Going Broke During Retirement: Could It Happen to You?
Increasingly people are in better health in later years, they want to get more out of life and are living longer so a pension and savings that might initially seem adequate can be rapidly depleted. Add to that the uncertainty of worldwide economies and our investments cannot always provide a dependable income.
What many retirees are not prepared for though is all that spare time on their hands. And what do we do when we have leisure time? We want to fill it – but that usually costs money. The over-50s now account for around 47% of all consumer spending, up from 41% in 2003, according to research from Saga and the Centre for Economic and Business Research.
It’s understandable to feel a huge sense of freedom when we retire especially after decades climbing the corporate ladder. And it’s tempting to reward yourself for all those years of hard work. But rewarding yourself too much can insidiously eat into a nest egg and contribute to people going broke in retirement.
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In the UK the government are already aware of the potential crisis in funding state pensions in the coming decades as more people will become dependent on the state because private pensions have not met investment targets or people have simply failed to take out a private pension.
Whatever size retirement fund you start out with your lifestyle choices during retirement can have a huge impact on how you can live in the later years of retirement. If you are already retired and have started to realize that your nest egg may not be sufficient there are a number of ways you can take action right now:
- Down-size to a smaller home – the running costs will be less and you will free up some additional capital.
- Take on some part time work –the thriving gig economy makes it easier and more lucrative now to work from home or even start a second career doing something you love.
- Cancel expensive subscriptions to clubs and gyms – instead stay fit at minimal cost by taking up running or cycling (or even just walking)
- Instead of shopping and eating out so often consider volunteer work to fill your spare time – it’s free and will give you a great sense of well-being.
However, unexpected events can happen to derail even the most careful financial plans and cause people to go broke in retirement – some of the events that you cannot plan for are:
- Divorce – rates of divorce are rising in the over 65’s unlike the rest of the population
- Serious health issues – causing healthcare bills to eat into a larger chunk of your nest egg than expected
- Failing Investments – if you’d invested in gold or oil in the past two decades you will have seen huge drops in the value of those investments.
Author Bio:
Amanda Gillam has been writing for many years about the fast-paced changes seen in many areas of life in the UK, including education, careers, the job market and personal finance. She contributes to a range of news sites and blogs including the Money Saving Matters Blog.
Image/bykst via pixabay
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