Are You Making These Money Mistakes? Part 2

Last week, the question in my blog post was, “Are You Making These Money Mistakes?” and covered common financial blunders made by people under the age of forty. Unfortunately, mistakes happen at ANY age, so protect yourself! That’s why we are focusing on common money mistakes to avoid in your 40’s, 50’s and 60’s. Let’s get started.

40’s

In your forties, many people are still taking care of their children, but they may also have some financial responsibility for their aging parents.

The biggest mistakes made at this age are:

·         Dipping into your retirement savings.

o   You’ve been told to start saving for retirement as early as possible so that your savings can compound. Withdrawing from your retirement account early impedes that process - so, hands off! Unless you have an emergency and no other alternative, don’t even consider the money in this account as being accessible.

·         Refinancing your mortgage for another 30 years.

o   Mortgage rates are at near rock-bottom lows;  it’s natural to want to take advantage of the savings! If you can save money and select a shorter term like 15 or 20 years, consider that rather than another 30 years. It’s bad enough that you are still going to have to pay property taxes that seem to increase yearly. The last thing you want to worry about in your retirement is paying a monthly mortgage.

·         Failing to plan for the future.

o   No one likes to think of their own demise, but if you haven’t planned for your final expenses and your legacy yet, your forties is the perfect time to start. Speak to an attorney to prepare your will, power of attorney, and medical directive. Don’t want to pay for a lawyer? Most of the info you need can easily be accessed online. For more information about retirement and estate planning, you can read my Blog post, “Fast Track to Retirement.”

·         Taking on more debt

o   Try to avoid piling on more debt. You’re always going to have living expenses, but if you can minimize new accounts and increasing balances, you will be better off. If you do need to take out a loan, be sure to shop around for the best rate. As always, your credit union is here to help!

50’s

At this stage, retirement is closer than ever! You may also find yourself an empty-nester. Are you still paying for your adult children’s schooling or helping them out of a financial bind? Now is the time to start cutting those purse strings. Your focus should be on setting yourself up for life after your career.

What to watch out for in this stage:

·         Family matters

o   When you love someone, you want to help them. Unfortunately, that usually means handing over some of your pay check. If you are in a position where money is no object, by all means, give generously. If not, you might think about reconsidering your “loan.” Too often, loaning a family member money means you may not get it back. Think long and hard about parting with it just ahead of when you need it most. Yes, this includes co-signing on a loan.

·         Thinking of an early retirement?

o   Don’t make any sudden moves until you speak to a professional or someone at the credit union.

o   A financial advisor can help put you on the path to retirement. Be honest and open about your goals to make them a reality. Never retire if you still have bills.

·         Plan and prepare (I always say, “Proper planning prevents poor performance!”)

o   People are living longer than ever, which means you need to make your money last. Think ahead before committing to financial obligations that will impact your budget in your next decade of life.

60’s

In your 60’s, you have so much to look forward to! Retirement is closer than ever; your children are (hopefully) independent, and you may be spending time with your grandchildren. Now is not the time to lose sight of your goals. In many ways, money is going to be more important than ever!

Here’s what you need to pay close attention to in this stage:

·         Debt

o   You may be facing the possibility of a fixed income. It’s likely you are also visiting the doctor more often and have more costs to maintain your health. Approach new debt with caution. Consider only short-term debts so that you don’t carry around the burden of another payment into retirement.

·         Collecting Social Security too soon

o   You’ve been working all of your life, and you are finally eligible to collect social security! Time to sign up…right? Not necessarily. Holding off on claiming that income for a few more years will put some serious cash in your pocket. The difference between your monthly benefit at age 65 versus age 70 could be hundreds of dollars per month. If you are healthy and able to continue working, delaying your Social Security could be the best option for your future! You can calculate your benefits here.

·         Splurging

o   Celebrating your retirement with that new sports car you’ve dreamt of may not be the best financial move to make. I would love a Ford Mustang as much as anyone, but the last thing you want is to blow your savings on one. You also shouldn’t take on a hefty monthly payment now. Life after retirement is a marathon, not a sprint, so take it easy. Of course, if you want to take on a part-time job and are comfortable with committing several years to pay off your car, that’s a different story. In that case, shift into gear and go for it! I recommend a convertible! :)

Reaching your sixties is a huge achievement! You get to spend your time the way that you want without answering to anyone else. This is YOUR time. Enjoy it!

What did you think of this post? I want to hear from you. Comment below or email me.

Krista Kyte is a personal finance blogger and personal banker with over 18 years of experience in the financial industry. Krista is passionate about helping our members understand their financial situations. She writes tips that will help consumers reach and maintain financial security, and start living the life they’ve always wanted.