It’s much easier to recover from financial mistakes when you’re young. In your 60s, however, making poor decisions with your money may prove catastrophic.
Rose Miller, head of the JN Foundation’s BeWi$e Financial Empowerment Programme says financial planning is important at all stages of life, however, it takes center stage as persons draw closer to retirement.
“Regardless of your earlier financial choices, the financial decisions you make in your 60s will have a profound effect on the rest of your life. Between deciding when to start accessing your pension, figuring out health insurance and managing your investments, making the right choices will help ensure that you and your family are properly cared for,” she said.
To help persons stay on the right track, Mrs Miller suggests four financial mistakes to avoid once they’re 60 and over:
Spending Too Much
Mrs Miller said there is absolutely nothing wrong with treating yourself with some of the funds you’ve sacrificed and worked to accumulate for your ‘golden years’. She, however, advised that persons should think twice before spending their retirement funds on projects, such as extensive home renovations, landscaping the garden, buying a new car, or taking an expensive holiday, before they’ve worked out a proper plan for retirement.
Being asset rich and cash poor
She also pointed out that longer life expectancy, increased property values, and the rising cost of living have resulted in an increasing number of persons realising that they are asset rich, but cash poor. “What this means is that these people typically have valuable assets, usually a house, but limited cash on hand or other meaningful income,” she explained.
She noted that persons can usually avoid this issue by conducting thorough retirement planning, as well as, downsizing to a smaller home sooner rather than later. “This can convert into cash the equity held in the family home and reduce expenses associated with upkeep of a larger property.”
Ignoring the Importance of Insurance Coverage
“You may feel strong and healthy now, but you don’t know what the future may bring. That’s why it’s important to include in your retirement plan a solution to pay for any long-term care or medical expenses you may need down the road,” the JN Foundation grants manager said.
Mrs Miller noted that investing in health insurance is a wise decision. “Some people may prefer to put money aside to pay for their care, however, it is not a good idea to “self-insure,” she warned. “A long-term or critical health event would devastate your financial plan. You can’t afford not to have some form of insurance.”
Overspending on adult children or grandchildren
Mrs Miller noted that one of the biggest threats to a person’s retirement savings might be their loved ones. “It’s important to develop a spending plan well before retirement and to stick to it, even when requests from family members tempt you to overspend.”
She also advised that seniors should be careful about being too trusting of friends and family, as financial abuse of the elderly is a real issue. “Ensure you think through all matters carefully, seek appropriate advice from legal and financial specialists, and then implement what’s needed.”