Retirement Spending Gone Wrong: 5 Purchases Retirees Wish They Could Undo

We all dream of enjoying the fruits of our labor, but there are some purchases that might leave us with a bitter taste in our mouths.

Let’s explore the five big purchases most retirees end up regretting!

Retirement Spending Gone Wrong: 5 Purchases Retirees Wish They Could Undo


Full transcript:


Alex Okugawa & Anthony Saffer

Anthony Saffer 0:00
Today we’re tackling a topic that can derail successful retirements. And that’s big purchases.

Now we all dream of enjoying the fruits of our labor. But big purchases can sometimes leave that terrible taste in our mouth.

Let’s explore the five big purchases that retirees often regret making.

Alright, before we jump into the nitty gritty, hit that subscribe and that like button, we would appreciate that. Alright, number five, Alex is the RV.

Alex Okugawa 0:26
Yeah, and a lot of people, right. So they’ve been working their whole lives are looking forward to retirement. And so they want to hit the open road, go explore the wonderful states of the United States. And so initially, in the early years of retirement, we see folks use the RV a lot. And then what happens is, after they kind of get that out of their system, and they get the travel bug out a little bit, it starts collecting dust it sits in the sun. And so now you have a depreciating asset on your hands. That is just maintenance costs. And you know, DMV fees and all the other stuff. And again, some people use the RV throughout their whole retirement. But it’s very common to see people they get all excited, they buy that expensive RV they use it for a year or two. And then it just sits in the sun and collects dust.

Anthony Saffer 1:14
It’s often better to rent. Alright, number four is the vacation home.

Alex Okugawa 1:19
Here’s the question is, how often will you actually be using the rental home? Because I think a lot of people justify this purchase because they go, you know, maybe you live in a state where you don’t have as great weather. So maybe the winters are really cold or their summers are super hot. And so you want to buy a second home in an area that’s you know, has a better climate during your offseason. How often are you going to be using it because, what you’ve essentially done is you’ve doubled your maintenance costs, not only do you have the maintenance costs of your current home, but now you have the maintenance costs on a second home, and all the upkeep that goes along with it. Now there are some certain cases where people go, well, I’m going to turn this into like a short-term rental or you know, I’ll rent it out. So we at least recoup the cost or maybe make a little bit of a profit. And that’s fine, as long as you go into it with open eyes saying do I really want to be like a manager on a property dealing with people coming into my house? Because I do plan on spending a long time here? Do I want people in and out? So that’s a big consideration that can really drain retirement assets.

Anthony Saffer 2:22
It certainly can make sense if your family is going to use it, but oftentimes it doesn’t. Alright, number three is the over-helping hand to family and friends.

Alex Okugawa 2:30
Yeah, so usually people are spending more time with family more time with the kids and grandkids. Because honestly, you have the time now in retirement, so you see them a lot more often. And what happens is, sometimes you’re giving them more gifts, right? So you’re making bigger checks, you’re giving them bigger gifts. And the key here that we often see people making a mistake, and then they regret it later down the line is because they are being so generous, and that’s a good thing, the recipients learn to expect the gifts, right? It’s an expectation that Mom and Dad or Grandma and Grandpa are going to pay for this. And so Grandma and Grandpa have now become an open checkbook. And there’s this expectation. And we’ve talked about this in previous videos, but this is why it’s so important that you pass on wisdom before wealth, right? You pass on your values before you pass on the dollars, your family could always make more dollars, especially when they’re younger. The values, it’s very hard to maintain those values, especially if that’s something important to you.

Anthony Saffer 3:37
Yeah, the open checkbook that you mentioned is really important when people have that expectation that children have that expectation. It can be really tough to break away from that. Alright, number two is the larger home which can then increase the cost of living.

Alex Okugawa 3:50
Yeah. Now again, most people they downsize when they get into retirement so they actually have a smaller home but there can be times when people actually get a bigger home and I’ll describe the most common scenario we see. Because we live in Southern California here in San Diego. People understand the size of the home that you could buy for the same price here in Southern California. You could buy you know a McMansion somewhere else in another state and so what ends up happening is your whole life you haven’t had this big home that maybe you’ve always wanted and you justify to yourself, well geez I could get a five bedroom five bath out here for you know, like the same price as my home here in San Diego. Like why don’t we do that I get more bang for my buck. But therein lies the trap because you’ve now purchased a larger home and larger homes more often than not come with more maintenance, more expenses, and more upkeep, and all that upkeep is probably not something that you want to deal with especially as you’re getting older.

Anthony Saffer 4:55
Yeah, certainly should be thought through and alright number one is the extravagant car.

Alex Okugawa 5:00
The number one thing here that we see people make a mistake on is buying a very expensive car, because here’s what ends up happening is usually people that want to buy an expensive car, because they have those expensive car tastes. They’re not the people that drive that for the next 20 years, right? They’re the people that are typically flipping over the cars every couple years because they gotta have the latest car, they might justify it with, oh, you know, it’s got all these safety precautions, which I need, because now I’m getting older, and maybe it’s just a little bit harder to see when I’m driving. But again, having a very expensive car, this depreciating asset, and something that recurs every couple of years and a financial plan is really a sure way to derail the success of your retirement plan.

Anthony Saffer 5:42
Yeah, absolutely, and with each of these, they’re, they’re not wrong in themselves. It’s just a matter of whether you’re using it whether you’re getting the value that you that you pay for it, and we want to enjoy the fruits of our labor. And unfortunately, sometimes those fruits aren’t really able to be enjoyed.

We posted a video previously on three compelling reasons that you should retire right now, to show the urgency sometimes over retiring and enjoying the fruits of your labor, you can go ahead and watch that below.

Thanks for watching. If you’ll subscribe, we post videos on helping you retire with confidence. In fact, we posted a five retirement mistake to avoid, a free guide that you can go ahead and download. We’ll go ahead and post the link to that. That’s our free gift to you. Thanks for watching.

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