4 Biggest Retirement-Saving Regrets That Will Cause You To Save Too Much
Written by
Laura Bogart
Edited by
Molly Sullivan
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The thought of saving too much for retirement may seem like an anomaly. When so much financial advice is geared toward boosting your retirement accounts, is it really possible to have too much of a good thing?
Apparently, it is possible. Devoting too much time, energy, and, yes, money over to your retirement account — especially at the expense of other financial goals — can actually have an adverse effect on your overall financial health.
But how do you know if you’re going a bit overboard on your retirement spending? GOBankingRates spoke to several financial experts to get a clear sense of the money mistakes you should avoid.
You Don’t View Your Financial Life in Balance
Maybe you approach your retirement account with a specific dollar amount in mind. As you creep toward that number, you ask yourself what the harm might be in blowing past it — by a lot. Before you know it, every part of how you think about money is oriented squarely toward retirement.
According to Jake Sadler, CFP, founder and senior advisor at Curio Wealth, retirement savings should be about balance. You don’t want to be like the grasshopper in the tale of the grasshopper and the ant, caught unprepared and unready for the next stage of your life. However, you don’t want to be so focused on retirement that you don’t get to enjoy your current life.
“If saving to that extreme brings you and your family great joy, then sure, keep going. But typically, if you save every penny, you will reach a point where it negatively affects your current quality of life,” Sadler said. “If saving every dollar blindly is making you miserable, then you may be on the path toward saving too much for retirement.”
You Try a One-Size-Fits-All Approach to Retirement Savings
When it comes to considering the best ways to save, Ohan Kayikchyan PhD, CFP, founder of Ohan The Money Doctor, suggested remembering the word “personal” in personal finance.
“With current technology and information availability, retirement planning often relies on general assumptions, which may provide certain numbers for your golden years that are not necessarily personalized. There is no one-size-fits-all savings amount,” he said.
Kayikchyan suggested that one of the best ways to avoid making money mistakes around retirement is to receive tailored guidance from a trusted financial advisor.
“You may discover that you need less money than you are accumulating for your golden years,” he said.
You Don’t Monitor Your Accounts
While you may think of your retirement account as a static part of your life, a repository for a set amount of money every paycheck, it’s actually a dynamic and changing part of your financial life.
“Not monitoring your plan can also lead to following rigid savings rules blindly. A plan is not static, it is constantly changing, so you need to adapt,” Sadler said. “Not adjusting your savings based on life changes or reaching milestones can set you on a track to save more than you realistically need.”
You Don’t Take a Holistic View of Your Needs in Retirement
For Taylor Kovar, CFP, the founder and CEO of 11 Financial and the CEO of The Money Couple, the root of over-saving for retirement comes from the fear of outliving your savings. Anxiety around experiencing your golden years tarnished by a lack of resources might compel you to contribute excessively to retirement accounts and neglect your other financial priorities.
“Take a holistic approach to financial planning. Consider factors such as debt repayment, emergency savings, and healthcare costs in retirement,” Kovar said. “Diversify your investments to mitigate risk and ensure flexibility in your retirement income sources. Regularly reassess your financial goals and adjust your savings strategy accordingly.”
Kayikchyan encouraged people to consider what they actually want to accomplish during their retirement.
“Giving while living is often the best use of your wealth, as it can help loved ones achieve their dreams, such as purchasing a home or funding education for grandchildren,” he said.
In a blind panic to save, save, save, you run the risk of not considering what you really want your lifestyle to look like when you’re retired. Sadler suggested figuring out what your one- to five-year goals would be, as well as your thoughts on retirement age and lifestyle.
“For example, not considering your desired retirement lifestyle could mean you are on track to save for a luxurious retirement that you might not even want,” he said.
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