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As I struggled out of the electrical retailer with an enormous box, a thought crossed my mind. I was grateful I had taken a pessimistic view of life in one particular area. The box contained a new flat-screen TV to replace our old one, which had recently given up the good fight. My pessimistic thoughts had led me to create a large emergency fund on my retirement spreadsheet specifically for replacing items that wear out.
I suspect, though I have no data to back me up, that some approach retirement spending with too much optimism regarding the longevity of their possessions. If life has taught me anything, it’s that this lumpy spending can come fast and often. Not giving it due consideration can be unwise.
Taking my recent past as a good example, my wife Suzie and I have had to replace a tumble dryer and a cooker extractor fan. We also had storm damage on our roof repaired and replaced seven Velux skylights that had reached the end of their lives. Other things come to mind, like an iPad my granddaughter dropped, breaking the screen, and a full exterior repaint of our home.
Sudden, significant expenses force a choice: dip into your emergency fund or sell a portion of your investments. If you haven’t planned for these “lumpy” costs, you might be forced to sell assets during a market downturn, locking in losses and eroding your future growth potential. This series of unplanned withdrawals can seriously derail even the most carefully crafted financial plan.
These costs can mount quickly and become substantial. This is an area where you need to be realistic, not optimistic. My personal advice is to think back over the past few years to get a feeling for costs. Also, consider the end-of-life components of your house’s structure and research repair and replacement costs. While this won’t give you an exact amount, it will provide a better-informed guess. Whatever figures you arrive at, double the amount and then sleep soundly at night.
Back to reality with my new TV, I was pleased with my purchase. More importantly, I was very happy that Suzie didn’t come with me. But the only cloud in my immediate future is explaining why I thought a 70-inch, all-singing, all-dancing flat screen was a direct replacement for the much smaller, recently deceased one it’s replacing. I’m sure the drive home will bring some inspiration. But it just shows even a sound plan can be derailed by “necessary” upgrade costs.
Congratulations Mark, A mention in the Barron’s weekly newsletter, not bad!
https://barrons.cmail20.com/t/j-e-wulon-ilyujiuyhy-r/
Michael, Thanks for the heads-up! They must have been stuck for material this week. I have to confess, this Irish savage had to consult Mr. Google to discover what Barron’s Weekly newsletter actually was. lol
Can’t believe the coincidental timing, so soon after reading your post, but last night our living room TV made a big popping sound and died. Did an internet search and it’s likely a capacitor failure. In days of yore, we might have been able to pull the board, go to the parts store, buy a new one, fix it ourselves and possibly get a thousand more hours of television life. However, it’s been at least a decade since our neighborhood TV service guy retired and though there’s a couple shops in the larger metro area, it doesn’t seem likely this 14-year-old plasma television is reparable.
Your tale hits home. We had originally purchased what seemed to be a gigantic 50″ television so my spouse wouldn’t sit right in front of the TV to better watch football and baseball games. But now 50″ is nearer the “small” end of the television spectrum. Plus, a generation of technological improvements result in a brighter, clearer picture, at a fraction of the cost of a decade ago. Still, the best quality picture and sound don’t come cheap.
For now I’m watching TV on the smaller18-year-old LCD in the kitchen, but I’m looking at those pretty screens at the front of Costco like I haven’t in years…
My father-in-law was a TV and electronics engineer. Unfortunately, he had the bad grace to retire and move to Spain! For the last 12 years, we’ve had to paddle our own boat with repairs, lol. That new TV you’re shopping for? Go big or go home!
Yes, and I’d add “at the most inopportune time”. Case in point, we are on a trek of 6,000+ miles. Our Class B is built on a Chevy 3500 chassis, which is well maintained, all preventative maintenance and inspections performed, etc. Quite a robust vehicle. But, as we were preparing for the final leg of 2,000 miles a problem surfaced. It was a front wheel bearing failure over the Labor Day Holiday weekend. This delayed our departure by a week. I noticed the issue mere hours prior to making all of the campground reservations. This spared me from cancelling everything and there may have been some unrefunded fees. It could have been much worse. This failure could have occurred a week earlier while we were touring the UP of Michigan, a a few days later as we were enroute to AZ. In fact, as it happens a very competent mechanic was only about 3/4 mile down the road from our present campground location. He confirmed my diagnosis, ordered the part (two were located nearby) and replaced the bearing assembly in about 3 hours. Last night we were being driven by friends who asked my opinion about the “rumble” that they noticed in their truck, a new experience! As it was, I used my recent experience to discuss the telltale signs of wheel bearing failure (There are other possibilities).
