Affording Your Home After You Retire

There are many sites on the internet that make recommendations for how much money a homeowner should expect to pay for home maintenance and repairs each year. Caldwell Banker, for example, suggests that homeowners should expect to pay “1.5 to 4 percent of the home’s original cost” for home maintenance and repairs each year. Let’s take a look at what that means, with two different examples.

(1) If you buy a home today for $300,000, you should expect to pay between $4,500 and $12,000 for maintenance and repairs each year-the equivalent of between $135,000 and $360,000 over 30 years of homeownership.

(2) If you bought a home in 1975 for $48,000, the annual estimated expense for up-keep would be between $720 and $1,920 per year-a total of between $21,600 and $57,600 over a 30-year time period.

Neither scenario sounds very realistic, does it?

It makes more sense to estimate a home’s maintenance and repair costs yearly, at 1.5 to 4 percent of the home’s current resale value, over the course of 30 years. That would account for inflation, the increase or decrease in home values, and the increase in costs for repairs and maintenance.

On a personal level, the necessity of repairs and maintenance along with your monetary situation throughout your years of homeownership will dictate how much money you put into your home each year and what kind of lifespan things have left when you retire. Maybe one year you’ll spend $2,000 to do rain gutter repairs, buy some trees, and replace a rotting front door. Maybe the next year you’ll spend $9,000 on replacing a broken water heater and a new boiler that cannot be repaired. Some years you’ll paint; some years you’ll upgrade your appliances; and some years you’ll get hit with larger expenses, such as replacing rptted siding or a roof. For all your repairs and maintenance you can follow You get the most affordable and quick services in Phoenix area.

Let’s say that that by the time you retire, you have paid off your mortgage. What happens to the amount of money you have for home repairs when you retire? Start with how much money will you have to live on when you retire. Your Estimated Benefits Statement, which you can request on the Social Security website, gives you an estimate of what you’ll get from Social Security; be sure to add in any additional savings and retirement plans you may have.

You have to do your own math, but here’s one an example of planning to care for a home with retirement income. With about 30 years left until full retirement age (70), according to your social security statement, you can expect to collect $2,266 per month if you retire at age 70. If you retire early, at age 62, you can expect to earn $1,262 per month-how does an annual income of $15,144 sound? Wait, first take out taxes, at about 15%. You’ll get 12,872.40 per year, which equals $1,072.70 per month.

Maybe you even have a spouse who earns about the same amount from social security, and you both retire at age 62. Then you’d have an annual income of $30,288. After taxes, the two of you combined would have about $25,744.80 to live on per year; that is $2,145.40 per month.

Based on today’s current prices for living expense (let’s forget for the moment that the cost of all these things keeps going up), subtract the following annual living expenses: $5,000 for property taxes (seems to be a fair average); $1200 per year for homeowner’s insurance; $2,400 for electricity at an average of $200 per month; $1,200 per year in telephone, Internet, and cable costs ($100 per month); $360 for trash removal ($30 per month); $2,400 for car expenses (insurance, inspection, repairs, registration, gas (about $200 a month, assuming the car is paid off); and $2,400 per year for food and household supplies (cleaning supplies, trash bags, light bulbs, etc.) at $200 a month. That leaves about $10,000.

What have I left out? What other things do you pay for over the course of a year that won’t fit into your budget if you retire? The cost of health insurance? The cost of your home security system? The cost of software and computer upgrades? A new grill, TV, or mattress when the old ones wear out? New clothing and shoes? Holiday gifts and donations to the local police and fire department? Dog and cat food and vet bills? The annual cost of filing your taxes? Oh yeah, and don’t forget the cost of home maintenance and repairs.

It’s hard to focus on it now, believe it and plan for it; but if not now, when? We all need savings accounts to live off of later. We need retirement plans, like 401ks and 403bs. Although they’ve been hit pretty hard by the current economy, they will still make a comeback over time. But take a look at them, too, and see how much money you can expect to get from them at a retirement age of 62 versus 70. How many of us really want to wait until we’re 70 years old to stop the daily grind? And what happens if we plan to not do any home repairs after we retire, but we keep living to age 90? What happens when we need a new septic system for at least $25,000 and a new boiler for about $5,000? And a new roof? And all sorts of other things start to fall apart? Everything in our homes is wearing out, our retirement income stay the same once we get there, and the cost of living and repairs keep going up.

I’m not ignoring the fact that homeowners can downsize or do a reverse mortgage when they get to retirement age; I’m talking about when homeowners want to stay in their homes after they retire. Continue living in the home that they’ve made so many memories in.

The best way to handle the situation is to have your house in good repair as much as possible all along, and especially before you retire. If you only spend $2,000 one year on home repairs and maintenance, set aside another $2,000 or more in a savings account for when then next year’s repairs are more expensive. Keep your home in good repair. Easy to say, I know.

About Oblena

Janica Oblena is the writer of ‘Midnight Secrets’. She is a graduate of Harvard University with a degree in Journalism. She is currently the senior editor of
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