Is It Possible To Save Too Much Money?

Is it possible to save too much money?

That question was the underpinning for an article from Marketwatch about a couple who are each 57 and have mid-seven figures accumulated after years of saving 25-30% of their incomes. What prompted them to ask the question about too much was outside criticism that they had sacrificed too much over the years in service of a future that is never guaranteed. This is a valid point. There is cliche that life is about the journey, not the destination and so if these folks look back and conclude that they didn't do much living (this point wasn't specifically addressed) then sure, they saved too much.

Also implied but not specified is that their accumulated savings is more than the amount they need for their lifestyle. What does that mean? In hopes that you reading this have the lifestyle you want, how much does it cost per month? For the lifestyle my wife and I have (and want), winning the Publisher's Clearinghouse Sweepstakes (we've never entered) would result in either very conspicuous and wasteful consumption or the money would accumulate in our checking account, I think the winner gets $5000/wk for life. So, at close to 60 years old, like the people in the article, if you're cruising along happily with a $75,000/yr lifestyle and know that when the time comes your $5 million rollover IRA is going to kickout a $200,000 RMD to start and you'd also have Social Security then that's more than you actually need for your preferred lifestyle. (technical note: the RMD would actually be a hair under $200k)

This is not a true problem per se but feelings of regret or time wasted are certainly not positive. Also, this scenario would owe a lot in taxes and yes it would be affordable it is still money they the couple doesn't benefit from.

The point here is one of balance. Not spending, investing really, in something that would make your life easier because you have to keep saving (the presumption being you've been a strong saver all along) is a negative tradeoff. Certainly some things are unnecessary even if they would offer a form of enhancement. An example that I hope makes the point, my wife and I each drive old cars. I have a 2006 Tundra and my wife has a 2003 4Runner. Properly maintained, Toyotas can last a very long time. We haven't had a car payment in more than 10 years. A new car with more features would be an improvement but not an important life enhancement. This year we areinvesting in a generator, I've mentioned this a couple of times. We bought a Goal Zero that has come in handy for two brief outages that happened recently but it is not a whole house solution. We've investigated a few things and are leaning to a solar powered back up system (probably the wrong jargon) where a few panels charge up an array of batteries that we can switch to when the power goes out.

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