When it comes to saving money for retirement, save early, save often is the conventional wisdom. But if you're overzealous, you may end up saving more than you actually need.
The recommendation to save is so widespread today that even teenagers today are saving for retirement. This can mean that some people save too much money for retirement.
Is There Such a Thing as Storing Too Much Money for Retirement? If you are sacrificing the joy of your current daily life, the answer is yes.
When it comes to estimating retirement expenses, few people actually create detailed, year-by-year budgets. Instead, they follow a popular rule of thumb.
Plan to spend about 70% of your annual income after you retire, aka the 70% rule. However, it is becoming increasingly clear that pre-retirement income is far from one-size-fits-all.
It is well known that retirees spend less as they age. The main reason for this is that people get less pleasure from spending money on various items and activities as they get older.
It's reasonable to expect total spending to decline during your retirement years, explains Susan Rohweather, one of the authors of the RAND study.
Saving for retirement is always a compromise. "One of the biggest problems with saving for retirement is that we don't know how long it will last."