Last year, behavioral economist Sarah Newcomb, PhD, explained to Bottom Line Personal readers why smart people routinely make bad financial decisions. The answer: Money mistakes often are driven by potent, underlying emotions that you may not be aware of and that you feel powerless to control.

When you reach retirement age, these same psychological barriers make you susceptible to new kinds of mistakes, says Dr. Newcomb. These mistakes can be especially damaging for older folks on fixed incomes because they can’t make up for their stumbles with a paycheck from work or a higher-paying job.

Good news: If you can identify what is driving your behavior, there are ways to avoid sabotaging yourself. Here are four mistakes and how to fix them…


Mistake: You procrastinate over making a will. About one-third of over-70 households don’t have wills. Leaving your intentions ambiguous can tear families apart, especially if there are complex dynamics involved such as unmarried partners and stepchildren.

Why you do it: The “ostrich effect”—you go to enormous lengths to avoid dealing with financial information that your rational mind knows is important because you expect it to be emotionally painful. It is difficult accepting your own mortality and confronting thorny family issues, so you keep pushing the problem into the future, even if doing that actually compounds your stress and anxiety. Or you wind up cobbling together a will hastily once you get very sick, increasing the likelihood that a disgruntled heir will claim your wishes were made under duress or in a diminished capacity. Ways to fix this…

Use external motivators. Pay a retainer to an estate-planning attorney. You are less likely to cancel or put off an appointment if you’ve written a check. Make yourself accountable—promise your spouse and/or children that you will complete your will by a certain deadline.

Reframe the issue. Example #1: A will isn’t just about your death—it’s about providing guidance and compassion as your family endures a painful period in their lives. Lack of planning can cost your loved ones enormous amounts of money and time. Example: #2: A will is your chance to control your legacy. Clarifying your last wishes can be empowering. If you die without a will (known as dying “intestate”), your estate is distributed according to the probate statutes of the state in which you reside at the time of your death. State succession laws vary widely and may dictate a very different outcome from your wishes and values. To better understand the financial consequences of death without a will in your state, go to


Mistake: You hang on to the family home for too long. There may be estate-planning reasons for not downsizing—perhaps you want to leave your house to heirs. But if you are an empty nester, you can wind up house-rich and cash-poor, overwhelmed by the home’s maintenance costs and taxes. 

Why you do it: Physical and emotional security. Your home is the foundation of your life that no one can take away. It’s also a repository of your memories and family heritage. You may fear that if you downsize, your life will become unstable. Ways to fix this…

Downsize your possessions first. They actually create most of the psychological resistance to moving. Start by sorting through the less emotionally challenging areas first—bathrooms, basements and garages. Consider giving away precious and sentimental pieces that you rarely use now, so others may enjoy them while you are alive.

Re-create the security and spirit of your old home in your new, smaller residence. Turn valued pieces of your old home into a curated art collection. Examples: One man took the antique weathervanes he had on his barn and displayed them on a wall in his new condo. Continue hosting the same traditional holiday meals for your family you always have—but send them off to nearby Airbnbs at the end of the night.


Mistake: You enable adult children with outsized or recurring financial help. Half of parents have dug into their retirement savings or emergency savings to give money to adult children in a pinch. Not only do you risk compromising your own financial future and becoming a burden to your children in your later years, the lack of financial boundaries can prolong adult kids’ inability to stand on their own two feet.

Why you do it: Enabling goes beyond the instinctual need for a parent to shield children from hardships. You may be experiencing a deep sense of loss over a child who has left the nest. Writing a check is a way to stay connected and feel needed. Or you may be feeling guilty for not better preparing your kids to handle their finances. Ways to fix this…

Put on your own oxygen mask first. Look for warning signs that you have crossed the line from protector to enabler and need to say no. These include…

  • You are more mindful of your children’s financial security than your own.
  • You care more than they do about their money problems.
  • You feel angry and resentful when you provide support.

Your new mantra: You are not responsible for how your adult children behave, but you are responsible for how you behave toward them. It’s okay to tell your child, “I love you and support you emotionally. But I’m not comfortable with how you are choosing to spend my money.”

Brainstorm with your children about expectations when they ask for help so that both of your needs are met. Example: Your 28-year-old son was fired from his job. He wants to move in with you so he can save money until he finds another job. You want to show parental compassion without nagging or being manipulated, so you and your son agree to a written contract. He will pay you a nominal monthly rent, show progress in his job search after three months and move out within six months. 

Mistake: You invest too conservatively. Many retirees ratchet down risk, loading up on cash, shorter-term bonds and slow-growing, income-producing stocks. By ignoring exposure to faster-growing stocks that can produce higher long-term performance, the returns you earn may not keep up with inflation. Plus, there’s a likelihood that you will run out of money if you live to a very old age.

Why you do it: Stock market volatility is nerve-wracking. You don’t want to suffer losing large amounts of money you worked so hard for and can’t replenish. Also, it’s very difficult to envision your distant future or living into your 90s, which would necessitate taking more portfolio risk now. Ways to fix this…

Expand your mental time horizon. Most investors are able to think only 10 years into the future before their life choices and possible outcomes grow fuzzy and vague. To make better long-term investment decisions, try this psychological trick—imagine your future self with greater clarity. The more vivid and concrete the details, the more important and real it will feel—and the more likely you’ll be motivated to plan for it accordingly. Example: It’s 20 years from now. Where do you live? How do you spend your afternoons? What is your monthly budget? When you look at your brokerage account, how much money do you see? Sure, any plan you make now may need to be revised, but the process allows you to anchor on ­specific, achievable investment goals.

Estimate your life span like an insurance actuary. Most people base their longevity on how long their parents lived or the average life expectancy in the US (76 years for men, 79 for women). Both methods tend to be very inaccurate and reinforce the notion that your portfolio doesn’t need to last for decades in retirement. Better: Look at actuarial tables of how long someone your age right now is likely to survive. In other words, if you are male and you’ve made it to 75, you’ll likely live to an average of 87…89 if you’re female. Make it to 85, and, on average, you’ll live to 90 if you’re male or 91 if you’re female. Resource: Retirement & Survivors Benefits Life Expectancy calculator at

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