5 Retirement Splurges Retirees Regret
Freddie: Today we're diving into the five purchases retirees almost always regret. Like boats.
Clip: Come on baby. Come to Papa. Yes, yes atta boy!
Freddie: RVs.
Dream Homes, and even giving money to their family. If you're near retirement, this episode could save you thousands and a whole lot of stress.
Hello again and welcome to Leibel On Fire. I'm Freddie Bell and with me is an author of Living with Financial Anxiety and also Authenticity. Leibel hello and welcome back sir. Good.
Leibel: How are you doing today?
Freddie: I'm doing well. And I'm really curious about these big purchases like boats. I've been told over time that there are two times when you buy a boat when you're really happy, one is when you buy it and then when you sell it. Yeah. RVs, timeshares shares, dream homes, giving large sums to family members, man, I know about that often lead to regret of retirement.
Can you tell me about that and how that impacts us in retirement?
Leibel: Yeah. So, often what happens is we get to retirement and people have this vision of what they want the retirement to look like. They also, for the first time have access to a large sum of money that wasn't accessible before either because now they're over 59 1/2, and so they no longer have that tax penalty.
Also, they've separated from their employer. So now they can actually tap that money that was in their retirement accounts. If they've sold their home and now they've got a large payout from their home. They're sitting on this money and they're going, all these things that I've held off for the last 20 years of enjoying because I've pinched every penny to get here.
I want to suddenly experience that I want to have my boat. I want to take my road trips. I want to enjoy it while I have my health. I'm all for that, right? I am the first person who will tell you that I think the best investment you can make is in getting experiences. Because having those experiences and enjoying life while you have your youth is how you keep your youth, right?
It's the thing that will keep you alive and happy and healthy. And the longer that you're happy and that you're happy, the longer you're gonna have your health and the less money you'll have to eventually spend on a nursing home. That makes sense. Now, if you pinch every penny. Yeah, you're gonna have lots of money, but guess what?
You're not gonna have your health or your happiness, and I can guarantee you, you will spend it on a nursing home. So, so having said that, what happens is retirees will get to this point, and then kind of like doctors, right? If doctors and athletes are famous for going bankrupt, and the reason for it is that they, they have this long period where they gotta defer their satisfaction, right? And then they get to this point, right? They spend 10 years, 15 years building a career, going to medical school, and then they finally start making money. And then they spend it because they're like, I earned it, right? I spent so much time earning this paycheck, I want to enjoy it.
And then the money just poof, right? Disappears. And so when we get to retirement, we need to really look at the purchases that we wanna make, right? And we gotta think through. Is this a sound purchase? Is this something that helps my financial security or it, hurts my financial security?
And that's short term and long term, right? Because in the short term, most things will not hurt your financial security because you have quite a bit of money, right? You have more than enough to cover your expenses. The question's, what happens in 10 years, in 15, in 20 years? What happens if you live 30 more years. What happens if you are one of the 10% of social security beneficiaries who are over the age of 100? And we're not talking about the Elon Musk figment, imaginary beneficiaries who are 300 years old. We're talking about the real people who are actually receiving checks and who are actually alive and who go on NPR while they're still funded.
And talk about, what it was like to live a hundred years ago. What happens if you become one of those people and the probability of being one of those people increases every single day with medical advances. And so you gotta really look at those purchases from that context.
So if we, kind of look at them, right? It kind of should become self-evident of what the problem is with those purchases. Not to say you shouldn't do it, but it just means make sure that your financial plan can withstand making those investments and that they're
not investments because you're not gonna get your money back because that's what all these things have in common.
Freddie: Those are toys that they're buying. Yeah. So how can you tell the difference between what's really a smart investment in joy and an emotional splurge that you'll regret later? I mean, the dream home, the RVs how can you tell the difference?
Leibel: So let's talk through some of the specifics, right? And then we can talk about the generalities of like, how do you know whether it's right or wrong? And I and so when we talk about specifics like the boat, right? Most people don't wanna buy a boat, but the people who do want a buy a boat,
they justify in their mind the reason why they're purchasing that boat, right? And they are justifying the cost of the boat. They say, oh, well, I'm gonna be on the lake or on the ocean, or whatever every single day of the summer. So I'm gonna get six months out of the year. I'm gonna get my, return on my money.
And so it's really, I'm only paying $10 a day for the boat. And when you look at it right now I'm paying to rent a boat. I'm paying to whatever. So therefore it's worth it, right? 'cause they come up with some kind of math. And so what I would argue is. Take a hard look at that fake math that you're using to justify it and put on some real numbers.
