# Can one save too much?



## larry81 (Nov 22, 2010)

Interesting article from the Globe, also take a look at the comments. Lets forget the specific over-the-top example in the article and discuss the subject, can one save too much ?

I personally think that i am saving too much but i don't see the point in purchasing things i don't need simply to 'spend'.

http://www.theglobeandmail.com/glob...acelift/can-one-save-too-much/article2046769/


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## Four Pillars (Apr 5, 2009)

Definitely an interesting idea.

I think it's possible to save too much. Not sure how to define it though.

Perhaps if you have certain financial goals and are saving more than you need to meet those goals, then maybe you are oversaving.

[edit] Just read some of the comments. They're right - that advisor was completely out to lunch.


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## larry81 (Nov 22, 2010)

What if someone make way more annually than he actually need ? Does that mean he should go wild and purchase an expensive euro car, a larger house, a boat etc ? Spending only for the sake of spending is a non-sense.

IMHO, a person in this situation should accumulate and invest with the goal of generating 50k passive income, and THEN use this money to buy expensive toys.

However, there no point in living like Ebenezer Scrooge only to accumulate more wealth.


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## larry81 (Nov 22, 2010)

Four Pillars said:


> [edit] Just read some of the comments. They're right - that advisor was completely out to lunch.


I have meet a fee-based advisor from T.E. Wealth, he was kind of index friendly but at the same time he tried to push 2.5% MER funds...


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## the-royal-mail (Dec 11, 2009)

I don't think you can ever have too much money. I've been very busy the past couple of years establishing a tiered savings plan and have had to access tier 2, twice now. Then I spend the next while re-establishing that fund before something else happens. If you have extra money you should think to the future and what sorts of things you might want. Wedding, baby, new car, house downpayment etc. All of these things cost lot of money and should cure any perception of having too much money.


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## Karen (Jul 24, 2010)

The article made me stop and think about whether I have saved too much. I am retired and have have a good monthly income, as a result of my own db pension plan and pension income from my two deceased husbands, so I'm unlikely to spend most of my assets. In my case, unlike the woman profiled in the article, at least I have children to leave it to, so it will be put to good use.

One thing that has made me wonder I may have saved too much is that this year, for the first time, I have lost about half of my old age security - and in a few years, when I'll be forced to convert my RRSP to a RRIF, I'll probably lose most of it. I'm not complaining about that at all, but I'm realizing that perhaps with better planning (pulling out money from my RRSP over the last few years, gifting some of my GICs to my daughters, e.g.), I might have been able to avoid that.

But what it boils down to is that when I was divorced at age 40, I had no idea that I was going to remarry even once, to say nothing of twice, so I started taking saving for retirement very seriously. If things had gone as I expected at that time and I had continued to live alone, my retirement plans would have given me an adequate lifestyle after retirement, but nowhere near the comfortable one I have now. So my point is that we never know what the future holds, and it's better to plan for a worst-case scenario than be overly optimistic. I do think, though, that the woman mentioned in the article may be going too far, especially since she apparently enjoys travel (which isn't feasible for me due to health problems and severe dietery restrictions).


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## Dave (Apr 5, 2009)

I think that most of us wish they had that problem  I do not believe that one can have too much money, but I believe in balance. To me, living like a college student all my life just to have a few hundred thousand or million dollars more at age 65 is not worth it. I know that I will not enjoy the beaches of the Carribean the same when I will be 70. And I do not even know if I will make it to retirement in good health or at all. Life is full of surprises.

Dave


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## Dave (Apr 5, 2009)

Royal-mail, can you give more details about how your savings are organized ? I am curious.

Dave


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## slacker (Mar 8, 2010)

The problem is that we don't earn the same amount throughout our financial lives. Thus if we spend too much during our earning years, we won't have enough left for a retirement.

To restate, the solution is to save in order to smooth out consumption.

So theoretically, if one saves too much, one can simply retire early. (retire meaning not financially bound to earn income). So no problem, theoretically.

There are many practical issues that come with saving too much too early. The earlier you retire, the longer the retirement period, the higher the volatility. So the nestegg you budgetted may had look great before 2008, but afterwards, you may had to come out of retirement. This risk necessitates an saving more than reasonably necessary, and will lead to inefficiencies.

