3 Purchases Retirees Often Regret
Buying these things in retirement could lead to big regrets. Some couples and people we’ve helped at Streamline who have retired and then made these purchases, and then they’ve shared some of the negatives with us. This isn’t a blanket statement about these things you never should buy. You could very well make these purchases and it ends up being one of the best decisions that you’ve ever made.
The Expensive Car
The most common expensive thing that sometimes people buy in retirement is an expensive car. It may be mainly for men, but there are women that have done the same thing in retirement. Here’s the good news with those people that could all afford it: it didn’t impact their retirement plan. However, when they looked at the cost of the car and then the value of the actual result, there was a bit of a difference there.
What ends up happening is about three months in, they’d say something like, “It’s nice. The car’s nice, but it’s…” The thrill wears off after a few weeks. But again, we’ve also had car enthusiasts who have a completely different feeling when they get into their car and when they drive it even a year or two years down the road.
A Bigger House
The next one that some people regretted was a big retirement house. Once they retire or move to a new state, they might go for a much bigger upgrade. We see it a lot very soon after retirement, sometimes they end up selling their place and getting something more suited to their needs. We’ve seen some of the happiest retirees rent the home or apartment first to make sure the new location is the absolute best place for them, and that gives them a little bit more flexibility. Sometimes renting and staying a little flexible could be a good move.
Large Gifts to Family
This one may shock you, and that is big gifts to your family. We are big believers in generosity and contributing to others’ lives in retirement, but the regret that we’ve seen or heard from 80-year-olds or older is they started to give to kids on a regular basis. In the beginning it was quite special, but after a little while it became an expectation. The kids started to expect the financial gift.
Let’s say mom and dad gave a $10,000 gift on Christmas to their kids, what a surprise! The next year: oh, that’s special! They gave another $10,000 gift. Then the next year they might be thinking, “I hope we get another $10,000 gift from mom and dad this year.” The next year it might be, “Mom and dad are going to give that $10,000 gift so let’s go ahead and make that purchase.” Or it starts to get worked into their regular monthly spending needs.
The main thing to think about here is what’s the expectation of your kids? If you have the funds to provide that 10K gift and it doesn’t impact you at all, by all means that’s a great thing to do. However, if that’s not the case you’ll want to make that expectation known. The same thing happens when you pass away. The most important thing isn’t the money that you’re going to pass along, but the fact that you have a conversation with the kids so they know what to expect. You don’t want them to have too much sudden wealth impacting them in a negative way. You also don’t want them to squabble over wealth because it wasn’t clearly laid out.