford cable or eyeglasses, but if they don’t fix the roof they’d better hold a bucket on their lap.

My Advice
Save. Lots.

Further Information

Join In
Did the cost of an unexpected repair or replacement challenge you recently? Have you started a savings system to be ready when the roof goes? Please share your experiences with a comment.

2 thoughts on “Budgeting for Retirement: The Long Term Costs of Maintaining a House Must Be Included

    • I suspect it might not be able to because the refrigerant used in those older fridges is no longer allowed to be sold. Still, it might be worth putting a new compressor and refrigerant in the old frame: honest steel vs plastic!

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