Baby boomers are living longer than ever before, which means shifting from a regular paycheck to living on a fixed income in retirement may require some adjustments.
In the 1930s, the average life expectancy of men was 58 years, while women were expected to live to 62 years, based on data from the Social Security Administration. At that time, one would hope to live long enough to enjoy retirement for at least a few years.
do not miss
But these days, there’s a 1 in 3 chance that women — and a 1 in 5 chance that men — will. Lives up to 95 or beyond. However, the average Social Security retirement benefit is only $1,827 per month.
This means that baby boomers — those born between 1946 and 1964 — will need to extend their retirement dollars for two to three decades. And those who retired early need a bigger nest egg. In addition, they may have additional expenses to include in their retirement budget, such as medical care or grandchild support.
If you want to make the numbers work, here are five things baby boomers should (almost) never buy in their retirement years.
High risk investments
Retirees should focus on preserving their capital rather than risking it unnecessarily. Complex or high-risk investments may offer potentially high returns, but they can also lead to large losses. As you get older, you have less time To wait out economic downturns, so make sure you don’t have an overrepresentation of stocks in your portfolio.
Rebalancing your portfolio on a regular basis can ensure the right mix of assets (including stocks, bonds, CDs, and cash) and risk levels appropriate to your changing retirement needs. It is essential to research and understand any financial products before investing. Be wary of financial products with high fees or unnecessary features that may not align with your retirement goals.
You may like to quote a Qualified financial professional To make sure you don’t miss anything.
Expensive vacations
Boomers may have been reluctant to travel during the pandemic, but now they’re enjoying vacations, including expensive items like exotic cruises. And while travel is a great way to enjoy retirement, excessively extravagant vacations can quickly deplete retirement savings.
Travel costs are rising, thanks to inflation and rising interest rates, and booming demand is driving up airfares and hotel prices. The cost of a trip can start to add up, once you factor in meals, excursions, tips, and travel insurance.
Finding a balance between Affordable and enjoyable travel is paramount. Consider traveling off-season when prices are lower and look for deep discounts offered by hotels and attractions.
Read more: Regret Boomer: Here Top 5 “big money” purchases you’ll (probably) regret in retirement And how to prepare for it
timeshares
A timeshare is often thought of as an “investment,” but in most cases it depreciates once you take ownership. You cannot get any income from it.
With a timeshare, you pay for part-ownership of a vacation property, which you have access to during the same week or month each year. But timeshares often come with high maintenance fees and limited flexibility, making them an expensive and inflexible investment for retirees. It’s not easy (or possible) to change your time, but you still have to pay an ever-increasing annual maintenance fee.
The average price for a one-week timeshare was $21,455 in 2020, according to its latest publicly available data From the American Resort Development Association (ARDA), with annual maintenance fees ranging from $640 to $1,290.
When you do the math, it can be much cheaper to stay in a hotel or rent a vacation home.
second homes
Many Boomers are considering buying a second home in their retirement years – perhaps a summer home in a country house or a winter vacation in retirement haven Like Florida or Arizona. Some see it as an investment property, or as part of their legacy to leave to their children.
But owning multiple properties can be financially stressful. If you’re renting it out as a source of income, you’ll still need to pay the mortgage, insurance, taxes, and maintenance, even when it’s vacant—and those costs will be higher if the property is located in another country.
In addition, managing a property is a lot of work, and if you hire a management company to handle that for you, you will have to share the profits. So it is important to think carefully about costs before Invest in a vacation home.
Big, impulsive purchases
Nearly half of Boomers (48%) said they would be comfortable with retirement if they “watched their spending,” according to 2019 Natixis reconnaissance. This goes back into the budget, which is important when living on a fixed income.
But to have a budget; It’s another thing Stick to this budget. Americans spend more than $300 every month on impulse purchases, adding up to over $3,600 per year. When these impulse purchases are expensive items, such as a luxury car or a yacht, it can make a huge dent in your retirement savings.
Ultimately, reckless spending can lead to regret and financial stress. It’s important to take time to assess whether the big purchase is a real necessity or just a passing desire.
What do you read next
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
