15 Ways Financial Advisors Wish Retirees Would Stop Blowing Their Money

Retirement is a time to live your best life. But it can be hard to live life to the fullest during your golden years unless you avoid throwing away your hard-earned money . Unfortunately, many seniors waste money all the time.

If you want to make the most of your money in retirement, here are 15 common mistakes financial advisors wish retirees would stop making.

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Not using membership discounts

As a senior, you have the option to join organizations like AARP. Through AARP, you can tap into a wide range of discounts on everything from travel to car insurance. If you don’t take advantage of these membership discounts, you are essentially leaving money on the table.

Do you owe the IRS over $10K? Ask this company to help you eliminate your late tax debt.

Not using senior discounts

Beyond membership organizations, many seniors can find discounts available when shopping. While you might have to prove your age with an I.D., you might as well take advantage of the deal.

Many stores offer discounts to seniors on particular days of the week. For example, Goodwill offers seniors 20% off on certain days of the week. And many car washes may have discounts on slow days like Tuesdays.

Giving too much money to adult children

It’s natural to want to help your children. But it’s important to take care of your own financial situation before handing over too much money to your adult children.

Before considering any financial gifts, take stock of your finances. Depending on your situation, you might decide to hold onto the funds. Don’t put your own financial stability at risk to help others. In the end, they need to learn how to live within their own means.

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Upgrading to two new vehicles

During your working years, you and your spouse may have needed two vehicles to make things work. But after retirement, a more flexible schedule could mean you no longer need two top-of-the-line cars. Beyond the car payments, you’ll also need to pay for insurance, gas, and upkeep, which can all add up quickly.

Consider scaling back to become a single-car household. You might be surprised by how much lower transportation costs can improve your monthly cash flow.

Staying in an oversized home

While you might want to stay in your current home, not downsizing can be a huge drain on your finances. As long-term homeowners know, maintaining a big house comes with myriad costs.

You may be able to shrink those costs by shrinking the size of your house, especially if you opt to move somewhere with a lower cost of living.

If you are struggling to stretch your retirement funds, downsizing your home could be a smart move.

Donating to anyone who asks

If you find yourself donating to every charity that asks, you might quickly spring a leak in your bank account.

Although donating to charity is an admirable use of your money, consider setting an annual budget for your donations. This allows you to be generous without derailing your retirement plans.

If you can’t afford to donate your money, consider donating your time to causes you care about instead.

Overpaying on taxes

A seasoned accountant can help you make a plan to minimize your tax liabilities throughout your retirement years. Depending on your situation, this could amount to thousands of dollars. Although you can’t avoid taxes, optimizing this expense is a smart move.

Ignoring investment fees

If you’ve grown an investment portfolio, it’s important to take a close look at the management fees. Although the fees might be 1% to 2% of your portfolio, that could amount to several thousand dollars each year on a portfolio of $500,000 or more.

For retirees who want to make a change, consider a fee-only financial advisor. Or consider managing your own portfolio using a low-cost online broker.

Choosing a lump sum for your pension

Although it’s tempting to take a lump sum instead of a monthly pension payment, this is usually the wrong move for your finances. If you want a lump sum, read the fine print to confirm you are comfortable with the fees involved.

Not taking care of your health

Throughout your entire life, your health is your biggest asset. Not only is life more enjoyable when you are in good health, but your medical costs can balloon if your lifestyle contributes to poor health.

Make an effort to take care of yourself by watching what you eat and committing to regular exercise. A little bit of effort can go a long way.

Committing to a major home renovation

Home renovations can be costly. And if you need to pull the funds out of your retirement resources, that’s generally a bad move. If possible, avoid ripping out your walls or undergoing extensive remodels.

On the other hand, if you intend to age in place, you might want to spend money to modify your bathrooms and kitchen to make them safer as you age.

Taking up expensive hobbies

Taking up new hobbies during your retirement can be a great way to stay active and meet new people. But try to avoid going all in on an expensive hobby until you're sure that you want to commit some serious time to it.

For example, buying a top-end boat to go fishing might not be the place to start if you want to go fishing more often. Consider opting for a more budget-friendly version, like a smaller boat or even fishing from the shore.

Buying unnecessary insurance

It’s a good idea to carry insurance. But while home and auto insurance are always important, other types of insurance can be a drain on your resources. For example, you might be able to discontinue your life insurance policy if you no longer have dependents to protect.

Likewise, disability insurance may protect you if you cannot work for a period of time, but a disability policy generally ends at age 65.

Skipping long-term care

Although some insurance is unnecessary, skipping long-term care insurance is often a mistake. This type of policy can help you pay for ongoing care if you need more help as you age.

Eating out for every meal

Dining out every now and then is a nice treat and a way to socialize with friends. But if you start eating out every single day, that lifestyle can consume your nest egg faster than you expected.

Bottom line

As you navigate your golden years, do your best to avoid wasting the money you worked so hard to earn.

By focusing on activities and friendships, you may create a stress-free retirement that won’t leave you worrying about money as you age.

Money tips that can work for everyone

No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.

Focus on paying off your debt. Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.

Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.

Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).