Maintenance doesn’t end when retirement begins

It’s a lot easier to take care of home maintenance with a steady income. For retirees, keeping their homes looking their best is a bit more challenging.

Figures from Harvard University’s Joint Center for Housing Studies have some 40 percent of households of Americans 65 years and older still paying on home mortgages. Just 18 years ago, the figure was about half. Some of this result was the rapid increase in the price of new homes and the refinancing done on homes to borrow more to satisfy other debt obligations, such as student loans, for siblings, credit card debt and other money obligations. With the cost of living outpacing income by about 2 percent a year, for most Americans it appears that this trend of mortgage payments by those 65 and older will continue and may well increase.

Owning a home is the average family’s biggest asset and needs to be carefully maintained so it can increase in value with the housing market. As I drive around looking at homes on the exterior I see many signs that this is not the case. Many are in need of paint, shingle repair or replacement, mold on siding, shrubs growing out of control, driveways needing repair or replacement to name just a few. I am sure that the interior of these homes are also in need of repair or replacement.

If one has to sell their home for some unexpected reason, the cost of the work needed to be done will be deducted from the proposed sales price thus reducing the value of your asset substantially. In order to maintain a property during retirement the typical homeowner must budget some 2 to 4% of the home’s value each year to pay for upkeep and replacement costs. If you own the home with no mortgage payments then insurance and taxes must be added to those costs. The median value of a single family home in Hancock County was $156,300 in 2015 per Stats Indiana, which would reflect per year figures of $3,126 to $6252 per year for proper upkeep depending upon age, condition and construction of your home. Those yearly figures may seem high however if you look at the rent for that median value home of being at least $1,000 per month one can see how landlords have included maintenance costs in the rent amount which alien with ownership costs.

A study of the life expectancy of home components was created by The National Association of Home Builders some 10 years ago to give you the years of life expected with new equipment. I have further given you a typical cost for budgeting for you to determine a monthly figure to set aside.

Obviously, the listed costs are only a rough idea and will vary depending upon the exact sizes in your home and the condition of each item. Taking the cost and dividing by the number of years left for each item (before replacement is necessary) will give you a monthly set aside amount to budget for your home, to have the money to provide proper maintenance to insure its full market value.

Dean McFarland is a member of the Hancock County Council on Aging.
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