are you saving too much?

The following URL rehashes a New York Times published a couple weeks ago spotlighting some academic studies suggesting very vaguely that Americans might be saving too much. I'm including the Yahoo! article to avoid the annoying NYT request login and signup pages.

Rethinking Retirement Savings (or Not)

Apparently, this irked some individuals in the retirement planning business, who shot back some darting rebuke found here: Could You Really Save Too Much for Retirement?


My take:

If you'd read through the Yahoo! article in its entirety, you'll bump into the author attempting to raise a worthy debate, ranging from purported academics proclaiming the consequences of saving too aggressively, to rhetorical questions such as why more of the elderly can be found working after 70+ years of age, if saving too much is really what's occurring.

Understandably, the financial planning community's outrage in the second URL makes sense from their fiduciary standpoint for their clients. By answering a shocking article with their own shock-and-awe rebuttal, their intentions are good, even though the actual message, their concerns, are actually somewhat unjustified.

Beyond that, the national savings rate - the difference between after-tax income and expenditures - is actually negative, government statistics show. This is a fact.

According to "The Coming Generational Storm: What You Need to Know about America's Economic Future": (pg. 217)

What's our best bet? If you're saving less than 10 percent of your income, excluding any employer match, you're living dangerously. Twice that rate wouldn't be excessive - the worst that will happen is that you'll have the resources for an earlier retirement or expensive medical care.

Despite this attempt to stir up controversial debate after reading this material, I'm not swaying much from my own beliefs. Retirement savings will significantly determine your lifespan. Consider the ever-popular theory that Social Security and Medicare may not even exist anymore by the time today's twenty- and thirty-somethings retire. The amount of money you have when you retire will ultimately determine how much you'll have to spend for the necessities: housing, food, clothing, transportation, health care, medicines, etc. The less you have, the less you can afford these necessities, the more likely the catastrophic risk of running out of money before you run out of life, eating out of canned cat food.

It's a "pay me now or pay me later" scenario. Either we save like crazy when we can, or adapt to a much more frugal lifestyle in our golden years - you decide.

And on this note, frankly, I'd rather save more than be destitute, shivering in some back alley.