8 Things You Should Not Do in Retirement

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You’ve done your homework, and now you’ve got this retirement stuff all figured out. Savings socked away. Debts paid off. A plan in place to transition from work to leisure. Let the good times roll!

However, some retirement mistakes operate under the radar.

Maybe they’re due to that heady rush of freedom in the first year of retirement. Perhaps you want to keep being generous, forgetting that you now have less money. And as we age, certain physical issues can make it harder to be frugal, and certain cognitive changes can lead to poor decision-making.

Here are some unwise decisions that could tank your golden years and how to avoid them.

1. Forgetting to create/update legal documents

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When was the last time you looked at your will and estate plan? Things change, and our legal paperwork needs to change along with them.

Maybe a grandchild was recently born, or your sibling died last year. Possibly the son who’d agreed to be your executor no longer feels up to the task.

Or perhaps during the pandemic, you had to sell some of the jewelry you’d planned to leave to your great-niece. If so, make sure those pieces aren’t included in the will, or whoever does end up as executor might pull their hair out trying to track down these mysterious baubles.

And if, heaven forbid, you don’t have a will or estate plan, get going on this yesterday. You’ll find help at “8 Documents That Are Essential to Planning Your Estate.”

2. Failing to budget

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You’re on a fixed income now, remember? Some costs do go down in retirement; for example, that 40-mile commute will be a thing of the past, and you won’t need to buy and maintain a work wardrobe. But other costs might go up. For example:

  • Medical bills. Sorry to have to tell you this, but Medicare doesn’t cover everything. Among other things, you’ll have to pay for glasses, hearing aids and most dental work, depending on what Medicare coverage you choose.
  • Household help. If you can no longer do yard work or deep cleaning, you’ll need to ask for assistance. Your grown kids are pretty busy with their own lives, so you can’t expect them to use one of their precious days off each week doing outside chores plus your cleaning and laundry. That means this could be a new bill to add to your budget.
  • Food. If health issues require specialized diets, the ingredients could get pretty costly pretty quickly. And if those health issues make it tough to cook, you might wind up relying on takeout or meal delivery services — much more expensive than from-scratch meals in your own kitchen.
  • Home modifications. Illness or the cumulative aging process might create the need for things like grab-bars in the bathroom or a wheelchair ramp out front.

This doesn’t mean you’re doomed. It just means you need to live within a reasonable budget, just as you did when you were working. Keep an eye on monthly spending, either with paper and pen or a service like YNAB (You Need A Budget), which simplifies the process (and automates it, to boot). In addition, companies like Trim or Truebill make it easy to find and cancel memberships and subscriptions you’ve decide you can live without.

Spending creep could cause you to take too much out of your retirement accounts, or to go into debt because you’re afraid to tap those accounts. Neither one is a good look. If this might be a concern for you, check out “5 Ways to Stop Lifestyle Creep From Stealing Your Retirement.”

3. Sliding into debt

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According to an Experian study, the average baby boomer owed $97,290 in 2020. That included mortgages and student loans along with consumer debt.

Ideally, you’ve planned to go into retirement with zero debt. But it’s all too easy to slide back in, especially if you haven’t created that budget — one that takes into consideration the fact that you’re now on a fixed income.

If you have more month than money, it’s time to identify the financial leaks. This likely means making some choices, such as cutting one of your streaming services or cooking more rather than ordering in.

Some overages are one-offs: wedding or graduation gifts, trips to see family, a car repair, an emergency loan to a relative. Others, such as insurance premiums or property tax hikes, are to be expected (but are never fun when they arrive). However, all these things should be factored into your spending plan, under categories such as “emergency fund,” “vacations” and “giving.”

If you’re carrying debt that is overwhelming you, however, consider talking to a reputable credit counselor.

4. Spending fixed income on grown kids

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Naturally, we want our offspring to live their best lives. Sometimes, however, helping them could jeopardize our own long-term comfort and security.

For example, it’s increasingly common for young people to live in the family home well into their 20s and even their early 30s. Sure, some of them offer to pay rent — but some parents refuse to accept it.

And ask yourself this, parents: Do you regularly drive the “kids” around or let them use your car, pay for groceries, grab the tab at restaurants, carry the offspring on your phone plan for free or cover the cost of additional streaming services so everyone is happy?

Even when children are out on their own, parents often still help out. According to the Pew Research Center, parents are stepping in to cover both money emergencies and basic expenses such as utilities or even mortgages. Nearly 6 in 10 parents of children aged 18-29 report they’ve given their offspring financial help.

