WEALTHY Retirees Avoid These 7 Assets — But Most People DON'T

Added: 2026-06-01

[00:00:00]Have you ever woken up in the middle of the night staring at the ceiling and wondering if your money is actually going to last through your entire retirement? If you have, take a deep breath because you are definitely not alone. For so many hardworking Americans, reaching retirement age triggers a sudden, very real panic. We spend decades working, sacrificing, and saving, but the moment the regular paycheck stop, the fear of outliving our money takes over. And unfortunately, that fear makes incredibly smart people do some very irrational things. When that panic sets in, we naturally start looking for a safety net. We want an absolute guarantee that we will be okay.

[00:00:42]And believe me, the financial industry knows this. Salesmen are waiting right around the corner with flashy brochures and free steak dinners pitching complicated, incredibly expensive products that promise guaranteed income and total safety. It sounds like the perfect solution to all your worries.

[00:01:00]But here is the hard truth. The ultra-wealthy folks in this country do not touch those products. Wealthy retirees do not stay rich by chasing every shiny new financial toy. They certainly do not lock their money into confusing contracts that require a law degree to understand. They stay wealthy because they know exactly what to avoid.

[00:01:21]They aggressively protect their nest egg by steering clear of the common traps that catch everyday people completely off guard. I am Kim and welcome back to Retire Smart with Kim. If you are new here, it is so wonderful to have you.

[00:01:34]This channel is a safe space where we have straight, honest talk about your retirement. We leave the confusing financial jargon at the door and we focus on one simple goal. That goal is keeping your hard-earned money exactly where it belongs, right there in your pocket. Today we are going to look under the hood of the financial industry. I am walking you through seven toxic assets that everyday people constantly get tricked into buying thinking it will magically secure their future. More importantly, we are going to talk about exactly what the wealthy do instead so you can apply those exact same smart strategies to your own life. You worked way too hard for your savings to let a bad investment drain your accounts in your golden years. So grab a cup of coffee, get comfortable, and let us dive right into the seven assets you need to avoid to protect your retirement. Let us talk about the very first asset on our list today, the high-fee variable annuity.

[00:02:29]I want to be honest with you. I completely understand why so many smart, capable people end up buying these products. The pitch is incredibly seductive. You get a nice invitation in the mail to a free steak dinner seminar at a fancy local restaurant. While you are enjoying your meal, a very persuasive, well-dressed salesperson paints a picture of the absolute perfect retirement dream. They look you in the eye and promise you all the thrilling upside of the stock market, but with a built-in safety net so you supposedly never lose a single dime. It sounds like pure magic. Honestly, who would not want that kind of peace of mind? But here's the conversational reality check we need to have. That magic is incredibly expensive.

[00:03:14]Let us peel back the layers and look closely at the hidden fees that quietly eat away at your hard-earned money.

[00:03:21]First, you have something called mortality and expense charges, which is basically an expensive insurance fee baked right into the product. Then, you have administrative fees just to cover them managing the endless paperwork. On top of all that, if you actually want that guaranteed income they promised you at the dinner, you have to buy an additional expensive add-on called an income rider. When you add it all up, you could easily be losing three or even 4% of your total money every single year just to fees.

[00:03:55]Think about it like buying a beautiful brand new car, but having to pay the car dealership a massive extra fee every single year just for the privilege of keeping it parked in your own driveway.

[00:04:07]It makes absolutely no sense for your wealth. But the absolute biggest red flag with variable annuities is the surrender charge trap. This is all about liquidity, which simply means how easily you can get your hands on your own cash.

[00:04:23]Let us say a few years down the road life happens. You face an unexpected medical emergency and you need a large chunk of your own money to cover those hospital bills. Well, if you try to withdraw your cash out of that annuity early, you are going to get hit with massive surrender charges. They essentially lock your money in a vault and penalize you heavily just for trying to open the door. You lose access to your own life savings right when you need it the most. So, what do wealthy retirees do instead? The wealthy value absolute control over their money above everything else. They do not lock their wealth away in confusing expensive insurance contracts. Instead, they build their own reliable income streams. They use a simple straightforward mix of low-cost index funds to get that stock market growth and predictable fixed income like standard bonds for safety.

[00:05:18]By doing it this way, they keep their investment fees practically at zero and most importantly, their money remains completely accessible to them at all times. If they need cash for a sudden emergency on a Tuesday, they can easily sell a few shares and have that cash sitting safely in their checking account by Wednesday with absolutely no surrender penalties holding them back.

[00:05:45]True wealth is having total control over your own choices. Moving right along to the second asset wealthy retirees avoid, and this one is deeply emotional.

