5 Reasons You Should Be Saving More — Even If You Earn a High Salary
Written by
Cindy Lamothe
Edited by
Jenna Klaverweiden
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We all dream about that high-paying job, right? The one that comes with a big paycheck, fancy dinners and the ability to buy whatever you want.
But just because you’re earning a hefty salary doesn’t mean you should let go of your saving habit. In fact, there are several solid reasons to keep putting money aside, even if your income is looking pretty sweet.
Here’s why saving more should still be on your radar, even if you earn a high salary.
Lifestyle Creep Is Real
“I never worry about the person making $50,000 a year who has managed to save $1 million,” said Stewart Willis, president of Asset Preservation Wealth & Tax. “That person has built strong financial habits and knows how to live within their means. The real concern? The individual who earns $500,000 a year but only has $500,000 saved.”
The more you make, the more you tend to spend.
According to Willis, high earners often upgrade homes, cars, vacations and daily expenses without realizing how much they’re increasing their financial obligations. As a result, high earners may have more financial commitments — mortgages, private school tuition, expensive hobbies and travel.
Without conscious saving, you might find yourself in a situation where your spending is outpacing your income, even if your salary is higher than most.
Plus, when retirement comes, adjusting to a lower, fixed income can be extremely difficult. Retirement is a big adjustment. When you’re used to a high income, turning off that financial faucet can be a shock.
“If you’ve built a lifestyle that requires $400,000+ a year to maintain, but your retirement savings only provide half of that, you’re in trouble,” he said.
Life Can Throw Unexpected Curveballs
A Marist Poll survey found that most Americans are dissatisfied with their savings. And for good reason. The truth is, no one has a crystal ball. Even if you’re rolling in cash today, life has a way of throwing curveballs.
Whether it’s a surprise medical bill, unexpected home repairs or a sudden job loss, having an emergency fund ensures you’re not caught off guard. Having that cushion makes life’s little hiccups a lot less stressful.
Retirement Might Seem Far Off, but It’s Coming
It’s easy to get caught up in the excitement of a paycheck today and forget about the future. Sure, you might have a decent pension or 401(k) contributions, but don’t assume that’s enough. Without aggressively saving, Willis said many financial obligations can become unmanageable in retirement.
According to Ben Loughery, CFP, lead financial planner at Lock Wealth Management, for high earners, Social Security will replace a much smaller percentage of income compared with middle-income workers.
“If you are making over half a million per year now, but Social Security only provides let’s say $45,000 annually — is that going to be enough for you?” he said.
The earlier you start saving for retirement, the better. Your future self will thank you when it’s time to kick back and relax without worrying about money.
You Never Know When the Economy Will Turn
Even with a high salary, the economy can be unpredictable. Layoffs, downturns or a shift in your industry could make your job uncertain.
Having extra savings in place gives you a safety net and more time to pivot or search for new opportunities without the added pressure of living paycheck to paycheck.
Your Spending Habits Can Affect Your Mental Health
Money is often linked to stress — and while it might seem counterintuitive to talk about saving more when you already have a good income, the reality is that spending without limits can create anxiety.
Knowing you have a healthy savings cushion gives you peace of mind and allows you to feel secure, even when things aren’t perfect.
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