Over-Saving for Retirement: Advice From People Who Saved Too Much

Editor's Note: This story originally appeared on NewRetirement.

Are you “saving too much”? Are you “not saving enough”?

These questions haunt people who are worried about funding retirement responsibly. However, it is important people tend to measure retirement preparedness as the value of their retirement savings. It is entirely possible (albeit difficult) to retire on Social Security alone — with no savings. And many people have more money than they know what to do with — which might mean that they have saved too much.

The reality is that savings are only one aspect of what goes into a secure and happy retirement. A solid retirement plan involves retirement income (and how that changes over time), whether or not the retirement income is guaranteed for life, retirement expenses (and how those change over time), how to anticipate unanticipated events and various economic assumptions that you have very little control over and — last but not least — how you will be spending your time.t to understand that the only person who can really answer these queries.

When It Comes to Savings, It Is Not Just a Number: Your Values Are Also Important

The reality is that there are not any right answers about how much savings is too much. There are only right answers for you and for what you value and need. You see, figuring out your financial plan is not entirely a numbers calculation; it is also a reflection of what is important to you, who you are and how you want to express your identity. is you.

1. It Is Only Too Much (or Too Little) if You Are Unhappy

Joe said, “If someone is unhappy, sure, then their balance might be off. I just know. I don’t deny myself anything I really want or need. I don’t yearn for anything. And it’s not like we never splurge on things that we really enjoy and that matter to us. But, unless you see someone is unhappy, who are you to know if their balance is off?”

Nicholas agreed with a sentiment that is true for if you have too much or even not quite enough: “It’s all about the lifestyle you want. As long as you are comfortable and happy. Enjoy.”

2. Focus on What Makes YOU Happy — Even if That Is Savings

Feeling financially responsible and accumulating money is not a negative. And, for many people, it is core to their identity and something that gives them peace and even joy.

As Kenneth pointed out, “In the end, your EXPERIENCE is almost all that matters. For example, you get to 70 years old realizing you saved WAY too much and could’ve drunk more whiskey and chased more women, but how was your EXPERIENCE during that time?

“Did you feel really good about saving, did you get psyched every time you got an extra $100 and sent it into your account? Did you spend an hour a week going over spreadsheets and doing ‘what if’s’ and liking what you saw?”

He continued, “Happiness is a conglomeration of things, really, and in the end, is what we’re after. LACK of money creates a lot of stress and diminished happiness, so is it better to err on the side of caution and risk doing without and saving too much?”

3. Find the Right Balance for You

Only you will know the spending and saving levels that are right for you now — and in the future.

Todd said, “While saving more is generally a good thing, some people who are savers have a difficult time making the transition to spending and might wind up depriving themselves from living the life they really want.

“Similarly, some people save so much of their income with a view toward tomorrow that they never get any enjoyment today — and tomorrow isn’t guaranteed. As with everything, balance is the key. The balance line is different for everyone.”

4. Be Aware That You May Need To Ease Into Spending

It is a massive paradigm shift to go from working and saving to leisure and spending. And, for some people, old habits die really hard.

Sean concurred with this sentiment, “I think one issue is that some people have been disciplined in saving and successful accumulating. So successful that they’ve got plenty to spend and plenty to leave to heirs. Yet they still struggle to break out of their savings mindset. It’s another facet of making the transition to retirement.”

Sean, continued, “A good number of people have indeed saved more than they’ll ever spend in retirement. One of the biggest difficulties is making the transition from accumulation to distribution. After living frugally for 50 years it can be very difficult to spend. That’s fine as a choice, but when it’s reflexive it can be helpful to let them know taking a cruise or buying that tractor is a realistic and affordable choice. Knowing that can be very helpful.”

5. Save or Spend as a Reflection of Where You Stand Today

No matter whether you have saved too much or too little, it is important to address where you stand today and make any necessary adjustments. Brad is philosophical about the fact that he may have saved too much and is careful to not focus on regret.

He said, “I am a couple of years into retirement and it’s starting to appear as if I saved too much or retired later than I could have. It is easier to judge these things in retrospect. Now, I could raise my standard of living quite a bit more.

“But I planned to raise it about 30% when I retired to travel. I can’t see the point of trying to see how little you can get by on in retirement as I have more time to do things. And, I chose not to be wasteful with my spending while I was working.”

