When retirees blow savings, the damage is huge because their incomes are limited. Retirees usually have a limited amount of money to spend during their golden years.
Unfortunately, some people make costly mistakes that can deplete their nest egg prematurely.
From giving away cash indiscriminately to refusing to embrace lifestyle changes, here are some surprising ways retirees waste their hard-earned savings.
1. Blow savings by ignoring senior discounts
It’s a mystery why anyone would pay more than they need to, but retirees do just that when they ignore senior discounts.
Maybe they don’t realize how much these benefits can add up. Some retailers, for example, offer storewide discounts ranging from 5% to 20% on certain days.
2. Buying unneeded insurance
During a person’s working years, disability insurance can ensure someone has the cash needed to pay bills if they become sick or injured and can’t hold down a job.
However, it’s a waste of money to keep paying disability insurance premiums when you’re retired. The same goes for life insurance if you no longer have kids at home or a spouse whom you’re financially supporting.
In fact, there’s a long list of insurance products you could probably drop from your budget. Just have a look at these insurance tips.
3. Supporting grown children financially
Parents sometimes spend a lot of money to support their adult children. That’s money retirees, particularly those with meager savings, really can’t afford to spend.
While it’s understandable that parents want to help their children, there are ways for you to lend a hand financially without paying their bills or handing over cash.
4. Maintaining two cars
Two cars are often a necessity for households in which two partners work.
However, retirees who have more flexible schedules may be able to easily get by with a single vehicle.
Transportation is the third-largest expense category for retirees, according to federal data. Ditching the second vehicle can save money on insurance, gas and registration fees.
To further cut your costs, review these six ways to save money on your remaining vehicle.
5. Refusing to downsize
More than one-third of spending in households led by someone age 65 or older goes to keeping a roof over everyone’s head, according to Bureau of Labor Statistics data.
You would think empty nesters might be keen to move to smaller, less expensive homes, but half don’t. In fact, nearly one-third actually upsize to a bigger house to accommodate visiting family members, says a Merrill Lynch-Age Wave study.
Retirees who are stretching their dollars should consider whether money on a bigger home is well-spent if the rooms remain empty for most of the year.
6. Insisting on brand-name medications
Medications are one of the items you should always buy as a generic, regardless of whether you’re a retiree.
The Food and Drug Administration says generic drugs must have the same active ingredients and strength as brand-name medications, and they can cost up to 85% less.
Some stores will even give you certain generic prescriptions for free.
7. Donating to every charity that calls
Many retirees have big hearts and are quick to open their checkbooks whenever approached about a good cause. However, people living off savings should be careful that they don’t give away too much and jeopardize their ability to live comfortably in the years to come.
What’s more, older Americans are often targeted by scammers who may use fake charity appeals to get money.
We have tips to help you donate to charity the smart way.