Dollars and Sense: Avoid impulse buying and shopping away your retirement

According to a 2007 Retirement Survey conducted by the Society of Actuaries, 50 percent to 60 percent of workers nearing retirement worry about not being able to maintain a comfortable standard of living once they leave the workplace.

Much of the concern comes from heightened health-care costs and the effects of inflation and the market on investments.

While these uncontrollable factors can affect your retirement savings, of greater impact on your nest egg is how you manage your personal savings throughout retirement.

Identifying and managing your spending habits is one of the most effective ways to protect your retirement savings. It’s easy to spend spare time at the grocery store or the local shopping mall looking at all the new products for sale. Buying nonessential items and excess of the staples are surefire ways to deplete your hard earned savings.

Don’t take my word alone, though.

The Stanford Graduate School of Business recently released findings that show impulse shopping normally leads to more unnecessary purchases.

Once you make your first purchase, you are starting to build what researchers call “shopping momentum,” which can lead to a slippery slope of continued buying.

This phenomenon is similar to compulsive eating or gambling, since shopping has addictive qualities.

The problem with most addictions is that they can be harmful to your budget, and shopping is no exception when it comes to extending your retirement savings.

Avoid the impulse purchase by making a shopping list before going out to any store, just like you would before heading to the supermarket.

There is a reason why writing down what you need is always a helpful shopping tactic.

Lists help you to be aware of what you want when unencumbered by impulse buying, and they can snap you back to your senses before succumbing to the allure of shopping malls or fast food restaurants.

It also can help you remember why you came to the store in the first place and perhaps dissuade you from wandering the aisles eyeing the goodies that will clutter your closets and deplete your savings.

I know some of you are reading this and saying, “Kevin, but I enjoy window shopping and I don’t want to stop!”

OK, then—but try to adopt this practice: After looking over products and finding ones you’d like to purchase, ask the sales clerk to hold your items for a day.

Then go home, evaluate your potential purchase outside of the store’s setting, and return the next day, if you so choose.

Whatever you wanted to buy will still be there, but this discipline allows you the chance to rethink your purchase.

The enjoyment of browsing can still be had, but you can also eliminate unnecessary spending.

The money you’ll be saving from being responsible and aware of your shopping momentum can be further stretched.

One easy way to do this is by having a checking account that pays interest on your deposited money.

Many banks have senior checking accounts that pay a significant amount on your deposits. Does yours?

That money can add up and help your budget without your having to move money from savings to checking on a regular basis, a process that can become tedious.

Of course, monitoring finances and keeping track of expenses will help you manage that nest egg of yours.

Most reputable banks offer free on-line services to help you monitor your accounts, and financial advisors offer advice on keeping your savings protected.

Creating your retirement nest egg during your employment years wasn’t easy; it required discipline on your part.

But that discipline paid off. By recognizing your current spending habits and understanding ways to prevent the “shopping momentum” from growing into something unstoppable, your retirement savings will be more secure and less affected by those concerns that are out of your control.

Kevin Jordan is a vice president and the Green Valley branch manager for Commerce Bank of Arizona, 222 W Esperanza Blvd. Contact him at 625-4650 or kjordan@commercebankaz.com