Okay, the biggest and most common mistake is that people don’t start planning for retirement early enough. Having said that, the most common mistakes made by those already retired or ready to retire are summarized below from an article by Michele Lerner for Investopedia.
- Using credit cards to supplement income – according to Bankrate.com, credit card debt is growing fastest among older people. Avoid building up credit card debt for everyday living expenses.
- Not choosing the right credit card – Some seniors have been burned by cards with a low short-term rate followed by a high rate, so be sure to read the fine print and know how long the interest rate will last. Also, try to avoid paying an annual fee. Find a card with low interest rates and no annual fees, such as UKFCU’s Platinum Visa card.
- Picking a card for its rewards – Make sure the rewards program fits your needs.
- Allowing your credit score to slip – a lower credit score could mean higher interest rates for credit cards and other loans, should you need them.
- Co-signing a loan – if someone needs to have a co-signer, that means the financial institution knows they are a high risk for defaulting on a loan.
- Not making a debt plan – While retiring debt-free is a worthy goal, retirees with debt need to make sure they have a plan for their future.
The bottom line
Retirees on a fixed income should carefully evaluate how credit can fit into their overall financial plan. Those who cannot afford their day-to-day expenses now should try to avoid taking on additional debt. They should instead consider a new spending plan.
This article was reported by Michele Lerner for Investopedia.
For the full article, click here.
And for those needing help planning for retirement or maximizing their retirement, we have our Investment Services representative. Contact us at (859) 264-4806 for a free retirement evaluation.