They say that home is where the heart is. And with more than 90% of adults over the age of 65 reporting that they wish to remain in their current homes for as long as possible, this sentiment is proving to ring especially true. But what does it really take to successfully maintain your home in retirement?
It’s no secret that keeping up with a home can be a labor of love. If you currently have any home maintenance projects that could or should be done, you’re not alone. In a recent study of homeowners over the age of 50, nearly half reported that they, too, had some pending projects ahead2. When it comes to homeownership, there is always something to be done. With more and more retirees opting to age in place, there are several things to be aware of in terms of weekly, monthly, and yearly maintenance that will go a long way in ensuring you’ll be able to spend many more healthy and happy years in your home.
But, like everything else, homeownership and maintenance come with a price tag. Millions of Americans are facing retirement with limited savings and reduced income, so funding these maintenance projects will inevitably require some planning ahead.
Luckily, there are ample ways to get in front of costly repairs and replacement of big-ticket items throughout your home. And while budgeting for home maintenance is likely not the first thing you look forward to in retirement, it’s one of the most important measures you can take. By putting aside some cash to use for upcoming projects—even just a small amount every month – you’ll find that funding home upkeep and repairs is, in fact, possible. Consider the following ways to prepare for home maintenance and upkeep in retirement:
Be Proactive with a Maintenance Plan
It goes without saying that the more regular maintenance you put into your home, the less likely you are to face larger, more expensive repair costs when things break. So where do you begin? Start by taking a walk through and around your house, taking inventory of tasks that need to be or will soon need to be done, as well as the purchase and service dates of major appliances. When was the last time your HVAC system was serviced? When was your chimney cleaned? If it’s been a while, you may want to move up these tasks on your to-do list. By establishing a home maintenance routine, you’ll be able to budget for these costs in advance, making home maintenance easier, more predictable, and above all, less expensive.
Establish an Ongoing Budget for Home Upkeep
By now, you’re an experienced homeowner and as such, you know just how important it is to account for the ongoing costs of upkeep and repair. But how much money should you be budgeting for these costs, especially in retirement? There is no telling what the future holds and while it can be difficult to determine the price tag of your home maintenance and upkeep projects, there are a few good rules-of-thumb to consider to help nail down a savings strategy.
The first of these is the percentage rule. This rule asserts that, generally speaking, you should plan to spend 1-4% of your home’s value on annual maintenance. For example, if your home’s value is $200,000, you should expect to spend anywhere from $2,000 to $8,000 per year. While this is a rather wide range, accounting for factors such as the age and location of your home will help you best estimate for your individual budget needs.
The second rule-of-thumb for budgeting for home maintenance is the square footage rule. As its name suggests, this rule advises allocating $1 per square foot of your home for annual upkeep. In the example of a 2,000 square-foot home, this would translate to $2,000 in annual savings, or about $167 per month.
Build up a Fund for Bigger Repairs
Now that we’ve covered ways to budget for predictable maintenance or general wear and tear, let’s talk about budgeting for some bigger home expenses. Major home repairs like replacing a roof or water heater, treating or removing mold, or even fixing a foundation that appears to be sinking are ultimately going to come at a much higher expense than what the above calculations allot for.
In addition to your ongoing home upkeep budgeting, it’s important to have an emergency savings account you can readily tap into in the event of these larger and often unforeseen expenses. And while these more expensive repairs may be less frequent in nature, the reality is that at some point they are going to happen. A recent study found that in the past year alone, 88% of homeowners were forced to make at least one major repair3.
To put it in perspective, consider this: there are an estimated 128 million hot water heaters across US homes, with lifespans of roughly 10 years. This means that, on average, 12.8 million will fail every year4. Appliances will need to be replaced and eventually the roof will, too. Having a reserve for these big-ticket items will make a big difference in not only keeping your house in tiptop shape, but doing so without going into debt.
Know When to Hire a Professional
When it comes to maintenance projects around the house, the first decision you’ll have to make is whether you can do it yourself or should hire a professional for the job. And one of the top benefits of tackling home maintenance yourself is the obvious cost savings. In fact, a recent study by AARP found that homeowners can save an average of nearly $2,000 per year just by managing certain maintenance tasks rather than outsourcing or hiring a professional for everything5. Mastering new skills like changing an air filter or tightening a loose pipe or water connection will not only make you feel safer and more confident around the house, but will save you some cash as well.
However, it’s extremely important to realize that not all home maintenance tasks can be easily done by yourself. Certain tasks like cleaning upper-level exterior windows or servicing your boiler or HVAC system are simply too complex, risky, or time-consuming for most homeowners – regardless of how handy you are. For jobs like these, you’ll want to hire a professional to help you safely stay on top of things. And it doesn’t have to cost you an arm and a leg – start by asking your family, friends, and neighbors for referrals.
Prepare for Aging in Place Projects
Aging in place can be good for you! After all, you have the opportunity to keep the routine you’ve come to know for years, maintain your local connections, and enjoy a higher level of control over your surroundings. But the reality is that most homes are not designed to accommodate the needs of aging seniors. However, by making some modifications around the house, you can implement the changes you’ll need to comfortably stay in your home well into advanced age. And even the simplest of modifications can go a long way.
Start by raising electrical outlets to make them more accessible, installing better lighting both throughout and outside the house, and replacing turning doorknobs with lever handles that are easier to manage. These are just a few small measures you can take to better prepare your home for your advanced years. The best part? They’re relatively inexpensive to complete. For more on aging in place, check out our blog, “The Aging in Place Checklist.”
Tap into Home Equity
It’s no secret that taking care of your home as it ages is going to cost you. In fact, housing is the largest expense both retirees and pre-retirees face annually. Just consider this: homeowners ages 55-64 spend 22% of their total income on housing6. And this number only increases with age—homeowners ages 65-74 spend 28%6. If you could use an additional source of cash flow to help cover significant housing expenses, maintenance, and upkeep, tapping into your home equity with a reverse mortgage could be just the solution.
Available to homeowners ages 62 and older, a reverse mortgage allows you to access a portion of the equity in your home to use as you wish. By improving your retirement income and monthly cash flow, you’ll be able to make updates, repairs, or modifications to your home to live more comfortably—and fund ongoing maintenance and upkeep projects around the house.
With the growing number of retirees wishing to age in place and stay in their homes well into advanced years, keeping up with regular home maintenance can present new challenges. And while staying in your home may be more complicated and expensive than you think, all it takes is a little proactive planning and budgeting to be homeward bound on your own terms.
Want to learn more about funding your aging in place, ongoing home maintenance, and upkeep projects with a reverse mortgage? Contact the Longbridge team today.