The 4 Purchases Retirees Regret Most

For years you’ve dreamed about how you’ll spend your retirement, and now it’s finally here. It’s time to make those hopes a reality. If you’re like many retirees, that means finally pulling the trigger on some big-ticket items. But before you do, make sure your potential purchase isn’t on our list below of retirees’ regrets. These four items have the greatest potential to bring you more headaches than joy.  

1. Timeshares

Timeshares always sound like a good deal at first. With an average purchase price of $22,000 – $24,000, the cost may even seem approachable for a lifetime of vacations. But what you may not realize is the upfront cost is just the beginning. You’re also signing up for loads of hidden fees, like maintenance fees and annual fees. And did we mention the blackout dates? Not only will your lifetime of vacations cost more than anticipated, but you probably won’t be able to enjoy your slice of paradise whenever you hoped. 
 
For the uninitiated, timeshares can work in a couple ways. The first is a deeded ownership, where you buy an ownership interest in a property. The second is a lease agreement, where you buy the right to use the property for a specified time, over a duration of a set number of years. With both of these arrangements, timeshare salespeople will likely tell you it’s a good financial investment, or that it will be easy to resell your share should you change your mind. However, timeshares are notoriously hard to resell. Worse, buyers’ remorse is rampant. Roughly 85% of timeshare buyers regret the purchase.

2. Boats

Here’s another purchase that seems fun until the unexpected expenses hit: a boat. Boats are insanely expensive. The average cost of a new boat is $174,000. But let’s be more specific. Maybe you have visions of wakeboarding behind a shiny new MasterCraft. That could set you back more than $200,000. Or maybe you see yourself sipping something cold, cruising on a party barge. Larger, fully decked out models can exceed $50,000, running as high as $100,000 or more. And let’s not forget the taxes on all of these. Yikes. But that’s not where the costs end. There are also dock and storage fees. Not to mention you can’t simply store a boat over winter. You’ve got to winterize it, too. 

If boat ownership is truly calling your name, take some rentals for a spin and pick the brain of any boat-owning friends to get a good picture of all the pros and cons. Anything you can do to try on the boating lifestyle before taking the plunge will be helpful. It could save you from a purchase you’ll later regret.  

3. Loaning Money 

Now, let’s say you didn’t buy that boat. With all the cash you saved, maybe you could loan some to your family member or friend for their new business idea! The tough truth is that if it was a good idea, they would have easily obtained funding through a bank. 

Arrangements like these feel nice at first but carry a high risk of damaging the relationship. One survey found that 27% of people who loaned money to a loved one regretted the decision. If the loan doesn’t get repaid, your monetary loss may be compounded by a loss of relationship, too. While that may be the worst-case scenario, there are still plenty of other undesirable outcomes: misunderstandings, shame, anger, tension, or awkwardness. Gifting the money instead of loaning it might not guard against this either, because let’s face it—expectations about how the money should be used don’t always line up. And let’s not forget there’s always a third person involved in transactions like these, and his name is Uncle Sam. There may be tax implications for you or the recipient, adding an unanticipated cost to your generosity.

4. Buying a Second Home

From a spot at the beach, to an abode near the grandkids, buying a second home is a popular topic in retirement. On the surface, it makes a lot of sense. Who wouldn’t want a private retreat in their happy place? Unfortunately, the reality isn’t always as dreamy. 
 
We all know homeownership is no cake walk, but it can be hard to fathom just how stressful caring for two homes will be (especially when one is located far away). There’s the business of furnishing a second home, with furniture and appliances. Then there are surprise repairs—like a plumbing leak, or a new roof. There’s ongoing maintenance in a second landscape to maintain and windows to clean. Plus, let’s not forget insurance costs, which continue to rise. Worse, insurance costs for a second home tend to be more expensive than your full-time residence; as much as 2-3 times higher by one estimate. Why? Many popular locales for second homes tend to have a higher risk of natural disasters like hurricanes or wildfires. Plus, when a home is unoccupied for large stretches, it’s more likely to be burglarized, vandalized, or damaged by an undetected hazard, such as a leak or fire. 

Yet despite all of this, one of the most underestimated costs has nothing to do with money at all. It’s the emotional cost. You might feel worried you need to spend a certain amount of time at your second home to get your money’s worth out of the investment. You may begin to resent what you’re missing at your primary residence—your friends, social events, and regular routines. Or, if you’re buying a home near grandchildren, you may find they’re so busy with sports and their own social lives that you spend less time together than you’d hoped.  

If you think any of these potential costs could put a damper on your ability to enjoy a second home, remember there’s another great alternative that will still give you more time with the people and places you love. That alternative is renting. Set aside a chunk of money and time each year and find a great long-term rental. You’re not beholden to a certain location and best of all, you can simply leave at the end of the reservation stress-free. 

Avoiding these purchases could be the best steps you can take toward securing a regret-free retirement. For more advice on guarding against common retirement pitfalls, check out our other resources, or meet with one of our retirement planners to create your personalized Roadmap for Retirement.

Disclaimer: Numbers are for illustrative purposes only. Consult a professional for personalized advice.