Don’t Underspend While Preparing for Retirement
Want to increase your independence in retirement? Save money? Live safely in your own home? Then spend on goods and services that will enhance your comfort, safety, and health. For instance, buy a new car. No, this isn’t a scam or a seedy sales pitch. In certain cases, a new car can be a wise use of your retirement dollars.
As regular readers know, I’m a big fan of frugality. Spending less than you earn is a crucial strategy for building wealth. Continuing this frugal lifestyle in retirement can also be a good way to be sure of having enough money to last for the rest of your life.
Some retirees, though, take it too far. Underspending can be a threat to retirement as much as overspending, especially when it affects your comfort and safety.
As more of my retired clients move into their later years, I am becoming increasingly aware of one kind of retirement spending that can actually be more of an investment than an expense. This, for elderly people or adult children caring for elderly parents, is spending money to make their homes and activities safer.
One immediate benefit of this kind of spending is being able to live more comfortably and with less anxiety. A second benefit is financial. Helping elderly parents stay in their homes and live independently for as long as possible can save money in the long run by reducing medical costs and long-term care expenses. It’s especially important to invest in this type of spending if you live too far away from your parents to provide regular help yourself.