The 2024 presidential election campaign focused on inflationa reality of life that particularly affects American seniors. Yet for all the label shock at supermarkets and restaurants, retirees face even greater financial risks, many of them the result of their own mistakes.

Here are seven money moves that could hurt your quality of life and put anyone in retirement or about to retire in checkmate.

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1. Rely on equity as retirement savings

If you sell your house and move into an apartment to live off the equity, you’re setting yourself up for a major financial mistake.

Let’s say you sell your Chicago home and pocket $400,000 in equity as your primary source of income. savings. A two-bedroom apartment in trendy Lincoln Park averages between $2,400 and $4,500, according to Domu. Assuming a midpoint of $3,450, you would spend $41,400 per year, or more than 10% of your equity. Even without a rent increase, your money would only last you just under 10 years and leave you with no assets to pass on to your family.

2. Move without researching the region

The Sunshine State has long dominated the list of top U.S. retirement destinations. Smart asset class three Florida cities appear in the top 11 for net inflows of people 60 and older after analyzing US Census Bureau data for 2022: St. Petersburg, Clearwater and Cape Coral. Yet destructive hurricanes have led to rising costs for residents.

Dozens of home insurance businesses have left the state to reduce their risk exposure, and the six most expensive cities for coverage are on Florida’s Atlantic coast – with Hialeah’s annual average of $17,606 topping the list compiled by Insurify in 2023. Flood protection can add an additional $2,472 to your annual insurance premium.

Learn more: The cost of living in the United States is still out of control. Use These 3 “Real Assets” to Protect Your Wealth Today, No Matter What the US Fed Does or Says

3. Falling for senior citizen scams

The FBI lists eight financial scams that make up the bulk of elder fraud. These include romance scams (in which criminals use a fake online identity to gain a victim’s affection, trust and money), tech support scams (fake IT professionals attempt to resolve a computer problem but have access to personal information) and grandparent scam (someone impersonates a person). a child or grandchild in serious financial difficulty).

The grandparents’ ruse has taken an insidious turn as AI voice cloning software now allows criminals to use audio clips to create samples of a loved one’s voice. Even well-known media outlets like Descript boast that they can clone your voice in a minute using just a few seconds of audio.

4. Rely on working after retirement to pay the bills

The 2022 Federal Reserve Survey of Consumer Finances reported that only 54.4% of American families have a dedicated retirement account, implying that countless older adults will rely on work after retirement to help pay their bills. But health during the retirement years is unpredictable, even if you rule out illness or life-threatening illness. The United States Centers for Disease Control and Prevention reports that more than one in four older adults fall each year, resulting in three million emergency room visits and one million hospitalizations.

It might also be much harder to find work. Even those who have not yet reached 60 struggle to get a job although he is qualified – perhaps too qualified. It can also be easy to fall behind on the latest skills that are typically in demand over the years.

5. Overspending

Go ahead and buy this tricked out sports car: you deserve it, don’t you? Yes, but stick to the financial speed limit or risk a financial crash full of buyer’s remorse. Surveying more than 1,200 people for its 2024 Retirement Confidence Survey, the Employee Benefit Research Institute find that more than a third of retirees said their travel or leisure expenses were higher than expected.

It is reasonable to assume that much of this spending leads to debt. Using data from the US Federal Reserve, the Center for Retirement Research at Boston College calculated that between 1989 and 2019, the share of households with unsecured debt aged 65 and over increased from around 25% to around 40%.

6. Move forward with Social Security

Taking Social Security early can be costly. Let’s say you were born in 1960. If you started collecting benefits in 2022 at age 62, your monthly income would be 30% less compared to full retirement age. Instead of $1,000 a month, you’ll only receive $700, according to the Social Security Administration.

Similarly, people born in 1963 will be 62 in 2025, but their full retirement age is 67. The $1,000 monthly benefit claimed that year would be reduced to $700 – but if they wait until age 70, they’ll get 132% of their monthly allowance in exchange for a 48-month deferral.

7. Borrow from your retirement fund

Retired journalist Bob Niedt, writing for AARP in September, called it “(his) biggest retirement mistake.” Like he explain After that, the funds he withdrew failed to grow, leading to years of losing compound interest and potential gains on investments.

Niedt does not see the irony in the fact that he was an economics writer. Although 401(k)s are often tempting as a source of cash to pay for a child’s college tuition or pay off credit card debt, explore other loan options first, such as a parent loan PLUS for students or debt consolidation ready.

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This article provides information only and should not be considered advice. It is provided without warranty of any kind.