Second, if one is conditioned to be stingy and not spend on luxury, it's hard to imagine flipping on the switch at age 65, and start travelling around the world.

So I think one can indeed save too much.


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## Plugging Along (Jan 3, 2011)

Yes, I think someone can save much. I don't have the exact answer to articulate this. I think its when someone is leaving extremely below there means in terms of income, based on their current savings they have way more than they will ever need in terms of retirement, living, providing for your kids/future, and are not spending on items that will bring them a higher quality of life. I think you need to have all 3 of these before it could be too much. It's difficult to quantify because there are many unknowns, and it's all very subjective. 

In the case of the article, I do think they she MAY be saving too much. She's living at under 50% of her means. She has more savings than she will ever need, assuming she doesn't have kids, and the key here, is that are some things that she wants to spend her money that she clearly has enough to do (such as travel), and she isn't doing it. If she didn't feel that there is anything that she is missing out, then I would save she is fine. But if she wants to spend more, but is afraid, then in her case she is spending too much.


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## the-royal-mail (Dec 11, 2009)

PA makes a good point. We've even seen that here with 22 year olds who continue to live like university students: bicycle, roomates or living with parents or cheap housing, no car, etc after starting jobs that pay $35K or more. I think everyone who makes that kind of money should at least live consistent with their peers and their standard of living. That applies to all brackets actually.

Hi Dave, my tiered savings format is explained in my sig file. Does that answer what you wanted to know?


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## financialnoob (Feb 26, 2011)

For most people before age 40, I'd say no, you can't save enough unless you struck it rich somehow. But it will vary depending on quality of life, things you'd like to do, early retirement is always an option. At the same time, I see some people who seriously cut into their current quality of life to save, like eating really cheap, poor-quality food. They see a dollar savings but not necessarily the cost in terms of reduced health, which significantly outweigh those savings.

I guess it's a personal thing depending on what you want to do with your life, as well as what stage you're at in your life. But it is possible to save too much.


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## I'm Howard (Oct 13, 2010)

The paper often prints stories about an elderly Person of limited means who, upon dying, have many millions of dollars and no immediate heirs.

Dad is 92, the probate fees are going to be very high, asking him to give monies now fall on deaf ears, He will eventually pass away and both levels of government will say Thank You and I can only think how much more useful some of his Grand Kids would have used the monies that will instead go as Taxes.

I have no doubts that some people save far too much, they have spent their whole life accumulationg and habits are hard to break.


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## hboy43 (May 10, 2009)

Hi:

Sure one can save too much. One can do anything too much, even drink too much water.

However, I don't think the complementary activity is spending more, which seems to be the implication in this thread.

I likely have saved too much. In my youth, I probably should have done things differently, but that is a sunk cost now.

So what to do going forward? I try not to wince so much when my wife comes home with yet another blowse (and asks me how it looks, oh gawd the torture!). We are starting to give away funds. This has taken on unsuspected and suprising meaning given a recent tap on the shoulder by the cold finger of mortality.

hboy43


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## andrewf (Mar 1, 2010)

She could use that extra savings to retire early if she wants. If she likes her job and will do it until 65 or later, then yeah, she should spend more.

Even donate to charity.


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## Plugging Along (Jan 3, 2011)

I think giving the money away is great, if that's what you wanted to do. However, I think if have lowered you quality of life, when you didn't have to because you are fearful not to have enough (when you clearly do), then its too much.

One person I know saves roughly 70-80% of his take home. He's single, no kind (in his late 40's) because he doesn't believe in spending money on dates, he doesn't own a car and walks every where because he doesn't want the costs associated with owning a car, he rent because is so fearful of debt. He would eat only when his company paid for it on his expense account, and other times would bring just plain sandwiches for lunch. He would tape the soles of his shoes with duct tape, so he wouldn't have to buy new ones. He was making 6 figures (I assume more now because he went into business for himself), but yet lives like he was a colledge student. He loves his work, and plans to work until his 70's, he could easily retired in his early 40s or sooner. We've had conversations where he has said he has wanted to travel, or do whatever, but he doesn't want to spend the money. He's given up on women and kids, because he thinks they are too expensive. Instead he will leave his forturne to his neices and newphews who he adores. I think he has gone too far on the savings. 

I don't think spending or giving away the money is necessarilky the answer. I think like everything else, it all comes down to balance. Spending on what truly brings you value/happiness, but yet below your means, saving for the future, without forgetting to live today, and being frugal with your lifestyle but not cheap.


