29 Ways that Retirees Use Money in Careless Ways
You have worked hard your whole life. Now you deserve to relax and enjoy the moment. retirement. But, it is important to monitor where your dollars are going when you live on fixed income.
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To find out how retirees waste their money, I talked to business leaders and financial experts. so you know what not to do and can make better decisions that enable your retirement savings to last well into your golden years.
Investment fees
Financial advisors can be great assets when it comes to retirement planning. However, make sure they aren’t charging you more than necessary.
“Investment fees could run 1-2% on your assets. Retirees who have a million dollars in assets should pay $10-20k per year for investment fees,” stated a speaker, writer and financial coach. Jillian Johnsrud. “If you are only receiving an hour check-in each year, that is a very expensive phone call. Make sure the service you receive is comparable to the cost if you use an advisor.
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Don’t Miss Senior Discounts
It might be difficult to find places that offer senior discounts. But it is well worth the effort.
Steve Gickling (founder of ) said, “One way retirees waste their money is not taking full advantage of the senior discounts.” ETLrobot. Senior discounts are available in everything from travel to restaurants and entertainment such as movies or museums. You just need to do some research, such as checking out online directories and sites like the AARP to locate these deals.
They should not be focusing on their health
While it might be more expensive to sign up for a gym and buy fresh produce than to sit on the couch and eat frozen meals, the long-term costs of not taking care of your health will be much higher.
“Healthcare is the biggest cost for retirees. It’s a direct consequence of most people not living a healthy life,” stated an author, entrepreneur coach, mentor and mentor. Todd Herman.
Remodeling their Home
It can be costly to make unnecessary home improvements, especially if your retirement savings are used to fund the project.
Jon Bradshaw, president and CEO of the Association for Retired Persons said that “The worst thing a retired person can do is take out their hard-earned cash from their retirement accounts early to make a remodeling project or a large purchase.” Appointment. “It is vital to make sure your retirement money lasts because there aren’t any new income sources which can replace it. It is better to avoid these types of purchases or projects.
Supporting Adult Children
Stephen Dalby is the founder and CEO of Gabb Wireless. “Retirees are likely to waste large amounts of money by continuing to support their children well into their adult years. It’s okay to help them in the short term, but it’s not a good idea to do so for the long-term.
Credit card debt
In retirement, it is possible to charge more on your credit card than you can afford.
Renee Johnson is the editor-in-chief at The TechReport. “I think I would even go so far as to suggest that retired people should not have credit cards as they are on a fixed-income and should only live within their monthly income. It’s too easy to get credit, then pay interest to make it more expensive.
You can make all purchases with cash, or with a debit/credit card if you are unable to.
Overspending on Automobiles
Mark Charnet, CEO and founder of American Prosperity Group Pompton plains, New Jersey resident, stated that there’s no compelling reason to own a luxurious car in retirement.
Let’s face facts: A $25,000 car is more expensive than a $100,000 car. [both] Let’s say you are between A and B. Is it worth risking your financial future to have the luxury of a more costly car? He stated, “I don’t think so.”
Multi-car ownership
Retirement homeowners should not only consider giving up luxury cars but also downgrading to a single car if they own more than one.
John Occhipinti (CEO of ) stated, “Unless you’re an avid car collector and can finance this hobby, it is a money-waster for retirees having multiple vehicles.” Naturebox. “Having one vehicle instead of multiple means that you have one payment and lower fuel, insurance, maintenance, and insurance costs. You can spend that money on other monthly expenses.
Falling for Scams
Kevin Prince, founder, CEO of IdentityTheft.com, said that fraud, identity theft, and scams are more common in retirees than in other age groups. StratoZenThe leading cybersecurity firm. “Scammers have the ability to micro-target individuals and can use sophisticated systems and sounding personnel to drain bank accounts of unsuspecting retired people.”
To avoid being scammed, it is best to learn as much as you can. Register for email alerts regarding common scams at www.email-alerts.com ftc.gov/scams.
