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Budgeting for irregular but essential expenses like house and car repairs in retirement requires a mix of estimating needs, creating sinking funds, and balancing portfolio withdrawals. Here’s how you could approach it:

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Step 1: Estimate Annual Needs

1. House Repairs:

   • The “1-3% of home value per year” rule is a guideline, but you can tailor it based on your house's age, condition, and your maintenance habits.
   • For example, if your home is newer or well-maintained, 0.5-1% might suffice. For a $300,000 home, that’s $1,500–$3,000 per year.
   • For major expenses (roof replacement, HVAC, etc.), break them into their lifespan costs and annualize them. Example: If your $15,000 roof lasts 20 years, budget $750 annually.

2. Car Repairs and Replacement:

   • A flat $300/month or $3,600/year, as you suggested, sounds reasonable. This can cover repairs and accumulate toward a replacement every 6-10 years.

Combined: Your $1,150/month ($13,800/year) budget seems reasonable but could be trimmed if your home’s maintenance doesn’t demand the high end of the spectrum.

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Step 2: Withdrawal Strategy

For infrequent expenses, a hybrid withdrawal approach can help:

1. Sinking Fund for Medium-Term Needs:

   • Withdraw your $13,800 annually and park it in a safe, liquid account (e.g., high-yield savings or money market). This ensures funds are accessible without exposing them to market risk.
   • If funds aren’t used, they roll over into the next year’s sinking fund.

2. Portfolio Management:

   • To minimize cash drag, keep enough in cash for 3-5 years of anticipated repairs ($41,400–$69,000). Beyond that, let your investments grow and replenish the sinking fund as needed.
   • Reassess every 3-5 years to adjust for changes in needs, portfolio growth, and inflation.

3. Emergency Buffer:

   • Maintain a separate emergency fund for unexpected costs that exceed your sinking fund, so you’re not forced to sell investments in a market downturn.

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Step 3: Adjusting for Real Expenses

1. Track Spending:

   • Over the first 3-5 years of retirement, track actual house and car repair costs to refine your estimates. You may find you need less (or more) than expected.

2. Rolling Budget:

   • If funds in your sinking account remain unused for multiple years, consider reallocating some to investments or other priorities.

3. Plan for Major Repairs:

   • Use tools like a home maintenance calendar to anticipate major expenses and adjust your sinking fund withdrawals accordingly.

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Alternative Approaches

1. HELOC for House Repairs:

   • Instead of maintaining a large cash reserve, consider a Home Equity Line of Credit (HELOC) as a backup for large, infrequent repairs. This lets you minimize withdrawals while keeping funds invested.

2. Staggered Withdrawals:

   • Withdraw funds only when major expenses are approaching. For instance, if you know a roof replacement is due in 5 years, start setting aside larger amounts 2-3 years beforehand.

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What Others Do

• Many retirees use sinking funds for predictable medium-term needs.
• Others keep a larger cash cushion (2-3 years’ worth) for all irregular expenses, including vacations and gifts.
• Some rely on flexibility in their discretionary spending (e.g., cutting travel or dining out) when big expenses arise unexpectedly.

Ultimately, the best approach balances accessibility, market risk, and personal comfort. With your $1,150/month plan, a sinking fund strategy with annual adjustments should work well.