![\"Retired](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/03\/iStock-2202636633.jpg\")
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\n iStock \/ Jacob Wackerhausen \/ iStock.com <\/p>\n
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GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines<\/a> and our products and services review methodology<\/a>.<\/p>\n 20 Years Trusted by The average person who\u2019s 65 or older spends $61,432 annually, per the Federal Reserve Bank of St. Louis<\/a>. But for the more frugally minded, the goal is to cut costs to stretch retirement funds as long as possible. <\/p>\n While being budget-conscious has its merits, there are a few common mistakes frugal retirees<\/a> make in an effort to do better financially. Want to make sure you aren\u2019t making those same mistakes? Here are some top things frugal retirees may do wrong with their money<\/a>.<\/p>\n 1. They Believe Frugality Equals Financial Security<\/p>\n Living frugally<\/a> can stretch your funds, but you\u2019ll want to think about your money in the long term.<\/p>\n<\/p>\n \u201cMany [retirees] confuse frugality with protection, when in reality the more frugal you are with your retirement savings, the more aggressive you will be with your savings in the form of required minimum distributions (RMDs),\u201d said D\u2019Andre Clayton, co-founder of Clayton Financial Solutions<\/a>.<\/p>\n If you don\u2019t take your RMDs on time, you could be charged a 25% excise tax on any amounts not distributed. This tax drops to 10% if you make the withdrawal within two years of the required date.<\/p>\n 2. They Skip Insurance<\/p>\n Being too frugal can lead to becoming underinsured. This can hurt retirees in the long run.<\/p>\n \u201cMany times, frugality is coupled with being vastly underinsured and major risks,\u201d Clayton said. \u201cIf your goal is to hoard cash to leave it to your family, insurance is a far more intelligent way of covering risk. Refusing to spend on health and quality of life, like skipping dental visits, etc., will only cost more in the future.\u201d<\/p>\n 3. They\u2019re Too Risk-Averse<\/p>\n Investing<\/a> is a common way to grow and maintain wealth, but it\u2019s not without risk. Some frugal retirees may be so risk-averse that they don\u2019t take chances, which sometimes limits their ability to build financial stability.<\/p>\n One way in which frugal retirees could display their aversion to risk is through not investing. Instead, they may keep their money in a low-interest-bearing account. The stock market is riskier in the short term, but it\u2019s seen overall historical growth and higher returns than savings accounts over time.<\/p>\n 4. They Don\u2019t Invest In Their Home<\/p>\n Some retirees will refuse to invest in their home for the sake of saving money.<\/p>\n \u201cSometimes frugal retirees don\u2019t make repairs to their homes, which can lead to bigger problems. Sometimes they refuse to update their home, which lowers its value when they sell,\u201d said Melanie Musson, a finance expert with Quote.com<\/a>. \u201cLook at the value when spending money. If you maintain your home, you may spend money, but you still retain its value. If you update your home, you can increase its value. It\u2019s not a loss; it\u2019s an investment.\u201d<\/p>\n 5. They\u2019re Afraid of the Wrong Things<\/p>\n![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-20.svg?webp=1&quality=75\"){kind=icon}
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