Advertising
Advertising

5 Costly Retirement Regrets We Should Avoid

5 Costly Retirement Regrets We Should Avoid

There is much to consider when preparing for retirement. New retirees are always more than eager to share stories, successes and mistakes they have made along the way. If you listen closely, chances are many of them will tell you something they wish they could do over or do different.  Here are 5 costly retirement regrets we should all avoid.

1. Spending too much in your peak years.

When you were young, you wanted the finer things in life; Cars, houses, cloths, boats etc. As you get older, spending too much in your peaks years becomes a retirement mistake.

This is because you lose the power of compound interest. The longer you keep your money invested, the more of it you will get out. Most people in their twenties and thirties unfortunately do not think this way until it is too late.

The best way to avoid this retirement mistake is to first control your spending. Clean up your vision board, you don’t need all those material things to show how successful you are. As Dr Sues once said “Those who matter don’t care, and those who care don’t matter”

Advertising

Next, get financially literate. Take some money classes to understand how to build a budget, get out of debt and invest.

Make sure you are also putting some money back in your youth. It may not seem like much right now, but little drops of water make a mighty ocean.

2. Not taking good care of your health and body

Entering into retirement with bad health can have some very costly consequences.  When we are young, we spend so much time working, so much so that health and fitness is often the last thing on the mind. The mistake here is that too often; people pay the cost of their bad food and exercise choices when they have the least amount to spend – retirement.

This retirement mistake will not only have you running out of money too soon into your retirement, it will also rob you of precious time that could have been spent with family.

Advertising

The best way to avoid this retirement mistake is to remember that your health is your only true measure of wealth, so take good care of yourself.

Start by making better food choices and also exercising to keep you looking young and vibrant. At retirement, you will probably be paying your own health insurance out of pocket, so it pays to have a solid foundation in health and wellness.

3. Borrowing from yourself

A major mistake people make heading into retirement is borrowing from their retirement accounts to fund large purchases. This could be a second home, a remodel, or a child’s college education. The big mistake here is not only will you have to pay taxes, penalties and fees to get your money out; you may also have to work longer.

The emotional attachment that leads you to justify making these large purchases will cost you big in the long run

Advertising

The best way to avoid this money mistake is to remember why you started saving in the first place. These fees are put in place to remind you of the commitment you have made to secure your final future.

Maybe start a fund for whatever project it is you want to accomplish. Set measurable savings goals over a set period of time to meet this financial goal. You may have to get an extra job, however it will be well worth it.

4. Not downsizing soon enough

Life can often feel like one big roller-coaster ride.  We leave the comfort and acreage of our parents homes to the small nest eggs of a bachelors pad or apartment. As we get older and have our own families, we also follow suit and acquire our own large homes to raise our kids in. However this becomes a retirement mistake if you do not know downsize soon and early enough. Whether it’s moving into a smaller home or selling off a second car, don’t forget that you must already be living below your investment income going into retirement. Most folks waiting to cut back at retirement will be drowned out by the cost of downsizing.

The best way to avoid this retirement money mistake is to make sure that you are not blinded by your pride. Do not be given to the temptation of keeping up the perceptions others have of you. At this age you should be travelling and enjoying the world with your spouse much more than you did when you were younger. Chances are you will not need the huge house. Not to mention, you will be paying lower monthly bills.

Advertising

5. Not kicking a bad habit early enough

There is a feeling of invincibility we all feel when we are young. We develop vices too often as a means to socialize or pass the time. From alcohol consumption, smoking cigarettes to gambling, most people regrettably count the cost of their vices when it is too late.

While it is OK to indulge yourself in whatever past time you choose, the retirement mistake here is forgetting to count the cost. A regular smoker will very easily spend three thousand dollars a year on cigarettes. This is money that could have been put into a ROTH IRA.

The best way to avoid this mistake is to create an allocation system for yourself or a play fund. This is a reasonable amount of money you have allowed yourself to spend on all vices. Your need to live a comfortable life in retirement must be greater than your need to have too much fun now.

Approaching retirement doesn’t have to be all dark and gloom. Just remember that the choices and decisions you make now will affect the rest of your future.

Featured photo credit: http://theneotericgroup.com/experience/retirement-residences/ via theneotericgroup.com

More by this author

15 Things Only Nurses Would Understand 10 Things Learnt From The Two Roommates Who Saved More Than $55,000 A Year You May Not Know Your iPhone Headphones Can Do These Things 10 Reasons Why Crazy People Are More Likely To Be Successful You May Not Know These 8 Things Are Pushing Your Husband Away

Trending in Money

1 10 Best Ways to Save Money Faster and Smarter 2 8 Best Finance Apps For Effective Budget Tracking And Planning 3 How to Start Investing Without Taking Major Risks 4 13 Books on Money to Transform Your Finance Management 5 How to Set Financial Goals and Actually Meet Them

Read Next

Advertising
Advertising
Advertising

Published on November 11, 2020

10 Best Ways to Save Money Faster and Smarter

10 Best Ways to Save Money Faster and Smarter

People love to talk about budgeting, reducing spending. and investing. But unfortunately, talk is cheap, and poor money management is expensive. It’s easy to talk about the best way to save money, but putting it into practice is a different thing.

What people need to talk about is the practical and efficient ways you can quickly save money to accomplish your goals. After all, they don’t teach this stuff in school.

Here are the 10 best ways to save money faster and smarter.

1. Cancel All Your Subscriptions

Yes, all of them.

Okay, you can keep your wifi and trash. But other than that, cancel all your monthly subscriptions for one month. You will survive, I promise. Better yet, you will realize you won’t miss all of them.

Now that you have had 30 days to examine what you really missed and what you never thought twice about, you can add some of them back in. The others? you never have to think about them again.

