Retirement dreams, more often than not, involve making big purchases. They may range from a two-month tour of European cities to buying a second home. If you perform an internet search on “big purchases in retirement,” many of the results center on discussing the biggest big-purchase mistakes retirees make.

But, who’s to say what is a big-purchase mistake? A boat, for instance, is one popular big purchase in retirement. Yes, we’ve all heard the saying, “The two happiest times in a boat owner’s life is the day they buy the boat and the day they sell it.” But, for the devoted fisherman or boater, buying a boat is no mistake.

Even the purchase of a second home is not cut and dried. Yes, it involves the use of a large chunk of cash to buy and increases monthly expenses substantially, but what’s the return on enjoying winters in a warm climate until traveling between the two homes becomes too onerous? Besides, the house can be sold and the cash returned to retirement savings at a later time.

Of course, retirees should always consider ways and alternatives to save on big purchases—for instance, replacing the expensive European tour package with a self-planned itinerary or buying a used car instead of a new one.

The Real Question is One of Priority and Capacity

Would you sacrifice eating out to afford a new car? Would you reduce your European tour by a week to save on the cost of a package tour so you can avoid planning the details yourself? Is buying an RV with which to tour the country worth surrendering the dream of a second home?

There is no absolute answer to these questions since each individual has his or her own set of priorities in retirement. Naturally, these priorities do not operate in a vacuum; they must reflect what an individual’s financial circumstances allow.

Which is to say, the value of having a financial plan in retirement is a crucial tool in helping retirees decide if they can afford that second home or that big boat. Perhaps equally important, it can provide “permission” to those retirees who may find it difficult to overcome a lifetime of financial discipline to make such big purchases.

Retirement is not a time for emotionally-based decisions—especially when planning for retirement during inflation. A big purchase requires practical analysis to ascertain whether it’s affordable or if it sacrifices financial security.  And the best way to put yourself in a position to be able to make those large purchases in retirement is by planning ahead for them now!

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