You don’t want to spend your entire life saving for retirement just to make a financial mistake once you’re in it. There are a few common errors seniors tend to make during retirement that could be avoided if you know what to watch out for.
Giving Too Much
While you may want to help your children finance their first home or pay for your grandchildren’s college tuition, you might not be able to fully afford to do so if you haven’t budgeted for it. As MSN Money says, “You can take loans out for college, but you can’t take out a loan to pay for your retirement.” Being able to afford gifts for friends and family every once in a while can be worked into your budget, but always remember to put your own financial needs first. Also, if there is a charity you would like to give to, make sure you do adequate research before donating. Always know exactly where your money is going, especially when living on a budget.
Liquidating Assets Early
Liquidating assets that you no longer use can be a good option to get money quickly, but it should only be done as a last resort. Talking to family members is a good first step before making any big financial decisions, especially in retirement.
Limiting Insurance Coverage
You may not need certain types of insurance coverage now, but your needs could change in the future. Instead of completely cutting back on your coverage, see if you can simply alter your plan. Some companies offer loyalty discounts for customers who have maintained coverage for a certain length of time. Also, you may ask about consolidation discounts before limiting the coverage you currently receive.
Falling for Scams
Unfortunately, seniors remain a target for financial scams. Make sure you are staying up to date on common tactics used by scammers and beware of offers that seem too good to be true. There are a number of resources you can use to find if a deal or company is reputable or not. If unsure, consult your family and friends. Many scammers use telemarketing to target victims. To avoid this, you can register your phone number with the “Do Not Call Registry.”
Not Planning for Long Term Costs
While no one can be certain exactly how much money they will need to maintain their lifestyle into retirement, it is important to know all of the costs that may arise. Long term care insurance, health care and other costs can amount to more than you had originally planned for. Having even a rough idea of how much these things will cost you and planning for them is an important step. Not doing so is a mistake you don’t want to make.
Relying Solely on Social Security
According to the Social Security Administration, the average benefit for a retired worker is about $1,230, while the median cost of an apartment at an assisted living community is $3,300. If possible, try not to be exclusively reliant on social security as your income in retirement. The future of social security remains a bit unclear, but you can see that the age to receive payments continues to increase. Being able to supplement your savings in other ways and holding off on receiving social security payments until later will help overall.
Investing Too Conservatively
Many people, especially seniors, remain wary of financial markets ever since the economic crisis in the past decade. There are many investments seniors can make in order to supplement their income that are relatively low risk. It is important to continue to actively be involved in your investments and not let your family or financial advisor completely take control.