Retirement is a time when you can finally kick back and relax. This is a time when you can finally enjoy all the years of hard work. Those long days of labor all led up to this point your life, so put your feet up and smile as you think about how you would spend the next several worry free years and let your retirement fund do all the work.
However, just because you have finally retired doesn’t mean that everything is now set. Even at this point in your life, there are several situations that look to separate you from your hard earned money. There are certain decisions a person can make that would turn what is supposed to be the best years of one’s life into a struggle. Here are the 10 financial sins retired people must avoid to enjoy a truly happy retirement:
1. Impulsive Investments
When living a relatively worry free lifestyle the way most retired people do, it’s easy to become overly at ease and let your guard down. This makes us more susceptible to making questionable decisions like making generally risky investments and even being targeted by financial scams. Many retired individuals have had their retirement ruined by the negative fall out by such decisions.
This can easily be avoided by simply being more careful. If someone comes up to you with an investment opportunity that seems to good to be true, chances are, it is. By asking the right questions, doing the necessary research, you can keep all that money you’ve saved for your retirement fund safe.
2. Making Unwise Purchases
Understand that while your retirement fund may be sizeable, it is not infinite. Just because you’re retired, that doesn’t mean that you have free reign to buy whatever you want. Remember, you have managed to come up with enough money to retire comfortably through smart financial planning. There is no reason to abandon that kind of mentality once you’re retired, especially if it would be detrimental to the finances of your retirement. Buying a boat may seem tempting, or even that car that you’ve always wanted, but if making such a purchase would mean that you won’t be able to make the next payment to your life insurance plan, then it might be time to ponder the smarter choice.
3. Neglecting Personal Health
Unless you are one of those people who struck it big and managed to retire at a young age, then it’s likely that you have reached retirement at an advanced age. This means that whatever lifestyle choices you have made in your younger years are going to start catching up with you, and a medical insurance plan can only cover so much.
If you want to enjoy a long retirement with minimal strain on your finances, taking better care of your health is the first big step. At this point, your financial health will go hand in hand with your physical health, and if you take care of one, you take care of the other.
4. Not Filing Taxes Properly
They say that there are only two things in life that are constant, and those two things are death and taxes. While death may be unavoidable, issues with taxes can easily be avoided by making sure all your paperwork is in order. Back taxes have a tendency to bite a retiree in the behind at unfortunate times. Be sure that your taxes are properly paid and filed so your retirement fund doesn’t go to the government.
5. Unwillingness to Cut Corners
Retirement is also a time to consider downsizing. Having a big house is great, but always ask yourself the question, “do I really need this?” Much like making unnecessary purchases, it’s best to assess your priorities. You might want to live in a smaller house that has a smaller mortgage, or trade in that gas guzzler for something more economical.
Take a look at your financial commitments now that your income comes solely from your retirement fund. Cost cutting doesn’t mean that you’ll be downgrading your life, but think of it as streamlining your lifestyle to something that is more appropriate to your needs. By cutting corners on things that you don’t essentially need, you can definitely stretch your retirement fund for a lot longer.
6. Being Unaware of Retirement Accounts
It’s also best to be aware of where your retirement fund is coming from, specifically. If you have an insurance plan, pension, savings and other sources of retirement income, find out how much you’re getting and using from each. Having a clearer idea of how much you will be receiving and how much you actually have will make planning your finances and expenses much easier.
7. Not Diversifying Your Portfolio
You may be one of those people who tend to be careful with your investment choices, and as alluded to earlier, a level of care is smart. However, you also run the risk of having a financial portfolio that is not diversified. This would limit your earning potential. Try to branch out a bit in order to learn of other avenues to turn a profit. Consulting a professional, a credible one, wouldn’t hurt as well.
8. Indulging in Complacency
The purpose of retiring isn’t really to stop working, but to put yourself in a position wherein you can do something that you really like in the time that you now have. Why not work part time, or even full time, in something that truly interests you? This would be intellectually, emotionally, and financially fulfilling since you’d be doing something that you love and something that challenges you, and you can even make some money out it. Making money on the side would ensure your retirement fund lasts longer.
9. Neglecting What is to be Left Behind
No one lives forever, and once you’re retired, it’s also an ideal time to think about where your money goes once you’re gone. Getting the family together to discuss possibilities after your passing may be a good idea to hammer out how things are to be handled once the unfortunate time of your passing has come. Also straighten out your life insurance policies and other responsibilities. These may require you to entertain certain unpleasant thoughts, but the sooner you get these out of the way, the sooner you get to enjoy your retirement.
10. Making Retirement About Money
A lot of people are under the impression that as long as you’ve managed to save a ton of money for retirement then everything goes smoothly. That is not specifically the case. Money does not equate to happiness, and retirement is a time when people get vulnerable to depression and other similar emotional problems. People who have such problems tend to make poor decisions, especially when it comes to money. Set your mind properly to what retirement really is, so you wouldn’t risk blowing your entire nest egg on impulse.
Ian G. Elbanbuena is a blogger and infopreneur who writes on various topics mainly finance, self-improvement, business and marketing. At present he works on behalf of Compare Hero, Malaysia’s leading comparison website. This portal helps individuals in saving money by comparing insurance rates from different providers. Twitter @elbanbuenaian