5 common holiday pay pitfalls that retirees should avoid

We all have a tendency to fall into vacation money falling. How could we not be? Retailers are shouting at the top of their marketing lungs: “Buy, buy, buy!”

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‘Tis the season to shop ’til you drop. And people aren’t holding back this year. According to the National Retail Federation (NRF), Americans are expected to spend an average of a record $902 per person on gifts, food, decorations and other seasonal items.

But retirees in particular may be at risk of falling prey to holiday pay traps. Frankly, they have more to lose because most live on a fixed income and have to stick to a tight budget. What are some common holidays Money Traps Retirees Should Be Aware Of?

Paying too much for holiday travel

Travel prices increase during the holidays, when demand peaks. Retirees can easily be tempted to overpay for their vacation trips.

“Flight and accommodation costs rise in December, meaning retirees can easily spend €1,000 or more than if they booked during off-peak times,” says Rebecca Awram, mortgage adviser at Senior Loan Center.

“It’s best to plan ahead and book trips months in advance to guarantee lower fares,” Awram said. “If possible, consider flying on less popular days, such as mid-week or after the holidays, when prices tend to drop. Also, don’t forget to take advantage of any travel rewards or points you’ve collected to help offset these costs.”

Giving in to the enormous pressure to spend money on gifts

“Many retirees feel pressure to give generously to family and friends during the holidays, but this can quickly lead to overspending, especially if it’s on a fixed income,” says Awram. “For example, if you give 100 euros to 10 people, that amounts to 1,000 euros, which can significantly stretch your budget.”

To avoid this money trap, Awram recommended setting a clear gift budget and sticking to it.

You also have to be creative. Think of cheap and free ways you can bring joy to your loved ones.

“Consider more thoughtful, cost-effective alternatives, such as homemade gifts or volunteering your time, such as babysitting or cooking a special meal,” Awram said. “It’s also helpful to have an open conversation with family about setting gift limits or hosting a Secret Santa, where everyone buys something just for each other, making it easier to manage holiday expenses.”

Commitment to a ‘cheap’ (but actually expensive) subscription service

Who doesn’t love a new subscription service, whether it’s a streaming platform like Spotify or a gift box service like Ipsy? These are certainly great gifts, but they can be a challenge to commit to, and buyers may end up spending a lot more than they expected.

“During the holidays we all see the monthly gift or streaming offer that seems too good to be true, just $15 a month and I can have that,” said Jed Collins, former NFL fullback and founder of Money vehiclean education company committed to closing the financial literacy gap in the US. “Too often we don’t think that these ongoing costs will continue to accumulate after retirement and harm plans. Don’t fall into the trap of buying something during the holidays that will impact your cash flow all year long.”

Trying to be trendy with gifts for your grandchildren

Okay, this one is kind of funny, but it’s also something to take seriously. Sometimes retired grandparents get a little too determined to stay trendy when giving gifts to their grandchildren. Not only is this potentially embarrassing for them, it’s also a money trap.

“Retirees today are shopping for their grandchildren and trying to figure out what is ‘cool’ or ‘current’. Stop!” said Collins. “You will never be trendy.

“Instead of trying to find the coolest and most expensive new thing, find the experience they would enjoy the most,” Collins said. “It could be a concert, a destination, a sporting event or a conference, but the experience will bring them much more joy than expensive clothes or toys that will never be used.”

Shop at retailers with poor return policies

Some retailers, especially small ones, who may not have the financial bandwidth to fund unlimited refunds, won’t accept returns or force you into an “exchange.” Take into account where you shop and make sure they have a good return policy.

“Your heart is in the right place, but you just made the wrong decision,” Collins said. “With the digital nature of shopping today, it should be easy enough to keep receipts, but don’t fall into the holiday trap of return issues: check the policy before you buy.”

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