While many people commit financial blunders throughout their lifetime, the impact of these errors tends to increase with age. Millennials and those in Generation Z are afforded much more time to learn from and correct their mistakes. On the other hand, individuals who are retired, or close to retiring, don’t have much wiggle room for course corrections. Financial mistakes at this stage of life can negatively impact how they spend their rest of their days.

Below are nine financial mistakes that retirees can’t afford to make.

1. Not Having a Financial Plan and Budget

Retirement is a life-changing event that should be strategically planned out. “Retirees should have a plan for how they will live and handle finances in retirement - and update that plan at least annually,” advises Kevin Gallegos, vice president of Phoenix operations with Freedom Financial Network. Gallegos tells Investopedia that this includes evaluating their assets and debts. And he recommends using one of the many retirement calculators available online to determine how much savings will be needed for retirement.

2. Paying Yourself Second

At this stage of life, seniors who are no longer working have to consider their needs first. “Many retirees still give too much of their own money away to kids and grandkids,” says Jake Loescher, a Rockford, Illinois-based financial advisor from Savant Capital Management. Loescher says this is an important and personal decision, but it often comes at the expense of their livelihood when retirees don’t know how much they can afford to give to others. He tells Investopedia this situation is similar to being a passenger on a plane: put the oxygen mask on yourself before you attempt to help others.

3. Financing College

One of the ways retirees overextend themselves is by helping their grandkids pay for college, but Josh Tschirgi, a financial advisor at Portland, Oregon-based Somerset Wealth Strategies, tells Investopedia that this is a move that can wreak havoc on their financial future. “If you have grandchildren, don’t go overboard and substantially help fund their college education unless you are extremely well-to-do,” warns Tschirgi. Since student financing is available at low terms, and college graduates have decades of working years ahead of them, Tschirgi says students have plenty of time to pay off their student loans.

4. Avoiding Estate Plans

It may be an uncomfortable topic, but retirees shouldn’t avoid completing basic estate documents. “Simple things like powers of attorney for healthcare and property are often ‘fill-in-the-blank,’ and would be critical documents should one spouse fall ill or incapacitated,” says Loescher. Also, he says that these documents provide direction to loved ones regarding how the deceased person’s property should be distributed and managed. And this can decrease, if not eliminate, confusion and possible arguments among survivors.

5. Failing to Purchase Health Insurance

Seniors are not eligible for Medicare until the age of 65, and if they retire before then, they’ll need to purchase health insurance, warns Tschirgi, “This is of the worst mistakes possible. If a retiree faces a major health issue, they could easily deplete much of their portfolio.”

Tschirgi says many financial planners are commission-oriented, so they will talk about and sell stocks and bonds but stay clear of health insurance, but this is a critical part of financial planning. “So if you retire, say, at 62, and lose your company-paid health insurance, you quickly discover that health insurance is costly and perhaps not an expense you planned for.” Nonetheless, he advises retirees to bite the bullet and buy it, especially since less expensive plans with high deductibles are available on the nation’s health insurance exchange.

6. Failing to Purchase Long-Term Care Insurance

It’s another topic that no one wants to think about, but retirees need to plan for possibly being in a nursing home or requiring long-term at-home care. Tschirgi says it could cost as much as $9,000 a month to stay in a long-term facility: “It’s not too late to buy LTC insurance if you can afford it, perhaps by shortening the number of years it would cover.” However, if this is out of reach financially, Tschirgi recommends buying an annuity offering nursing home doublers. “These essentially double monthly annuity payments if you wind up in a nursing home and cost little or nothing,” says Tschirgi. While they don’t cover everything, he says they provide some financial relief.

7. Going Overboard Attempting to Be Debt Free

Sometimes, retirees attempt to sell off many of their retirement investments to eliminate debt. Although this provides a nice cushion for cash flow, Loescher says it usually means that all retirement assets are concentrated in things that cannot be sold quickly to create income, such as a home, car, other personal property. “A retiree should be mindful of bad debt, of course, and pay off higher interest rate debts like credit cards, but be careful not to 'sell the farm' and pay off otherwise cost and tax-efficient debt like mortgages and home equity loans,” advises Loescher.

8. Failing to Diversify

Many retirees forget the value of diversification, according to Lucas Casarez, a wealth plan assistant with Keystone Financial Services, in Loveland, Colorado. “Whether it be a hot stock or hot sector, these types of things can cause havoc to a portfolio.” When individuals become euphoric about recent successes, Casarez says they tend to over-allocate, and when that investment is no longer hot, they’ll be in trouble. “Lack of diversification may also arise if an individual has over 10% of the investable assets tied up in their employer’s stock.” He says this happens when a retiree has spent a long time with an employer and doesn’t want to let go of that employer’s stocks.

And Loescher says that many retirees are too conservative. While this may feel good, he says that what feels good doesn’t always provide long-term results. “Retirees can no longer live solely off bond or CD interest in retirement,” Loescher warns. “Taking a risk in diversified stocks will be required to have a higher probability of not running out of money.”

9. Failing to See the Big Picture

Retirees can’t afford to let political drama determine their financial decisions, according to Ken Weber, president of Weber Asset Management in Lake Success, N.Y. “As the nation has become increasingly divided politically, I am seeing more older investors becoming fearful about ‘the way this country is headed.’” In fact, Weber says they tend to use those exact words, and he can hear the fear in their voices.

However, Weber explains, “Regardless of who is in the White House or who controls Congress, this is and always will be a capitalist economy, meaning every for-profit company will always strive to build the better mousetrap.” Weber says that retirees should realize that the permanent competition among firms is what drives the economy forward, not the temporary leaders in Washington. Once they understand that rock-solid concept, he says that they can focus on a long-term financial plan, which usually involves being invested in the U.S. stock market.

Another part of seeing the financial picture involves maintaining self-discipline. Tschirgi warns, “Some people facing retirement, especially if they have been careful, lifelong savers, mistakenly ask themselves what can be a dangerous question: Is this what life is all about? Sacrificing just to survive?” And then he says that some of them turn into spendaholics. In just a few years, they ruin a financial plan that they spent decades building.

The Bottom Line

While no one is immune to financial blunders, these mistakes can be particularly devastating when they occur later in life. However, financial literacy and proper planning can allow retirees to live a comfortable life reaping the rewards of their hard work and sound financial decisions.

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