Once you hit retirement age, you might have a bucket list you intend to check off. These are your golden years, which typically means you have more time to spend on yourself. Unfortunately, spend is often the operative word. If retirees aren’t careful, they might overspend on big-ticket bucket list items they wind up regretting.
The “go-go years” years of retirement — age 65 to 75 — are an opportunity to finally devote some time to travel and hobbies. But it’s important to consider your long-term budget in these early years. No one wants to outlive their nest egg, after all. With this in mind, here are nine purchases that can lead to a serious case of buyer’s remorse.
A Swanky House
While downsizing has been a hallmark of retirement, seniors are increasingly moving into larger “dream homes” in their golden years. In fact, CNBC says a recent study found that 30% of retirees bought bigger homes in their last move.
However, you might want to think twice about upsizing. For instance, a bigger home means spending more on property taxes, maintenance expenses, and heating bills. Plus, there’s more house to keep clean and likely more lawn to maintain.
You might be tempted to treat retirement like one big vacation, but endless extravagant travel can drain your retirement fund. It’s not that you shouldn’t travel at all. Just consider pacing yourself with smaller trips instead of big vacations.
Take international travel, for example. ValuePenguin says 12-night vacations outside of the country cost, on average, $271 per day. Four-night vacations within the United States, on the other hand, only cost an average of $144 per day.
Fancy Cars, RVs, or Boats
After you retire, it can be easy to adopt an “I’ve earned it, so I’ll treat myself” mentality. Nevertheless, you might want to take a beat before sinking a lot of money into fancy toys like a luxury car, RV, or boat.
That’s because all three are far from one-time purchases. For instance, they involve maintenance, insurance, and storage expenses. Those costs really add up for something that instantly depreciates in value after buying it.
Some retirees dream of adding a pool to their homes. They might envision all of the grandkids coming over to splash around. Or perhaps they want to turn their backyard into a resort-inspired retreat. But pools can be money pits.
There’s the cost of installing one for starters. According to Angi, “An in-ground pool typically costs around $55,000 to install.” Then there are the upkeep costs and pricier home insurance. And pools don’t increase your home’s value.
Excessive Help for Adult Kids
Closing the “bank of mom and dad” can help you avoid going broke in retirement. While the urge to provide unlimited financial support to your kids is understandable, dipping into your retirement savings is something you may regret.
According to a recent Edward Jones study, 71% of retirees are willing to jeopardize their financial future to support their families. However, keep in mind your family can get loans for college and houses. There aren’t loans for retirement.
A Second Home
Buying a second home is another retirement dream that can turn into a nightmare. That’s because a second home can greatly increase your expenses. In addition to a new mortgage, it’s another property to insure and maintain.
Plus, retirees may find they regret tying themselves to one destination. Instead of a second home, you could go on a few big vacations as well as regular small trips during retirement. That way, you’ll see more of the world and spend less.
Life insurance often makes financial sense when your kids are growing up. But it’s an unnecessary expense for many once they hit retirement age. When you pass away, you likely aren’t leaving your spouse to support a house full of kids or pay off a mortgage on their own.
As a result, life insurance doesn’t carry the same importance during your golden years. Of course, everyone’s situation is different. You might decide the price of a small life insurance policy is worth the peace of mind, though you likely don’t need a million-dollar policy anymore.
Online or TV Shopping as a Hobby
Retirees have more time on their hands, which can be dangerous for their bottom lines. For instance, there’s more time to get sucked into special offers for as-seen-on-TV products in infomercials. Similarly, online shopping can draw them in as a way to pass the time.
But shopping as a hobby can become a huge drain on your retirement fund. It’s wise to avoid making it a habit because who wants to realize they blew a chunk of their nest egg on a bunch of stuff they didn’t really need? It’s just more clutter to deal with eventually.
If you’ve been persuaded against a second home, then you might be eying a timeshare as an alternative. However, timeshares are a commonly regretted purchase. Expenses are part of the reason you may want to avoid them. For instance, escalating maintenance fees, utility bills, and taxes can drain your retirement fund.
Timeshares are also notorious for being expensive to exit. When the time comes to get rid of a timeshare for whatever reason, Kiplinger says people often have trouble selling them because “timeshares are basically worth nothing.” Unlike a second home, you don’t even get the benefit of building equity when you buy a timeshare.
The Bottom Line
Every retiree’s situation is different, so you may find that some of these commonly regretted purchases make sense for you. But it’s important to think carefully about discretionary spending. That’s because too many impulse purchases can quickly crack your nest egg.
Before making a pricey purchase, ask yourself whether it’s a “want” or a “need.” It’s not that retirees shouldn’t ever treat themselves to a “want,” it’s just that they need to be thoughtful about their spending now that they’re retired. That way, you don’t wind up with buyer’s remorse.