For many federal workers, the first phase of retirement turns out to be what experts call the Go-Go years. This is when you spend the most money embracing your free time and enjoying the fruits of your labor.
From purchasing big-ticket items like a sailboat or RV, to eating out at pricey restaurants every weekend and booking expensive vacations, it seems like the sky’s the limit when you have all that cash in your nest egg. However, if you’re overspending in the Go-Go years of retirement you’re risking your financial security in your later years.
Are Retirees Spending More Than They Expected?
The short answer: yes. According to the 2023 Retirement Confidence Survey conducted by the Employee Benefit Research Institute, 30% of retirees surveyed say they’re spending “somewhat more” on their overall expenses than they expected while 18% report the cost of their overall expenses are “much higher than expected.”
Healthcare and dental expenses top the list of higher-than-expected expenses while the cost of housing takes second place. Add to this, 29% of retired respondents report they’re paying more than they expected on travel and entertainment. Of course, inflation was also higher than expected in the past few years but the biggest reason retirees overspend is the lack of a strategic plan.
“When you think about it, you can test drive virtually any lifestyle changes you’ve considered by renting before you buy.”
Wait 6 Months Or More Before Making Big Lifestyle Changes
Try to stick to your usual lifestyle in terms of entertainment and other diversions. This gives you time to think twice about buying your dream vacation home or pricey toys like a boat to sail the Caribbean or an RV for a cross-country trip.
When you think about it, you can test drive virtually any lifestyle changes you’ve considered by renting before you buy. It’s also a good idea to space out your bucket-list adventures to avoid pulling a large amount out of your TSP and other investments in your first year of retirement.
Work With A Qualified Retirement Planning Advisor
When you work with an FRC® trained advisor who understands your federal benefits, they can help you analyze the pros and cons of your retirement-planning decisions including:
- Working until age 62 to get the FERS 10% Bonus.
- Timing when to file for Social Security to maximize your benefit.
- The ins and outs of choosing a FERS survivor benefit.
- Plus decisions about annuities, long-term care insurance and more.
When you can see the big financial picture of your retirement, you can avoid overspending and putting your golden years at risk.
Source: https://www.ebri.org/retirement/retirement-confidence-survey
