The 12 Worst Ways to Blow Your Retirement Savings

Avoid these 12 budget-busting items to help ensure your savings last throughout your retirement.
Last updated April 3, 2023 | By Roger Wohlner Edited By Rebecca McCracken
Senior lady holding shopping bags

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Congratulations! You worked hard to save for your retirement. You’ve funded your 401(k) plan, you used both IRAs and taxable investment accounts as well. Your spending is under control and you are ready to move forward into retirement.

This isn’t the time to relax as far as your money is concerned. Sadly, many folks in or nearing retirement find ways to ruin their finances and put a real damper on their retirement plans. Don’t be among that group. Here are 12 ways that we’ve seen retirees throwing away their money.

Not paying attention to the little things

comzeal/Adobe Senior couple worried and calculating bills

A $50 item here and a $25 item there might not seem like much, but these smaller expenses can add up in a hurry. This is where tracking your expenses via a budgeting tool can be helpful.

As you encounter these smaller expenses, ask yourself if you still need the product or service involved. Who hasn’t kept paying for a subscription to something or a gym membership that we stopped using years ago but never canceled? These little items can accidentally ruin your finances in retirement if you continue to pay for them.

Spending without a budget

Seventyfour/Adobe Senior couple at the store looking at budget

A budget provides an overall picture of your monthly spending as well as the money that’s coming in. Budgeting t is a critical financial tool at all stages of your financial life, but especially so in retirement.

Developing and adhering to a budget can help you determine if your spending is in line with your retirement income. Operating without a budget is like flying blind financially. Preparing a budget prior to retirement can help you determine if the money you anticipate coming in on a monthly basis will be sufficient to support your desired expenses, or if adjustments will be needed. This money could be from Social Security, a pension, or another source.

Impulse buying

moodboard/Adobe senior woman shopping online using laptop and credit card

Occasional impulse buying is fine and normal. Buying that inexpensive bottle of wine at the supermarket or similar low-cost items won’t hurt you financially. It’s when this impulse buying becomes rampant and the cost of the items becomes large that it can ruin your finances.

To eliminate impulse buying, go to the store with a list and stick to the list. For larger purchases plan them out. This is another area where having a budget can help.

Dining out too often

LIGHTFIELD STUDIOS/Adobe senior friends clinking glasses of beer

We all enjoy eating out. For those who are empty-nesters, this can be easier than cooking for one or two. But dining out can get expensive, especially at nicer restaurants.

This is where restraint comes in. Build a line item into your budget for dining out, and do your best to stick to that expense amount each month.

Remodeling your home

Halfpoint/Adobe Senior couple painting walls in home

We all want to live in a nice home. If you’ve lived in the same house for a long time, it might be time to remodel. This can be cost-effective versus moving and buying a new home. However, its important not to get carried away.

Be sure to set a budget for what you can afford and stick to that budget. There’s always a nicer version of a cabinet or flooring, but at some point, you have to weigh the benefits against the costs in terms of what that added cost can mean to your retirement budget.

Collecting Social Security too early

zinkevych/Adobe Senior woman holding check

Deciding when to collect Social Security can have implications for your finances in retirement. Though you are eligible as early as age 62, waiting can increase your monthly payment by as much as 30% or more.

This is a key part of retirement planning and you will need to look at a number of factors in deciding when to commence collecting your monthly benefit.

Buying new or expensive cars

curto/Adobe senior woman driving convertible car

At some point, we all need to replace a car. They get old and the cost of repairs can become a financial burden. However, the cost of some new cars can be out of sight.

The best solution is to determine what you need in a new car. Look at both new and used vehicles and try to get the best value for your money that meets your needs.

Buying lottery tickets

The Toidi/Adobe Florida Lottery ticket play slip kiosk

It can be fun to play the lottery, especially when the jackpot reaches very high levels. We can all fantasize about what we’d do with the winnings, but the reality is the odds are against us.

Self-control is key here. Spending a few dollars a week is fine, if you spend more than this, you may have a gambling problem and should consider seeking help.

Ignoring the stock market

insta_photos/Adobe Worried senior couple checking bank documents at home

Some may think that once they reach retirement the best move is to be conservative with your investments and move all or mostly to cash. The reality is that you still need growth to stay ahead of inflation. The best solution is to allocate an appropriate amount to stocks that will balance your need for some growth while minimizing your downside risk and that is in line with your overall financial planning strategy.

Not downsizing

Yakobchuk Olena/Adobe Senior couple enjoying time together

In some cases, it might make sense to downsize your home in retirement. If you still have a mortgage, selling the home would pay off the mortgage, eliminating this monthly expense. Maybe the costs of upkeep and maintenance on your current home are getting to be too much, downsizing can help reduce these costs.

A family home might have sentimental value, but you need to weigh the monetary costs of staying there during retirement.

Owning more than one home

MonkeyBusiness/Adobe senior couple selling home

Perhaps you bought a vacation home while your kids were younger and you enjoyed many family vacations there over the years. At this point in your life, you need to weigh whether the cost of owning two or more homes makes financial sense.

Do you use all of these homes? Does your family? Can you afford the taxes and upkeep? In the case of a vacation home, perhaps this location is where you want to live in retirement.

Giving money away to friends and family

koldunova_anna/Adobe Senior father and adult son counting money

Giving away money to friends and family is at best a touchy subject. Sometimes it's unavoidable such as in the case of a serious illness incurred by a friend or family member.

In other cases, it may be time to put your foot down. If your adult children are still looking to you for support, retirement is the time to put a stop to this. While this should probably have been done earlier, your fixed income in retirement makes this a necessity.

Bottom line

deagreez/Adobe Senior lady holding shopping bags

Any one of the items listed above may not be a retirement budget breaker by itself. But several of these or other bad financial habits combined can serve to erode all of the hard work that you’ve done to save for retirement.

We can’t stress the need for a sound financial plan, including a detailed budget and spending plan in retirement. These are smart money moves at any age that will go a long way towards helping to ensure that you have a financially secure retirement.

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Author Details

Roger Wohlner In addition to his bylined articles on sites like TheStreet, ThinkAdvisor, and Investopedia, Roger ghostwrites extensively for financial advisors, investment managers, and financial services companies.