One Year Before Retirement: 4 Frugal Habits To Stop Now
Written by
Katie Wudel
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Retirement marks a significant transition in life that brings many changes. As you approach this new chapter, it’s essential to reassess and adjust your financial habits. While frugality has likely served you well during your working years, some frugal habits might not be as beneficial as you step into retirement. Here are four frugal habits to reconsider or stop altogether as you prepare for retirement.
Overcautious Investment Strategies
In the years leading up to retirement, many people adopt a highly cautious approach to investing, prioritizing capital preservation over growth. While avoiding high-risk investments as you near retirement is wise, being too conservative can also be a pitfall. Inflation can erode the purchasing power of your savings, and with increasing life expectancies, your retirement funds need to last longer.
Action Steps
- Rebalance your portfolio. Consult with a financial advisor to find a balance between stocks and bonds that suits your retirement timeline and risk tolerance.
- Consider inflation. Include investments that have the potential to outpace inflation, such as certain types of stocks or real estate investments.
Extreme Couponing and Bargain Hunting
While couponing and hunting for bargains can save money, they often require a significant time investment. As you approach retirement, consider the value of your time. Retirement is an opportunity to enjoy the fruits of your labor, engage in hobbies, travel, or spend time with loved ones.
Action Steps
- Prioritize experiences. Shift your focus from saving every penny to investing in experiences and activities that bring joy and fulfillment.
- Use technology. Take advantage of apps and websites that offer discounts without the time-consuming process of traditional couponing.
Delaying Major Purchases
Many frugal individuals delay major purchases, such as a new car or home repairs, thinking it’s best to wait until absolutely necessary. However, entering retirement with a list of deferred purchases can lead to financial stress. It’s often better to address these needs while you still have a steady income.
Action Steps
- Assess major needs. Make a list of significant purchases or repairs you’ve been putting off and plan to address them before retirement.
- Budget accordingly. Allocate funds for these expenses while you’re still working so they don’t strain your retirement budget.
Skimping on Health and Wellness
One area where frugality can be counterproductive is in matters of health and wellness. As you age, investing in your health becomes increasingly important. Cutting corners on healthcare, nutritious food, or fitness activities can lead to higher medical costs down the line.
Action Steps
- Prioritize healthcare. Don’t delay medical appointments, treatments, or preventive care. Consider a good health insurance plan that covers your needs in retirement.
- Invest in wellness. Allocate a portion of your budget to maintaining a healthy lifestyle, including quality food and regular exercise.
Bottom Line
The years before retirement are a time to reassess your financial habits. While frugality has its place, some practices may not serve you well in retirement.
By adjusting your investment strategies, addressing major purchases before retirement, and investing in your health, you can set the stage for a comfortable retirement. This transition is not just about financial planning but also about preparing for a new lifestyle that balances enjoyment with financial security.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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