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How to keep your home and your budget in good shape in retirement

by Alliance America
Novermber 2, 2023


Retirement is often visualized as a period of relaxation and freedom. However, it comes with its own set of responsibilities, particularly in terms of financial management. For many retirees, a significant expense over the years is home maintenance. As we age, so do our homes, demanding regular upkeep, repairs and possibly modifications. Proper budgeting for these expenses is crucial to ensure a comfortable and worry-free retirement.

The first step in budgeting is understanding what kind of maintenance your home will require. Older homes might need more frequent repairs, while newer ones might only require basic maintenance. Consider the age of your home, the condition of major components like the roof, plumbing and electrical systems, and plan accordingly.

What are average maintenance costs and saving strategies?

a family making home repairs together

Generally, financial experts suggest setting aside 1% to 4% of your home's value each year for maintenance and repairs. For example, if your home is valued at $250,000, you should try to set aside $2,500 to $10,000 annually. Adjust this figure based on the age and condition of your home. Here are some saving strategies to consider:

  • Create a dedicated savings account. Open a savings account exclusively for home maintenance. Contributing a small amount monthly can build a substantial fund over time, offering peace of mind and ready resources when needed.

  • Understand seasonal expenses. Certain home maintenance tasks are seasonal. For instance, you might spend more on heating system maintenance in the fall and on landscaping in the spring. Plan these seasonal expenses in advance to avoid financial strain.

  • DIY vs. professional services. Consider what maintenance tasks you can do yourself and what requires professional help. DIY can save costs significantly, but for complex or risky tasks like electrical work or major structural repairs, hiring professionals is safer and possibly more cost-effective in the long run.

  • Prepare for unexpected repairs. Homeownership inevitably comes with surprises. A portion of your maintenance fund should be allocated for unforeseen issues like a broken furnace or a leaking roof. Financial advisors often recommend keeping an emergency fund for such scenarios.

  • Utilize tax exemptions and assistance programs. Some regions offer tax exemptions or rebates for seniors, particularly for home repairs or improvements. Additionally, look into government and nonprofit assistance programs that offer financial aid or reduced-cost services for home maintenance and upgrades.

  • Consider long-term modifications for aging in place. If you plan to stay in your home throughout retirement, consider investing in modifications that can accommodate age-related needs, such as installing grab bars in bathrooms, improving lighting or even moving the primary living spaces to the ground floor.

Budgeting for home maintenance in retirement requires foresight, planning and an understanding of your home and financial situation. By preparing adequately, you can ensure that your retirement home remains safe, comfortable and a source of joy rather than a financial burden. Remember, a well-maintained home not only provides a better living experience but can also contribute to preserving or even increasing your property's value over time.

What are ways to reduce utility bills for retirees?

Retirement brings a transition into a phase where managing finances becomes crucial, and one of the regular expenses that can be optimized is utility bills. For retirees, reducing these costs can lead to significant savings and a more comfortable retirement budget. There are practical ways for retirees to decrease their monthly utility bills, ensuring more of their hard-earned retirement funds can be used for enjoying life rather than just covering the basics.

someone calculating maintenance cost of a home
  • Audit your energy use. Begin by understanding where your money goes. An energy audit can help identify areas where you're losing energy – and money. Many utility companies offer free audits, or you can conduct a simple one yourself. Look for leaks, drafts and inefficient appliances.

  • Upgrade to energy-efficient appliances. If your home appliances are outdated, they’re likely consuming more energy than necessary. Upgrading to energy-efficient models can reduce electricity usage significantly. Look for products with the Energy Star label, which meet energy efficiency guidelines set by the U.S. Environmental Protection Agency and the U.S. Department of Energy.

  • Mind the thermostat. Heating and cooling can account for nearly half of a home’s energy use. Using a programmable thermostat can help manage these costs more effectively. In winter, set the thermostat to 68 degrees Fahrenheit when you're awake and lower it while you're asleep or away. In summer, do the opposite with your cooling settings.

  • Utilize natural light and heat. Embrace natural light; it’s free. Open curtains during the day to light your home and provide warmth. In cooler months, sunlight can naturally heat your space, reducing reliance on heating systems.

  • Seal drafts and insulate. Sealing drafts around doors and windows and ensuring your home is well-insulated can prevent energy loss. Insulation isn’t just for walls and attics – consider insulating pipes and water heaters as well.

  • Switch to LED bulbs. LED bulbs are more energy-efficient than traditional incandescent bulbs, using up to 75% less energy and lasting 25 times longer. Though they have a higher upfront cost, the long-term savings can be worth it.

  • Reduce water heating costs. Water heating can be a substantial portion of your energy bill. Lowering the thermostat on your water heater to 120 degrees Fahrenheit can reduce your heating costs without sacrificing comfort. Also, consider investing in a tankless water heater that only heats water when needed.

  • Cut phantom loads. Many appliances consume energy even when they’re turned off, known as phantom loads. Unplug chargers, TVs and computers when not in use, or use a power strip to turn off multiple devices at once.

  • Take advantage of rebates and programs. Check if your utility company offers rebates for making energy-efficient upgrades. Some areas also have assistance programs for seniors to help with the cost of energy improvements.

