3 Assets Retirees Should Ditch Before They Drain Their Savings

skynesher / Getty Images

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

Most people probably know that it’s better to bring assets into retirement than liabilities — but some assets can become liabilities, and those are the ones you want to avoid once your career winds down.

Retirees should jettison the following assets before they retire or, if they don’t already own them, avoid buying them in their golden years.

Also see six financial traps to avoid at all costs if you’re retiring in 2026.

High-Fee Investments

Investment fees are cracks in nest eggs from which money pours, often too slowly to notice, but with potentially ruinous results, even if they don’t seem like much on paper.  

For example, passively managed, low-cost S&P 500 index exchange-traded funds (ETFs) can have expense ratios as low as 0.03%, or just $3 on every $10,000 invested.

Conversely, the Securities and Exchange Commission outlined just how damaging it can be to instead choose high-fee investments like actively managed funds.

• A seemingly modest 1% fee on a $100,000 investment earning 4% returns adds up to $28,000 during 20 years of retirement. 
• Additionally, if the $28,000 had been invested instead of forfeited to expenses, the retiree could have earned an additional $12,000.
• A total of $100,000 earning 4% becomes $180,000 over 20 years with a 1% fee, $198,000 with a 0.5% fee and nearly $210,00 with a 0.25% fee. 

New Vehicles

It might be tempting for retirees to buy their dream car after clocking out for the last time, but they should consider buying it as they dreamed it a year or two earlier.

According to Kelley Blue Book (KBB), the average new car loses 30% of its value in the first two years and is worth less than half of its original purchase price after five years. Retirees should avoid driving old, unreliable and unsafe beaters — but great cars don’t have to be brand-new. 

KBB stated that it’s reasonable to expect to buy a year-old car that’s essentially as good as new for 80% of its original price. It also suggested retirees buy a used car from the current or previous model year to sidestep depreciation while benefitting from the remaining warranty. 

Timeshares

According to the Federal Trade Commission, timeshare scams are among the most common and costliest swindles targeting people seeking a convenient and cost-effective way to vacation — and they disproportionately make seniors their marks.

That, however, is not the only reason retirees should think twice about buying or keeping timeshares.

Kiplinger warned that those who purchase a timeshare don’t actually purchase land or property, but merely buy a contract that gives them the right to use a property a handful of times per year — and getting out can be a nightmare.

Here are a few things to be aware of:

• Exiting the contract usually means selling it at a loss.
• Many contracts are non-cancelable. 
• Annual maintenance fees can be exorbitant, whether you use the property or not.
• Many people simply give the contract away to cut their losses and avoid the annual costs.
• Timeshare companies are notorious for making it difficult and expensive to exit, and collections practices are often predatory, tying seniors up in expensive ongoing litigation.

Share This Article: