It can begin with creaky pipes that leak, or even explode, into your bedroom. Or maybe it starts with a sputtering air conditioning unit that quickly leaves you sweltering in the summer heat. No one likes paying for home repairs, but the expense can become especially problematic when you’re living on a fixed income. So when should you repair your home, and when should you give up and downsize to a smaller place? Here’s how to make the decision.
Before You Retire
Some home repairs are simply unavoidable. Roofs must be replaced. Air conditioners eventually die, and every home needs good insulation. If you’re not yet retired, consider asking an inspector to take a look at your home and assess the potential cost of upcoming repairs. Make those repairs now, before things become dire. You may save money by repairing parts of your home before they’re in complete disrepair, and it’s always better to make home repairs when you’re still pulling in an income.
Assessing Home Repairs
Already retired and looking at funding a number of costly repairs? Begin by assessing which repairs are absolutely necessary. For example, you might not need central air conditioning, and may even find that you save money by installing window units instead. Replacing your pricey washer and drier with something more energy efficient could save you money in the long-term.
But if the repair is a necessary one – such as a new roof, replacing broken stairs, or fixing leaky pipes – you’re going to have to bite the bullet. Viewing these repairs as a necessary and inevitable part of home ownership can be a good thing, since it forces you to take a long, hard look at your retirement budget. Consider meeting with a financial planner, who may be able to help you factor home improvement expenses into your long-term retirement budget.
Options for Funding Home Repairs
The good news is that, even if you’re worried about money, you probably have a small nest egg to draw from to fund your home improvement project. The real question is whether you should draw from that fund, or try another source. Your financial advisor can help you decide. If you know you want to stay in your home, consider a reverse mortgage. This option draws from the equity in your home to give you tax-free money you can use to repair your home. You don’t have to repay it as long as you remain in your home.
Time to Sell?
So when do home repairs mean that it’s time to sell? Consider downsizing into a smaller house if:
- Home repairs are so costly that they will eat up a significant portion of your retirement, and they are necessary to make your home safe to inhabit.
- You are considering moving anyway, and your repairs will greatly increase the sales value of your home.
- Repairing your home will require a large loan, or demand that you go back to work.
- Your home is in poor condition, but is in an area where property values are rising and where developers or buyers may be willing to pay a premium for an imperfect property.