How many days are you actually gonna be on the water? How much is it gonna cost you to store the boat? Where are you gonna store the boat? How much are you gonna have to pay in maintenance? How much are you gonna pay in storage? All those costs that you don't think about. Those are the real things that kind of like sink you.
And then when you talk about the, you people talk about boats or cars as investments. They're not investments, they're depreciating assets, right? You put money in and you never get money back. So the question is when you sell it, if you sold it for zero, if you had to pay someone to take it off your hands, was it still worthwhile?
Could your finances still handle that? And if the answer is yes, then go for it. Go buy your boat, right? As long as your finances can withstand taking that money and lighting it on fire and you would be okay, then go do it. It is not an investment in monetary terms as an investment in your health and wellbeing and as long as you can withstand it, do it.
Freddie: So how do you help your, the people who come to you to separate that emotional from something that is more rational?
Leibel: That is difficult. And that is usually what I get paid to do. People come to me and they outsource the rational thinking because they know, like, they know that they wanna remain
partial. They wanna remain attached to their dream, and they want me to make their dream a reality. And so they come to me and say, I want this. Can I do it right? And or how do I do it? And I'm not one who likes to say no. And I'll explain to them what are the ways, what would it take to make this dream a reality?
Are you okay with the cost to make this a reality? Are you okay with the uncertainty that it brings or the risk that will have to take to make it a reality? Or if it goes wrong, this is what it's gonna look like, right? And we have those conversations, and if they're okay with it, then let's do it if they're not okay with it,
they may go, you know what, it's not really worth me doing it. I'll find some other way to get that reality. But, if it's something that you really want and it's something that'll bring you happiness, then yeah, let's figure out how to make it happen, but do it in a financially responsible way.
So,
Freddie: That's the tough part. Yeah. We're talking about the five big retirement splurges you'll wish you didn't make. So what if somebody comes to you Leibel and they've already made one or more of these purchases and they regret it? What should they do now?
Leibel: The instinct that everyone has when they make one of these decisions and they regret it, is to
undo the decision. That's usually the instinct. They're like, I hate this. I was wrong. I need to hit, control Z. I need to undo it, right? And that usually is the wrong answer. Because when you start doing things again from an emotional standpoint, and you're not focusing on the dollars and cents,
you need to focus on what is the thing that you know, we are here now, right? We made the wrong decision. Maybe it was the wrong decision, but we've decided that this is not the decision we want to make. How do we extract ourself from that decision with the least amount of financial damage?
And that may be holding onto the boat for another year and paying the cost to hold it so that we can sell it at a better point. That might be it. Or it might be selling it at a loss and accepting that loss. Who knows what, you know with everyone, it's a different, the answer is different because everyone's situation is different.
That's where you start doing the hard work of figuring out exactly what the damage is and how do we limit or minimize the damage as much as possible.
Freddie: Interesting. This is not the first time that I'm sure that you've been faced with this, but it something tells me that you've gone through this with a number of different people.
Have you written about this anywhere?
Leibel: You know what, I haven't written about this. This is a good topic to write about. How do you exit bad decisions or at the point where you realize where you have buyer's remorse how do you now undo that?
Freddie: That's a tough one.
Leibel: It is a tough one and there's a lot of personal individual situations there, so I don't know how much we can generalize in a book.
'cause a book you can't be like, it depends, that is not the ending to any book.
Freddie: What are three things we should think about before we say goodbye when we're talking about these big retirement splurges so that we don't regret it later on?
Leibel: I think the first thing that you need to do is look at the
decision objectively. And actually I outlined this in my book, Living With Financial Anxiety the questions that you need to be asking yourself in order to really evaluate the decision, right? Because you gotta look at it from an immediate standpoint, from a long-term standpoint. You need to look at it from the financial impacts you know, of, if everything went right, if everything went wrong.
What are those financial impacts? That's where, a financial advisor does come into play, but guess what? Chat GPT and all these AIs, they can be a good stand in for helping you kind of work through those decisions, especially if you give them the framework that I have in my book, which as I'm talking about this is, I think this might be the next tool that we put on yields 4 U, is a financial decision making AI that, kind of uses our framework for making decisions.
But you gotta really walk through the pros and the cons and weigh them of, long term short term, and I very much have in the Living With Financial Anxiety, that book is all about giving you the framework for making these decisions.
Freddie: And you can still tap into yields4u.com.
That's yields the number four, the letter u.com. And you can start to separate the rational from the delusional, I'll call it that. That's a wrap on the five big retirement splurges that you'll wish that you didn't make. The smartest retirement decisions aren't about the big spending, as we've learned today.
They're about protecting your lifestyle and protecting your peace of mind. And remember, retire smarter. Not just richer.
