From the time you walk in the door at your first job, to when you walk out the door at your retirement party, you have been saving up for the time in your life when you can finally enjoy warm weather, golfing, long walks on the beach, and other relaxing activities people dream about during their working days. However, not everyone has the happy retirement that they were hoping for. It turns out that many seniors are prone to making many financial mistakes that can ruin their retirement. Sometimes, they don’t even know they are making these mistakes. Here, we take a look into a few of the most common financial mistakes made by seniors and how to avoid them before they turn into a financial nightmare.
Not Planning for the Big Picture
One of the first assumptions made by seniors at the beginning of their retirement is that they have enough money to support themselves for the rest of their life. As time passes, life expectancy in the U.S. continues to rise – growing from 75.62 to 78.8 in the past 20 years that means people are going to need their retirement fund to last a little longer than in the past. Although your income has significantly declined since your working years, there are solutions to this. First and foremost, keep investing in your future. Pulling money from your retirement fund early won’t comfortably get you to your 80’s and 90’s, you need to consider that you are going to live a long and happy life and invest as much as it takes to make sure you can. There are many ways to plan for the big picture. You may want to consider annuities or look into using a reverse mortgage as a retirement planning tool. It could help delay your social security payments, supplement your income, or help you keep money on hand if something you did not plan for happens.
Becoming the Family Bank
You have been helping your kids out financially for their entire life, so it may seem difficult when the time comes to let them go out into the real world on their own. It can be hard not to help them when they make their first big financial decision, for example buying their first car or their first home. This not only goes for your kids, but other family members and close friends as well. It may feel good to help them out financially, but you are also leading them to believe they can rely on you for money and they may not be prepared for the real world when it comes knocking on their door. In other words, you will become more and more financially vulnerable, with your family and friends – especially if they start expecting you to pay for things or they try to take advantage of you and your money. It is common to want to help out the ones you love, but keep in mind that you can only do so much before you might need financial help yourself.
Selling Assets Too Quickly
What is your first reaction when you realize you don’t have as much money as you thought? To sell your stuff, but be careful! There’s nothing wrong with selling your assets if you no longer need them, but that should be your last resort. You’ve spent hard-earned money on the assets you own and use, while the equity in your home remains unused. Before selling everything you have too quickly, you may want to consider an alternative money-saving strategy – a reverse mortgage. With a reverse mortgage, you can pay off debts, including your current mortgage*.
*Homeowner is still responsible for taxes, insurance and property maintenance.