5 Ways to Waste Your Retirement Savings

Retirement Income

5 Ways to Waste Your Retirement Savings

Posted by Asset Protection Group
2 years ago | October 14, 2020

After decades of watching your nest egg grow, your thinking will shift after retirement. Now it’s time to spend that money – wisely, of course. Instead of focusing on accumulation, you will begin to consider ways to make that money last for the rest of your lifetime. So, you will need to be on guard against these five common money wasters in retirement.

Supporting adult children. It’s understandable to want to help your children succeed, especially these days when the cost of living can be high for young families. Keep in mind that handing over cash is just one of the many ways to help someone financially, and is the least effective in the sense of helping them help themselves.

Consider other ways to offer assistance, such as providing childcare to grandchildren so their parents can work, loaning an extra vehicle when possible, sharing a cell phone plan, or keeping adult children on your health insurance plan until they turn 26 (ask them to pay the difference in premiums). If you do allow an adult child to stay with you, make it clear that they are expected to share in household expenses.

And, whatever you do, resist the temptation to take out huge college tuition loans. Investigate all other means of paying for college first.

Hanging onto two cars (and two car payments). Once you’ve both retired, you and your spouse might not truly need two vehicles anymore. By sharing a car, you can dump one payment, along with some of the insurance and maintenance costs.

A huge home (and mortgage). Living in a larger home than you need can become an enormous money waster. Not only will your payment be larger than necessary; maintenance will cost more as well. Downsizing into a smaller home can net you some serious savings. As a bonus, you’ll have fewer bathrooms to clean.

Using brand name medications. Generic is almost always cheaper, and generic medications must pass the same rigorous approval process with the FDA (so they’re just as safe and effective). Investigate your options by talking to your doctor and pharmacist.

Overdoing your charitable contributions. Giving to charity is a terrific thing to do, but not if you’re giving more than you can truly afford. Set a budget for charitable contributions each year, stick to it, and make sure to claim those gifts on your taxes. And remember, not everyone who claims to be running a charity is legitimate. Check to be sure a group is IRS- approved to receive charitable donations before pulling out your checkbook.

All of these money wasters are good to know about ahead of time, so that you can watch out for them. But if you’re still in the “saving” phase of life, give us a call to discuss your retirement planning options. We can schedule a consultation to ensure that you know about all of the options available to you.

 

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