Main Reasons Why People Go Broke after Retirement

Main Reasons Why People Go Broke after Retirement

There are so many retirees who run out of money. In more often than not, this happens because of the mistakes they did during their working career, and when they had already retired. Knowing the reasons why many people go broke after retirement can’t help you come up with steps to avoid running out of money as you enjoy your twilight years. Let’s take a look at some of the main reasons people go broke in retirement.

  1. They don’t spend wisely

You might unknowingly spend too much during your first years of retirement, and this is a mistake many retirees do. Since you have just started the new phase of life, and you don’t have to wake up early and rush to work anymore, you might find yourself without anything else to do expect to enjoy yourself. While it is not bad to enjoy yourself, you might end up spending too much if you don’t plan your spending carefully, and you can put a huge dent in your long-term savings. So, spend wisely.

  1. They live longer than they expected

Longevity is another reason why people go broke in retirement. Objectively, it is good to live longer. However, if you fail to plan for it, then you will not be financially prepared and you might run out of money before you die. When you reach 65, you can still live for more than 30 decades, and that is what you should plan for. But if you didn’t plan for a 30-year retirement, you can cut down your expenses, and find more sources of income so that you don’t go broke because you have lived longer than you expected. You can also move to a smaller house, or move to a place where the cost of living is low.

  1. They only depend on a single source of income

Some retirees rely on Social Security or pension alone. This is definitely not a good strategy. When relying on pension alone, it means that you will be ling in a much reduced income that is fixed. And life, especially at 65 or older, can be very unpredictable and can come with costly emergencies such as age-related health issues, which come with hefty price tag. Invest part of your savings, and find a retirement job if you still have the energy.

  1. Being unable to work after retirement

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Many retirees who cannot go back to work after retirement are typically disadvantaged.