I’m a Bank Teller: Here Are 6 Mistakes I See Retirees Making

03/05/2024

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Working as a bank teller, Rachael P. gets a front-row seat to people’s financial lives and habits. She’s seen it all — from savvy savers to careless spenders. But when it comes to retirees, there are some all too common mistakes she’s noticed over her 15 years behind the counter. Here are five blunders she cautions against if you want to make your retirement fund last.

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Misjudging How Much They’ll Need

“You’d be amazed how many retirees come in thinking their modest savings will be enough to live on for 20-30 years,” Rachael shared. “But they haven’t really accounted for inflation, increasing healthcare costs, or just how long they may live in 2024 — and beyond.”

Basic underestimating is one of the biggest pitfalls, she said. She always reminds potential retirees to not only factor in basic living expenses, but also budget for travel, hobbies, helping out grandkids and kids, and any outstanding debts. Speaking of which…

Carrying Too Much Debt Into Retirement

“Look, I get it — life happens,” Rachael said. “But walking into retirement still paying a mortgage, with lingering credit card balances, old student loans, or car payments can really put a strain on those retirement funds.”

She’s seen way too many folks hit retirement age and keep racking up interest charges on unpaid balances.

“That’s a huge drain on what should be getting socked away for the future,” she stated.

Reining in debt before calling it a career is often a necessary part of retirement planning, according to Rachael.

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Withdrawing From Accounts Too Soon

This one really gets under her skin.

“You know the rules — no dipping into retirement funds until you’re 59 and a half!” Rachael exclaimed. “Still, every week I see people trying to cash out 401(k)s or IRAs early and having to pay excessive penalties and taxes as a result.”

Unless it’s an absolute emergency, leaving those accounts untouched until they’re of age is crucial, she said. She can’t tell you how many people have made that mistake and depleted what could have been a decent nest egg all because they were impatient.

Forgetting To Update Beneficiaries

“This is something easy to overlook but can have major consequences,” Rachael stated.

Some retirees pop in wanting to change beneficiaries, only to find they never updated them after a divorce, death in the family or another life event decades ago.

Not keeping beneficiaries current could mean longstanding retirement accounts get held up or, worse, end up with the wrong people when you’re gone, she explained. It’s a headache she’s seen far too many people have to sort through in difficult times.

Falling for Scams

Sadly, con artists love to target retirees and the elderly, Rachael shared. And having worked the bank window for so long, she can’t tell you how many times she’s had to gently warn someone that the “investment opportunity” they’re wanting to fund is likely too good to be true.

“Just last week, an older couple insisted on withdrawing a huge sum to put into some cryptocurrency scheme promising unrealistic returns,” Rachael recounted. “The red flags were all over — evasive email communications, high pressure tactics, a slick-looking but suspect website.”

Rachael has some advice for retirees: Anything seeking upfront cash, pushing you to act right away or guaranteeing wild profits should be vetted thoroughly. She advises bringing in a trusted financial advisor or even a younger loved one to make sure everything is legitimate.

Ignoring Required Minimum Distributions

“Another issue I regularly see is retirees failing to take their required minimum distributions (RMDs) from retirement accounts once they hit age 72,” Rachael said. “These are mandatory withdrawals the IRS forces you to take from 401(k)s, IRAs and other tax-deferred accounts.”

She explained that if you miss taking an RMD, you can face a hefty penalty (a percentage of the amount you didn’t withdraw in time).

“That’s a hefty price to pay, so I always urge retirees to stay on top of their RMD schedule,” Rachael stated.

Those are just a few of the more glaring mistakes Rachael has seen retirees make regarding their money and future. The broader lesson? Have a rock-solid plan, a mindset of preserving what you’ve acquired and maybe an open ear for a level-headed bank teller’s advice every once in a while, she said. Avoiding these pitfalls can make for smoother sailing in your golden years.