Overthinking About Children’s Inheritance Is One Of The Worst Money Mistakes Most 50-Year-Olds Still Make
50 is no longer the age to think about your children’s economic life
Most parents don’t hesitate to play like the richest guys in the city when it comes to giving their sons something.
Even knowing all the risks that this brings later on.
50 and 60 are the ages when children become independent and start their own families.
The worst mistake parents make at this age is to use part of their retirement money to help their spoiled children.
Given the closeness of retirement, it is impossible to recover this capital again.
In these decisions, people of this age do not think with their minds, but with their hearts. Which by the way is very fragile.
Another economic mistake made by people at 50 is:
Having a house that doesn’t meet your needs
A house is a family’s biggest investment, and most of them will end up paying for it by the age of 60.
The problem is that, in their younger years, not everyone still needs a six-bedroom house that is designed more for a family than for a couple with older children who have fled the nest.
Even if the house is already paid for and there is no mortgage to pay, a bigger house will always mean more expenses.
To begin with, the expenses for energy and conservation will be higher, but you will also pay more taxes.
We keep the family home for sentimental reasons, for all that we have lived in it, and in case the children need it at some point, something that in the end rarely happens.
To this is added the hereditary component, since the house is the main asset that passes from parents to children.
In that sense, it is not always necessary to sell the house to get a financial loan. Transferring it can have a high tax cost in the form of sales taxes.
An alternative solution is to rent the six-bedroom house and go rent one that better suits your current needs.
Among the advantages of betting on renting is the freedom to live wherever you want.
Use that capital to live downtown, in the country, or wherever you want.
In addition, it is very easy for what you charge to rent your home to exceed the price you pay to live in rent, with which you will have found an income that supplements your pension.
Housing can be a stream of income for savings in old age.
If you are able to plan and don’t mind moving, you can stretch your retirement much further than you think.
Losing a lot of money by recovering your pension plan
If like most people, you have invested through a private pension plan, you will be able to get your money back when you retire.
At that point, you will have to choose between collecting a monthly, quarterly, or semi-annual income or recovering all the money at once in the form of capital.
The latter option may sound very attractive, but it is also a source of disappointment.
To begin with, you must take into account that you will pay more taxes. And to continue, it is easier for you to waste the money you have accumulated ahead of time.
Plan clearly how you will collect your retirement plan and when you will pay less taxes or you will see how the Treasury takes much of your retirement savings.
Also, remember that you are not required to get your money back as soon as you retire. But it is up to you to choose when to start receiving the plan or any other investment you have.
You can get your pension plan back in the form of capital or as income, and getting the formula right will make you pay more or less tax.
Another mistake people make at retirement age is:
Continue risking part of their assets
If at 50 it was time to be more conservative, after 60 the risk to be taken should be minimal or zero.
If you have more than 10% of your savings in stocks, you are risking too much.
If you have a portion in crypto, then you are the only person in the world at that age doing that.
Bet on assets with lower volatility and less chance of crashes, even at the cost of a smaller profit.
Thinking too much about what to leave children is too much drama
In the 1960s, it was common to take stock of possessions and think about what will be left for your children.
But it’s one thing to take the time to organize your inheritance, and quite another to obsess about leaving the largest possible estate to your children.
Likewise, spending like there is no tomorrow is not a good idea either.
The reality is that no one knows for sure when their time will come and how far you will need to stretch your retirement income, so it is best to be cautious.