6. You Won’t Have To Go Cheap on a Nursing Home

A HUGE reason that many people “over save” is that they want to anticipate anything and everything that can go wrong in the future. Long-term care is a potentially massive expense that you have a high chance of needing to fund. Having a plan for long-term care is not something you want to overlook.

Long-term care is not covered by Medicare. You can run through all of your assets and then get the care covered by Medicaid, but it might not be the type of facility you would prefer. Steve is happy he saved too much. He said, “I don’t want to have to go to the cheap nursing home.”

7. Be Ready for Dementia Care

Long-term care is expensive, but usually only lasts an average of between six months to three years, depending on the exact demographic. It will put a crack in your nest egg, but might not bankrupt you. However, dementia care can be a significant cost for a significantly longer period of time. Jordana pointed out, “What matters [with regards to how much savings you need] is that if you get dementia, the average time for care is six to 10 years and potentially it could be 20.”

She continued, “How can you say you have planned for retirement safely and securely if you haven’t planned for 20 years of nursing home care. I don’t have kids. I need to make sure I’m comfortable and happy no matter what happens — especially in elder life. That is when I want the most luxurious environment and conveniences — since I won’t be able to rough it as much as I can now.”

8. Cover All Unknowns and Worst-Case Scenarios

We simply don’t know what will happen in the future, and it is best to make sure that you have enough savings to cover potential unanticipated possibilities. This is one of the reasons why so many people feel like no amount will ever be enough.

Anticipating unknowns — and creating financial backup plans is a good practice for retirement planning. It is especially a good idea for those who are struggling with the idea of whether or not they have saved too much or not enough. Not everything unanticipated will actually happen, but you will absolutely be more certain that you are prepared for what does.

9. Don’t Neglect Enjoying the Money You Earned

Many people save their whole lives, then retire and some then become obsessed with growing their asset base. Don thinks it is a good idea to understand why you want to grow your assets. He said, “If your goal is to match the indexes I ask, ‘Why?’ How will your life change if you have $2.2 million extra instead of $1.7 [million]? It won’t.

“So what can you think of that would be a bucket list, that’s no longer out of reach financially? Attend the Super Bowl? Play every major PGA course in America? Pay off an extended family member’s college loans? Leave a thousand-dollar tip at lunch? Or not. Just having this conversation could cause their financial insecurity and stress to nearly disappear.”

He continued, “I believe there are three ways to fail in retirement: not save enough, outlive your savings (a variation of not saving enough), or have plenty and not enjoy the financial independence you have earned. It’s a good problem to have but it’s still a problem.”

10. Retired, Not Retired, Too Much, Not Enough: Doesn’t Matter, Live Now

DeWayne urged people to live the life they want now — no matter their circumstances. He said, “Some people out there seem to think life’ does not begin until they retire — that it’s important to save like mad, and live frugally so their retirement balances are maximized, the house is paid off, and so forth.

“So they postpone travel and hobbies, thinking they’ll pick that up during retirement. A lot of people never make it.” He continued, “My parents had that mode of thinking, being very frugal, never going anywhere, and putting every excess penny into paying off the house. Due to major health issues with my Mom, my Dad had to take early retirement and became literally a full-time caretaker; and they never got to do anything during their €˜retirement’.

“I watched my Dad go slowly downhill and he died literally a broken man. Over and over he told me he wished they had gone to some of these places that he had always dreamed to see, while my Mom was still healthy.”

DeWayne concluded, “There’s a balance there. I make sure to maximize our retirement contributions, put some extra in our cash/emergency savings, then spend the rest on travel. I have seen multiple friends die or have major health issues in their 50s and 60s and am all too aware as to how little time you might have to live the life you might desire.”

11. Throw Off the Bowlines

DeWayne also offered this advice and a well-known quote, “You cannot let that fear drive you too much — or you’ll end up with a lot of regret in your later years. There’s a quote, wrongly attributed to Mark Twain, that I’ve got pinned to my desktop:

“Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines! Sail away from safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover!'”

12. Love — Not Money — Is the Real Answer (for Some)

Finally, in the ever-entwined relationship between money and emotions, Nancy offered this opinion, “I think the important thing is to do the things that are important to you and that bring you joy. This is the only life we get and my life will be judged by how much love I shared, not how much money I left.”