Here is an interesting article dealing with some people saving too much for retirement.
While I can feel there can never be too much saved for retirement, it does make the point that you need to enjoy your money a bit, if you have it to enjoy of course. Before I used to think that if I kept saving as I did, once I hit 50 I at least wouldn't feel like I had to be saving more. I would have enough that as long as I wasn't wasteful I would be fine. Now I'm not so sure about that time frame (for the obvious reasons). My home should still be paid off for before I hit 50, so thats good.
Anyway, after saving so hard for a few years, and knowing that I have a solid job now and semi solid savings, I would be happy to splurge a little, but there is so little I want now, and no one to enjoy it with, eh - what am I to do? No crying here, but sheesh, boy do I feel out of sync with society as a whole.
June 26th, 2009 at 02:48 pm 1246027717
And I'm not talking about obvious outliers such lottery winners who took home more than $5 million dollars. Regular people in ordinary circumstances really need to save a lot more than they think they need to.
The reason why is because, anyone who has examined the issue of retirement projections know that the "science" behind it is less than perfect. Far less. The more accurate an equation attempts to be, the more information people have to put forth and even guess in order to punch into the equation.
Even with a perfect set of data, a (Monte Carlo) simulator still has to project the probabilities of future stock market performance.
In light of all this, I believe the only logical conclusion is to simply OVER-SAVE for retirement. Yes, save way more than you think you need, just in case you do end up requiring more than the estimate.
Over-saving will also afford you a few more options down the road:
1. You can stop saving earlier, and focus your money on other things you enjoy in life.
-or-
2. You can retire earlier.
-or-
3. You can retire more comfortably.
Also, let's not forget that our saving contributions in itself is not what builds our portfolio, but rather, the power of compounding. And in order to leverage compounding to its max, we need to give it as much time as possible. Ideally, it means to save and invest, as much as possible, as early as possible.
Bottom line: Anybody who tells you that you might be saving too much is WRONG. They're telling you a dirty, dirty lie.
Yeah, I could be wrong too. But if I'm wrong and you save too much, well, I'm sure there are ways to easily fix that eh? But if they're wrong, and we end up not saving enough....
With all that said though, I also agree that we also have to balance saving for the future with enjoying our life in the present as well. I think somewhere in there is a happy medium.
I'm off the soapbox now.
June 26th, 2009 at 04:13 pm 1246032827
The only bright spot is that, since about half of our income goes toward debt payments, our future lifestyle will be much cheaper than our current one once we're retired (assuming we're debt-free).
June 26th, 2009 at 05:57 pm 1246039045
But that's just me.
Saving gives you more options. I don't think we have enough saved for retirement. I'm working on saving more myself (and convincing my reluctant spouse that saving more is the thing to do).
July 11th, 2009 at 03:55 am 1247284559
getting you to spend.
I think that you can save too much if it leads you to: commit a crime, lose all of your friends, violate your ethics, develop a health or a safety issue (hoarding), etc.
But the garden variety "I'm putting in 20% in my 401K and everyone else is putting in 6%"...the saving too much argument makes me laugh.