Retirement is a time to truly live, you’ve worked so hard, after all. But that desire to live your life to the fullest can oftentimes collide with the reality of living on a fixed income. We get it, you want to ‘add guacamole’ free from guilt, but now is not the time to spend frivolously in an effort to keep up with the Joneses.
On a more likely scale than guacamole, you may be eyeing up a sports car or planning a once-in-a-lifetime trip. We support planned purchases that complement your new retirement lifestyle, but it’s important to stay diligent in order to not waste money.
We’ve compiled 5 ways we see seniors waste money that you can avoid. A financially savvy mindset goes beyond the stock market and complex tax code. Whether you have the extra funds or not, wasting money is simply not productive, so let’s see where you can save:
1. Depreciating Purchases
It’s no secret a new vehicle quickly depreciates as soon as you drive out of the car lot. Yet many have retirement dreams that consist of a sports car, a bigger boat, or a fancy golf cart.
While we’re not arguing these new rides can make retirement life a bit more fun, it’s important to budget for them accordingly. We all become accustomed to a certain lifestyle and wants can easily be mistaken for needs when it’s time to trade-in for something new.
We encourage you to save and budget appropriately for the hobbies or items that will truly bring joy during your retirement years. But at the same time, remember that vehicles are just things after all, and you may be just as happy focusing on one fancy ride rather than several.
Remember to think beyond vehicles. Electronics, sporting equipment, and timeshares are other investments that quickly depreciate.
2. Senior Discounts
A 10% senior discount is common amongst several chain restaurants, but the benefits of being over 65 reach far beyond hamburger discounts.
Some airlines, hotels, cell phone plans, and even some retail stores offer a discount to seniors. There’s just one simple caveat — you have to ask! While many senior discounts are exclusive to those 65-and-up, some start at age 50.
It’s easier than ever to find out if your favorite establishments offer a senior discount by simply looking online. But there should never be any shame in simply asking. Over time, your discounts could equate to hundreds if not thousands of dollars per year.
3. Overspending on Insurance
While you’ve been busy preparing for things like Medicare and Social Security, it’s easy to overlook areas that may not change. You’ve possibly created a relationship with an insurance agent or simply hung on to the same policy for years. It does the job and it’s a cost none of us can avoid.
But don’t let taking the easy way of holding on to an existing policy be an excuse to overpay. The best way to learn if you’re overpaying is to pull out your current policy and request quotes for the same coverage from other providers. While the shopping around process can take some time, you may be surprised at how easy it is to obtain quotes.
To save yourself some administrative time, you can also connect with an insurance broker who has the ability to compare multiple policy providers at once. Brokers also have an added level of knowledge as to who provides the best service and the most competitive rates.
If you are genuinely happy with your current provider, learning you’re overpaying can be a powerful negotiating tool to improve your rates while keeping your policy and trusted agent.
4. Collecting Social Security Too Early
If you’ve followed our blog for any length of time, you may already know we highly encourage individuals to educate themselves on the benefits of deferring collecting Social Security before making a decision.
The U.S. Government will increase your monthly payout by a set percentage each month you defer, up to the age of 70. The Social Security Administration has stated those born after 1943 will receive an 8% annual credit for each year they push back cashing in their benefit.
If you can wait until age 70, you will receive a substantially higher social security monthly payment compared to drawing your benefit at the age of 62. If you’re in the retirement planning phase — take a few minutes to brush up on the benefits by hopping over to Delay Collecting Your Social Security — Here’s Why!
5. Investment Fees & Taxes
Our existing clients know that Integrated Wealth Management is a fee-only firm, and they’ve come to understand first-hand the benefits of working with an advisor who is a fiduciary. What this actually means is, we’re morally and ethically obligated to put your best interest ahead of our own. Thanks to our fee-only structure, you don’t pay us a percentage of your earnings in commission.
This combination allows you to place trust in our advisors and services. If you’re currently paying commission or the fee structure associated with your investment portfolio is not crystal clear, you’re likely overpaying.
We also provide tax prep services to our retirement planning customers. Don’t overpay Uncle Sam. Working with a professional when it comes to taxes often pays for itself. Skipping out on really digging into tax mitigation strategies or not partnering with a professional can cost you thousands over a lifetime.
Time to Take Action
Are your wheels spinning? We hope we got you thinking about areas in your life you may be wasting money. View retirement planning as an opportunity to educate yourself to gain confidence in taking those next steps. For more helpful tips and deep dives into other important financial planning topics — browse our other blogs.
You’ll find guidance on topics like long-term care, securing a mortgage after retirement, fluctuating Medicare premiums, and an actionable pre-retirement checklist.
While we want our blog to serve as a resource center, you may end up with questions related to your specific retirement planning journey. We encourage you to reach out and take advantage of our 30-minute call to learn how our service can benefit your retirement planning efforts.