Long-term Investments
Retirement investors don’t have the same time frame as younger investors to see returns. Retirees should adjust and build their portfolios accordingly.
Robert Glazer, CEO and founder of Investing in Retirement, said that “I see retirees begin to invest in things they shouldn’t,” Acceleration Partners. “The problem with the investment landscape is that it is designed for long-term investors rather than those who are retiring soon. If they make these investments only to see their retirement funds shrink, they won’t be able to recover those losses in the same timeframe as someone who is still working.
Not Downsizing
Chalmers Brown of Unit21, the lead solutions architect, stated that your home is your castle. However, as you get older, you will need to reduce its size. You don’t want to spend too much money cleaning up and maintaining large yards and additional rooms, even if you have grandkids and kids. You can save your retirement money by finding a smaller home that is less maintenance-intensive and you can use that money to buy other things.
You can even make it worse: Upgrading their home
We see too many people wanting to buy large homes a few years before retirement or transitioning into retirement. This is the exact opposite strategy. [of what] “We recommend,” said Michael Lackwood – founder principal of New York-based company. Spring Delta Asset ManagementAccording to, he also suggests downsizing for retirement.
Shopping as a Hobby
“Retirees have more time to spare,” said serial entrepreneur and serial entrepreneur, Paula Sullivan. They may spend their time browsing the internet or shopping at the mall, which could lead to them spending more money. John Rampton. It’s not often for things they don’t need but it’s still something to do. To fill the time, it would be better to develop hobbies that don’t require as much money as mindless shopping.
Other costly hobbies
Shopping is not the only money-sucking hobby.
Lackwood stated, “Everything should be kept in moderation. That goes for all expensive hobbies.”
Before you decide to go scuba diving, or to start yacht racing, ensure that you have enough money to cover the costs.
They Don’t Want Insurance
Nate Nead is the managing director of Investment Bank. “Drop life and disability insurance products if you’re no longer employed or focusing on caring for children who are still living at home.”
Don’t Spend Too Much on Insurance.
You should ensure that the insurance you choose is at the lowest rates.
Leslie Tayne, founder of debt solutions law firm, stated that “retirees are likely to overpay for their insurance, regardless of whether it’s auto or home, health, life, or any other type of insurance.” Tayne Law Group. “When it comes to auto insurance, be sure to check out other companies to ensure you are still receiving a great deal. You may be eligible for discounts depending on where you live. Let your insurance company know that your retirement will help you get a lower home insurance policy. Many insurance companies offer a discount to retirees. Last, ensure that your beneficiaries are updated with your life insurer company. This includes if your spouse has died or you have remarried. If your spouse dies, your mortgage is paid off, or your children turn 18, you can reduce your coverage. To ensure you have the best rates possible and that you have adequate insurance to meet your retirement needs, it is important to review your policies regularly.
Being too generous
Jason Powell, a real estate and securities lawyer, said that while it is a good idea to give to charities, you don’t have to do so every time. Estate Investing. As a retired person with limited income, choose one or two nonprofits to give money to and then think about other ways to help them. Volunteer work is possible if you have more time. It is free and enriching.
Two Homes
You should consider selling your second home before you retire. It can become a money pit.
Lackwood stated, “The maintenance and real property taxes can be too high to maintain.” Tax laws pertaining to real estate are less favorable for second homes. You can sell the second home and use the proceeds to rent out your home or for home rentals during family vacations.
Too soon to start collecting social security
Even if your Social Security benefits are available, it is best to delay claiming them until you have the opportunity to get maximum benefit.
Yenn Lee, Frate’s CTO, stated that it is important not to start collecting Social Security benefits too soon. You’re basically wasting your money if you do. You are essentially wasting money because you are letting go of money you could have had if your wait was just one more year. This is a huge difference. If you wait until you turn 70, instead of taking the money at age 62, you can get around 30% more.
