Retirement Spending: 9 Things Even Spendthrifts Don’t Waste Money On
While many retirees live on a fixed income and have to find ways to cut down on unnecessary spending or excessive costs, some have a little more wiggle room in their budgets. For those who love to spend money, this can equate to buying a lot of things — essential or otherwise.
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But even spendthrifts will balk at certain purchases. Whether it’s because they simply have no interest or it’s not worth their hard-earned cash, here are some things these retirees generally won’t buy.
Extended Warranties and Insurance Products
According to Dennis Shirshikov, head of growth at GoSummer and a finance professor at the City University of New York, even spendthrifts often skip extended warranties and optional insurance policies. This is especially the case of those they deem don’t add a lot of value to their lives.
“They are likely to evaluate the cost versus the actual risk and often conclude these products are not cost-effective ways to spend their money,” he said.
Luxury Cars
Luxury vehicles can easily cost $80,000 to $100,000, if not more. Even retirees with funds to spare and a penchant for shopping often skip this particular purchase.
“The reasoning is twofold: depreciation and maintenance costs,” Shirshikov said. “Luxury cars depreciate rapidly and incur higher insurance and maintenance expenses. Retirees often prefer more economical cars that promise better longevity and lower overall ownership costs.”
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Latest Gadgets
Technology changes constantly. There’s always a new iPhone or upgrade available, and retirees often don’t see the value in trying to keep up with the frequent changes.
“Retirees tend to avoid indulging in expensive, high-tech gadgets that frequently become obsolete,” said Marty Burbank of OC Elder Law. “I’ve observed clients choosing technology that serves essential needs over the latest models. This approach prevents them from facing rapid depreciation and the hassle of constantly upgrading devices.”
Of course, many retirees will still keep up with technology as a whole, especially the things that improve their quality of life in some way. They just tend to avoid wasting money on things that will quickly become obsolete or don’t add much to their way of living.
Timeshares
Timeshares and vacation memberships are another big one that even spendthrifts tend to skip due to their high fees and the difficulty of getting out of them.
“The recurring fees and the challenge of reselling these properties make them less appealing, and my clients often favor more flexible, lower-commitment travel options that don’t tie up their funds indefinitely,” Burbank said. “Many have experienced or heard cases where it became burdensome to manage or exit such memberships, leading them to opt for travel choices that ensure liquidity and freedom.”
According to the American Resort Development Association (ARDA), the average timeshare costs $23,940. But when you add on annual maintenance fees, you’re looking at another $1,120 or so each year.
Gourmet Dinners Out
“While dining out remains a pleasure for many retirees, spendthrifts usually don’t indulge in frequent high-end dining experiences,” Shirshikov said.
This isn’t the case for everyone, of course, but many retirees will go out to eat as a way of splurging rather than as a way of life. Oftentimes, they’ll stick with at-home dining or less expensive restaurants — particularly their old favorites or places where they can meet with friends or others in their community.
High-Fee Investments
Investing is important in retirement, but even those who aren’t as careful with their money generally avoid high-fee investment products.
“[Retirees know] that these fees can considerably erode capital over time. For instance, instead of opting for funds with high management fees, the savvy retirees I’ve worked with favor low-cost index funds or ETFs, which often result in similar or better long-term returns without the hefty fees,” said David Blain, CFA and CEO at BlueSky Wealth Advisors.
Speculative Investments
Even if someone’s a spendthrift, they could still value financial security and investing in the things they know over those they don’t or that carry higher risk.
“Throughout my career, I’ve observed that retirees favor investments in more stable, established markets over the allure of potentially high but risky returns,” Blain said. “They understand that the volatility of speculative markets like cryptocurrencies or high-stake startups might not align well with their need for predictable, stable income during retirement.”
Expensive Remodeling Projects
A home remodeling project can easily cost tens of thousands of dollars, if not more. For most retirees, spendthrifts or otherwise, this simply isn’t a feasible investment.
“In practice, I’ve seen that while maintaining their home’s functionality and comfort is crucial, many retirees prefer cost-effective modifications that increase their home’s safety and accessibility rather than aesthetic upgrades,” Burbank said. “Strategic improvements ensure they can age in place comfortably without unnecessary spending.”
Cafes
The occasional pick-me-up aside, many older retirees especially don’t bother much with cafes.
“Retirees won’t waste their money on expensive coffee shop drinks,” said Melanie Musson, a finance expert with Clearsurance.com. “The coffee shop era missed them, and they’re happy to pick up gas station coffee for $1 and avoid the $5+ coffee shot drinks.”
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This article originally appeared on GOBankingRates.com: Retirement Spending: 9 Things Even Spendthrifts Don’t Waste Money On