[00:05:55]Timeshares and vacation ownership. I want to acknowledge exactly why these are so incredibly appealing. Who does not want the promise of guaranteed beautiful family vacations in sunny Florida or gorgeous Hawaii every single year. You sit through a high-pressure presentation, usually while you are already on vacation and feeling completely relaxed, and they sell you on creating lifelong memories for your kids and grandkids. They make it sound like a brilliant piece of real estate that belongs to your family.

[00:06:26]But, it is time for some hard truth, my friends. A timeshare is not an investment at all. In reality, it is a massive financial liability. Here is the nightmare they do not highlight during that cheerful presentation. The annual maintenance fees. In the United States, these maintenance fees are notorious for skyrocketing year after year. If the resort needs a new roof, your fees go up. If they decide to upgrade the swimming pool, your fees go up again.

[00:06:54]And the absolute worst part is that you are legally obligated to pay these soaring fees every single year, completely regardless of whether you actually travel and use the property. If your health declines or you just want to stay home one year, those heavy bills just keep on coming right to your mailbox. A lot of folks think, "Well, if it gets too expensive, I will just sell it to someone else."

[00:07:21]That brings us to the harsh reality of the timeshare secondary market. The resale value of a timeshare is practically zero. You can go look online right now, and you will see thousands of desperate owners listing their timeshares for literally $1. They are just trying to give them away, but nobody wants to take them because absolutely nobody wants to inherit a lifetime of unpredictable endless maintenance fees.

[00:07:48]You quickly realize your money is completely trapped. So, how do wealthy retirees handle their vacations? The wealthy absolutely love their flexibility. They know that tying up thousands of dollars in a single location with ongoing mandatory fees is a terrible financial move. Instead, when they want to travel, they simply rent a beautiful house on a site like Airbnb or they book a stunning room at a nice hotel. They enjoy their luxurious vacation. They make those wonderful family memories. And when the trip is over, they pack their bags and they go home. They walk away with zero ongoing financial obligations hanging over their heads. True financial freedom means keeping your options wide open. Let us move on to the third asset that wealthy retirees always steer clear of. And this one thrives on pure panic. I am talking about physical gold and silver coins. If you are ever up late at night watching television, you have undoubtedly seen those scary dramatic commercials aimed directly at older Americans. The announcer uses a deep serious voice to warn you that the United States dollar is completely collapsing. They insist that the economy is on the brink of absolute disaster. And they tell you that the only way to protect your hard-earned life savings is to buy physical gold coins and lock them away in a heavy safe in your basement. It is incredibly effective marketing because fear is a very powerful motivator when it comes to your money. But let us put the fear aside for a moment, keep the math really simple, and look at the actual reality of buying those shiny coins. The biggest problem you face immediately is something the industry calls the spread. The spread is simply the massive difference between what a retail dealer charges you to buy the coin and what they are willing to pay you to buy it back. For example, if you buy a beautiful gold coin from one of those television dealers for $2,000, their heavy retail markup means you might only be able to sell it right back to them the very next day for $1,600.

[00:10:01]You are literally losing hundreds of dollars the exact second that coin ships to your house. It is a terrible way to start any investment. On top of that huge initial loss, physical gold is what we in the financial world called dead money. Think about it this way. When you buy a solid stock, it pays you regular dividends. When you buy a nice rental property, it pays you monthly rent. Even when you just put cash in a standard savings account, it pays you interest.

[00:10:30]But physical gold pays you absolutely nothing. It just sits there in the dark gathering dust inside your safe. In fact, it actually costs you extra money to own it because you have to buy a secure home safe and you have to pay extra premiums on your homeowner insurance policy just to protect it from theft. So, what do the ultra-wealthy do when they want to protect their portfolios? If wealthy retirees want a little bit of exposure to precious metals as a safety hedge against inflation, they completely avoid buying the physical coins. Instead, they buy low-cost gold exchange-traded funds or ETFs directly through their standard brokerage accounts. These funds track the price of gold perfectly, but they only cost a few pennies to trade. They require absolutely no expensive home security systems, and best of all, if you ever need your money back, you can sell your shares instantly with just the click of a mouse. Keep your retirement simple, safe, and highly liquid. Let us move on to the fourth asset you need to avoid. This one is practically everywhere on daytime television. I am talking about reverse mortgages. You know exactly the commercials I mean.

[00:11:45]They always feature a familiar trustworthy celebrity, usually an actor we all loved from classic television shows. They look right at the camera and tell you that a reverse mortgage is a wonderful stress-free way to tap into your home equity tax-free. They promise you can live the good life, fund your retirement, and best of all, never have to make a monthly mortgage payment ever again. Honestly, the way they pitch it, it just sounds like free money falling right out of the sky. But, we need to sit down and look at the hidden math, just like two friends having a cup of coffee. The reality of a reverse mortgage is incredibly expensive. First, you get hit with massive upfront closing costs and heavy origination fees just to open the loan. They roll those fees right into the balance, so you do not feel the pain immediately, but you are absolutely paying for it. Then comes the really dangerous part, the compounding interest. In a normal mortgage, you pay down the balance every month and your equity grows. But, in a reverse mortgage, it works completely backward.

