Congratulations, you finally made it to retirement! You can now relax and enjoy the nest egg you worked so hard to build. At least that’s the plan. The truth is you can’t put your guard down now. The constant income you enjoyed when you had a J-O-B has left the building. It is now up to you to survive on what you have been able to accumulate over the years. This will be a challenge for many, but you can improve your odds if you are aware of a few of the common pitfalls retirees fall prey to.
One pitfall that can derail a good retirement plan is when retirees continue to support their adult children. Sadly, I have heard of this quite often over the years. Parents love their children and want to help them when they are struggling with their finances. Their student loans, the rising cost of housing and credit card debt begin to crush them. Unfortunately, that’s when parents bite the bullet and try and rescue their children, rather than allowing them to learn to swim and rescue themselves. It doesn’t do any good to help them if it costs you the retirement you worked so hard to build. Plus, did we neglect them the opportunity to grow, and don’t we all grow the most when we are uncomfortable?
Another area where retirees can lose control is in buying too many gifts (grandkids in particular). I think it was summed up well when someone said, “Grandkids are God’s reward for not killing our children”. Okay, this is obviously not meant in a literal way. I’m sure anyone that had kids understands what they are saying. We love our kids, but grandkids have a special place in our heart. And so, we tend to spoil our grandchildren – particularly the first one. We try to keep up with the second, but we become more and more overwhelmed as each new grandchild enters the world. We want to be consistent to each of them, but the financial burden becomes too much.
We also face the real possibility that we may need long-term care someday, and that is not cheap. Okay, so maybe you are a fine oiled machine today, but the future is uncertain. The fact is there is a 50/50 chance that we will need some sort of long-term care. That’s a coin flip. Of course, there is a chance you will never reach that point, but is it really worth the risk? It’s better to be prepared.
Yet another pitfall we can fall into is the desire to maintain the same lifestyle we lived while working a fulltime job. The reality is our retirement money needs to last us the rest of our lives, and we don’t know how long that will be. Therefore, we likely will need to consider a simpler life. A smaller house, less toys and less eating out may be in order.
Don’t forget about taxes and the rising “cost of living”. We may save a large sum for retirement, but often that money is tax deferred, and I guarantee Uncle Sam has just been biding his time until he gets his cut. The “cost of living” continues to go up as well, which means your money today is not worth as much as it was yesterday. Prices continue to go up, which means your money will not go as far as once would have.
Is everything doom and gloom? I hope not. Hopefully you have been able to save well over the years and will have more time to follow other passions that God has placed on your heart (like those beautiful grandchildren). Just don’t forget to continue to educate yourself and adjust course as needed.