Preparing for Retirement Expenses: 3 Home Repairs To Include in Your Long-Term Budget
Written by
Yaël Bizouati-Kennedy
Edited by
Amber Barkley
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When it comes to being prepared for expenses in retirement, the list tends to be long, and a well-thought-out plan is key to not being financially derailed. Indeed, retirees can face several financial shocks — and when switching to a fixed income, these can rapidly take a toll on their financial well-being.
One of these unexpected expenses is home repairs. With a lot of seniors wanting to “age in place,” this expense can be difficult to manage. Indeed, a Society of Actuaries survey found that one of the most common financial shocks retirees face is home repairs and upgrades, with 28% of retirees surveyed noting it.
“Just like us, as our homes age, they require more maintenance over time,” said Steve Sexton, CEO of Sexton Advisory Group. “Without accounting for home repair expenses, you’ll be in the red and have to dip into other critical financial buckets to cover these expenses, or even worse, go into debt to pay for them.”
Roof Repairs
Roof repair expenses can be extremely expensive — and they are often completely unavoidable. Delaying can cause even more damage the longer you wait.
“When you are in retirement, living on a fixed income, being faced with a sudden necessary roof repair can be a major financial strain if you hadn’t planned for it in your budget,” said Seamus Nally, CEO of TurboTenant.
‘Once in a Quarter Century’ Repairs
As Peter C. Earle, senior economist at American Institute for Economic Research, explained,by the time one reaches retirement, seniors have usually been living in their domicile for a long time.
“Just under 40% of homeowners have been in their existing homes for 30 years when they reach 65,” he said. “At that point, they could be facing some once-in-a-quarter century repairs: roof replacement, foundation work, window replacements and so on. If those individuals who’ve been in their homes for decades plan on staying in them, they’d better be prepared, and budget for some sizable expenses.”
In turn, in addition to accounting for roof repairs, Earle recommended budgeting for foundation repairs and possibly water damage restoration — which usually also requires mold remediation — depending upon where you live.
Mobility Enhancement Features
Another important factor to consider is that seniors aging in place might need to make some adjustments to their home. For instance, Brian Mollo, licensed real estate agent and CEO of Trusted House Buyers, noted that it’s important to keep cash on hand for accessibility additions, such as potential ramps, grab bars or other mobility-enhancing updates.
“As any homeowner can tell you, there are always things that could go wrong. If you are planning on living in your current home throughout your retirement, then you want to have money set aside to deal with major repairs, just in case,” he added.
All in all, Mollo placed the home repair budget ballpark in the $25,000-$75,000 range.
What Should Retirees Do To Not Be Caught Off-Guard?
According to Nally, each year, the general rule is that you are supposed to save 1%-3% of your home’s value for home maintenance/repairs, so homeowners should aim to do this over the years.
“Ideally, you won’t always have to spend that much in a year, so the money will spill over into the next year and eventually accumulate to a decent sum in retirement,” he added.
Michael Micheletti, chief communications officer at Unlock Technologies, also noted that while seniors are increasingly opting to “age in place,” many might move to smaller places — such as condos or townhomes.
“And if they own the unit, they will still be responsible for interior maintenance. While an HOA (homeowners’ association) will cover costs such as those associated with landscaping, roofing [and] exterior paint, a condo or townhome owner still must take care of everything from appliance repair, air conditioners and furnaces to flooring and any upgrades,” he added.
According to Micheletti, some of the steps people readying for retirement should take include maintaining an emergency fund — which, ideally, should cover 9-12 months of base living expenses.
“When those unexpected expenses happen — like an appliance goes out — you need to be ready,” he said.
In addition, he stressed the importance of paying off debt as soon as possible. “Going into retirement carrying debt is not a good idea for anyone. This includes your mortgage, any medical debt and any student loan debt,” he said.
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