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## steve41 (Apr 18, 2009)

Why don't these people simply work it out?? For goodness sake.... this is a very modest data entry exercise... current salary, loans, current savings (reg/non/tf), expected pension/cpp/oas, estate target (die-broke or leave an $x net estate), and finally a simple 'what-if' with your retirement age, rates (market&inflation) and out falls a range of living expense vs savings rate trajectories. 

This G&M example is part of a much larger problem... the fact that only a small percentage of working/retired Canadians have a written financial plan (projected numerically out over time). What people don't realize is that you can easily DIY it. None of the above elements require a professional, these are data elements that everyone has immediately at hand.

<end of rant>


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## Sampson (Apr 3, 2009)

I think one can save too much... sometimes I think my family save's too much.

I see it as a question of what the value of holding off and scrimping on some purchases now vs. future needs whether that be emergencies, early retirement, or anything else.

Our plan is to build up sizeable assets, and income streams whereby we can retire early, pay for our child(ren)'s education, and leave some legacy either to our kids, or to charity, and even with some significant planning for contingency (both through insurance policies and our own savings) our projected timeline seems too soon in life. The plan is to reach full financial independence by 47, and we are on target.

So I ask myself the question, are we not enjoying our lives as much as we could/should be. Have we been so indoctrinated by the financial services industry to think that retiring early is the end-all and be-all? Even though I quite like my job?

The reason for the dilemma is that in our eyes, we live a very high quality of life, there aren't too many things we could add/buy that would give us much more joy. But why not buy an Infiniti instead of a Nissan? Why not stay in that 4-star hotel during vacation instead of the 3-star? Why not retire at 55 instead of 47?

To me, saving aimlessly is too much. It is important to build a strong foundation and be conservative (i.e. save even more than the risk warrants), but blindly accumulating money with no goal... there's more to life than that.


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## I'm Howard (Oct 13, 2010)

My S in L got her Divorce Notice on Her 30'th Wedding Anniversary, and My Friend just got back from His Sister's funeral, She never even had time to cash Her first CPP Cheques, so all the planning in the world has the habit of going out the window.


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## donald (Apr 18, 2011)

I think it depends,i think one can save too much,sometimes goals and ambition drive a person more than money and what money can do,each tier you go up you want to reach the next.For some money is a by-product of what is truly motivating them.

Look it warren buffet,bill gates,ect..if you ever read about them they are simple men,with simple pleasures,they just happen to be really good at what they do and id bet they really dont hold the illusion that money can somehow elevate them(spending)imho buffet is escentric,i think he lives in a house thats very average,same with mexican tycoon carlos slim,i like to read about succesful people and i always notice that almost all of them are a bit like this.

On the other side of the coin,you ever notice people who are sucessful and spend lots,get a bad rap also?just try being the wealthiest person in your family....watch how subtle.

Maybe the "journey" really is greater than the realization?Im positive there are rich people who when they arrived-house,vacation house,new cars ect ect and all that money can buy wake up and realize that "stuff" is empty,the all that glitters is not always gold.


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## Dmoney (Apr 28, 2011)

I don't think it's so much an issue of saving too much, as much as it can become an issue of spending too little. If two families have identical lifestyles, but one makes twice what the other makes, is the better off family saving too much? 

While there is saving too little, saving more than enough will never actually be saving too much, unless it is at the expense of lifestyle quality. I have some friends who say I should spend more money, but I have no interest in spending on the things they see as important. I have no interest in expensive clothes or shoes, but I love going out for meals and drinks with friends. 

As long as my saving habits don't eat into my happiness, I don't think there is such a thing as saving too much. The article simply shows a woman who is saving more than enough, very different from a somewhat abstract "too much".


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## steve41 (Apr 18, 2009)

$3.3M plus her condo when she's 90??? Let's look at the winners and losers here. The losers... travel agents and the tourism industry, hair salons, nail spas, the fashion industry, restaurants, luxury car dealers and mechanics, luxury home furnishing/entertainment suppliers. Let's not forget charities.

The winners? That's easy... the feds and the investment dealers. (taxes and MERs) This is beyond stupid.


