Retirement is the final goal for each worker to achieve. However, everyone should pay attention and make an advance plan that guarantee his/her financial life and save a significant amount of money. An advance thinking of retirement may help you to live a security social life. So, to prevent you from becoming a bankrupt, read this article carefully to see the 40 financial faults that retirees do.
- Retirees make a risk investment
The most popular mistake all retirees make is investing their money using the incorrect way and this may cost them a lot of damages. The perfect time to invest is in your 20s or 30s because you are just starting your financial life; nevertheless, with your 50s you just want to enjoy your money, it is no time for making mistakes. For instance, instead of putting your money into a brand new start up that needs a time to flourish. You may start to invest in mutual funds that guarantee you an interest amount of money every year.
2. Property tax
You should always benefits from the advantages of property tax. The retiree person who have a full retirement age and owned his house, government will make an exception to reduce the amount of property tax, or you can get a tax freeze to ensure your property tax will never increase than it currently is. This is very beneficial for people in retirement, because you could not afford taxes that suddenly become high and your social security will do nothing.
3.Not taking advantage of property tax discounts
In judiciary law, if you own a house and you have the full retirement age you will do an exception to lower the property tax amount. Or you will have a tax freeze to guarantee your property tax’s house will never get higher. Make sure you always look for property tax discount for seniors.
4. Withdrawing your social security too early
Among the biggest mistakes that retirees do, is withdrawing their money very early. Whenever you wait to take out your money, the better your social security is. For example, in USA the suitable age for people is 62 to take out their social security but they will receive only 75% of it. So, be patient and wait until you complete your full retirement age i.e.66 years old. You will benefits as much as possible from your social security.
5. Withdrawing your Roth IRA very soon
Among the helpful retirement account Roth IRA, which is consider to be one of the most important way to save money. Withdrawing your funds too soon will cost you a lot of high taxes to pay; and the minimum wage required for someone to withdraw money from Roth IRA without penalty are 59 and a half.
6. Spur-of-the-moment during retirement
During retirement, many couples prefer to live in another country and there are so many articles that convince those people, but before that they should pay attention the language, laws, and the regulation of that country. It is not too easy to pack your bags and get on a plane. Unfortunately, many couples did this risk and they realised that it was too late to take a step back. Most retired people wish to live near to their family member especially old one. As an advice for retirees, a right thinking will always lead you to good and successful results.
7. Ignoring the FMERR Program
The Freddie Mac Enhanced Relief Refinance Program permits people to refinance their mortgage if they have little or no equity. Before the 2008 financial crisis, the prices of homes increased and people applied for financial loans, and now so many homes have lost value. So if you find yourself within the same position do not forget to consult the FMERR.
8. Falling for an online scam
An online scam becomes among the biggest crime in the all over the world, and the elder people are the most harmful category due to many reasons; may be those people are not very familiar with technology and internet, or maybe they are lonely and need to talk to someone on the phone or on Facebook. So please pay attention to whom you are talking with and you should always have anti-virus software, and make sure you use a strong password especially when it comes to your money.
9. Living a lavish retirement
Old people should keep in their mind that their lifestyle is going to change after retirement; and the luxurious life that they were living it is going to be changed, since the salary in going to be decrease. When you are retiring, you are going to live on what you have been saved during your practical life and you should forget your expensive vacations if you are that kind of person. So, with the help of your social security check you will live a humble life in order to last you the rest of your life.
10. Planning to work forever
Some people choose and decide to work for the rest of their lives in order to enjoy it. Yet, it is not good choices to follow or to plan to sine you do not know what life is going to hide for us and no one can live forever. If someone had a health problem this will obstruct your plan. So instead of working forever, try to have a good plan retirement.
11. Never using coupons
When you are retiring, you should try to use coupons to help save money. It seems not a good idea but for young people. However when you get older you realise that coupons could help you save money especially during your retirement period.
12. Not taking advantage of senior discounts
There are so many places for old people who could get profit from senior discount, for instance, restaurants, movie theatres, or Subway Company. The main objective of this advantage is to help this category saving money especially during retirement. However, a lot of people do not ask for these advantages, so it is time to start thinking about using senior discount.
13. Buying a time-share
When old people retire; they start thinking to go in vacation with their family members with their saving money from the retirement period. However, you can invest your money into a timeshare. A timeshare kind of owns a small portion of a property where you are only allowed to go there certain times of the year. Like Disney that has such programme but you are obliged to your owned apartment one week in the whole summer.
14. Not matching your employer’s 401K benefits
When you give the minimum amount of a 401k distribution from your pay check, even when your employer match it dollar-for-dollar, so this is just like putting away your free money and you should always try to match your employer’s maximum contribution.
15. Raising your adults kids as children
We find some parents see their children as little babies because they truly love them. That is why we find those adult children even their age live with their parent and this may cause a bit problem concerning the parent’s money because they will always consume and spent the money of their parents. For this reason, we consider each parent to let their children take their responsibility and live their own life and spend their own money.
16. Borrowing from your 401 k
When you have a full time salary job, possibly your employer gives you the chance to deposits into your 401 k. if you withdraw from your 401 k early i.e. before you reach your retirement age you will pay taxes on that money. That is why you should think twice before doing this.
17. Ignoring saving until the last minute
The sooner you start saving for retirement, the better. You should plan yourself earlier for saving money and put it into your account to guarantee for yourself a joyful and modest life. On the contrary, waiting until the last minute will create for you a big problem that you can not handle it.
18. Trying to maintain your working lifestyle
A lot of people get used to the working lifestyle and to spending money here and there. Some people are used to meet each week to go for restaurant and take their lunch out of their homes; or some of their do his shopping every two weeks. This kind of style is not going to be the right direction for someone who wants to retire. Once you are nearing the retirement age, try to create a modest and simple environment of lifestyle.
