5 Common Holiday Money Traps Retirees Should Avoid
Written by
Nicole Spector
Edited by
Caitlyn Moorhead
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All of us are prone to fall into holiday money traps. How could we not be? Retailers are screaming from the top of their marketing lungs, “Buy, buy, buy!”
‘Tis the season for shopping ’til dropping. And folks aren’t holding back this year. According to the National Retail Federation (NRF), Americans are expected to spend a record-breaking $902 per person, on average, across gifts, food, decorations and other seasonal items.
But retirees might be particularly at risk for falling prey to holiday money traps. Frankly, they have more to lose as most are living on a fixed income and have to stick to a tight budget. What are some common holiday money traps retirees need to be on the lookout for?
Overpaying for Holiday Travel
Travel prices surge during the holidays when demand peaks. Retirees can easily be lured into overpaying for their holiday trips.
“Airfare and accommodation costs soar in December, meaning retirees can easily spend $1,000 or more than they would by booking during off-peak times,” said Rebecca Awram, mortgage advisor at Seniors Lending Centre.
“It’s best to plan ahead and book travel months in advance to secure lower rates,” Awram said. “If possible, consider flying on less popular days, like mid-week or after the holidays, when prices tend to drop. Also, don’t forget to take advantage of any travel rewards or points you’ve accumulated to help offset those costs.”
Caving Under the Enormous Pressure To Spend on Gifts
“Many retirees feel the pressure to give generously to family and friends during the holidays, but this can quickly lead to overspending, especially on a fixed income,” Awram said. “For instance, giving $100 to 10 people adds up to $1,000, which can stretch your budget.”
To avoid this money trap, Awram recommended setting a clear gift budget and sticking to it.
You should also get creative. Think low-cost and free ways you can bring joy to your loved ones.
“Consider more thoughtful, cost-effective alternatives like homemade gifts or offering your time, like babysitting or cooking a special meal,” Awram said. “It’s also helpful to have an open conversation with family about setting gift limits or organizing a Secret Santa, where each person only buys for one other, making it easier to manage holiday expenses.”
Committing To an ‘Inexpensive’ (but Actually Expensive) Subscription Service
Who doesn’t love a new subscription service, be it a streaming platform like Spotify or a gift-box service like Ipsy? These make for great gifts, sure, but committing to them is a big deal, and buyers may find themselves spending way more than they anticipated.
“During the holidays, we all see the monthly gift or streaming offer that feels too good to be true, only $15 a month and I can have that,” said Jed Collins, former NFL fullback and founder at Money Vehicle, an education company working to close the financial literacy gap in the U.S. “Too often we do not consider that these ongoing costs will continue to stack up in retirement and are detrimental to plans. Do not fall into the trap of buying something during the holidays that will impact your cash flow all year.”
Trying To Be Trendy With Gifts for Your Grandkids
OK, this one is sorta funny, but it’s also something to be taken seriously. Sometimes retired grandparents get a little too hung up on trying to be on trend when gifting for their grandkids. This is not only potentially embarrassing for them, it’s also a money trap.
“Retirees today are shopping for their grandchildren and trying to figure out what is ‘cool’ or ‘current.’ Stop!,” Collins said. “You will never be on trend.
“Instead of trying to find the coolest and most expensive new thing, find the experience that they would enjoy the most,” Collins said. “This can be a concert, a destination, a sporting event or a conference but the experience will bring them much more joy than expensive clothes or toys that will never be used.”
Shopping at Retailers With Bad Return Policies
Some retailers, particularly small ones who may not have the financial bandwidth to fund limitless refunds, either don’t accept returns or coerce you into an “exchange.” Be mindful about where you shop, ensuring they have a good return policy.
“Your heart is in the right place, but you just made the wrong decision,” Collins said. “With the digital nature of shopping today it should be easy enough to keep receipts, but do not fall into this holiday trap of return issues — review the policy before you buy it.”
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