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Retirement Planning

5 Signs You are Wasting Your Retirement Savings

The point of saving for retirement is to live the last years of your life in relative peace without having to worry about money. You will have plenty of other worries, mainly health, apart from finances in your autumn years. However, you will have to worry about money if you end up wasting all your hard-earned retirement savings. You may wonder how this could happen. Here are several reasons:

1.     You Still Have Credit Card Balances

Credit cards are something only workers should worry about. You should settle all credit card debt before retiring or as soon as possible. If you have any remaining credit card balance, that means interest will be charged for everything you buy using the card. Your expenses will pile up and you will use your savings on a credit agency. So, don’t bring credit cards into retired life.

2.     Majority of Your Monthly Budget is Spent Eating Out

Eating out is all right once in a while. But you should not eat out all the time. Eating out at restaurants seriously inflates your monthly food budget. Now that you are old, you might not want to cook. If you have a wad of cash at hand from savings, it may not seem harmful to eat out several times a week. But when you add up the numbers at the end of the month, you will find that most of your monthly budget was spent eating out. So limit going out to eat.

3.     You Have More Than Three Insurance Plans

Insurance, like credit cards, is something workers should have. If you have paid the premiums during your working years, now is the time to enjoy benefits. Retirees do not need long-term life insurance plans or housing insurance on homes they no longer own. So, go through all your insurance bills and determine if you are paying for any unnecessary ones.

4.     You Have a New Car

Cars are terrible items to invest in during retirement. Items like motor vehicles and electronic gadgets lose value over the years. The car you buy today will be worth much less a year in the future. Therefore, do not waste your retirement savings buying fancy cars. It’s simply not worth it. Instead, spend your money on things that go up in value over time, like fixed deposits and condos in the city.

5.     You Still Use Family Packages for Services like Cable TV

If you are a retiree, you probably live alone or with your spouse. Your children probably would have moved out a long time ago. Therefore, there is probably no need for family-sized service packages for cable TV and internet. Now that you no longer work, you may not need an expensive internet plan either. So, go through the service packages you have, and downgrade as necessary to meet your current needs, not the needs of the past.

If you are a retiree then you are eligible to obtain a special type of home loan to help you maintain a comfortable lifestyle during your retirement. That special option is a reverse mortgage. The reason the loan is considered to be reverse is that you will not have to pay it back in small chunks beginning right away as you would when borrowing money the traditional way. Instead, you will receive monthly installment payments from your reverse mortgage lender agency. You will then have a very low risk of defaulting or losing your home, since the loan balance will not be fully due until you pass away or voluntarily move off of the property in question.

Your retirement savings are not an unlimited fund. It is possible to deplete it five or ten years into retirement. Therefore, be frugal, and be mindful of the above listed money wasters.

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Erin Thompson

Erin Thompson spent years managing her own blog about budgeting and debt. Because of that, she has great insights not only about managing spending and borrowing but also about running websites profitably. When she's not writing articles for us, she's traveling and looking for new types of wines to try.
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