|Financing our homes needs to be done with care.|
As you get older, it becomes more important for you to evaluate each and every major financial decision that you make in depth. One large mistake that might have set you back when you were younger but still able to work could have some very serious implications for individuals that do not have the same earning capacity as they once did. You will find that there are many different small mistakes that you may be able to tolerate, but also many big decisions with high stakes that should be avoided if you can. A few of the different unhealthy financial decisions that are commonly made by retired individuals include:
Loans With High Interest
One of the worst decisions that you can make as a retired individual, is to take on loans with a very high interest rate. You will find that loans with high interest rates can have very terrible long term ramifications which should be avoided by you if possible at all. One of the specific types of loans that you should look to avoid as a retired individual is a payday loan. Payday loans might make sense when you are young and have a lot of incoming income to help you out, but may not make as much sense down the line as a retired person, since you are not going to have as much income to count on. This, plus the fact that payday loans can have interest rates as high as150%, it can be easy to see how low interest rates could potentially damage your finances, which are particularly vulnerable as a retired person.
Another common financially unhealthy mistake is overspending. As a retired person, there is a lot that needs to be taken into account as you figure out the amounts that you can reliably spend. Remember that if you have a set amount of money that you have to work with throughout your retirement, that you really look at the amount that you can spend on a yearly basis and budget all the way down to monthly and weekly spending to ensure that the money that you have saved for retirement lasts. Far too often people will not plan far enough into the future, and then be forced to live on programs like social security for the rest of their life.
A huge mistake that many retired individuals make is not budgeting at all. Spending wildly can put you into a bad place quickly. When individuals first retire, many choose to go on extravagant vacations and take trips that they have been looking at taking for years, without taking the financial ramifications into account. Make sure that you do not begin to spend just because you have recently retired, and have a financial planner if need be there to help you to make smart spending decisions.
Not Making Meaningful Investments
Far too many people believe that they will be able to live on their savings and social security alone throughout their retirement. While this might not be impossible for everyone, the fact of the matter is that it is not very much for you to live on, especially if you are going to be living to a ripe old age. Make sure that you appropriately plan out a number of investments that you could potentially supply you with income throughout retirement, even if the return on investment is a small one.
Good points and actually apply to everyone, not just the retirees.ReplyDelete
My goal is to be debt-free in my retirement years (with perhaps the exception of maybe a mortgage).
I'm grateful for the good earners we were and the conservative spenders we are.ReplyDelete
All good counsel, Barbara.
Good advice. My husband just retired, and we are having to adjust our style of living a bit to accommodate that. One never knows what the future will hold, and with people living longer all the time, we have to be careful to conserve those funds!ReplyDelete
Good reminders. I myself don't overspend; but I don't budget either. If I did a budget, I'd be more comfortable doing my spending. I keep telling myself this -- but somehow it never gets done. Maybe you'll be my inspiration ...ReplyDelete
These items were sent to me by an expert...my husband seems to have a sixth sense when it comes to spending. He budgets instinctually. It has paid off for us in so many ways.ReplyDelete
Sue said something that I think we need to keep in the front of our minds no matter our age. Lifestyle habits can be a killer...remember to fit your spending BEFORE retirement to what you will be earning after. What we earn in the present will need to keep us in the future.