The Social Security program is crucial for retirees in the United States. As reported by the Social Security Administration, more than half of the seniors aged 65 and older depend on their Social Security checks to cover around 50% of their income, and 25% depend on it to cover around 90% of their family income.
Add the fact that the median monthly retirement benefit has reached around $1.711 in November 2023, retirees have to make quite the savings and compromises to make sure they don’t run out of money by the end of the month. Some, however, completely and irresponsibly waste their money on all sorts of things.
”For some people, that might be enjoying a night at the casino, cracking open a bottle of wine or smoking a fine cigar,” says Ken Moraif, a certified financial planner and senior advisor at Money Matters. “Others might get more enjoyment from travel or lavishing their grandchildren with gifts.”
If you’re in the same situation or don’t want to end up broke, read on to find out what not to do to waste your social security checks.
It might be time to cut some things off your spending list. Stop overspending and start saving!
Ways People Are Irresponsibly Spending Their Social Security Checks:
Spending too much on restaurants
Retirement comes with many perks, one of the most important ones being the free time to do whatever you want, without worrying about a tight schedule. “Slapped” with all this extra time, many retirees try to occupy it by going out more.
While this is not necessarily a bad thing, it’s not healthy for your finances to start a pilgrimage to all the new (and old) restaurants in the city. Eating out on a constant basis is not cheap for anyone, especially not for retirees living on an average Social Security check of $1,790.
The opposite situation, that of isolating yourself inside your house is also not a good idea. Just maintain a certain balance between entertainment and finances, so that you stay within your budget but still enjoy life in retirement. It is possible!
Overspending for others
Offering presents to others is a beautiful and rewarding act. Retirees might also find themselves tempted to buy all sorts of nice things for their family members, charity groups or close friends. As nice as gifting might be, don’t do it at the cost of your own financial stability.
If you’re having trouble managing your money and find yourself in financial distress every single month, gifts and charity can wait. If you’re on a tight budget, you can still make other people happy by volunteering instead of overspending.
Buying a brand-new car
New cars do not come cheap for anyone. The average price of most new models floats somewhere around $50,000, which is usually far more than what the average retiree can afford from their measly social security benefits. And that’s not even the worst part. The worst thing about purchasing a new car is the huge price depreciation in the very first years.
According to financial experts, a car’s price can depreciate by about 20 percent in the first year after the purchase. In the first five years, your brand-new car will lose 60 percent of its purchase value! If you want to buy a new car, opt for a certified pre-owned vehicle. The loss in value over time will definitely not be as big.
Paying too much for your house
Many retirees are no longer living with their children, which means they have spare rooms that no one is using. However, the mortgage still needs to be paid even if your giant home is no longer fully occupied.
If you’re an empty nester, wasting your social security check on too much house is not the best idea. Just as buying a big house in retirement when it’s only you and your spouse is also a huge blow to your budget.
If you’ve managed to pay off your mortgage, turn your big house into a source of income by renting out one of the spare rooms; or you could just move to a smaller place and enjoy all the money you’ve saved to secure your retirement fund.
Overindulging in conveniences
Retirement might come with its benefits, but there are also various challenges that seniors have to overcome as best as possible.
Restricted mobility, lack of transportation and the like are some of the situations that retirees have to deal with in retirement. And what better way to solve such problems than opting for delivery services for food and shopping, or streaming services for entertainment? However, as convenient as these services might be, they can also become quite costly.
If food delivery is your only option, then you might have to find certain categories of items to cut back on. But if you’re indulging in conveniences just because they’re there, then you’re wasting a big part of your social security benefits that could be used for more important things.
With all the extra time on their hands, many retirees find it fun to start gambling. Not to mention that casinos use all sorts of ads and incentives to attract older gamblers and make them spend their monthly Social Security checks.
Don’t let yourself be fooled by free transportation, free lunches, and other seemingly appealing perks. At the end of the day, you’ll be paying for every single one of them, and then some.
If you’re living off your Social Security benefits, gambling is not the best way to spend your free time and money. There are other more interesting activities you could do than losing your entire social security check in one go.
Sadly, for most seniors, aging comes with a lot of health issues. According to the American Pharmacist Association, most seniors need at least one prescription medication. The place where you buy such prescriptions can make a huge difference in terms of price.
If you’re not paying attention, you could end up paying a serious amount of money on prescriptions alone. When you’re on a fixed income, every penny counts. To make sure you’re not wasting your social security money on overpriced medication, make sure your insurance covers your prescription. If that’s not the case, shop around until you find the best price; opting for generics instead of brands is also an efficient way to save some money.