As the flight attendants say, you must put on your own oxygen mask first. Before you help your kids, or your grandkids, take a hard look at your own finances: Can you truly afford to subsidize everyone indefinitely?

Sound harsh? Here’s what’s harsher: Having to contact those adult kids a decade from now to say, “I can’t make my basic bills. Can you send me some money? Or can I come live with you?”

Harshest of all: The possibility that your offspring might not be able to help you, which means you could be facing extreme poverty in your last years.

5. Withdrawing too much money

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Once you’re retired, you might want to do All The Things. After all, you no longer have to schedule time off for vacations, spa days and the like. Finally, you can buy season tickets to your favorite sports team or subscriptions to theater or dance companies. You can take riding lessons, splurge on fancy kitchen equipment, or beef up your collection of power tools.

But can you, really?

If you claimed Social Security before your full retirement age, you’ll have permanently reduced benefits — and the conventional wisdom is to take no more than 4% out of your accounts each year. Out-of-control spending may cause you to loot your retirement funds faster than you should.

Then there’s the possibility (likelihood, really) of a market downturn during your golden years. With your retirement funds worth less, withdrawing that 4% means the fund will diminish faster.

Having a decent-sized cash cushion can help, because it lessens the amount you’ll need to withdraw. Having a sensible budget that allows for some fun — but not All The Fun at once — helps, too.

6. Becoming sedentary

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Plenty of people dream of taking it easy in retirement. But you don’t want to take it too easy. A lack of exercise can lead to all sorts of health issues. The National Institute on Aging, part of the U.S. Department of Health & Human Services, reports:

“Often, inactivity is more to blame than age when older people lose the ability to do things on their own. Lack of physical activity also can lead to more visits to the doctor, more hospitalizations, and more use of medicines for a variety of illnesses.”

Being active improves energy, physical strength, balance and sleep. It can help you reach or maintain a healthy weight, reduce stress and anxiety levels, improve cognitive function, and manage or even prevent certain diseases. Taken together, all these improvements could make it possible to live independently for longer, or maybe for the rest of your life.

Vowing to stay active isn’t enough. You need an actual plan in place, such as a daily mall-walking date with friends or a YMCA or health-club membership. Recreation centers and colleges could also be sources for affordable exercise options.

Note: Silver Sneakers, a wellness program included free with many Medicare plans, can set you up with fitness videos, live online classes or in-person workouts at more than 15,000 locations nationwide.

7. Letting yourself become isolated

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Some people do pretty well on their own, for a time. But prolonged isolation can lead to some serious physical and mental health issues, according to the National Institute on Aging. Among them: depression, anxiety, cognitive decline, high blood pressure, obesity, weakened immune function and heart disease.

“Older adults are at higher risk for social isolation and loneliness due to changes in health and social connections that can come with growing older, hearing, vision, and memory loss, disability, trouble getting around, and/or the loss of family and friends,” reports the NIH.

A 2019 retirement survey from the Society of Actuaries notes that 26% of retirees have social engagements only once a month or less often. Some say that’s because they like staying home, but others cite lagging energy, disability or illness, lack of money, no longer living near friends or not having transportation as contributing factors.

What to do? Depends on what you like to do. The NIA suggests solutions like volunteering, auditing classes at a college or university, adopting a pet (if you’re physically able), joining an exercise class, restarting an old hobby or taking up a new one, visiting a senior center or the library regularly, staying in touch with family and friends via video chat or other technology options.

8. Giving too much

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They say it’s more blessed to give than to receive. But suppose your giving gets out of hand?

Instead of wrecking your own finances, make “charitable giving” part of your budget. Maybe that’s a specific percentage, such as a 10% church tithe. Or maybe you’ll look at the numbers and decide, “I can afford to give away $100 a month.”

Once you’ve reached that amount, stop. Yes, it can be hard with so many emails, social media postings and relatives’ kids selling band candy.

Note: If you find it hard to say “no” in the moment — and who can resist a little tuba player with a box of chocolate? — then set aside part of your giving budget for these spur-of-the-moment requests.

And before you decide to give to a cause, check it out through websites like GuideStar or Charity Navigator. You’ll get an idea of how much of the money actually goes toward helping others. For a smaller or new charity, go to the websites to look for an IRS 990 Form, which spells out salaries and expenses.

It’s good that you want to give. But you need to take care of yourself before you can help anyone else.

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