  • Consider renewable energy sources. Solar panels or solar water heating can be a cost-effective way to reduce utility bills. Though the initial investment can be significant, federal tax credits and other incentives can help offset the cost.

Managing utility bills in retirement doesn’t have to be a struggle. By implementing these strategies, retirees can enjoy a comfortable home environment while keeping costs under control. It’s about being smart with energy usage and making small changes that can lead to big savings. Remember, each step not only helps in reducing bills but also contributes to a more sustainable, environmentally friendly way of living.

How can technology help reduce home expenses?

Home expenses can really add up, but there are lots of ways that you can use technology to save money. Here are some additional tips:

  • Use a budgeting app to track your spending. This can help you identify areas where you can cut back, and it can also help you make sure you're not overspending.

  • Use online tools to comparison shop. This is especially useful when you're buying big-ticket items like appliances or furniture.

  • Take advantage of online discounts and coupons. Most retailers offer some sort of online discount these days. And many utility companies offer discounts for signing up for paperless billing or autopay. So be sure to take advantage of these discounts when possible.

  • Use a cash-back rewards credit card. This can help you earn rewards for your everyday purchases that you can use to offset some of your expenses.

  • Use solar power. Solar power can help you save money on your energy bills by offsetting the amount of power you need to buy from your utility company. If you live in a sunny climate, solar power is definitely worth considering.

Should I consider downsizing my home in retirement?

two wooden blocks each with a different size house printed on them

The decision to downsize your home is often as much an emotional decision as it is a practical one. Many homeowners consider downsizing for various reasons – financial benefits, reduced maintenance, lifestyle changes or preparing for retirement. It’s important to explore the various aspects you should consider to determine if downsizing your home is the right move for you.

Downsizing can potentially lead to significant cost savings. A smaller home generally means lower mortgage payments, property taxes and insurance costs. For those nearing or in retirement, reducing these expenses can be a critical factor in stretching retirement savings.

A smaller space typically costs less to heat, cool and light, leading to lower monthly utility bills. Larger homes require more time, effort and money to maintain. Downsizing can reduce these burdens, offering both financial relief and a simpler lifestyle.

Also, if you have substantial equity in your current home, selling it to move into a smaller space can free up cash for retirement, travel or other interests and needs.

Then, there are lifestyle and emotional considerations to keep in mind. A smaller home can mean a simpler way of life with less cleaning and maintenance. This change often appeals to those looking to spend less time on home upkeep and more on hobbies, travel or family.

As mobility and health needs change, a smaller, more manageable home might be more practical. Features like fewer stairs, a more compact layout or accessibility modifications can be crucial for aging in place. Downsizing might also mean moving to a new location that’s closer to family, offers better amenities or has a more vibrant community of peers. However, leaving a home full of memories can be difficult. The emotional attachment to a family home shouldn't be underestimated.

It's also important to consider how you use your current space. Will a smaller home meet your needs when it comes to hobbies, hosting guests or having room for grandchildren? Plus, smaller homes have a smaller environmental footprint. If sustainability is a priority for you, downsizing can be a step toward a more eco-friendly lifestyle. But moving to a smaller space requires adjustment. This transition can involve decluttering and getting rid of items that won’t fit in the new home.

What is the process of downsizing?

First, start off by assessing your needs. Clearly define what you want in your new home. Consider location, size, community and features that match your current and future lifestyle needs.

You’ll also need to consult with a financial professional to understand how downsizing will affect your financial situation, particularly if you're retired or planning for retirement.

Meanwhile, another task is to explore housing options. Look into different types of homes, such as condominiums, townhouses, smaller single-family homes or retirement communities. Each has its pros and cons, depending on your lifestyle and mobility needs.

If you decide to downsize, plan your move methodically. This involves sorting through belongings, deciding what to keep, sell or donate – and preparing for the emotional journey of leaving your old home.

Remember, downsizing isn't just about moving into a smaller space; it's about re-evaluating your lifestyle and needs. It offers both financial and lifestyle benefits but also comes with emotional and practical challenges. Weighing these factors carefully will help you make a decision that aligns with your long-term goals, financial situation and personal well-being. As with any significant life change, thoughtful consideration and careful planning are key to ensuring that if you do decide to downsize, the move is as rewarding and stress-free as possible.


Taking care of your home in retirement is essential for maintaining a comfortable and worry-free lifestyle. It is important to plan ahead and budget for maintenance and repairs, as older homes may require more frequent upkeep than newer ones. Be prepared for unexpected expenses by setting aside an emergency fund. Consider doing some maintenance tasks yourself, such as changing air filters or cleaning gutters, but hire a professional for more complex tasks, such as electrical work or plumbing repairs.

You can take advantage of tax exemptions and assistance programs that may be available, especially for seniors. Consider downsizing your home if you have a large one, as this can reduce your maintenance costs. Planning for home maintenance in retirement can be daunting, but it is an investment in your future that can help ensure that your retirement home remains safe, comfortable and affordable for years to come.

Alliance America can help

Alliance America is an insurance and financial services company dedicated to the art of personal financial planning. Our financial professionals can assist you in maximizing your retirement resources and achieving your future goals. We have access to an array of products and services, all focused on helping you enjoy the retirement lifestyle you want and deserve. You can request a no-cost, no-obligation consultation by calling (833) 219-6884 today.

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