This is something you can and should do with every part of your life. If it’s clutter, cancel it. Being able to step back and see what is cluttering your life and what is excelling your forward helps improve your quality of life and financial standing.

Advertising

2. Automate Savings From Your Paycheck

Many of us are so excited about getting a new job that we rush through the paperwork during the hiring process. Good news for you, I have had lots of jobs so I have seen it a million times.

There is an option for a portion of your paycheck to go directly into a secondary savings account. This is by far the most effective way to save money every month. We tend to spend most of what we have. So, if we take it off the top first, then it’s less likely to be spent. Just head over to HR and ask. It will only take two minutes.

3. Cancel the Happy Hours for the Rest of the Pandemic

We are in the middle of a global pandemic, which means that there is no better time to buy some drinks from the local store and stop shelling out $5 a drink at the local cocktail bar. When we look back at our bank statements, we are always shocked that fast food and alcohol can add up so quickly. You can easily save a couple of hundred dollars just by taking this step.

A great exercise is to print out your last bank statement and highlight all the areas of alcohol and fast food. The amount may surprise you and make you think twice about that old fashion.

4. Online Grocery Shopping

Some people think online shopping increases the amount they spend. For the most part, I would agree—except for this category.

Online grocery shopping is now a no-brainer, though. Whenever you walk through a grocery store, two things always happen: you always grab impulse items, and you never know the total of your cart until you checkout. This means that we always spend more than we originally planned.

With online shopping, you can see your total as you add items to your cart. You are way less inclined to make those impulse purchases and because of that, I would venture to say that you could even pay to have them delivered to your door and still save money each month by choosing online grocery shopping.

Advertising

5. Get a Famzoo Debit Card

This is something my wife and I swear by, and it’s great for the entire family! Famzoo strictly exists to help families and kids budget their money better. Each month, my wife and I have an allotted amount loaded onto our pre-paid Famzoo debit card. This amount has changed every year depending on promotions, kids, stage of life, etc.

The important part is that when you give yourself the freedom to spend a certain amount, you are more likely to only spend the allotted amount. Think of it as a diet. If you are counting calories, you are more likely to stick close to the amount you set. You can also look for some tips online to better stick to your family budget.

6. Purge

This is actually my favorite to do, and it is actually one of the best ways to save money. Raise your hand if you have ever moved. Okay, so everyone.

When we move, we are always amazed at how much junk we have acquired. I have found that about every 6 months, I can find a couple of boxes to sell online of things that we never use. This not only gives you so extra quick cash, but it also keeps your house more tidy and organized.

Now, go clean out that garage!

7. Amazon Subscribe and Save

32! That is how many items I have setup on amazon subscribe and save. Let me explain.

This sounds expensive, I know. But it actually saves us hundreds of dollars per year! We all need toothpaste, shampoo, razors, laundry detergent, toilet paper right? This feature is truly a triple threat. When you have more than 5 items on subscribe and save, you automatically unlock the max savings for every product on your list. This can be up to 20% per item!

Advertising

Now, even better is that it ships straight to your door on the exact day you want the item, maybe monthly or maybe you only need it every 4 months. This way, you never have too much or never run out. Either way, it’s totally customizable.

Lastly, there is no contract for any items, which means you can switch brands or items at any given time at no cost. My advice: every single staple item should be on your subscribe and save.

8. Rewards

This may ruffle some feathers, but if you are using your debit card for purchases, you are missing out on free money! We have this notion that credit cards are evil but in reality, they are the same piece of plastic as your debit card.

How you use it can be bad, don’t get me wrong. But if you want my opinion though, ditch the debit card and get a rewards credit card. Use it just like you would your debit card and make sure to pay it off as soon as the statement comes in!

Just to give you an idea of how powerful this can be in terms of money, here are some things that our miles have paid for:

  • 4 nights in Vail with Flight
  • Rental car in Vail (convertible might I add)
  • Flight to Ireland
  • Flight to Hawaii
  • Multiple staycations at very nice Hotels

That’s roughly about 7 thousand dollars in travel expenses so far! Remember that the credit card is just a tool and can be one that benefits you if you use it wisely. Ironically, this can be an effective way to save money.

Pro tip: If you don’t trust yourself carrying around a credit card, then set up all your monthly bills with your credit and leave it in a drawer at home. This way, you rack up miles but don’t get tempted to overspend.

Advertising

9. Vacation With Friends

Now, I know travel is hard right now but what a perfect time to go grab an Airbnb in the woods with a couple of friends and detox from the world right now!

Vacationing alone can be pricey and get rather boring quickly, but if you split lodging and set out for a road trip, it can become affordable quickly! For a couple of hundred bucks apiece, you can have one of the most relaxing vacations ever. Don’t forget to pick up your food at the local grocery store to avoid eating out every meal!

10. Make a Budget

When is the last time you updated your budget or made one for that matter? Making a budget is like writing down your goals. If you don’t make a budget, then you will struggle to save.

How can you know if you are spending wisely if you are not tracking everything?

Our advice would be to get a finance app like Mint, Every dollar, or personal capital. All these apps are free and do a tremendous job of tracking spending and budgeting. I still am old-school and have an excel spreadsheet which I do highly recommend.

Work Smarter, Not Harder

The entire goal is to boost your bank account while reducing the effort required. Efficiency is the name of the game, and automation is the key player. Luckily, we live in a world that has more perks than we can ever take advantage of. But if I were to choose a few, it would be the ones above.

Taking on all 10 of these steps may seem a little daunting. You can first try to pick three of your favorite and start there. Saving money doesn’t have to be a chore as long. As we use the tools correctly, it can be quite effortless. And now, you have a great blueprint to get started!

More Tips on Saving Money

Featured photo credit: Sharon McCutcheon via unsplash.com

Read Next