Every finance newsletter tells you to save more. Here’s the opposite argument.
Some people save too much. Not most. But some.
A reader emailed me last year. 58 years old. $2.1 million saved. Still saving 45% of his income. Still living on a strict budget “just in case”. Still refusing to travel.
He asked me: “Am I on track?”
He was decades past on track. And he was wasting the one resource he couldn’t get back. Time with the health and energy to enjoy what he’d already earned.
Over-saving has two signs. First, you’ve already accumulated enough for your planned retirement lifestyle plus a reasonable buffer, and you’re still saving aggressively instead of shifting toward enjoyment. Second, you’re cutting experiences you’d value highly “because they cost too much”, while your portfolio grows faster than you’ll ever spend it.
The danger isn’t running out of money. The danger is running out of life while still saving for it.
There’s a simple calculation. Total savings, divided by your annual expenses, gives you years of financial independence. If that number is more than 30 and you’re already over 50, you don’t have a savings problem. You have a spending problem in the other direction.
Rule
Money is a tool, not a goal. There is a point where the return on spending on experiences exceeds the return on saving. Recognise it when you reach it.
Action for this week
Calculate your savings divided by your annual expenses. If the number is above 25 and you’re close to retirement age, start asking: what am I saving for that I’m not doing now?
Next week
The salary sacrifice question most people get wrong.
Know someone who needs permission to spend? Forward this.
P.S. The richest retirements aren’t the biggest portfolios. They’re the ones where the money matched the life. Under-saving is a problem. Over-saving is also a problem. Both are failures of design.
Decide Your Money
Not how much you earn. How well you decide.
Decide Your Money Educational content only. Not financial advice. Decide Your Money is not a licensed financial adviser. Speak with a qualified professional before making financial decisions.