After 40 – 50 years of working, you’ve earned the right to splurge on whatever you want. Perhaps you dream of relaxing on white sands, sipping margaritas after heading south for winter.
Whatever your retirement goals and dreams, it helps to plan what you intend to spend your money on. Consider whether you’re creating beautiful memories, building friendships, or buying short-term joy.
We’ve picked seven great splurges that will improve the quality of your life and seven that might leave you feeling deflated with a smaller bank balance.
1. Take up a Hobby
Spending money on a new hobby is a great splurge. It gets you out of the house, and you can meet new people and learn new skills. Perhaps you want to learn how to create a masterpiece oil painting or take up golfing, which can be expensive.
Before starting, consider the setup costs and what you want to gain from the hobby.
2. Winter in the South
If your winters are cold, why not consider heading south during the coldest months? If you can afford a significant splurge and find a vacation you love, you might consider buying a second home in the South.
Arrange an appointment with your financial advisor to weigh the pros and cons.
3. Experiences Over “Stuff”
Material purchases provide a short-term dopamine boost, but the joy isn’t sustainable. You won’t get lasting memories from buying a designer dress or an expensive car.
Instead of splurging on purchases, seek experiences that will create lasting memories. Book a concert, head to a new destination, take up a hobby, or share special moments with a loved one.
4. Adopting a Pet
If you love animals, few things compare to sharing your life with a loving pet, especially if you live alone. When you retire, you have the time to devote to a pet, such as walking your dog. It gets you out of the house, exercising, meeting other dog owners and making new friendships.
If you prefer cats, you’ll still benefit from having a fluffy, affectionate pet in your life.
5. Visiting Loved Ones
Retirees have a flexible schedule, and there’s nothing that makes some people happier than spending quality time with loved ones. If your children have moved across the country, it’s the perfect splurge to spend a few weeks or months visiting them.
Visiting loved ones gives you beautiful memories, and you get to experience new places.
6. Fitness and Well-Being
Investing in your fitness and well-being is a fantastic splurge that can help keep you healthy and mobile. You might want to splurge on a gym membership or hire a personal trainer, so budget for what you can comfortably afford.
Staying fit improves your strength and balance, which can help avoid falls in later life.
7. High-Quality Bedding
Sleep deprivation can cause significant health issues. Good sleep is essential for retirees’ well-being, so investing in the best quality bedding is a splurge you will not regret.
Purchase a comfortable, supportive mattress and consider getting a larger bed, like a super king. Buy pillows, sheets or duvet covers made with luxury materials that feel good against your skin.
The following splurges are those that many retirees say they regret.
1. Bankrolling Adult Children
Most parents want to support their children, but bankrolling your adult child if they hit a financial crisis can lead to you running out of money later on. Sometimes, children aren’t aware that their parents may not be independently wealthy.
Financial advisors suggest discussing your finances with your adult children so they understand your retirement fund is not bottomless.
2. Going On Exotic Vacations
Taking exotic vacations is expensive. A common misconception for retirees is that they have more money than they think.
Financial advisors suggest that retirees spend at least one year adjusting to managing their expenses, planning a budget and getting a feel for how much they can comfortably budget for spending on vacations.
3. Withdrawing Too Much Money Too Fast
You’ve built a healthy retirement fund, which seems like a lot of money. Splurging the cash early in retirement is a common issue for many new retirees. They don’t budget for emergencies like property repairs, utility bill increases, inflation, etc.
Most of us aren’t financial experts. A chat with a trusted financial advisor can help you create a long-term plan based on a monthly budget, investments, and tax requirements.
4. Taking on New Debt
The last thing you want to do in retirement is take on more debt. The way to make the most of your retirement fund is to be debt-free. Before splurging on expensive luxuries like a yacht, beach house or flash car, ensure they are affordable.
Think about whether a luxury splurge could create an income. For instance, before buying a beach house, consider whether you’d be happy renting it to holidaymakers when you aren’t using it.
5. Starting a Business
Many retirees start a new business using their nest egg. They imagine it’s a way to keep them busy and make a healthy income, but a new business venture can become a money pit.
Remember, there’s no guarantee a business will succeed. It takes time, money, energy and commitment. It can quickly drain your retirement fund, which you cannot replenish.
6. Renovating a Home
It might make sense to renovate your home to live independently, but you may spend money on improvements you didn’t plan. Watch any renovation program on TV, and you’ll see that the renovators exceed their budget 99% of the time.
Buying a property that better suits your retirement needs could be more cost-effective in the long run.
7. Investing Too Aggressively
Financial experts advise against risking your retirement funds with aggressive investing. The problem is that some high-risk investments pay off handsomely, which makes people believe it can work for them.
Instead of seeking investments with high-profit potential, consider more conservative investment options. That way, you avoid the “boom and bust” scenario of aggressive investing.
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