You may figure it’s better to own your home than to rent when you’re retired. But then you get hit with an eye-watering bill for roof repairs. Or your condo board approves a special assessment. Or a pipe bursts in winter. Or the air conditioning breaks down in summer. Or you need to replace a major appliance. Or your city or town jacks up property taxes.
And then you remember why it’s not always a terrible thing to be a renter. A new study by money manager T. Rowe Price about spending in retirement unveils two things that will probably come as a surprise to many people — and especially to those not yet retired. The first is that spending from year to year is much more volatile than you might think. And the second is that it’s these home expenses, rather than health expenses, that are most often the main cause. On the volatility of spending, the study found that during a two-year period, about a quarter of retirees experienced a jump in expenses of at least 17%. Maybe more remarkably, during their entire retirement, more than one retired household in five experienced at least one year when their expenses went up by at least 50%. “That’s why we stress on the need for liquidity,” the study’s author, Sudipto Banerjee, …
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