If it’s your first year out of the workforce, the holidays may be different this year. Thanks to reduced obligations and increased free time, retirees may be better able to savor the season.
“We find that retirees are often more relaxed during the holidays,” says Kyle Quinn, managing partner with Mariner Wealth Advisors in San Diego. “Without the stress of work, combined with the hustle and bustle of the holidays, it’s easier to focus on family.”
However, seniors need to be wary of common pitfalls that can trip up holiday celebrations later in life, not the least of which is overspending.
[See: 25 Ways to Enjoy Retirement on a Reduced Income.]
Consider Scaling Back Gift-Giving
It’s a common mistake for seniors to continue lavishing gifts on their grandchildren after retirement. “I’ve seen some people spend such an enormous amount on gifts for the grandkids,” says Ed Kohlhepp, CEO of Kohlhepp Investment Advisors in Doylestown, Pennsylvania.
While retirees with plenty in savings think they can afford to splurge, many don’t take into consideration how it will affect the long-term value of their portfolio. “They think they can spend the same amount in retirement [as before], especially since they have no concept of how long they will live,” Kohlhepp says. However, living to age 90 is a real possibility for many people, and Kohlhepp says his firm plans for clients to reach 100.
Lack of budgeting is one part of the overspending problem. The other part is a lack of willpower. “Even if they go into it with the best of intentions, it’s easy to overspend,” says Laura Adams, host of the Money Girl Podcast and U.S. News contributor.
One way to limit spending is to limit gift-giving. Some families may only give presents to children or agree to draw names out of a hat so they are only buying one gift. These methods can be particularly helpful for seniors with large families who might otherwise feel as though they have to buy for a dozen or more children and grandchildren each year.
[See: 10 Tax Breaks for People Over 50.]
Factor Travel and Health Into Planning
Gifts aren’t the only thing that might change after retirement. Travel may need to be adjusted. “A lot of folks don’t like to travel as much,” Adams says, particularly as they get older or if their health declines. “They prefer for the family to come to them.”
Asking adult children to bring their kids to visit senior grandparents can prove problematic in some families, though. If grandparents have retired to another state, families could incur significant expenses traveling to it. What’s more, some parents may dig in their heels at the idea of disrupting home traditions to celebrate elsewhere. Adams recommends seniors be upfront and transparent about their health and financial concerns to smooth the way to any major changes in family celebrations.
Even for seniors who are still interested and able to celebrate at their children’s house, holiday travel can look different after retirement. “Driving 10 to 15 hours might be doable when you’re younger,” Quinn says, “but the older we get, the less appealing it is.”
That means seniors may need to budget more for airfare. They may also need to rent a vehicle or book extra nights in a hotel if they want to return home at a more leisurely pace. Quinn says he works with clients to not only factor in the actual travel expenses, but consider extras such as pet boarding and dining out.
Keep Kids in the Loop About Changes
Communication is key to keeping the holidays a joyful time in the face of changing traditions. “I find it helpful for our clients to talk with the adult children prior to the holidays and have them set the stage in their respective homes,” Quinn says. With December upon us, that means seniors should be having these conversations now.
“Grandparents anticipate they will get grief,” Kohlhepp says. However, that isn’t always the case. What’s more, some children may appreciate having the opportunity to make suggestions that can save their parents time and money.
[See: 10 Financial Perks of Getting Older.]
Adams notes that cash is usually a welcome gift for teens and young adults as they prepare for college or independent living. “A lot of [adult children] are uncomfortable asking for cash for grandkids,” she says. If a grandparent brings up the topic of gifts, it can open the door for children to suggest contributions to a college savings plan or a cash gift for another reason.
For many new retirees, this December will be the first time they can slow down and enjoy special celebrations without stressing about what will be waiting on their desk when they get back to work. With a little advance budgeting and some honest conversations with family, the stage will be set for this to be the meaningful holiday season you’ve envisioned.
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What the Holidays Look Like After Retirement originally appeared on usnews.com