[00:12:53]The interest gets added to your loan balance every single month. So, while you are sitting in your living room, the amount you owe the bank is quietly growing larger and larger, eating away at your hard-earned home equity. We also have to talk about the deeply emotional side of this, which is your family legacy.

[00:13:14]So many parents dream of passing their family home down to their children or making sure a surviving spouse is completely financially secure. But, a reverse mortgage can absolutely destroy that dream. When the borrower passes away or even if they just need to move into an assisted living facility, the entire loan balance suddenly comes due.

[00:13:36]In so many tragic cases, the kids are forced to quickly sell the family home just to pay back the bank, leaving them with absolutely nothing.

[00:13:47]So, what do wealthy retirees do when they are facing a cash crunch?

[00:13:52]The wealthy aggressively protect their home equity. They treat it like a sacred vault. If they find themselves needing more monthly cash flow, they take a very practical approach. They will right-size or downsize, selling the large, expensive family home and moving into a smaller, much more manageable property.

[00:14:13]This frees up hundreds of thousands of dollars in pure cash, completely debt-free. And if they just need cash for a quick, short-term emergency, they will use a standard home equity line of credit. They borrow only exactly what they need, pay it back quickly, and keep their wealth safely in the family. Let us dive into the fifth asset on our list. This one can be quite tricky because it sounds absolutely fantastic when a salesperson pitches it to you.

[00:14:44]I am talking about non-traded real estate investment trust or REITs for short. Let us break down what that actually means in plain English. A REIT is simply a company that pools money from lots of regular investors to buy big, expensive properties like shopping malls, office buildings, or large apartment complexes.

[00:15:07]When bank interest rates are low and you are not making much on your savings, brokers love to lure retirees in by promising huge, steady yields. They will often dangle returns as high as 7 or 8%.

[00:15:21]When you are retired and desperately looking for reliable monthly income, those big numbers are incredibly tempting. It feels like the perfect solution. But here is where we run into a major heartbreaking issue. Size. I like to call these non-traded REITs the financial equivalent of a roach motel.

[00:15:42]You see, your money goes in very easily, but it is almost impossible to get it back out. In the financial world, we call this being illiquid. Unlike a normal stock that you can sell anytime you want, these specific non-traded products are not sold on a regular public exchange. If the real estate market gets a little rough, or if you simply face a sudden medical emergency and desperately need your cash, the company can legally freeze your ability to withdraw your funds. They can completely shut the door, leaving you entirely unable to access your own life savings when you need it the absolute most. Then we really have to talk about the outrageous upfront fees. When a broker sells you one of these non-traded products, they are taking a massive cut for themselves. These upfront fees can legally be as high as 10 to 15% right off the top. Let us do the simple math on that together. If you invest $100,000 of your hard-earned money, only $85,000 actually goes to work for your future.

[00:16:50]The other $15,000 goes straight into the pocket of the person who sold it to you.

[00:16:55]That puts you in a deep financial hole on day one. So how do wealthy retirees handle real estate? They absolutely love real estate, but they strictly buy publicly traded real estate funds. By doing this, they get all the wonderful benefits of owning real estate, but they keep total control over their wealth. If a wealthy retiree decides they need their cash on a Tuesday, they can simply click a button, sell their shares, and have that cash sitting safely in their checking account by Wednesday. Always keep your investments liquid and never pay a massive commission just to have your own money locked away. Let us move to the sixth asset on our list today, and this one is all about human psychology. I am talking about the hot tip on an individual stock. We have all been in this exact situation. You were at a neighborhood barbecue or a family gathering, and a friend or a neighbor starts bragging loudly about how they just made an absolute fortune on a brand new tech company. It is completely human nature to feel that sudden pang of fear that you are missing out. You start doing the math in your head, thinking that maybe if you just take a large chunk of your retirement nest egg and throw it at this hot tip, you can double your money overnight and completely secure your future. It is incredibly tempting to want to catch up quickly, but we have to talk about the absolute devastation of concentration risk. When you take a huge portion of your life savings and put it into one single company, you are no longer investing.

[00:18:28]You are gambling. You are tying your entire financial future and your peace of mind to the daily decisions of one single chief executive officer. We only have to look back at recent United States history to see how completely devastating this strategy can be.