19. Minimising everything
There are some categories of people think that that they should minimize everything in their life and they downsize all their programmes to live a fulfilled retirement life. Yet, it is very good to save money for the rest of your life and have fun from time to time. Retirees should not truly downsize all things. So be a good organize, but do not overboard.
20. Collecting social security and still working full-time
Woking throughout retirement means that you can lose the free money and through collecting your social security there is a limit to how much money you can produce to lose it out of your benefits. Sometimes, working full-time can cost more than retiring.
We have spoken about downsizing and minimising the stuff during retirement, but most retirees tend to hoard especially those who experienced the great depression. Some retirees end up hoarding things they do not actually need, this mind-set should be changed and we should eliminate the unnecessary and useless things.
22. Buying a Two-Story Home
A lot of people prefer to have a two story home because they are raising their babies, but once their kids grow up and they are close to the retirement age, it is preferable to change the house into a one story home, especially when you get older you need everything in front your eyes, and you will no longer be able to go up and down the stairs; hence, It is better for retirees to live in a single-story home.
23. Spoiling your grandkids
Grandchildren are the best gift, and grandparents want to spoil their grandkids and in many cases those children occupy and strongly their parent’s place. Grandparents may reach a certain point in which they spoiled too much their grandkid and give them everything they ask for. So as an advice, do not spoil your kids to the extreme.
24. Forgetting to make a retirement budget
Most people are guessing a number for what they need for their retirement, and this one of the biggest mistakes that most retirees do, many people do not discover how much money they need to save every year and they never sit down to figure out the retirement budget.
25. Avoiding long term medical care planning
The more you get older the more you need to insure yourself. People should always plan for long term health care because being young is very different from being old, that is why long term medical is among the decisions that you should plan for to have a health insurance. Besides, you need to have friends or a family member in order to help you in case you have a medical appointment.
26. Never writing a well
Some people think that when writing a will they will pass away very soon, however it is always important to write your last statement before it is too late and you can change it as long as you are alive. It is good to be optimistic and wishing to live for a very long time by reality is stronger than that because many people die suddenly and unexpectedly.
27. Waiting too long to buy life insurance
A big percentage of Americans agree on the expensive insurance and 40% of them do not have a life insurance. The more you get older the more life insurance will increase and be expensive. So make sure you get a life insurance before it is too late.
28. Not planning for a new hobby
Boredom is one of the biggest problems that retirees face. This feeling comes to people who addicted to work and once they get retire they could not stay without doing anything. It is very important to plan for hobbies during retirement to bring happiness and live an enjoyable life.
29. Investing too aggressively
Investing too much is not a good choice to follow. You should save for retirement to live a normal life; we can invest in Roth RIA. We can save an amount of money each month instead of aggressively investing.
30. Refusing to downsize
As we have mentioned above concerning the change of home from two storey home to one story home, this modification is included within downsizing your home into a small building when you are retire due to many reasons, it is easy to clean a small house and if you suffer from arthritis or any other types of injuries, you definitely need to live in a house with one floor.
31. Refusing to get a part-time retirement job
We have different ways of thinking in the society concerning working or retirement. The special category is to think to get out of their job just because they hate their domain and they can not wait until their retirement age, and we have already spoke about withdrawing the social security, so those people take a big risk when it comes to their financial situations. Thus, the best solution is to find another job that you like even with a small wage income.
32. Never going to free senior events
There are loads of opportunities for senior citizens to get free entertainment. For instance; in the United States, there are so many opportunities for elder people to get enjoyed. You should simply check your local town about these events.
33. Still having debt
The debt issue is among the great problems especially for elder people who are close to retirement can be incredibly stressful, and depending on your social security that is not enough to keep you alive mostly when it comes to rent taxes. That is why some people think that they should work two or more years to get rid of debt.
34. Avoiding the stock market
The stock market is something that everyone gets afraid from it. They thought that you should be intelligent or genius in order to understand how it works. But investing in a stock market can boost your retirement saving using just a few clicks on your smartphone.
35. Putting all of your (investment) eggs in one basket
The biggest mistake that most people do is they put and invest their money in one single stock. In order to have a healthy investment you should diverse your money into different marketplaces, if one of your investment goes down you can guarantee that the other one will be going up. However if you put your eggs in one basket you will put yourself in a danger of losing everything you own.
36. Buying a new luxury car
Many people wish to have a new car after their retirement, and indeed most of them buy a luxury one because they think that they deserve it. However, they will spend all their saving money to buy such expensive car. So before you make this step you should realise your budget because your retirement may not be enough to have a luxury car.
37. Continuing with bad habits
There are plenty of people who used to practice some bad habits and could not stop doing that after retirement such as drinking and smoking. The sooner you end these bad habits the better and the healthier you will be. Alcohol and cigarette drive you to many illnesses particularly the elder people. So it is best to stop all of your old habits once you get older.
38. Failing to take required minimum 401k distributions
During retirement, retirees make a minimum amount of 401k withdrawals every year. And the perfect age to withdraw your money out of your 401k is 75 years old. The Roth IRA does not demand any withdraw until the death of the owner
39. Over spending in your 60’s
Make sure not to spend all of your retirement savings when you are still in your 60’s because most people get excited when they finish working and they want to live their lives with overspending in their 60’s by buying a new car, or a big house and even start going on vacations. You must be economical as much as possible.
40. Understanding your life expectancy
There some people who thought that they will live until a specific age in comparison to their parents and grandparents, however with the new medical breakthroughs you will never know what is going to happen and you can never expect if you will live to be 100 years old. Yet, you can save money than is actually necessary in case of emergency.