What This Actually Means for Seniors
The study’s message is clear: managing your finances in retirement is a form of self-care, as important as eating well or staying active. Financial stability creates a foundation of security that allows you to thrive. When that foundation feels shaky, it can affect your health in very real ways.
The researchers identified nine common financial habits that were most strongly associated with this slow drain on savings and the resulting health impacts. Let’s look at each one, not with judgment, but with gentle awareness. Recognizing these patterns is the first step toward feeling more in control.
1. Overlooking “Lifestyle Creep”
Lifestyle creep happens when your spending gradually increases as you become more comfortable in retirement, without you really noticing. A dinner out once a month becomes once a week. The basic cable package gets upgraded to the premium one. These small changes feel earned and deserved, but they add up. Over a year, an extra $150 a month in small luxuries becomes an $1,800 expense. This is a classic example of hidden expenses that can strain a fixed income, causing underlying stress when the credit card bill arrives.
2. Underestimating Healthcare Costs
Even with Medicare, out-of-pocket healthcare costs are one of the biggest financial surprises for retirees. The study noted that many participants failed to budget for copays, deductibles, dental, vision, and hearing aids—none of which are fully covered by basic Medicare. This oversight is one of the most significant financial mistakes draining senior savings. When an unexpected medical bill arrives, it can trigger immense anxiety, leading some to drain emergency funds or even avoid follow-up appointments, which can worsen health outcomes.
3. Keeping Too Much in Cash
It feels safe to have a large sum of money in a checking or savings account. But in reality, it’s a silent drain. Inflation—the rate at which the cost of living increases—eats away at the purchasing power of your cash. If inflation is 3%, your cash is effectively losing 3% of its value each year. While you need some liquid cash for emergencies, letting too much sit idle instead of in a properly managed, low-risk investment vehicle means your savings aren’t keeping pace with rising costs, forcing you to draw down your principal faster than planned.
4. Falling for Sophisticated Scams
Today’s scams are incredibly sophisticated and often target older adults. They aren’t just obvious emails from foreign princes. They are convincing calls from someone pretending to be from the IRS, Medicare, or even your own grandchild. The financial loss from a scam is devastating, but the report highlighted the secondary health impact: the feelings of shame, violation, and stress can lead to depression and a reluctance to trust others, causing social isolation—another major health risk for seniors.
5. Mismanaging Required Minimum Distributions (RMDs)
Once you reach a certain age (currently 73 for most), the IRS requires you to withdraw a minimum amount from your traditional retirement accounts (like a 401(k) or IRA) each year. Forgetting to take your RMD or taking the wrong amount can result in a steep tax penalty—25% of the amount you failed to withdraw. This is a purely avoidable financial loss that can cause a significant and stressful hit to your savings. It’s one of the most technical but common bad money habits after 60 simply due to oversight.
6. Paying for Unused Subscriptions and Memberships
The “subscription economy” has crept into everyone’s lives. That streaming service you signed up for to watch one show, the magazine you no longer read, the gym membership you haven’t used in six months—they all add up. A monthly “auto-pay” of $15 here and $10 there can easily become hundreds of dollars a year. The study found that auditing and canceling these small, recurring charges was a simple way to reduce financial outflow and the accompanying mental clutter.
7. The “Bank of Mom and Dad” Stays Open Too Long
It is a natural and loving instinct to want to help your adult children and grandchildren. However, providing regular, significant financial support without a clear plan can jeopardize your own security. Many retirees in the study were giving away money they couldn’t truly afford to part with, leaving themselves vulnerable. This creates a difficult emotional and financial bind, where the stress of worrying about your own future conflicts with the desire to help your family. Establishing boundaries is crucial for your long-term senior money management.
8. Not Re-evaluating Insurance Coverage
Your insurance needs change dramatically after you retire. You may no longer need a large life insurance policy if your mortgage is paid off and your children are independent. You might be driving less, which could qualify you for a lower auto insurance premium. Continuing to pay for coverage you no longer need is like throwing money away. A yearly review of your home, auto, and life insurance policies can often free up hundreds, if not thousands, of dollars.
9. Delaying Long-Term Care Planning
This is the elephant in the room for many. The possibility of needing long-term care—whether at home or in a facility—is a major source of anxiety. Ignoring it doesn’t make it go away. In fact, the study found that the *worry* about a future long-term care event was a significant health stressor. Failing to have a plan can mean that if the need arises, you are forced to make rapid, emotional decisions that can deplete a lifetime of savings in a shockingly short time. Creating a plan, even a simple one, provides an enormous sense of control and relief.
