What to Buy/Repair/Upgrade BEFORE retiring?

[momoney]

Actually did the opposite. Spent the first two years of retirement remodeling our daughter's and our own house. Did all the labor myself so it was much cheaper than if I had to pay someone while I was still working.

What did you do and how much do you think you saved?

 

[wearefinishedworking]

We still laugh about the 3 big things that happened in the 3 months before retirement.
Dishwasher died. Hot water tank leaked. 75 foot tree cracked in half.
This led to having a massive tree removed and also trimming other tall trees.
Total unexpected out of pocket was about $8500. You will always need an OH SH!TE fund.

 

[TickTock]

We bought a new car to replace a 15 yo car with ~159k miles on it.

 

[freedomatlast]

I really don't understand any advantage of spending money on big expenses before retirement rather than after. With proper planning, it really shouldn't make a difference.

 

[MichaelB]

Money spent before retiring is the same as money spent after. It doesn’t matter when, it’s all the same money.

The thing to look for before retirement is what benefits do you have that will go away. Dental coverage is one. If employer sponsored, get dental work done now. If going from an employer sponsored health plan with broad coverage and low deductibles to an ACA plan, major medical work is also best done now, as once on high deductible kicks in. Making sure all the retirement accounts and HSAs are maxed out.

Finally, if there is any severance, trying to set it up so it’s paid early in the retirement year, which would help max the after tax amount. In general it makes sense to look at income flows in the final year of employment to look for opportunities to smooth out the payments.

 

[Lorenzo]

• Purchase accordion store shutters to avoid having to manually put up those steel ones.
• Replace dishwasher which is about 15 years old and rusting.
• Get new springs, wheels and grease hinges for garage door.

Man, those are downright modest expenses. These are more like annual expenses in my household than things to take off the list before retirement. Okay, that's slight exaggeration, but it seems like something is always in need of repair or replacement. We do what we can each year and put off what we can't, but the list never empties.

Hmmm, new shower would be nice for list too.
Frame is rusting and the soap film is about an inch thick.

Now you're talking!

Stove and Frig about 5 years.
HVAC replace probably 12 years ago
Roof shingles replaced probably 10 years ago.
Looked into replacing the windows but that was going to be $30k.

Yep, some major item like this pops up on my to-do list with surprising regularity. We replaced the A/C condenser unit a few years ago. We also upgraded the electrical panel to 200A. The roof was new-ish when we bought the house a few years ago, but it will need to be re-done before we know it, and so we need to plan for it in our so-called "lumpy expense" category. We have been putting off replacing the ancient single-pane windows, but we can't put it off forever (the electricity bill in the summer is a motivator). Oh, and then there are our 20 year-old vehicles. It's always something.

Search for discussions on "lumpy expenses" if you haven't come across that already.

 

[1242Vintage]

Upgrade what needs to be upgraded so the house/condo can safely sit empty when you travel.

Exactly …

We had a kitchen remodeled and upsized our standby emergency generator and propane tank. BUT other items we upgraded were so the house can safely sit empty when we travel.

Replaced the gate and intercom, replaced exterior lighting, and added additional exterior security cameras.

 

[sdtech]

What did you do and how much do you think you saved?

Pretty massive rebuilds - gutted the main floor on both houses - all new kitchen's, flooring and painted everywhere. Spent $50,000 on stuff... probably saved $200,000 in labor?? 4 to 6 hours a day for 2 years. Was a great break in for retirement and instead of selling homes and buying, we renovated our homes to exactly what we wanted. So saved real estate fees, commissions, etc also.

 

[GoBirds]

Money spent before retiring is the same as money spent after. It doesn’t matter when, it’s all the same money.

What if OP pulls money out of tax deferred accounts to pay for these items when retired?

That (unexpectedly) increases taxable income for the year whereas paying for these items pre-retirement suggests that the money will be coming from post-tax funds

 

[RetiredHappy]

What if OP pulls money out of tax deferred accounts to pay for these items when retired?

That (unexpectedly) increases taxable income for the year whereas paying for these items pre-retirement suggests that the money will be coming from post-tax funds

Money is fungible. If money is unspent pre-retirement, that money will typically sit in taxable account, which can be spent post-retirement for the same big ticket items.

 

[TheWizard]

I really don't understand any advantage of spending money on big expenses before retirement rather than after. With proper planning, it really shouldn't make a difference.

Agree.
In my case, I set up my finances to have ruffly the same income hitting my checking account in retirement as when working, and only about 1/3 of that was from portfolio withdrawals to start with.

A few years into retirement, I paid off my small remaining mortgage, so $1000/month more of disposable income.
Then at age 66 I started my Divorced Spouse SS benefit, so another $1000/month and basically no need to w/d from portfolio on regular basis anymore.

Things just keep getting better...

 

[FlyingCircus]

@TheQuestionGuy - if you don't already have a HELOC established before you retire, get one set up while you still have a job(s). You won't necessarily get one at all or as good a rate when you're retired. #2, unless you've got more than $1.5-$2m saved (without a pension), I'd advocate for getting big things done - roof? major repair? car replacement? while you have a job instead of drawing down your retirement fund or relying on dividends immediately. "Money is fungible" only when one has enough of it to not bother with "do I have enough" calculations.

 

[TheWizard]

... "Money is fungible" only when one has enough of it to not bother with "do I have enough" calculations.

