Me, surprised last year in Bayeux, France.
Well, Mr. Smartypants-no-surprises got a bad surprise! Ouch! For those of you that saw the last post that looked at budget to actual, you may have noticed that I said, “We did find some areas that needed refinement which will push us closer to the retirement income spending ceiling next year. I under-budgeted for home maintenance expenses.” That was the understatement of 2018.
While most of our retirement budget was pretty well researched, the one area for which we really ‘winged it’ was maintenance. Basically, we just guessed at it. The guess was way low for the year. I decided that we should do a better job of quantifying how much ‘maintenance’ would really cost.
First, find out what maintenance is
In our case, last year maintenance was a new water heater, a furnace service call, a dryer service call, and a new dryer. I suspected the water heater would need to be replaced soon, but not quite so soon. The rest were true surprises.
In the spirit of no surprises, we researched all the items that we know have a maintenance life. These included the roof, driveway, appliances, HVAC, outside paint, snowblower, mower, and bed.
‘Personal association fee’
An association fee is a fee from, for example, a condo association that takes care of outside maintenance, snow shoveling, lawn mowing, etc. You might think of a monthly allocation for maintenance as your ‘personal association fee’. Take the monthly allocation and put it in a savings account for when you do need it. I’ve seen savings accounts and money funds now yielding over 2%!
After we assembled our list of maintenance items, we looked at the cost for a new comparable item and estimated the life of our current installations. The cost of the new item divided by the number of months until replacement gave us our monthly maintenance cost. Wow, we were surprised that our new ‘personal association fee’ has tripled over our ‘wing-it’ maintenance budget. The good news is that now we plan for maintenance expenses that will, no doubt, happen. Advance planning will help avoid a bad surprise dent our retirement savings.
Thank you for reading the blog this year. Health, happiness, and prosperity to you in 2019. Also, may you have no bad surprises in 2019.
Actions you can take include:
Try your own assessment of what your ‘personal association fee’ should include and cost.
And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here.
Questions, comments, or suggestions for retirement surprise areas you want to know more about?
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