Common Financial Mistakes Retirees Make

By Anneliese Rosar, 9:00 am on

Retiring involves making the transition between working and living leisurely. However, unless seniors use caution, spending their retirement funds may soon lead to financial crisis. There are several common mistakes that retirees must avoid, but Allen live-in care professionals believe the following mistakes are the most common. 

Lacking a Budget

Allen, TX, care professionals believe that without a monthly budget and monitoring spending habits, households fall into trouble. Make sure you talk to your loved one and establish a monthly budget that he or she can maintain.

Planning for Unpredictable Expenses

While seniors may adhere to a budget, they often fail to plan for paying income taxes or repairs that might be needed around the home or on vehicles. These expenses are part of normal life and money should be set aside for these situations. 

Relying on Investment Returns

Seniors may base their monthly income based on unrealistic expectations of receiving high returns on their investments. They then withdraw more money than they should. Surveys indicate that up to 30 percent of retirees withdraw up to seven percent of their investment returns annually. This action is ill-advised unless they have an affluent back-up plan. 

Holding Risky Investments

Some see hanging on to risky investments as being cautious. If the investment is worth less than the cost, many are reluctant to sell. If the risk takes up too much of a portfolio, retirees are carrying excessive risks. 

Too Generous

It is not unusual for retirees to compromise their financial stability by giving money to charities or family members. Seniors must make their financial health a priority and avoid giving too much money away. 

Taking Social Security Benefits Early

In order to have income, seniors may be tempted to take Social Security as early as 62. However, this action results in a 25 percent reduction in benefits. Retirees can collect full benefits at age 66. By waiting until the age of 70, benefits rise 32 percent. 

Get Bad Advice

While family and friends may believe that they have a senior’s best interest at heart, they do not have all of the information necessary to make the best financial decisions. Retirees are better off by consulting with a certified financial planner or a registered investment advisor to get their affairs in order.

Financial planning isn’t easy to do alone. Turn to Home Care Assistance for help managing all aspects of your loved one’s wellbeing. We provide flexible live-in and hourly home care Allen, TX, families can trust to help seniors age in place comfortably. Call (972) 548-0392 today to learn more about our services and how they can help your loved one.