It’s a crucial move to make.
There’s a reason many retirees opt to own homes rather than rent. When you rent a home, you might have to move repeatedly. When you own a home, you can stay put as long as you want, provided you’re able to keep up with your mortgage (if you still have one), property taxes, and other necessary costs.
But if you’re going to own a home in retirement, there’s one key move you have to make — maintain an emergency fund for repairs.
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Obviously, home repairs can be a budget buster at any time. But you’re on a fixed retirement income that may not be much more than your monthly Social Security check, it’s important to have funds on hand to cover unexpected repairs. And while borrowing against your home equity may be an option, that means taking on debt at a time in life when you should be doing your best not to add to your ongoing expenses.
Not only should you have an emergency fund for home repairs, but you should make sure to keep it in cash. If you invest it and need the money at the wrong time, you might have to sell assets at a loss.
Remember, if your plumbing stops working at a time when the market is down, you may not be able to wait weeks or months for a recovery. So your best bet is to keep your home repair emergency fund in a high-yield savings account. That way, you can at least earn a little bit of interest when that money isn’t being used.