While many people look forward to retirement, others are never ready for it.
After your company throws you a retirement party and after everyone has wished you a long and happy retirement, you may or may not be happy about it. If you’ve planned, then you’ll look forward to finding the time to do more of the things you love; but, if you haven’t thought too much about it, then you’ll probably be anxious about the future.
3 Blunders to Avoid
Here are three big retirement blunders to avoid:
- Forgetting about funeral expenses.
Although you may already be well-insured for many things, make sure you have final expense insurance.
According to PolicyZip, final expense insurance is an alternative to end life insurance. It’s a policy specifically designed to help your family manage the cost of funeral and memorial arrangements.
Sometimes referred to as burial insurance, this type of insurance will give you peace of mind because it will help your family fulfill all your last wishes. What’s more, final expense insurance costs much less than a pre-paid funeral.
- Going on a spending spree.
While many retirees intend to be frugal during their retirement years, they end up doing just the opposite. About 46% of retirees spend more than they had planned during their first year or two after retirement.
This is far more common than you might think. In retrospect, many retirees confess that they got carried away by an exhilarating new sense of freedom and started doing things that they had always wanted to do. They may, for example, travel to exotic places, play golf every day, or fix up their homes.
The best way to avoid overspending is to make a long-term budget and stick with it. Anticipate expenses–like frequently dining out with friends or visiting children and grandchildren during the holidays–and build a spending plan.
Naturally, for your budget to work, you must carefully track your spending, balancing rising costs by saving in other areas. For instance, if your hobbies are costing you more and you’re skimping on meals, cut out the cost of buying your supplies and spend more at the grocery store.
If you need money because you’ve overspent, then you may need to sell a few high-ticket items like extra cars and other things that you don’t use much.
- Falling prey to financial schemes.
When you get older, you’re often targeted by scammers to buy financial services that you don’t need.
Unfortunately, fraud is on the on the rise and it’s easy to be hoodwinked by investments that either turn out to be hoaxes or fail to deliver a positive return on investment.
Here are five steps you should take when solicited by phone or in the mail:
- Avoid buying any expensive insurance or investment vehicles that will lock up your funds and penalize you for making an early withdrawal.
- Avoid making a large down payment for anything.
- Run any financial decisions you’re thinking of making past a financial advisor.
- Even if the solicitation comes from someone you know, like your insurance agent or your bank, it may not be in your best interests to buy legitimate products like annuities or reverse mortgages.
- Never let scarcity and time-pressure salesmanship tactics force you to make a decision you’ll regret later.
Retiring is Never Easy
When you retire, you’re not withdrawing from your occupation and from an active working life, but you’re starting a whole new phase of life. By anticipating the curves on the road ahead, you won’t forget to buy final expense insurance, overspend in your first few years, and get talked into making bad financial investments.