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## Karen (Jul 24, 2010)

I don't think it's her responsibility to support any kind of business that she doesn't choose to, no matter how much money she has. We don't know that she doesn't spend money on getting her hair done, and she probably does take her car to a mechanic now and then. But as for things like buying a luxury car if she's perfectly satisfied with the car she has, paying someone to give her phony fingernails if she's not the kind of person who wants them, or buying new luxury furniture that she doesn't need - wouldn't that be stupid?

On a *VERY* much smaller scale, my daughters are always telling me to spend my money - not to feel that I should save it for them, and I tell them that I not only have everything I need, I have everything I want. I assure them that if I want something, I will buy it (I just bought myself a new computer), but surely they don't want me to spend money just for the sake of spending it. Even though this woman has a lot more money than I do, I think the same principle applies.

As for charity, we don't know what her plans are; maybe she prefers to keep what she has for her lifetime and leave money to charities in her will - surely that's her business.


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## Financial Cents (Jul 22, 2010)

@Karen,

From what I've read, it sounds like you're in good financial shape to say the least. 

I think folks can save too much, be focused on saving too much and missing the ride life has to offer with all its ups and downs. While I love investing and learning about how to do it better and better, I'm not going to sacrifice many things life has to offer in order to have a huge, fat bank account when I'm 70, 80 or 90. 

Did you ever consider collasping your RRSP early?

@steve41 - agreed. $3.3 M at age 90 is the antithesis of dying poor.


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## steve41 (Apr 18, 2009)

> my daughters are always telling me to spend my money


 Can you imagine her financial adviser telling her the same thing? _His_ BMW mechanic would prefer him not to.


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## Karen (Jul 24, 2010)

> Did you ever consider collasping your RRSP early?


As I explained in another post, my annual income has unexpectedly improved in recent years due to receiving survivors' benefits from my two late husbands, hardly something I planned for. If I had known how my life was going to go, I would have started collapsing my RRSP early, but I don't see any point now. In fact, unless you have some advice for me that I haven't thought of, I plan to leave it until I have to convert it to a RRIF, so I don't lose any more than necessary of my old age security.



> I think folks can save too much, be focused on saving too much and missing the ride life has to offer with all its ups and downs. While I love investing and learning about how to do it better and better, I'm not going to sacrifice many things life has to offer in order to have a huge, fat bank account when I'm 70, 80 or 90


I'm not sure if the above quote was just a general comment or whether you're wondering whether I've sacrificed many things in my life. I assure you that I haven't done that; in fact I've had a very good life. I've travelled in North American, Great Britain, Ireland, several Asian countries, and I lived in Australia for two years. I even spent a week in New Guinea years ago. I'm very grateful that I took advantage of those opportunities when I was able to, because my health doesn't allow me to do it now. In other words, I completely agree with you!

Note to Steve: Good point!


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## andrewf (Mar 1, 2010)

donald said:


> Look it warren buffet,bill gates,ect..if you ever read about them they are simple men,with simple pleasures


Gates is hardly a playboy, but he does live in a many million $ mansion on the coast. I admire what he's doing in his charitable activities. It will be a more meaningful legacy than what he did with microsoft.


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## Financial Cents (Jul 22, 2010)

@Karen, re: collapsing your RRSPs, wow, I had no idea. You never know what life will bring both good and not so much. The living life to the fullest comment was not directed at you at all, rather, my philosophy on life to avoid saving, saving and saving and to never enjoy life's opportunities.

It sounds like you've taken some amazing trips, *great on you to do so! *


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## KaeJS (Sep 28, 2010)

Save too much?

No.

You can always spend it later or give it away to people who need it.


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## steve41 (Apr 18, 2009)

KaeJS said:


> Save too much?
> 
> No.
> 
> You can always spend it later or give it away to people who need it.


$3.3 Million fu**ing dollars at age 90? You must be kidding.


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## KaeJS (Sep 28, 2010)

steve41 said:


> $3.3 Million fu**ing dollars at age 90? You must be kidding.


Yeah. *IF* she retires at 60. Continues to make $90k/year and assumes a 5% return on all investments while keeping her standard of living the same. She's in her 40's right now.

She can retire sooner, if she wants. Or she can increase her cost of living if she wants.

So, I still say that no, you can never save too much.

Go buy a new car or house. Retire 10 years earlier. Go travel and increase your standard of living. Go sponsor some kids.


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