Retirement is meant to be a period of relaxation and enjoyment, a time to reap the rewards of decades of hard work. Yet, despite the many opportunities for leisure and personal growth, it’s not uncommon for retirees to fall into traps that can seriously hinder their enjoyment of this precious period of life. Here, we’re going to delve into 21 of the most bewildering decisions that people often make in their retirement years. Whether due to a lack of foresight, misinformation, or just plain bad habits, these mistakes can prove costly – both financially and emotionally.
Having A Spending Spree
When you retire you can have a lot of free time on your hands. That can make it tempting to fill in your days by going shopping or splurging on things you previously didn’t have time for. However, if you burn through the cash, the latter years of your retirement will become a financial struggle.
Don’t Want to Work Part-time
You spend a good part of your life working, so why get a part-time job once you retire? Well, there are a couple of benefits for working part-time: you get extra income (which makes your savings last longer) and you have a chance to socialize.
Being Overly Cautious With Your Investments
If your investments aren’t giving you a return that matches or outpaces inflation, then your spending power is eroded. You don’t have to go overboard and invest in the riskiest venture you can find but look at something that offers a decent return in your investment.
Ignoring Future Medical Costs
A fact of life is that as we get older we may require more medical care. Does your health insurance or medical plan ensure that you can provide for future health needs?
Becoming Inactive
We mentioned working part-time. That’s one way to remain active. Sitting around the house all day doing nothing will eventually lead to physical and mental health issues. Sure, you have retired but that doesn’t mean you quit living an energetic life.
No Senior Discounts
Some stores openly advertise senior discounts, others don’t. If you aren’t sure if one of your favorite stores has a discount for those who have retired, ask them! Don’t be embarrassed about it. Think of it as being financially prudent.
Giving Money To Your Grown Kids
Your children will always be your kids…forever. You don’t stop caring for them no matter how old they are. However, if you are constantly giving them cash every time they need it you can find that your retirement fund will run dry pretty fast. If that happens, how willing are the kids to have you move in with them?
Hanging On To A House You Have Outgrown
It’s understandable that, once the children have all moved out, you may want to remain in the house they grew up in. There are countless memories that are invoked as you walk through the rooms. However, think of the financial cost such as property taxes and maintenance that you are incurring. Downsizing your home is a way to reduce your expenses. It doesn’t mean you forget the memories, you can take them with you when you relocate.
Buying Brand-name Medication
Why do you pay more for medication from a brand-name company when you can get a cheaper version that works equally well? It could be a trust issue. Talk with your doctor and do your own research, then make the switch.
Donating To Every Charity
You live to give because you have a heart full of love and empathy. However, you need to be selective in which charities you donate to. Set a realistic monthly limit on your maximum charitable giving.
Withdrawing Your Retirement Funds In A Down Market
When financial markets go south, people panic. Don’t let your emotion override your more logical response. You many think that your retirement funding is slipping away, but remember: What goes down always goes back up again.
Paying No Attention To Your Health
You may tend to consider that pain in your leg something not worth worrying about. Yet, it gets worse and you still try to make excuses that it’s just a sign of “getting old”. Don’t disregard your health. When you aren’t feeling well, make an appointment to see your local health professional, Your kids and grandkids want you around for as long as possible.
No Financial Plan
As the saying goes, “If you fail to plan, you plan to fail.” Heading into the headwaters of retirement without any economic direction could lead you to a financial shipwreck.
Ignoring Tax Breaks
Once you hit that magic age of 65, the deductions that you can claim from your tax increase. If you aren’t aware of what you can claim, you are paying more in tax than you have to. Check out the IRS website for the latest information about what you can claim.
No Thinking About Inflation
You may have retired, but inflation doesn’t. If your retirement fund isn’t keeping pace with inflation you will find that your purchasing power decreases. To ensure this doesn’t happen, seek out the advice of a competent financial professional.
Excessive Investment Fees
Not all investment funds are created equal. You may be thinking you’re getting a great return on your money with the fund that you’re with. However, if the fees you pay are high, then you aren’t getting the best bang for your buck. Regularly review your funds and the costs they charge.
Not Updating Your Will
People can come and go in your life. Things get busy and your will may be the last thing on your mind. When you pass to the great beyond, does this document reflect your true last wishes? Don’t be afraid to update your will. Estate lawyers recommend reviewing your will at least every three years.
Borrowing Money
For some, it can be a struggle to live on a retirement income. When things get a little hard the temptation to borrow money may be strong. The issue is that now you have an extra bill to pay: your debt servicing. When you find that you may not be able to make ends meet, pay a visit to a financial advisor.
Withdrawing Too Much Of Your Savings
You may want to treat yourself to that special holiday or be a blessing to your friends. But how much does that cost? Are you just doing things without an idea of the budget? After all, you have your retirement savings. Having a blasé attitude to your spending will see your savings run out pretty quickly.
Isolating Yourself
Humans are social creatures. When you isolate yourself from others, it has a negative impact on your mental well-being which does affect your physical health. Retirement should be a time of getting out and meeting new people. Taking up that new hobby you didn’t previously have time for. Get out and enjoy yourself!
Being Too Trustworthy
Unfortunately, unscrupulous people prey on the older members of society. Scammers are constantly looking and how to dupe you out of your cash. If you receive unsolicited emails or phone calls from people trying to get you to part with your cash…delete the spam/hang up the phone.
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