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The first baby boomer will turn 62 in 2008, and the youngest will turn 67 in 2031. So while some members of this generation have been retiring for years, others have no plans to retire anytime soon.
According to a study conducted by the Transamerica Center, if baby boomers are still working, the median amount of savings they believe is necessary to feel financially secure in retirement is 750,000. is a dollar. But the average worker in this age group saves only $202,000.
For those currently retiring, Social Security certainly helps supplement their income, but the average benefit is only $1,691.53 per month. Therefore, many retired baby boomers may need to tighten their spending a bit so that they can continue to live comfortably in retirement.
Are you a baby boomer worried about how much money you have in your savings account? Now is the time to plan how you can save while enjoying the golden age.
Here are seven tips from financial experts to help you identify ways you’re wasting money in retirement and turn things around.
Here’s how much you’ll need to retire in each state:
Don’t plan your vacation strategically
“I don’t mean to classify vacations and experiences as a waste of money, but we have traditionally seen baby boomers spend more money in these areas after retirement because they now have things off their to-do list. , make memories and try new things,” he said.Steve Sexton, Retirement Planning Expert Sexton Advisory Group.
However, when planning a vacation, he recommended being as strategic as possible to save money in the long run.
“For example, avoiding planning vacations during peak travel seasons can save hundreds, if not thousands, of dollars in travel and accommodation costs,” he said. “Or consider a local vacation that you can drive to, which will save you money on airfare.”
If those ideas don’t work, he suggested getting the plan a little more creative.
“Some of my clients have swapped homes with friends living abroad or offered house sitting while they’re away to save on hotel bills,” he said. “Finally, choosing the right credit card that offers travel rewards and points can go a long way in saving you money on your travels.”
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buy expensive gifts
“Baby boomers, especially those with grandchildren, often spend a lot of money on gifts for family and friends,” Sexton said. “Gifts are a thoughtful way to express affection, but they are not the only way.”
Instead, he suggested finding meaningful ways to show affection to family and friends.
overpayment of medical expenses
While he doesn’t intend to classify healthcare as a waste of money, Sexton said how you handle medical bills can have a big impact on your finances.
“Always request a medical billing statement to avoid being mischarged or double billed for medical services and procedures,” he said. You can also ask which fees can be waived, if any [for] You may run into financial difficulties or have an interest-free payment plan. ”
Ultimately, by planning ahead and having enough money in your emergency fund to cover unexpected medical bills, you won’t have to pour money into your savings or retirement accounts.
adult child bill payment
As a father himself, Michael Gennawey, financial advisor to the CRPC, LPL affiliate, said: SoCal Wealth Management, we understand your desire to do anything for your child. But he says it can add up quickly as he pays the regular bills for his grown children (rent, car insurance, mortgage, part of a cell phone provider’s family plan). said there is
Gennawey said it’s important to consider the potential impact of continuing to pay bills. Who will they turn to if you run out of money? And will they support you in your later years?
“If payments change from temporary assistance to permanent expectations, confront the child about making the payments themselves,” he said.
He said this is important because continuing to pay bills could jeopardize the success of your financial plans.
Think of buying a timeshare as an investment
“Many times I see clients trying to explain that a timeshare is an investment,” says Gennawey. “They will say that children can inherit it just like an IRA, or that it is the property equivalent to a rental property.”
But this is a rare case, he said, and timeshares should not be equated with stocks, bonds, or real estate. As is often the case, that doesn’t stop maintenance costs from rising, and returning the keys adds just a penny to the total cost of ownership.
Gennawey says timeshares are a great way to create memories with loved ones, but they also offer options like ETFs and a diversified portfolio of mutual funds that cut travel costs, generate lasting income, and provide long-term savings. We do not increase our wealth.
“If you like the idea of a timeshare, model it into your financial plan and make sure it’s forever affordable.
Apply for a loan to cover planned expenses in retirement
“When people create a financial plan for pre-retirement, they almost always ask for a lot of money in the first few years of retirement,” says Gennawey. “Baby boomers need to get the resources amassed for these life upgrades before they quit their jobs to get the best interest rates and most favorable loan terms.”
He advised entering the true cost of large expenditures into your financial plan to make sure you can really afford it.
Completing expensive home improvement projects
When you retire, you will probably have more time on your hands. This may inspire you to complete a home project that costs a lot of money. carolina financial planning.
“If the property is in good shape and you want to refurbish another room every two years, do it,” he said. “But in a constrained cash flow projection scenario, residential projects are runoffs that can have a significant impact on the future.”
He said it’s important to be aware of your financial situation and keep your cravings in check when living on bonds.
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This article originally appeared on GOBankingRates.com: 7 reasons baby boomers are wasting money in retirement and how to stop it
