Warren Buffett Says People Over 60 Should Never Do These 6 Things With Money

Warren Buffett, who led Berkshire Hathaway as CEO for decades and recently stepped down at 95, has several pieces of money advice for people over 60. His advice isn't earth-shattering. In fact, it mostly consists of investing conservatively for the long term.

While many workers have retirement plans through their employer, others have to open their own IRA accounts to invest for their futures. Here is some of Buffett's advice that's applicable to everyone, regardless of account type, socioeconomic status, or portfolio size.

Time the market hoping to get a big return

Buffett does not recommend that investors try to time the market or engage in active trading, hoping to get a big, fast return. 

He also warns against paying high fees, instead recommending that people invest in S&P 500 index funds and avoid expensive managed funds. 

He explains that index funds are naturally diversified, something many people in their 60s don't have in their portfolios. Diversification can help workers nearing retirement mitigate risk, and index funds are a straightforward path to achieve that.

Borrow money to treat the market like a casino

Buffett also strongly warns against people borrowing money to invest in the market. He says too many people choose speculative trading, which is akin to gambling in the casino. 

He reminds people that the stock market is highly unpredictable, and not even skilled investors like himself know what will happen to it. This is especially important for those in their 60s, as they are too close to retirement to engage in risky investments that could create significant financial problems and delay retirement as a result.

Panic sell as soon as the market starts to dip

Buffett also preaches patience and long-term investing. He recommends that people invest in index funds and hold them for decades. 

People who are close to retirement may be tempted to panic sell if they start to see their hard-earned portfolios drop in a market dip. However, this could be a mistake that would be difficult to recover from given how close people in their 60s are to retirement. The stock market is, as mentioned, unpredictable, but withdrawing money prematurely could hurt retirement account returns for decades to come.

Never paying off credit cards, despite the high interest rate

Buffett says that one of the best investment returns you can get is paying off high-interest debt, like credit card debt. 

Today, the average credit card interest rate is near 21%, which can make debt compound and minimum payments grow. When people move from a salaried income to a fixed income in retirement, managing high-interest debt can be stressful and disrupt cash flow. That's why Buffett recommends paying it off as soon as possible.

Going through life without an emergency fund

Buffett also recommends that people have an emergency fund. Even when it comes to his company Berkshire Hathaway, he keeps large cash reserves to protect the company and to give him capital should the team spot a good investment in the future. 

Having a savings account is especially important for those nearing retirement, as it gives you cash on hand if you encounter unexpected emergencies, like home repairs or medical costs. Additionally, having an emergency fund helps you avoid withdrawing from your retirement accounts during a down market.

Living way above your means, especially in retirement

Though he's one of the richest people in the world, Buffett drives a Cadillac with hail damage and has lived in the same home for 60 years. He encourages people to live within their means and avoid lifestyle inflation, too. 

Adopting more frugal habits and learning how to manage money are useful skills for retirees who are living on a fixed income and need their nest eggs to last long term. Retirees especially need to plan ahead for the future, when medical costs may increase as they age.

These tips work for everyone, regardless of their wealth

Buffett says that these money tips, such as investing in index funds and holding them long term, are the same advice he gives to everyone, whether they're new to investing or multi-millionaires. He's even advised multi-millionaire professional athletes like LeBron James to do the same. 

These are the tips Buffett has been repeating for decades, in the media, at his shareholder meetings, and in his letters. Ultimately, his money principles stand the test of time and have made him very wealthy and his company successful.

Bottom line

Buffett says the financial mistakes mentioned above can prevent people from building wealth. He's adamant that taking part in risky investments, like day trading, can create financial problems that are difficult to overcome. 

Instead, he says people, regardless of wealth, should invest in low-cost, diversified index funds like an S&P 500 fund. That, and making sure to avoid high-interest debt and lifestyle inflation, can help people build secure futures for retirement.

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