Web Wealth: Are you saving too much?
We are not a nation of savers. But can some individuals and families be "oversaving"? A few advice-givers contend that is the case, putting oversaving in a league with hoarding.
We are not a nation of savers. But can some individuals and families be "oversaving"? A few advice-givers contend that is the case, putting oversaving in a league with hoarding.
Could you oversave for retirement? That surprising question is answered with a yes in a Morningstar report that's described in this post on Yahoo Finance. Financial advisers and retirement calculators "often rely on a generic formula that could lead some workers to oversave for their golden years by as much as 20 percent," according to the post. The gist of the Morningstar report: Assumptions about how much income you'll need from a retirement account, how much inflation will increase that need, and how long you'll live are often way overestimated. But Yahoo Finance writer Mandi Woodruff goes on to note that while experts call for more saving, the unfortunate fact is "most Americans aren't saving enough for retirement."
Savings aren't just for retirement, and oversaving is probably not your problem. In that case, putting money aside is a sane way to meet big expenses without borrowing. AmericaSaves.org has a trove of tips for saving money. The site is funded by a group of nonprofits and banks. Tips listed on this page include setting aside loose change and asking "your local electric or gas utility for a free or low-cost home energy audit."
Another AmericaSaves page enlists young people to take the Young America Saves Pledge and begin saving toward specific goals - college, a car - by putting aside a "realistic" amount of money each month.
Are some retirees so set in their ways that they continue saving money when they no longer need to? This post at FinancialSamurai.com, a site by early retiree Sam Dogen, outlines how "prodigious savers can break our financial habits." Dogen's site promises tools for "slicing through money's mysteries." One of his surprising points is to reconsider how long you'll live. Keeping a shorter life span in mind could free you up to spend more, he contends. If that sounds a bit dicey, remember that Dogen is talking to hoarders who need to be jolted from their oversaving ways.
BusinessInsider.com carried a post earlier this year that maintains "there's a point when saving does more financial harm than good." In short, writer Alan Moore says: "Although retirement is the goal we talk about most often, travel, new car purchases, paying for kids' college expenses and leaving a bequest are all perfectly good long-term goals, too. If you save enough to meet those goals, saving additional money is oversaving."