If you have ever gone to college, you've probably seen the following scenario play out more than once:
A kid was heavily monitored by parents, never allowed to do anything fun. The kid goes to college, parents release the reins and let the kid succeed with minimal intervention. Once the kid goes on campus, he goes nuts and starts drinking, smoking, and screwing everything in sight. Within three years, the kiddo becomes a burnout and works at McDonald's.
It's a classic trope that is played out in college campuses every single day. Believe it or not, there's a retirement trope that's very similar to this more familiar tale. It also has similar outcomes to the college burnout trope, too.
With this trope, what often happens is that a couple of retirees who were financially wise their entire life end up making some of the biggest mistakes people make after retirement. Next thing you know, they, too, are flipping burgers at McDonald's.
Want to avoid that fate in the future? Here are some of the things you shouldn't do as a retiree...
Spending All Your Retirement Money on a Giant RV or Boat Where You'll Live Happily Ever After
We get it. Most people spend their entire lives toiling away at an office, or in a grimy area. They yearn for the day that they can do whatever they want and finally treat themselves right. This is why you see so many sextegenarians rushing to a yacht dealer or a RV dealership the moment they are free from their jobs.
If you spend $80,000 on a luxury RV you can't afford, you're going to end up paying for it dearly. This is doubly true when you realize how much upkeep they require and how unfortunate it will be when (not if) it breaks down.
On a similar note, you might want to avoid buying a boat as your retirement home—lest it sinks and leaves you homeless.
Not Shrinking Your Lifestyle Down
The most common mistakes people make after retirement is that they forget they're retired. When you are no longer working, you no longer have the same income that you did back in the day. This means that, inevitably, you will have to scale down your life.
If you can't handle that, you may end up having to find a part-time job somewhere. Otherwise, you'll run out of money sooner than you'd expect to—and that can lead to bad things. If you're wise, you'll try to find new ways to save money and fast.
Retiring Before You Can Afford To
To a point, this is one of the most dangerous mistakes people do after retirement and prior to it. If you've never crunched numbers in a retirement calculator, you need to rethink retiring now.
Most retirees know how much they can afford and what they have to do to keep up that price. This is because most people, when they retire, have already spent years planning this out.
If you feel you're not ready to retire, or actually know that you don't have enough money to support you, what are you doing? You're going to end up running yourself into the ground in your old age! Stop and get a job before it's too late.
Keeping Your Portfolio the Same After You Quit Your Job
When you're still working, there's really no issue with losing a little money in the stock market. A lot of the most dangerous investments you can make are actually very profitable if you're both lucky and smart about it.
However, when you're not working and you're living off your investments, losing a money isn't easy to recover from. That's why retirement experts urge people over retirement age to stick to investments that are more conservative once you enter your golden years.
Even billionaires like Buffett and Ray Dalio have taken a more conservative approach to their portfolios later on. If you want to invest like Warren Buffet, get conservative!
Claiming Social Security Too Early
Social Security is a great thing that has helped millions of Americans live happily in their old age. It has been a social safety net that has also helped the poor, the widowed, and the extremely low-income families that would have been homeless without it.
It's common knowledge that SSI makes around 40 percent of all retirees' incomes once they say goodbye to the workplace. It also happens to be the source of one of the biggest mistakes people make after retirement.
Most people are aware that if you claim social security the moment you turn 62, you will lose out on money. What most people don't realize is how much. Depending on your situation, you could literally lose thousands per year by immediately withdrawing your benefits.
A better option? Wait until 67.
When we're talking about mistakes people make after retirement, we're assuming that the people we're talking about aren't super rich. If you're a 60-year-old geezer who's worth tens of millions or billions, ignore this advice. If not? Well, we got news for you...
You need to stop splurging.
Sadly, this is one of the most common mistakes people make after retirement. While you should enjoy retirement, you shouldn't be splurging on things you don't need. The entire idea of a retirement budget is to have enough money to last you for decades.
Being Unaware of Frauds
As much as we hate to say it, the elderly are the most common targets of scams. People expect older people to be unaware of how tech has changed, how society has changed, or how laws have changed.
Sadly, there's a lot of truth to that statement in many situations. Remaining unaware of the new scams people use on seniors is one of the costliest mistakes people make after retirement. That's actually
How badly this can affect you depends on the kind of scam that you fall for. If it's something simple like paying a "bill" to a political party, then you might only lose $100 or so. If it's something more sinister, like accidentally signing your will over to someone or falling for an online dating scam, it could be far worse.
It's up to you to make sure that you don't fall for these scams.
Cashing Out Your Pension Quickly
Pensions, if you have them, are a blessing. They are wonderful things that can help you sustain your standard of living beautifully. However, there's a little-known issue with them that you might be surprised about.
Not knowing that you can get penalized for cashing a pension out too quickly is one of the biggest mistakes people make after retirement. The thing with pensions is that they are steady income. By cashing out too soon, you're putting yourself at the market's mercy—and that will bite you in the butt.
Forgetting to be Tax Smart
Though it might not seem fair, you're still going to have to deal with taxes after retiring. It's just the way things work. That doesn't mean, though, that you should have to just buckle down and deal with a ton of taxes. Uncle Sam should be good to you!
The worst tax mistakes people make after retirement is assuming that they have to bear a massive tax burden when they don't. A better way to handle it? Learn about how to save on taxes after retirement.
Bruce Larsen's A Concise Guide to Taxes After Retirement is an excellent book for people who want to learn more about tax options once they've finished up.
Finally, the most pricey mistakes people make after retirement involve supporting adult kids.
Look, we know you love your kids and it's so hard to say no to them, but it's true. Supporting kids when you really should be focusing on supporting yourself is a bad idea, particularly if your adult children aren't contributing to the household bills.
You spent years on retirement planning. You saved, talked to a financial advisor, the works. But, really, are you going to let your kids drain your retirement savings? Probably not a good idea.
If you want to do the smart thing for yourself and your kids, you'll have them stand on their own two feet—or at the very least, make sure you're not setting yourself on fire to keep them warm.