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Best Ways To Go Broke In Retirement

Most people believe that after they are done with working hard their entire lives, struggling with finances on daily basis, raising kids and putting them through college, they can finally retire and enjoy the rest of their lives in peace. Sounds fun, right? Well, it isn't - at least it's not all sunshine and rainbows as you might believe. If you think social security is simply enough to enjoy retirement, you'll be soon asking your kids for allowance, while hoping that they don't remember those times you didn't give them lunch money, because they wouldn't finish their breakfast.

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Furthermore, you may have saved for retirement and had a retirement fund, but you don't really know if it will suffice, until you actually retire. So, it's like playing the bingo, with chances of going completely broke if you don't have a winning combination. Also, there is a chance of spending your retirement fund too soon on blackjack and spa treatments. The point is that you're faced with a new set of challenges, even though you thought you left all of that behind you. Here are a few ways you can go broke in your retirement.

Forgetting to save when you were young

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Let's be honest, no one thinks about retirement when they're young and enthusiastic. Then again, retirement is the time when you enjoy the benefits of your past decisions. Most people don't even like to reminisce on their past decisions, let alone have them determine their financial status when they retire. However, experts suggest you should save 10-15% of every paycheck, from the moment you land your first job, if you want a sound retirement that is.

Forgetting a retirement plan

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Who needs to plan things when you can improvise, right? Wrong! Forgetting to establish a retirement plan is like forgetting a protective cage when you go diving with sharks. As a part of your retirement plan, you should invest in individual retirement accounts (IRA) or have an employer-sponsored retirement plan, also known as 401(k) plan. Otherwise, your social security simply won't be enough to help you get by.

Deciding to retire early

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You may feel like you're full of it and you just want to retire already and get it over with. However, sticking it to the man and retiring early is definitely a huge mistake, unless you can afford it. For instance, every person at the age of 62 can retire, that being an early retirement, but you get 25% less benefits. That's why you should take an aged pension income test to determine just how much social security you'll get when you retire, so that you don't end up regretting your decision.

Supporting your kids

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Sometimes your kids will ask for financial support and you may feel the need to take out a bit from your retirement fund to help them along. Don't do that, you raised responsible adults, so let them take care of themselves for a change. If you keep supporting your kids you'll run out of retirement funds faster than you realize. Also, if you haven't retired yet, retrieving assets from your retirement fund nets you a special surprise from the government in form of tax penalties.

Getting sick a lot

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Why someone decided to call the old age "golden years" is anyone's guess. There's nothing golden about it when you consider that you might need over $350,000 to cover healthcare bills during your retirement. Moreover, a private room of a nursing home may cost you up to $8,000 per day. So if you haven't financially prepared for getting sick when you retire and when you're more prone to diseases, then you should try to not get sick at all, quite easy wouldn't you say?

Overspending

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Retired seniors are quite carefree. As a matter of fact, 46% of senior couples tend to spend more in first two years of their retirement than they do prior to retirement. You need to monitor your spending accordingly, especially since you no longer have a profitable source of income. On the other hand, if you're not careful what you spend your retirement budget on, you might just outlive it. Guess those blackjack and spa treatments don't sound so appealing now do they?

Forgetting you can't work no more

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Perhaps you thought about working for as long as you could and retiring at the age of 70, thus gaining up to 32% of extra benefits for late retirement. If you're not your own boss, chances are that little to no companies will allow you to work that long. In fact, 60% of seniors end up in early retirement, while accepting buyouts due to organizational changes or health issues. You are not young any longer, so don't rely on yourself to provide income anymore. Instead, save on time and enjoy your retirement without having to worry too much.

Retirement isn't as smooth and relaxing as people think, especially if you're not adequately prepared. Heck, forget about savings, retirement accounts and taxes. Party hard while you’re young and you’ll have enough time to contemplate life when you retire. However, you may not have enough money to contemplate it for too long - but best of luck though.

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