Wise retirees seek out financial advice in their quest to spread their dollars as far as possible. Some of the suggestions they get are good. Others, not so much.
“Retirees often encounter various frugal living tips, but not all advice aligns with optimal financial well-being,” said Harvard-trained behavioral economist and financial planner Keisha Blair, the award-winning international bestselling author of the “Holistic Wealth” book series, founder of the Institute on Holistic Wealth and host of the Holistic Wealth podcast. “In navigating retirement, it’s crucial for individuals to evaluate advice critically, considering their unique circumstances and priorities. Retirees should approach retirement through a holistic wealth lens that enhances their mental, emotional, physical and financial health, and ensures balanced living.”
Here are some well-intentioned but misguided frugal living tips that retirees should avoid in 2024.
In retirement, you have to make every penny count — but that doesn’t mean you have to count every penny.
“While budgeting is crucial, overly restrictive budgeting can lead to a diminished quality of life,” said Blair. “Retirees should focus on balancing financial responsibilities with enjoying well-deserved leisure, experiences and hobbies. A holistic wealth approach to life in retirement ensures this balance for healthy living.”
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Not Investing in Good Health
Health is wealth, especially in retirement when medical bills start to pile up as the body breaks down. Saving money by scrimping on physical and mental well-being is not frugality. It’s financial shortsightedness.
“Cutting corners on health-related expenses, like preventive care or necessary treatments, can lead to more significant costs in the long run,” said Blair. “Investing in health today can contribute to a more fulfilling retirement.”
Cutting Costs by Cutting Out Social Connections
When friends ask you out to lunch, a movie, or anything else that costs money, you might see an opportunity to save — but there’s a significant cost to letting those crucial social connections fray.
“Saving money shouldn’t mean isolating yourself,” said Blair. “New studies show that loneliness during retirement also negatively affects health outcomes. Maintaining social connections is essential for mental and emotional well-being. Retirees should allocate resources for social activities and relationships to ensure a fulfilling retirement. They might be advised to minimize spending at all costs, leading to missed opportunities for enriching experiences. But smart and mindful spending, aligned with personal priorities, can enhance retirement satisfaction without jeopardizing financial stability.”
Saving Money by DIYing Your Finances
CPAs, investment advisors, financial planners and other money pros don’t come cheap — at least not the good ones — but retirees should consider their fees to be an investment that will pay for itself, not an expense to avoid.
“Some retirees may be tempted to navigate their financial journey alone, dismissing the need for professional advice,” said Blair. “However, seeking guidance from financial experts can help navigate complex investment landscapes and ensure a secure financial future.”
Financial planner Michael Ashley, a former high-level employee at Wells Fargo and Citi and founder of the personal finance site Richiest, agrees.
“While frugality is admirable, I advise retirees not to dismiss seeking professional financial advice,” he said. “Market conditions and retirement strategies evolve, and consulting a financial planner can provide personalized insights. Ignoring professional advice may lead to missed opportunities for optimizing retirement income and navigating tax-efficient strategies.”
Eliminating Investing To Reduce Risk
Many retirees believe that investing is something you do before retirement so you have money to spend in retirement — but leaving your career doesn’t eliminate opportunities to grow your wealth.
“I often come across retirees who are advised to shy away from investments entirely for fear of risk,” said Ashley. “However, with careful planning and a diversified portfolio, investments can be a vital part of retirement income. Ignoring investment opportunities may lead to missed chances for wealth preservation and growth, especially considering the potential longevity of retirement.”
Always Buying the Cheapest Version of Something
When there are several versions of a chair, lamp, measuring cup or anything else you have your eye on, you might have been told that wise retirees make those choices based solely on the price tag. But that strategy often winds up costing more because the least expensive version is often the cheapest — and you wind up spending more to replace cheap things that break before their time. If you’re going to buy something, spend enough to make sure you buy it only once.
“Opting for the cheapest option in every scenario can be counterproductive,” said Ashley. “Retirees should focus on value and quality rather than just the price.”
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This article originally appeared on GOBankingRates.com: 6 Frugal Living Tips Retirees Should Avoid in 2024