I remember being fascinated by something I learned in an adult development class in college. The professor said that learning is a continuous process, regardless of how old we are. We never "arrive" or possess all the knowledge we'll ever have. I sat in that class decades ago, and I'm here to tell you I'm still grateful for that lesson.
Today, when I make a mistake, I can tell myself it's all part of learning something new. I'll get some things right, mess up others, and learn from it all. It may be one of the coolest aspects of aging.
As my husband approaches retirement, I find myself interested in all things retirement-related, including lists warning me of what could go wrong. For example, I know that some retirees are surprised by the cost of medical care throughout their golden years, the effect taxes have on their income, and what happens when retirees fail to factor inflation into their budgets.
Those are some of the significant financial hurdles retirees can face. Here are some of the less-discussed hurdles.
Recycling passwords
Our lives are stitched together by passwords. Everything -- from work to banking and streaming services -- requires us to provide a password. Unless a person has a memory like a steel trap, it can be difficult to keep all those passwords straight.
That helps explain why so many of us use the same password repeatedly. For some, the password they use to log into the Social Security portal is also what they use to make online purchases.
According to Georgetown University, the more you reuse a password, the more opportunities there are for your data and money to be stolen. All it takes is a single hacker getting their hands on a password for one of your accounts. The first thing that hacker will do is try to log into all your other accounts, using that single password.
While using a single password may feel like it's simplifying your life, the habit can lead to a host of financial problems. One way to block a hacker's path to your IRA is to give each major account its own password and use a free password manager to keep them all straight. Some of the most popular free password managers are Bitwarden, Proton Pass, Zoho, Dashlane, and Keeper.
Being generous with everyone but yourself
If your retirement account is overflowing and you have more money in other accounts than you can imagine spending, it's fine to donate. However, if you're on a budget and concerned you'll outlive your savings, it's OK to say no to others when they ask you to share the wealth.
In all fairness, many people don't know how expensive retirement can be. They assume that you spent your entire life building up a small fortune and are now in a position to give it away. Saying no to the people you love and causes you care about may feel painful at first, but it's about protecting yourself. You never know when a medical expense will hit or your car will need repairs, and you owe it to yourself to be prepared.
If you're on a budget (and who isn't?), it's OK to be generous with your time and wisdom, but you don't have to give the farm away just because someone believes they need it more than you.
Pinching pennies
It's true that having a post-retirement budget is essential. It's also possible to pinch pennies unreasonably. For many, switching from accumulation to decumulation modes can be challenging. After years of diligent saving and prioritizing future goals, spending money can feel wrong.
If you can afford a vacation or home upgrades but can't quite bring yourself to part with the money, Old National Bank offers these potential reasons why:
- Deeply ingrained habits: If you've spent much of your adult life living below your means and being frugal, it may have become a core part of your identity. If, despite all your retirement planning, you can't bring yourself to spend, you may be making retirement more difficult than it needs to be.
- Fear of running out: If there's one thing life teaches you, it's that the future is unpredictable. Given the rising cost of healthcare, inflation, and geopolitical drama, it's easy to feel vulnerable and worry that you won't have enough to carry you through the rest of your life.
- Loss of income identity: Once, you worked and had money coming in. Because you worked for it, you felt justified in spending it. Now that you're not working, you may view spending as irresponsible.
- Cultural conditioning and scarcity mindset: If you were raised with values like "saving for a rainy day," it's possible that spending -- even when you have the money -- triggers feelings of guilt or anxiety.
Penny-pinching can become counterproductive when you refuse to spend money due to guilt or anxiety. It may help to meet with a financial advisor to better understand where you stand and how much you can spend without the concern of outliving your money.
The goal in retirement is to relax and live a balanced life. If you need to change a few habits to find balance, it's good to know that it's never too late.
