Is There Such a Thing as Saving Too Much for Retirement? Here's the Truth.

I'm at a stage of life when a lot of my friends are hitting the midway point of their careers. And while most of the people in my social circle aren't ready to start counting down to retirement, they're worried about saving for it.

And I'm in the same boat. It's hard for me to know how much money I'll need once my career comes to an end, so I've always subscribed to the philosophy that more retirement savings is better than less.

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But I also think there is such a thing as allocating too much money to retirement savings. And it's something I was doing for a stretch of time without even realizing it.

When you sacrifice your near-term happiness, here's what happens

Something interesting happened to me during the pandemic: When the world shut down, I found myself with extra working hours and tons of economic news to write about.

So write I did. I hammered out content morning till night, all the while trying to manage remote school and a gaggle of restless kids who missed their friends and their normal routines.

You'd think that would've prompted me to give myself a break in other regards -- for example, splurge for a somewhat expensive vacation rental that summer so we could travel safely at a time when I wasn't thrilled about booking a hotel. Instead, because I'd gotten into a really good flow with retirement savings contributions, I refused to divert funds away from my 401(k) and brokerage account.

The result? That year was more difficult for me (and my family) than it needed to be. And my reason for denying myself some of the things that would've made it better was that I frankly got obsessed with growing my retirement nest egg while I had the opportunity.

I didn't just stop there, though. I obsessed over funding my retirement savings in 2021 and 2022 before coming to my senses in 2023 and realizing that yes, we were entitled to one nice vacation each year, among other reasonable indulgences.

And you know what? Once I started scaling back on retirement contributions, my savings still got funded. Maybe it wasn't the same percentage of my income as before, but it still happened.

It's all about striking a balance

I only spent a few years in retirement fund obsession mode. But people fall into that trap on a long-term basis, and it's painful to watch.

So what I've learned from my experience is that yes, there's certainly such a thing as saving too much for retirement. If you're denying yourself little things that make you happy, or bigger things you can afford, because you keep raising the bar on your savings goals, you're going to end up needlessly miserable in the near term.

I like to tell people to try to save 15% to 20% of their pay for retirement at a minimum. And if you can comfortably go beyond that, great -- you'll be happier for it later in life.

But there's a reason I rejected the FIRE movement years ago -- I never liked the idea of sacrificing near-term joy to exit the workforce on an earlier schedule. So I'm glad I've learned to strike a better balance.

I've also learned that it's OK to adjust your retirement savings goals based on where you are in life. In recent years, I've come dangerously close to burning out between juggling a hectic work schedule and parenting responsibilities. This year, my plan is to cut back on the former and try to focus more on the latter.

Will it mean that less money goes into my nest egg? Probably. But I'm grateful my brain has learned to be OK with that. And if you've been pushing yourself to save for retirement to the max, it may be time to ask yourself whether you, too, are actually going overboard.

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