Is It Cost-Effective to Replace Your Refrigerator Today?

James wrote to me with an interesting question:

My neighbor recently replaced his 20 year old fridge that was still working just fine. According to his math he would actually save money over the next few years by replacing it rather than letting the old one sit. Is that possible? Also what about hooking it up in the garage as a second fridge?

At a quick glance, yes, it is possible to actually save money over the next several years by replacing a 20+ year old refrigerator right away. There have been enormous leaps forward in the last decade in terms of the efficiency of condensers and coils on refrigerators, to the point that the energy savings on a refrigerator made in the late 2010s can save you $75 a year or more compared to a refrigerator made in the 1990s. This doesn’t even include any rebates you might get as a result of replacing your fridge (many energy companies offer rebates for replacing an appliance with a more energy efficient model), or any state tax benefits you might get related to energy efficiency.

If you’d like to calculate the raw energy savings that you would get from replacing your older refrigerator, this EnergyStar calculator will prove really useful.

In other words, if you’re not buying an expensive high-end refrigerator, there’s a pretty good chance you’ll save money over the next five to 10 years by replacing your old refrigerator right now with a more energy efficient model. That seems pretty certain.

I did the calculation on our own refrigerator (which was already installed in our house when we bought it) and I found that we’d be saving about $450 in energy costs over the next five years by replacing it with a new model of similar design, and perhaps even more if we chose a more energy efficient design.

Given this, the question switches from whether or not it will save you money to replace your older refrigerator right away to whether or not it’s the best time to replace your refrigerator. I did some research into this question and here’s what I’ve found.

First of all, over the history of home refrigeration, the energy use of a refrigerator has halved about every 15 years. In the 1970s, refrigerators gobbled up about 2200 kWh of energy per year. By the early 1990s, that was down to about 1100 kWh. By the mid 2000s, that was down to about 600 kWh. Today, we’re getting close to 300 kWh on the most efficient models. Assuming that things continue to get more efficient, you can assume that a fridge will be down in the 150 kWh per year range by the mid 2030s or so.

Let’s translate that to today’s dollars. A good nationwide average for energy use is about $0.12 per kWh. So, a 1970s fridge would eat up about $264 a year in energy use, an early 1990s fridge would gobble up $132, a mid 2000s fridge would slurp down $72, and a fridge today would only consume $36 per year in energy use. At that pace, a fridge in 15 years would only consume $18 per year in energy use.

Let’s look at that in terms of the average lifespan of a refrigerator, which is around 15 years. Over the course of 15 years, a 1970s era fridge would eat up about $3,960 in energy use. A 1990s era refrigerator would swallow $1,980 in energy use. A mid-2000s era refrigerator would eat up $1,080 in energy use. Meanwhile, a modern refrigerator would eat up about $540 in energy use.

Thus, replacing a 1970s era refrigerator today would save you $3,420 in energy use over 15 years, replacing an early 1990s refrigerator would save you $1,440 in energy use, and replacing a mid-2000s refrigerator would save you $540 in energy use.

There are two big conclusions to draw from that. One, the gain that you get from replacing an old refrigerator right now won’t be nearly as beneficial as your next refrigerator replacement. This isn’t something you can just repeat every few years – refrigeration is now so energy efficient that replacing a pre-2000 fridge is probably the last time that replacing a refrigerator will save you money in terms of the energy efficiency gains.

Second, the older your fridge is, the better the benefit in replacing it. Choosing to replace a refrigerator that’s more than 20 years old before it breaks down means that you’ll probably recoup the cost of that fridge in energy savings well before the end of that new fridge’s normal lifespan, plus you don’t have the cost of replacing any food in the event of a refrigerator failure (one that’s probably coming if you have an old fridge).

So, here’s my final conclusion on the matter. There are definitely situations where replacing your refrigerator right away will save you money in the long run, but there are some conditions on it. First of all, you need to be either living in your current home for the next several years or planning to take your appliances with you. Second, you need to be replacing a fridge that’s older – no less than fifteen years old, and preferably a fridge with a manufacture year in the 1900s. Third, you need to not be moving to the absolute latest state of the art fridge; an entry level fridge or a Consumer Reports best buy is what you should be aiming for with your replacement.

If all of those things are true, you will very likely save money by replacing your refrigerator with a new entry level model over the course of the next several years. If not, then you’re probably better off hanging on to your old one.

After this point, however, you probably won’t save money by replacing your fridge for energy efficiency purposes. Fridges today are so efficient that even if they continue to halve their energy use every 15 years, you still won’t be gaining enough compared to a modern refrigerator to make the cost of replacing it for energy efficiency purposes worth your while.

What about moving that old fridge into the garage and storing less essential things in it? Well, remember that if you’re moving an energy inefficient fridge into your garage, you’re going to still be paying those energy costs listed above. If you’re moving an early 1990s fridge out of your house into the garage, it’s going to be setting you back about $130 a year in energy use until it fails. If that $130 a year (and the cost of any ruined food items when it inevitably fails) is worth the value you’d get from a refrigerator in the garage, then move it out there. Otherwise, recycle it.

As for us? The numbers on this question have me leaning toward replacing our old refrigerator if I happen to find a good deal on a well regarded entry level refrigerator. I’m pretty sure that we’re going to be in our current house for the next five years and the energy efficiency numbers on our current fridge are perhaps closest to the early 1990s refrigerators, as I noted earlier. I would probably move our current fridge out to the garage and use it for additional cold storage, enabling some refrigerated items to be bought in bulk.

However, am I rushing out to the appliance store to buy a replacement? Nope. I’m just watching for appliance sales and seeing if I can find a low cost refrigerator with strong energy efficiency numbers and a good review from Consumer Reports. If I find that, then I’m pretty sure that we’ll save money by getting that new fridge into our home sooner rather than later. By doing it this way, we can transfer our food to the new fridge without losing anything and then, since the garage fridge would be secondary cold storage and probably include some things that wouldn’t be ruined by a failure (like beverages), it won’t be a major food loss if it does fail.

So, if you have a fridge that’s at least 20 years old and can find an inexpensive modern refrigerator and you plan on staying in your current place for at least five more years or plan to take your appliances with you when you move, then you’ll probably save money by replacing your fridge if you find a good deal on one. This is particularly true if your energy provider offers you a rebate for refrigerator replacement or if you live in an area where there are tax benefits (sorry, there are no federal tax credits for refrigerator replacements). Otherwise, you’re better off staying put with what you have.

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Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.