As many Americans are living longer and the costs of healthcare and long-term care continue to increase, many retirees face the possibility of outliving their retirement savings, placing them in a financially stressful situation later in life. Financial products such as annuities and life insurance can help prepare consumes for retirement and decrease their chances of overspending.
However, consumers must also make efforts to spend wisely. To prevent overspending during retirement, Financial Planning suggests clients continue to meet with their financial advisers to make sure they are living within their means throughout retirement. Consumers should also create spending plans to itemize what expenses are necessary and what are luxury costs. This spending plan can then be used to create a budget consumers should follow to avoid overspending.
SmartMoney agrees, consumers should continually question and review their spending habits well into retirement. Many expenses are now able to be automatically deducted from bank accounts without consumers realizing it, which can lead to overspending. The more informed the consumer is regarding where their money is being spent regularly will help them lower expenses to live within their means and avoid financial hardship.
In addition, SmartMoney suggests consumers start the planning early and try to imagine themselves at the retirement age. This will inspire consumers to focus more on retirement savings early, to ensure they have hassle and financial concerns when they are older.