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Big Ticket Purchases Can Sink Your Retirement…

Big Ticket Purchases Can Sink Your Retirement…

October 18, 2023

You’ve worked hard, you’ve provided for your family, you’ve educated your children, you’ve been disciplined in saving for retirement. The stock market has had an unprecedented run. Isn’t it time for a little fun…

It may be tempting to buy that second home by the water or that beautiful sailboat, but such big-ticket purchases can end up putting an unnecessary dent in your retirement plan, especially if they haven’t been part of that plan. You don’t want such a purchase to put you at risk of falling short of what you’ll need to live comfortably in retirement.

For instance, the purchase of a second home could take away from money that could be invested elsewhere in an asset that’s more liquid than real estate. And the return on a more liquid investment may well exceed what could be earned on a second home if you were to rent it. Should you not be buying it as a rental or investment property, then it earns nothing.

There is the rationale that the property will appreciate, so they can monetize or liquidate the investment if they need to. But the success of that strategy is very dependent on the real estate and mortgage markets.

The purchase of a boat is another example of a big-ticket transaction that can significantly reduce a retirement nest egg

A $50,000 boat may cost $15,000 to $25,000 per year to keep up with insurance, storage, and maintenance.

As tempting as it is when all is going well to put your current lifestyle choices ahead of your future retirement needs, it is important to look at all aspects of the decision.

Your One Financial Services advisor is always available to assist you in evaluating the long-term financial impact of big-ticket purchases. Our highly experienced team is here to provide analysis and support for all your financial decisions.