[00:18:45]>> [sighs and gasps] >> Think about the hard-working folks who were invested heavily in Enron or Lehman Brothers.

[00:18:52]People lost their entire life savings practically overnight.

[00:18:57]When you are in your golden years, you simply do not have 20 long years to wait around for a single company to recover from a massive crash.

[00:19:07]You need that money to buy groceries and pay your bills today.

[00:19:11]So, what do wealthy retirees do when it comes to the stock market?

[00:19:16]They introduce us to the absolute beauty of being completely boring.

[00:19:22]Wealthy retirees know that retirement is about wealth preservation, not getting rich quick.

[00:19:28]Instead of chasing a hot tip, they focus their money on broad, low-cost index funds like the S&P 500. When you buy an index fund, you instantly own a tiny profitable piece of 500 of the largest, most successful companies in America. If one single company makes a terrible business decision and goes bankrupt, your overall retirement portfolio barely even feels it. The wealthy keep their money incredibly safe because they know that when it comes to your retirement, being boring is a beautiful thing. Let us move on to the seventh and final asset on our list today. And this one might actually surprise you because it does not feel like an investment at all.

[00:20:13]I am talking about holding on to far too much idle cash. I want to completely validate exactly why so many of us do this. Keeping something like $150,000 sitting right there in your standard local checking account feels incredibly safe. There is absolutely zero stock market volatility to worry about. You do not have to watch the evening news and panic when the market takes a sudden dip. Your balance never goes down, so it feels like the ultimate financial security blanket. It is essentially the modern-day version of stuffing your life savings safely under the mattress. But we need to sit down and have a serious talk about a silent thief that is robbing you every single day. That thief is called inflation. Think about your most recent trip to the local grocery store. You have undoubtedly noticed that a carton of eggs, a simple loaf of bread, and your favorite brand of coffee cost quite a bit more today than they did just a few short years ago. That is inflation at work. If your hard-earned cash is sitting in a traditional brick-and-mortar bank earning a microscopic 0.01% in interest, but your everyday living costs are going up by 3% every single year, you have a very real problem on your hands. You are safely, slowly, and completely predictably going broke. The actual dollar bills are still sitting in your account, but their purchasing power is fading away. You simply will not be able to buy the same amount of groceries 5 years from now with the money you have sitting there today. Now, I am not saying you should have zero cash, not at all. We have to work together to find the perfect sweet spot. You absolutely need a solid emergency fund. You need enough cash readily available to cover unexpected medical bills, a new roof, or just to help you sleep peacefully at night without tossing and turning.

[00:22:16]But there is a huge difference between holding a responsible, fully funded emergency account and hoarding a massive pile of cash just out of pure fear. So, how do wealthy retirees handle their everyday cash? The wealthy never, ever let their money sleep. They know that every single dollar they own needs to put on a hard hat, go to work, and earn a respectful wage. Instead of leaving their extra cash completely idle at the local bank, they move their liquid money into high-yield savings accounts, certificates of deposit, or short-term United States Treasury bills.

[00:22:55]Reassuring, these options are incredibly safe, fully protected, and easy to understand. But instead of earning practically nothing, they are safely earning enough interest to fight back against inflation. The wealthy protect their purchasing power, ensuring their money works just as hard for them in retirement as they worked to earn it in the first place. We have covered a lot of ground today, looking at everything from variable annuities to holding too much cash. But if you take away just one thing from our time together, I want it to be this.

[00:23:28]The ultimate secret of wealthy retirees is not some complicated exclusive Wall Street strategy. Their secret is actually total simplicity. Keeping their money highly liquid and paying incredibly low fees.

[00:23:44]The financial industry loves to make things seem confusing, so you feel like you need their expensive help. But here is the truth. If a financial product requires a 50-page legal prospectus for you to even begin to understand it, that product is almost always designed to make the salesperson rich, not you.

[00:24:03]You have worked your entire life to build your nest egg, and you deserve absolute clarity and peace of mind in your golden years. Reassuring.

[00:24:12]So, I want you to remember Kim's golden rule for retirement. Keep your money simple, keep it completely accessible, and never ever invest in something you cannot explain to a smart 12-year-old.

[00:24:26]If it sounds too good to be true, or if it is just too confusing, simply walk away. Your financial security is worth so much more than a free steak dinner.

[00:24:38]Now, I would absolutely love to hear from you. Which of these seven toxic assets actually surprised you the most today? Have you ever sat through a high-pressure pitch for one of these products? Please let me know down in the comments below. I read every single one, and I love hearing your personal stories. If you found our conversation helpful today, please do me a quick favor and hit that like button. It really helps the channel grow so we can reach more folks just like you. And do not forget to subscribe so you never miss an episode. Thank you so much for joining me today, and I will see you in the next video.