They are not making the most of their Social Security claim
Retirees who collect too soon can also be guilty of wasting money on Social Security.
Lackwood stated that sometimes retirees lose their spouses and don’t know that the deceased spouse can still collect Social Security benefits while they work. “After the spouse dies, the receiving spouse will have to decide which of the two Social Security benefits they would like to receive in the last years of their lives.”
Abandoning Medicare and Long-Term care
Lackwood stated that some retirees spend too much money on their healthcare insurance instead of purchasing long-term care or supplemental Medicare.
He suggested that you consider obtaining all of the supplemental Medicare in order to avoid paying too much and not be out of pocket. “Incorporate long-term coverage that integrates with your life insurance. This will allow individuals to offset the costly cost of nursing and not wasting premium if they never require long-term.
You often eat out
It’s fine to have a few fancy meals out, but if you make it a daily habit, it can lead to trouble.
Lackwood stated, “Eating out five times per week even if you’ve worked hard and saved a lot of money is likely to make you spend more than you earn.” Cooking can help you save money and most importantly, it will make you live longer.
Paying more taxes than they need
Stoyan Panayotov CFA, founder and senior advisor at Babylon Wealth Management. “Ultimately, taxes are due. However, with good tax planning, retirees can avoid unexpected surprises and keep more of their money.”
Reexamining their Investment Portfolio
While it might be a good strategy to invest when you’re younger, it may not work well for retirement.
Charnet stated that portfolios should be reviewed at least once per quarter. If you want to know what money is going out and what is being replaced by the performance you are getting, you can do so once a month. Establish and maintain great relationships with your financial advisor. If you don’t already have one, do so as soon as possible.
How to Cash Out Your Pension
It could be tempting to take a lump sum from your pension. Who wouldn’t want the additional money in the bank earning interest. Tayne explained that this could lead to a huge financial loss for you and your advisor, who may be paid a commission. Take your time before making major financial decisions. Don’t be rushed and make sure to read all the fine print.
You are paying too much for your cell phone plan or other utility services
Retirees may be unaware that their cell phone bills are becoming more expensive and could be paying extra for data or other extras. They may be paying too much for cable and other bills.
Tayne stated, “Make sure you ask your carrier whether they offer a discount to seniors or retirees.” Sprint and T-Mobile offer an exclusive plan for customers 55+. You can also ask your carrier if they have a similar plan. Many cable and satellite TV providers will increase your monthly bill slowly over time or offer promotional pricing for a period of one or two years. You can still call to inquire about a lower rate or downgrading your TV package, even if you’re under contract.
Start a New Company
Many retirees set up a side-business or business to keep their income going after retiring from the 9-5. While this may be a smart move for some, it can prove costly in other cases.
Craig Kirsner MBA, speaker, president of at Stuart Estate Planning Wealth Advisors. “The truth is that most businesses fail. Therefore, starting one in retirement is not a wise idea.
Do the math first if you are determined to open a business in retirement. This will ensure that you have enough money to pay for the expenses. To keep overhead costs low, consider starting a business that you can do at home.
Making Risky Investments
Retirement should mean that your portfolio has less risk than it did before you retired.
Kirsner stated, “Make sure that you are taking the right risks because if you lose 50% of your retirement assets you will have to earn 100% to break even.”
Kirsner suggests that you consult a fiduciary financial advisor before making major investments.
There is no difference between ‘Wants’ and Needs’
Retirees are wasting money if they don’t make the effort to distinguish between their needs and wants. While it is okay to indulge in some “wants” from time to time, that shouldn’t be the main focus of your money.
“Before you make a purchase, especially if it is expensive, ask yourself ‘Does this item really matter to me?’ Charnet agreed.
More Information from GOBankingRates
Gabrielle Olya This article was contributed by the authors.
This article first appeared on GOBankingRates.com: 29 Careless Ways Retirees Waste Money