By John Csiszar
Once they retire, many boomers change their spending patterns quite a bit. There’s nothing inherently wrong with this, as long as they remain within their retirement budget.
However, there are some things that boomers tend to splurge on in retirement that can wreak havoc on their long-term financial plans.
Whether it’s because they feel like “they’ve earned the right” or they simply don’t understand how problematic it can be, overspending is a sure way to put their long-term retirement lifestyle at risk.
To help avoid falling into this situation yourself, take a look at this list of things that boomers should never buy in retirement.
1. Overpriced Vacations
It’s only natural to want to take a vacation once you retire. In fact, some retirees try to make it a lifestyle. And there’s nothing wrong with going on occasional trips, or even living overseas. But you have to ensure that your vacation spending falls within your budget.
Even if you’re retiring with a seven-figure nest egg, that doesn’t mean you can take a $50,000 round-the-world cruise every year. While what is an “overpriced” vacation will vary depending on your lifestyle and the amount of money you have, anything that’s more than double the price of your usual vacation likely qualifies.
2. Extravagant Gifts
Retirees are often generous with their money, enjoying the feeling they get from helping out family and loved ones.
But it’s important to curtail the urge to give pricey gifts to everyone you know because before you know it, you’ll be depleting the savings that you need to live a decent lifestyle.
3. Unneeded Home Renovations
If you plan on spending a lot of time at home during retirement, there’s nothing wrong with making the occasional home upgrade.
But overspending on unneeded home renovations can be a huge financial drain. Unless you’re planning to improve your home so you can sell it at a higher price, renovating every single room is probably unnecessary, for example.
4. Discretionary Items You Can’t Pay For With Cash
Most retirees live more or less on a fixed income consisting of Social Security and retirement and pension account income. This means that if they spend beyond their budget, they may have to go into debt to cover that expense.
This is something you should try to avoid at all costs in retirement. Debt will drag down even the best laid-out of financial plans, especially when you’re living on a fixed income.
Timeshares can seem like a great deal to retirees. After all, they promise the freedom to go vacation in a specific location a few weeks or even a month every year, and some even allow trading so you can stay in a new destination.
But the truth is that timeshares can be expensive and restrictive. They are typically difficult to sell, rarely appreciate in value and have ongoing expenses and upkeep that can really add up. Most retirees are better served simply taking traditional vacations.
6. Excess Life Insurance
By the time you reach retirement age, a new or increased life insurance policy could prove prohibitively expensive.
If you don’t already have life insurance and have a spouse or heirs that depend on you financially, it may still be viable. But generally speaking, most retirees already have grown kids and a paid-off mortgage, making life insurance somewhat unnecessary.
7. Out-of-Network Medical Services
You can generally expect your medical expenses to increase once you reach retirement age. But there’s no need to spend more money than you have to.
Most insurance plans will charge you a higher amount if you use a doctor or hospital outside of their preferred network, so it pays to find an in-network provider before you undergo any procedures.
8. Things Your Kids Should Be Paying For
It’s only natural to want to spend money on your family after you’re retired, especially your children or grandchildren. And while you shouldn’t completely neglect them, you should also avoid the temptation to spend money on them for things they should be taking care of themselves.
For example, while it’s common to give the ones you love gifts for the holidays, it’s another thing entirely to pay their monthly bills or rent for them. Not only are you teaching them bad financial habits, but you’re also, no doubt, hurting your own retirement lifestyle as well.
Caveat: Everyone Is Different
This list isn’t meant to tell you how to live your life after you retire. But it’s a reminder that spending on certain items in retirement is more likely to cause you financial difficulty than others.
As everyone’s financial situation is different, the most important thing to remember is to stick to a budget and avoid living beyond your means, as it can be hard to dig yourself out of a hole when you’ve living on a fixed income.
Story previously published in GObankingrates.com. Reprinted with permission.