What you're saying is, there's a big difference between Fat FIRE and Lean FIRE.
Fat FIRE is lots more funner...

 

[Exchme]

What if OP pulls money out of tax deferred accounts to pay for these items when retired?

That (unexpectedly) increases taxable income for the year whereas paying for these items pre-retirement suggests that the money will be coming from post-tax funds

It only matters if the expense cropping up puts off the retirement date so to accumulate enough cash to pay for it. Without new money, it makes no difference which side of the retirement date an expense happens.

Not all expenses are a surprise - we know we have a 20 year old roof and an 11 year old car, so we make sure we have cash flow to replace them in the next few years along with a hefty allowance for other wear and tear things. If the typical household surprise expense would make someone change their retirement date, I don't think they were financially ready and certainly didn't have a good plan.

 

[equakesfan]

Actually did the opposite. Spent the first two years of retirement remodeling our daughter's and our own house. Did all the labor myself so it was much cheaper than if I had to pay someone while I was still working.

Similar here. I replaced 2 gutters, installed rain barrels and painted the exterior of the house saving me about ~$10k. We had to repair the header beam in the garage, install a heat pump and remove some trees that we paid for because I'm handy but not that handy. At least I was a able to plant the replacement trees (saving me ~$1000). I'm currently working on replacing the patio cover all during the first 2 years of retirement.

 

[bada bing]

I had pretty good employer provided dental and vision insurance. The dental coverage had a $2000 per year cap on treatments plus a couple paid cleanings per year. The last 5 years working I had my dentist address everything that could be an issue on the $2000/year insurance budget. I had several amalgams replaced with porcelain, an old crown redone and a root cleaning. I had dental coverage for 3 years after retirement on retiree medical, but that's all gone now with Medicare. I haven't had a single issue show up on my cleaning/check ups. It pays to get things 100% before the insurance lapses.

A common job related ailment was knees and hips going out from years of walking up and down stairs and across miles of metal grating. I had lots of peers that went in for knee and hip replacements right before retiring. I fortunately didn't have the joint problems but it was common after a career in chemical and oil production plants. I used to average 15K steps a day, all on expanded metal grating.

 

[TheQuestionGuy]

When establishing a HELOC, I believe there is an initial cost, right?
How long are the funds available?

If wanting cash for a car loan, are these rates usually lower than most new car loans (assuming dealer isn't offering 0%).

 

[pjigar]

When establishing a HELOC, I believe there is an initial cost, right?
How long are the funds available?

If wanting cash for a car loan, are these rates usually lower than most new car loans (assuming dealer isn't offering 0%).

Our credit union offers no-cost HELOC. But yes, think of anything that needs to pull a credit report and get those done before your paycheck stops. New credit card, higher credit limit, HELOC, new mortgage? We have heard from many members as to how hard getting a new credit can be once you retire.

 

[Onda]

If you think you may need a HELOC or other borrowing to support your lifestyle, that is often a sign retirement may be premature.

 

[RunningBum]

What if OP pulls money out of tax deferred accounts to pay for these items when retired?

That (unexpectedly) increases taxable income for the year whereas paying for these items pre-retirement suggests that the money will be coming from post-tax funds

Taxable income is usually a lot lower after one retires, especially if retiring early, so pulling extra out of a tax deferred account if needed might not sting so bad.

Many things need to be replaced/repaired every X-ish years. Replacing something early might mean one extra time in your lifetime.

 

[COcheesehead]

I really don't understand any advantage of spending money on big expenses before retirement rather than after. With proper planning, it really shouldn't make a difference.

I agree. What one should focus on is what can they take advantage of while still having documented income.

 

[Aerides]

When establishing a HELOC, I believe there is an initial cost, right?
How long are the funds available?

If wanting cash for a car loan, are these rates usually lower than most new car loans (assuming dealer isn't offering 0%).

Heloc depends on your bank. Our was free and is still available 10 years later. It's a supplemental emergency fund at most.

We'd likely never finance a car again unless getting a 0% loan. When I bought my last car post-retirement, I just haggled the price before I talked financing, then wrote a check.

 

[Out of Steam]

Replacing both of cars in the first four years of retirement, one unplanned, was a drag. It's easy to have said that we should have replaced one sooner but for this issue.

Many things need to be replaced/repaired every X-ish years. Replacing something early might mean one extra time in your lifetime.

 

[Aerides]

Many things need to be replaced/repaired every X-ish years. Replacing something early might mean one extra time in your lifetime.

And save you a headache each time. Replacing appliance when they die:

Spoiled food/smell (fridge)
Handwashing dishes/clothing/laundry service
Flooding from a hot water heater that gets a leak

Not to mention, shopping when the sale/offer isn't optimal. We were super lucky a few years back when our fridge died right in the middle of costco's memorial day appliance sales, and we also have a back up garage fridge.

But when the washer died? No such luck, and the model I wanted needed 2-3 weeks to deliver. I spent a few bucks, and time, using laundry services.

 

[old medic]

Debt is just a tool. You can build yourself up with it or you can pound your finger. All depends on your craftsmanship.

I totally agree. And a good tool to have available. After selling our house and paying cash for a dump we were debt free. We spent several years rebuilding with 0% deals over several accounts and kept our "stash" moneys. If your money makes you more than it cost to use someone else's....