Retirement is a time of well-deserved rest and relaxation after a lifetime of hard work.
However, even if you’ve managed to save enough to secure a comfortable retirement, you’ll need to keep planning and making wise financial decisions to ensure you don’t squander your hard-earned savings on foolish or unnecessary spending.
Let’s take a look at some of the most ill-advised expenditures that financial experts see retirees spend their savings on.
Living In An Expensive City
The cost of living can vary quite a lot depending on where you are. If you’ve lived most of your life in a low-cost area, the price of a restaurant meal in Manhattan or San Francisco might make you pass out from shock. It can be hard to leave a place behind, especially if you’ve lived there long enough to put down roots – but making a move could make your retirement a lot more comfortable.
“Don’t spend all your savings paying high rents or property taxes just because you don’t want to move,” said Young Pham, investment analyst and financial planner with BizReport. “In fact, when you retire, you are more flexible to live anywhere you want. You can pick up a decent city in middle America or even some affordable neighborhood across the US coasts and take advantage of these differences in the cost of living.”
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We all probably have something about our appearance that bothers us, especially as the years take their toll on the body. Because cosmetic procedures are typically not covered by health insurance, they are often out of reach for those without a lot of disposable income. It may be tempting during retirement to finally splurge on it, but doing so rarely makes sense financially.
“A growing number of people over 55 are undergoing cosmetic procedures for different reasons. Some want to get back into dating or make clothes fit better, while others view it as a reward in retirement,” continued Pham.
“The most common procedures in this group include ear reshaping, face-lift, and hair transplants. Going under the knife will not only drain your retirement savings, as most are not covered by health insurance, but also put you at risk of developing complications owing to the fact that the ability to recover from surgery declines with age.”
Supporting Adult Children
Unless you got started very late, your children will have moved out and be well into their own professional lives. Every parent wants to make sure their child can have the best possible life – but it’s important to remember that as a retiree your income is fixed, and providing financial support to others could put your own future at risk.
“Many retirees have a natural inclination to help their adult children financially, especially during challenging times,” noted William Rivers, Founder of Senior Strong. “While providing support to family members is important, it’s crucial to set clear boundaries and avoid jeopardizing one’s retirement savings.”
On paper a timeshare might sound very enticing — owning a piece of a vacation home without the potentially exorbitant price tag of a second house or condo. Make sure you read through all of the fine print before you make a commitment though, because you could be making a costly mistake.
“Timeshares are a terrible investment for retirees,” Julia Kelly, Managing Partner of Rigits, warned. “Unfortunately, many timeshare companies target retirees with free trips or other perks in order to lock them into a long-term financial investment…”
Kelly continued, “Timeshare ownership can burden retirees with unexpected financial obligations. For instance, most people don’t realize that they will owe annual property taxes on their timeshare. They may also find themselves on the hook for additional expenses on top of the regular repair and maintenance fees, such as a new roof or parking lot.”
As you get older, your health naturally becomes more and more of a concern. After all, what was the point of all that saving and investing if you won’t be around to enjoy the results? Unfortunately, worries about aging and failing health can make retirees a target for the unscrupulous.
“Retirees are often targeted by scammers who prey on their concerns about health and medical issues. These scams can range from unproven medical treatments to fraudulent health insurance plans,” said Brian Meiggs, entrepreneur and founder of My Millennial Guide.
Meiggs noted, “Retirees should exercise caution, research and verify the legitimacy of any health-related offers or investments, and consult trusted healthcare professionals or financial advisors before making any financial commitments in the name of health and well-being.”
Don’t Waste Your Savings
Retirement should be a time of financial security and peace of mind. However, retirees must exercise caution and avoid making poor financial decisions that could jeopardize their savings. By being mindful of their spending habits, setting realistic budgets, and seeking professional advice when needed, you can make informed choices that ensure a worry-free retirement.
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