There is a century-old proverb that goes something like this: old habits die hard. Once we develop a habit and perform it consistently, it becomes second nature to us. What if you reached a point in your life where that habit was starting to impact you negatively? Do you think you could give it up as easily as you acquired it?
Many adults find themselves faced with this challenge as they enter retirement. So many years have been spent acquiring the keen saving skills required to build a sizeable nest egg. Yet, it’s these same skills that will cause retirees to suffer during this period in their life and not fully reap the benefits of their labor for the past few decades. So what exactly are these “bad” habits? Here are a few:
- When saving for retirement, successfully building a sizeable nest egg may require a certain level of frugality. This may mean cutting back on certain expenses that are not quite as important. However, many retirees maintain this frugal mentality well into retirement, depriving themselves of the fruits of their labor. Therefore, it is quintessential that you understand the difference between being economical and self-imposed unhappiness.
- In order to keep track of savings over the course of your career, you may have developed a habit of keeping a mental account of your transactions. Switching money over from one account to another, and having a general idea of how much you would need to save in order to reach a certain goal. The problem with this mental tracking is that when you enter retirement, you will spend much less of your income than you potentially could. Additionally, your fear of running low on funds may lead you to re-invest the money you’ve saved which bears a lot of risk and could potentially leave you with nothing.
- We are often told to live life with no regrets, yet many retirees are afraid to tap into their retirement savings because of these regrets. They fear that they will regret the decisions they make with the money, thus electing to hold onto it instead of spending it.
- While the average life expectancy has increased over the past several decades, many retirees have taken this as an indication that they will live a much longer life. The truth of the matter is, there is no way to be sure of this. Unexpected health issues can arise as you age, and these will significantly impact the amount of years left in your life. The lesson to be learned from this is that life is short, so you shouldn’t spend the entirety of it saving for the future.
- Going hand-in-hand with the previous point, retirees have a bad habit of delaying gratification. In retirement, the idea that waiting longer for something will make it much more pleasurable is simply not true. You’ve spent your entire life waiting for this moment, and now it’s time for you to indulge. Take that trip around the globe you’ve always considered, sign up for the cooking class you were interested in. Do the things you’ve been putting on hold all these years. There is no time like the present.
- It is a commonly-held belief that the best time to relinquish your fortune is after you’ve already passed away, the reason being that you may potentially run out of money before this, or simply because that’s just the way things are. Yet, for those who truly enjoy being generous, why not consider handing over small portions of your estate now? Not only would you be giving your children a cushion to work with, it would also help you keep closer track of your finances and manage your budget effectively.
As a retiree, it is comprehensible that you will hold onto the convention of saving for retirement, but with more free time available it also gives you more time to break these habits. If you’re interested in learning more about retirement spending, click here to read the rest of the WSJ article. Do you or your loved ones have any “bad” retirement habits? Let us know about it! Go over to the Retirement section of our forum and tell us what you think!