6 Money Mistakes Retirees Make That Force Them To Change Their Lifestyles

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6 Money Mistakes Retirees Make That Force Them To Change Their Lifestyles

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If you’ve spent years saving for

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, you probably have no plans to go through all your savings. But unfortunately, it can happen if you’re not careful.

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Discover More: 4 Unusual Ways To Make Extra Money That Actually Work

To make sure you spend your retirement years financially stable and comfortable,

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that have derailed even wealthy retirees.

There’s a time and a place for taking financial risks, and it isn’t during your retirement.

Wealth advisor and senior managing director at

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, Sharon Hayut, has seen this play out among her clients.

“As an advisor, I often see individuals taking on excessive risk entering retirement, which leaves them vulnerable to market corrections,” she said.

There’s a term for this risk: sequence of returns risk. Your long-term average returns on your investments matter, but it also matters when you earn high returns versus losses.

A market ****** early in your retirement can wipe out so much of your portfolio that it never recovers. That same market ****** a decade later might leave your portfolio chugging upward long term — because it had a chance to grow before the next bear market.

Hayut also added that

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aren’t just for those who are still working.

“Another common mistake is not having an emergency fund with at least six months’ worth of expenses to cover unexpected costs, whether for healthcare or something as simple as needing a new car,” she continued. “When these [expenses] occur, they can significantly impact one’s financial stability and peace of mind.”

Without a cash emergency fund, many retirees have to sell off investments regardless of whether they take a loss during a down market. Ideally, you should avoid forced selloffs in retirement as much as possible.

Consider This:

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Retired or not, you’ll still have to pay taxes. But with careful planning, you might be able to reduce just how much you pay.

“Underutilizing tax-advantaged accounts is a common mistake,” said Mike Falahee, the CEO and owner of

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. “Roth contributions are taxed upfront but compound tax-free, and you pay no taxes on withdrawals in retirement.”

When the government takes less of your income in retirement, you don’t need as much gross income to survive. That, in turn, means you don’t need as much saved up in your nest egg.

When your circumstances change, your spending should also change. But change isn’t always easy.

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“Retirees often fail to adjust their financial plans in response to changing circumstances,” said Hayut.

According to her, serious life events such as the death of a spouse, unexpected medical expenses or economic downturns can significantly impact a retiree’s financial situation. Hayut recommended regularly reviewing and adjusting your retirement plan so you can “stay on track and make necessary changes to avoid financial hardship.”

Without careful planning, you could potentially incur high fees and rates when withdrawing your retirement funds, which will only deplete your savings faster.

This was true for Cem Oezulus, who immigrated to the U.S. and co-founded a small business called

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. He retired comfortably but has had to adjust on the fly since then.

“Retiring with wealth, I didn’t expect overspending and high withdrawal rates to drain my savings so quickly,” Oezulus said. “Poor investment choices and lack of diversification added to the financial strain.”

For Oezulus, these mistakes forced him to drastically alter his lifestyle and adopt a more cautious financial approach.

Most people don’t realize just how many benefits they qualify for or how many programs are available to them. Attorney Marty Burbank with

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sees this all the time among his retired clients.

“Many of my clients, especially military veterans, were not fully aware of the benefits available to them through programs like Aid and Attendance,” he said. “I once worked with a veteran who missed out on thousands of dollars in benefits simply because he didn’t know how to apply.”

As Burbank went on to explain, it’s important to leverage all potential sources of income and support available to you. Those things can and will make a significant difference in your retirement security. Whether you retire with $300,000, $3 million or $30 million, you can lose it all if you’re not careful.

When it comes down to it, Hayut said, “Avoiding money mistakes requires careful planning, disciplined spending and regular reviewing of your finances.”

Not only that, but she said it could be necessary to work with a financial advisor. You don’t have to hand them all your money to manage for you; you can simply pay a flat or hourly fee for expert advice.

“It is important to work with a proactive advisor, that can help retirees ensure that their savings last throughout their retirement,” Hayut added.

Following the experts’ advice and avoiding these mistakes could make the difference between a comfortable retirement and one spent pinching pennies.

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