How to use this calculator
- Enter or choose method.
- The set aside per year updates as you type. Use Copy result or Share to keep it.
Method
Percentage: Reserve = Value × Rate; Area: Reserve = Area × Rate per unit; Components: Reserve = Σ (Replacement cost ÷ Years until replacement)
- Replacement cost
- today’s cost to replace the component
- Years until replacement
- remaining useful life
Worked example
- Roof 12,000 ÷ 20 = 600; HVAC 8,000 ÷ 15 = 533.33.
- Water heater 1,500 ÷ 10 = 150; paint 4,000 ÷ 8 = 500.
- Total = 1,783.33 a year, or 148.61 a month.
Setting aside about 1,783 a year (149 a month) funds these four replacements by the time each is due.
What the result means
The component reserve covers big planned replacements; routine repairs come on top. If you already have savings earmarked for a component, subtract them from its cost.
Assumptions and limits
- Replacement costs are in today’s money; no inflation or interest on the reserve is applied.
- Rule-of-thumb rates are starting points, not standards.
- Unexpected failures and routine upkeep are not predicted by the component list.
Questions
What is the 1% rule?
A rule of thumb that a home needs about 1% of its value in maintenance each year. It ignores age, climate and construction, so treat it as a rough floor.
Should the reserve include inflation?
For long-life items it helps to raise the cost by expected inflation; the Inflation Calculator can estimate the future cost.
Please note: This calculator gives estimates for planning. It is not financial advice, and lenders’ actual terms, fees and rounding may differ.