Question for this week: Should I continue to save money once I am retired?
While it obviously depends on your specific situation, my answer is generally,
“No, you don’t. You save money in order to retire comfortably. Once you retire, your saving days are done. It’s time to use the money.”
Mostly the people that seek out my services are the people who listened to their parents. They worked hard, saved money, and lived below their means. Believe it or not, one of the most pervasive problems is the fact that these same prudent and responsible people never stop saving.
Look at my grandfather. Papa died a couple of years ago at age 89 with $900,000 in his bank account. He was an elementary school teacher who never made more than $25,000 a year. He and my Nana always acted like the next Great Depression was right around the corner. If toilet paper was on sale they would buy ten cases and hoard them in their basement.
We looked at his bank records after he passed away, and we realized that he had saved money every month of his entire life.
Does this make sense to you?
Money, you see, is just a tool. Money, by itself, doesn’t mean anything. Only when you use the money do you release its potential and value.
So, if you are on a “fixed income” in retirement and you find that you have extra money to save each month, my advice would be- use it! Buy your granddaughter a new computer, give money to the church, spend a month in New Zealand, remodel your kitchen, eat out at fancy restaurants- the world is your oyster!
If you are worried about medical expenses- remember that as long as you have Medicare and a Medicare supplement that the annual maximum out-of-pocket cost is quite low. If you get cancer and have $500,000 in medical bills, you will be responsible for less than $10,000. If you are worried about going to a nursing home- you need to realize that the vast majority of people live for less than a year once entering a nursing facility. These fears are completely overblown.
The most recent government study concerning this subject shows a very clear pattern. On average, retirees are dying with nearly twice as much money in savings as they had on the day they retired.
I’m drawing a line in the sand. There is no way that this is going to happen to you on my watch. You are going to get the most life from your money. It doesn’t especially matter how much is left in your savings account when you die. What matters is what you do with it in the meantime.