We recently also had a “lumpy” expense when our 20-year-old central AC unit died without warning. Ok, maybe the 20-year thing should have been a warning. So there went $10,000 we hadn’t been expecting to pay right now. This on the heels of treating ourselves to a huge (70-inch) upgrade to our TV watching, along with a trip to Hersheypark with two of our grandkids. We’re seven years into retirement and generally very conservative in our spending so all is good. Our spending philosophy is “Save money on what we need so we can spend on what we want.” The kids break our chops when we use coupons so much and make trips to Costco, but so far so good.
I’m waiting for the day our heating boiler dies. It’s also twenty years old, and although it’s serviced every summer, I cross my fingers every year that it lasts another heating season.
My house has a 30-year-old furnace and it’s not given me trouble. Last year I called the company that replaced my neighbor’s furnace anyway. After measuring the space and talking about what they’d likely replace it with, we agreed the most cost-effective strategy is letting the old gal just keep going, at least one more season. The same for my AC though the outdoor condenser seems more likely to give up the ghost before much longer. These major systems have lasted so long because honestly the climate is milder here. Plus this equipment lacks bells, whistles, and computer circuits.
Meanwhile the “routine” repainting of the house has turned into a more intense project, and work on the in-ground pool (already here when we bought the place) is causing a cascade of effects since city code on overhead lines has changed since the pool was originally constructed an estimated half century (or earlier) ago… Similar problems with work on the 95-year-old garage, big bucks required. I budget 2% of current value of my house for maintenance every year, sufficient though expenses are lumpy. One year might be only 0.5%, the next 5%.
Wow, you have a lot going on! I’ve been at my vacation home all summer, and I’m going to head back home in a couple of weeks. I’m dreading the work that’s going to need doing in our half-acre garden. All I can say is, it’s a good job I’m retired.
We have already replaced hot water heater and HVAC system. Both were 12 years old from new construction.
They only lasted 12 years!? Yikes
I think I would go with a heat pump if my gas furnace dies. But I hope it lasts a long time.
Builder grade stuff I guess. We had a hot water heater at our house last 25 years and then I just replaced it even though it still worked.
Goodness, that’s bad luck!
When I used to own some rental properties, I budgeted 10% of the rental income for repairs and maintenance. That rule served me pretty well, and some variation may work in retirement as well. Of course that should not replace having a sufficient disaster fund.
For us, the HVAC stack in our – then – “new to us” (built in 2007) Condo. Ouch!!!
Expensive!
Yup.
Which is why our “emergency” is larger (much more conservative) than usually suggested.
A lot of those potential expenses went away when I moved to a CCRC. I did buy a new TV, though.
My husband wanted a 75-inch flat screen TV back in 2017, and I thought he’d lost his mind. Then it got installed and hooked up, we turned on an afternoon baseball game, and I could literally see individual blades of grass on the field. I was hooked.
At the time, I thought the screen was too big for our space, but then we moved in 2019, and it was/is perfect and looks great. He’s now making noises about a new, even bigger one, but the (now) old one works fine. That said, the VRBO we rented in July had a very slick smart TV that did great with streaming and screen casting, and our “ancient” 2017 TV isn’t all that smart. So…
Go for it!
My wife buys me a new TV at the “celebration” of each new coming decade of my life, ie 50, 60. Only 2 1/4 more years to go!
I’m curious—over time, has the screen size mirrored your age? A 70″ for your 70th birthday, maybe?
My wife Suzie has taken to calling the new TV Gargantuan, lol
Everything breaks. On the bright side certain replacement costs are lower as things get cheaper. Your flat screen comes to mind. The old 26-inch flat screen in the Michigan “lily pad” needed replacement. The new 32 inch with built-in wi-fi and streaming, etc. was about $90 on sale. At Harbor Freight I can purchase tools that are quite reasonable for those odd jobs. Of course, “the sky is the limit” so I need to match my requirements to the what’s available to make a purchase.