Are You Focusing Too Much on Your Retirement Savings?

People are constantly discussing the issue of poor retirement planning and the lack of savings that many Americans have. Not saving enough for retirement can cause serious issues, and if you start saving too late or if you don’t save enough, you might have a very difficult time during retirement. Still, there is no magic number that will guarantee that you will be happy and financially comfortable during your retirement years.

In general, it’s better to save too much or more than you need, rather than not saving enough. Occasionally, though, there are circumstances when someone might focus too much on retirement spending. If you are neglecting other important issues, like paying off debt, establishing an emergency fund, saving for a college fund, or even just leaving money for fun activities, you may be prioritizing retirement too heavily. As important as retirement savings are, there are other important factors to consider.

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Financial needs

According to Fidelity, you should save at least eight times your ending salary when you retire. This is good advice to follow — and some people would suggest you need even more — but some variables will change and can affect that amount, such as when you start saving, when you plan to retire, your deferral rate, as well as several other things that could potentially affect the amount that you need.

There is no set amount or percentage that works for everyone. You may spend less when you retire, or you may spend more, so it’s important to think about your retirement plans and goals to determine if you are saving enough or if you are saving more money than you will ever need. Filling out a retirement budget can help. Kiplinger also has a quiz that will help you determine if you are knowledgeable about retirement savings.

Debt level

Determining how and when to pay off debt is always a difficult decision to make. No one wants to have debt, and if you are drowning in debt or if you are getting constant calls from creditors, you probably need to prioritize paying down debt. Some debt is very detrimental, including credit card debt, because it is easy to get into the habit of paying the minimum, or facing interest charges, which put you into even more debt.

Making regular payments on other debt, such as a reasonable car loan or a school loan with a low interest rate, might actually help you build up your credit. Living with no debt is usually the best place to be, but if you have a small amount of debt, often your best bet may be to save for your retirement, instead of paying off that debt quickly. It all depends on your personal circumstances: If you are saving loads of money for retirement while you’re sitting on a huge pile of debt, you might want to make a change.

Other savings

You will certainly need a lot of money to retire comfortably, but in addition to ignoring debt, failing to establish other savings can also be a real concern. If you have a good nest egg set up for retirement but you have no emergency fund, you will face going into further debt if an emergency arises. Although you can take money from your retirement fund in certain situations, this isn’t the best way to deal with an emergency.

Instead, you should try to at least have some money saved for an emergency (hopefully several months’ worth of your income). It’s also important to save for repairs that you know will come soon, as well as other expenses that are not part of your regular budget. You shouldn’t pour money into a low-interest savings account to the extent that you ignore your retirement savings, but you do need to save for other situations in addition to retirement.

Educational expenses

Not every parent can help pay for their kids to go to college, and that is fine. Having them pay for at least part of their own education can actually be a good way to teach kids about money. However, if you want to help your kids attend college, then you need to think about how you are going to do it. Consider how much you have already saved and figure out if you are putting too much emphasis on saving for retirement. If you are, you can consider putting money in in a college savings plan, such as a 529 plan, which may give you tax benefits in addition to helping your kids.

If you have no children or don’t plan to help your children pay for college, you still might want to consider your own education. If you have always wanted to obtain your degree or pursue an advanced degree, and your retirement account is healthy, now might be a great time to invest in your own future.


It’s important to set money aside to have fun. The best way to do this is to set aside money each month from your budget. Usually the amount should be small — enough to let you participate in activities you enjoy or go out to dinner once in a while. However, if you are a great saver and you are ahead of where you need to be for your retirement, splurging once in a while isn’t a bad thing. The real issue is when people don’t have enough money for retirement, or they spend big too often. If you are a healthy saver, then there’s no reason to count out your own entertainment, as long as you aren’t going overboard.

It is absolutely essential to save for retirement, and in general, the more you save, the better off you will be. However, if you know that you are saving more than you need, or you already have enough, you should consider your other needs, as well.

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