Surprising ways retirees can waste their savings

You’ve worked hard all your life, so you deserve to enjoy yourself once retirement comes around. However, there are some common mistakes retirees make when it comes to their finances, here’s what to avoid . . .

Not taking control of your super
You should be aware of all your options when it comes to your super, you can typically take it as a lump sum, an allocated pension or an annuity. It may be best to speak to a financial adviser to find out what’s right for you.

Not knowing your entitlements
Don’t make the mistake of not knowing what payments you’re eligible for in retirement. This may include government benefits, such as the Age Pension, carer’s allowance or disability support through to concessions on health and travel.

Falling victim to scams
Scammers can micro-target individuals and have sophisticated systems ready to drain the bank accounts of unsuspecting retirees. Figures for 2020, from the Australian Competition and Consumer Commission’s (ACCC) Scamwatch, show that in November last year, 31 per cent of all money lost to scammers ($5 million) belonged to people aged 55 to 64. Another 29 per cent of the money lost ($4.7m) belonged to those aged 65 and above.

The best way to avoid losing money to a scam is to educate yourself.

Read more: How to spot online dating scams

Supporting adult children
It can be tough for young adults right now – wages have stagnated while house prices have skyrocketed – but retirees shouldn’t be supporting their adult children in the long term. Of course, it’s fine to help out now and again but only if it’s money you have to spend. That way, you can be sure you’re not helping your children fund a lifestyle that they may not be able to maintain by themselves.

There are other ways you can support your child financially without handing over cash. Like letting them borrow your car, or offering to babysit if they need to take an extra shift at work.

Skipping senior discounts
Finding places that offer a senior discount might take a little research, but the pay-off is worth it.

If you still haven’t gotten yourself a Seniors Card, you should sign up today. They are available in every state and territory and give you discounts on goods and services. You can save on everything from restaurants to travel, car rentals to gym memberships, cinema tickets, museum exhibitions and more.

Read more: Seniors Card explained: Are you eligible? Where to get discounts?

Maintaining a home too large for your needs
There’s a reason so many retirees downsize. A smaller house can mean bigger savings on insurance, utilities and mortgage payments. Staying put definitely makes sense in some scenarios but consider whether your home is getting to be too much for your needs.

If you find it exhausting to keep it clean, or find yourself not using some rooms at all, downsizing may be a good option.

Maintaining two cars
Two cars are often a necessity for households where two people work but retirees with flexible schedules may be able to get by with a single vehicle.

If you have a second car that is already paid off, not only will you get a bit of cash when you sell it, but you’ll also save down the line on things such as insurance, maintenance, and taxes.

Carrying credit card debt
Credit cards certainly have their place but can quickly become money wasters if you’re not careful. If you’re using a credit card to gain points and other benefits, never spend beyond your means each month and set up a direct debit to pay it back on time to avoid paying interest or fees.

Not switching to generic medications
More often than not, when filing a prescription, you’ll be asked if you’d prefer the branded medicine or the generic option.

The main differences between branded and generic drugs are the cost and the inactive ingredients. Generics usually cost less than branded medications, so for pensioners, this makes them a better option. Companies that manufacture generic medications do not have to pay the enormous costs associated with researching, developing and advertising the drug, so they can afford to offer consumers a lower price.

It’s worth consulting your doctor to see whether there’s a generic available for any given prescription that will work for you.

Read more: Is branded or generic medication better?

Your retirement is in your hands, so try to make the most of the money you’ve got and invest wisely to make it last.

How do you save now you’re retired? Do you support your children or grandchildren? Have you downsized?

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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Written by Ellie Baxter