A Retirement Savings Problem That No One Talks About

If there’s some good news about saving for retirement, it’s that you could be saving too much. Yes, it’s really possible in some cases. If you’re already accustomed to living on less because your income doesn’t permit a lavish lifestyle (and you manage credit cards wisely), you stand a better chance of getting a Social Security payout that replaces more of your income.  

The way the system works, people with high salaries are expected to stash a certain percentage over the decades to build up a nest egg that will get them through retirement comfortably. For high earners, just paying into Social Security won’t do it. 

If you’re one of those people who earns a lot and also saves a lot, it’s worth taking a look at what your expenses might be in retirement to see if you’re saving more than you need to. Most people don’t realize that spending tends to decrease as the retirement years tick by. Even when there’s more spending on health care, those costs are often offset by lower spending in other areas, like vacations. 

To see if you can cut back on your retirement plan contributions, check out our story, which also takes a hard look at a popular retirement spending guideline.