This article takes a look at the 10 careless ways retirees waste their savings. If you wish to check out our detailed analysis on the importance of financial literacy, you may go to 30 Careless Ways Retirees Waste Their Savings.
10. Being Overgenerous
Insider Monkey Score: 46
Yes, being overgenerous is a thing and can cost you your life savings. Understand that as a retiree, you are dealing with a limited budget, and overspending on charities and donations can mean you have little left for yourself. One way to make sure you are not overspending is by making a budget and finding other ways to be helpful like volunteering.
9. Accumulating Credit Card Debt
Insider Monkey Score: 47
According to the Federal Reserve Bank of New York, the credit card balances of Americans reached $1.08 trillion in Q3, 2023. Adults aged 60 and over were found to hold 29% of that total. Retirees should realize that the average cost of debt is very high, and accumulating debt can prove to be dangerous for their retirement savings. The burden of debt also restricts retirees to enjoy a comfortable and debt-free lifestyle.
8. Starting a New Venture
Insider Monkey Score: 49
Starting a new business venture is an extremely risky affair. Many new businesses are at risk of failure, which is why retirement is certainly not the time to start a business and potentially risk losing all your savings.
7. Supporting Adult Children
Insider Monkey Score: 50
Another factor that can strain retirement savings is supporting adult children in your golden years. This financial burden may lead retirees to deplete their savings prematurely or forgo opportunities to grow their nest egg.
6. Failing to Review and Adjust Your Investment Portfolio
Insider Monkey Score: 52
Retirees need to review and adjust their investment portfolio from time to time. Failing to review your portfolio from time to time will result in misalignment with retirement objectives, and possibly lead to missed opportunities for growth.
5. Investing in Volatile Assets
Insider Monkey Score: 53
Since the value of volatile assets can fluctuate widely over short periods, retirees are at risk of facing substantial losses. Not only does this pose a risk to their savings, but also jeopardizes their financial security.
4. Overpaying Utilities
Insider Monkey Score: 54
Besides looking out for potential discounts, check with your provider whether you are paying for a plan or a service that is more than your requirement. If you are paying for more than what you are using, it will eventually drain your savings faster.
3. Falling for Sales Tactics
Insider Monkey Score: 55
Another careless way retirees waste their savings is by being pressured or giving into sales tactics. Falling for such tactics can lead retirees to make impulsive purchases that they may need or even want.
2. Neglecting to Create a Will or Estate Plan
Insider Monkey Score: 56
If a retiree fails to create a will or estate plan, it can lead to significant financial consequences for both retirees and their beneficiaries. What will happen in such a case is that their assets may be distributed according to state laws, leading to higher probate costs, delays in asset distribution, and potential disputes among family members.
1. Overlooking Opportunities for Extra Income
Insider Monkey Score: 58
While starting a new venture in your golden years may not be the best course of action, it doesn’t hurt to try less risky opportunities for earning extra income. Overlooking such opportunities, such as part-time work, means you potentially miss out on extra income and waste your savings instead.
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