XPost: soc.support.depression.family, alt.economics

from https://www.marketwatch.com/story/i-have-a-seven-figure-nest-egg-am-i-saving-too-much-for-retirement-2020-06-30

Help Me Retire
I have a seven-figure nest egg — am I saving too much for retirement?
(So ---- 3 to 7 million $)
Published: July 18, 2020 at 12:59 p.m. ET
By Alessandra Malito

A big pile of money is great, but it raises questions

I recently had a conversation with a colleague about retirement and was
told I’m saving too much! My wife and I are both 57 and have been
aggressive savers ever since my brother, an institutional retirement
financial expert, told us to max out our savings when we were 25 years
old. As a result, we have saved 25-30% of our income and invested
aggressively over the years. We have a very healthy nest egg in the low-
to mid-seven figures and no debt other than our home, which is very low interest and will be paid off before retirement. Our children have no
student debt. My colleague says we are “postponing” our lives and
creating tax problems for when we retire. We have never felt like we
have missed out on anything by saving and have lived a full life but is
there such a thing as saving too much?
Signed,
Live for today or save for tomorrow?

Dear Live for Today or Save for Tomorrow,

I’ll start with the answer you may not have expected: Yes, there is such
a thing as saving too much money, financial advisers said. That doesn’t necessarily mean you personally have saved too much, though.

NOW PLAYING:
How Investors Can Play the Coming Rise in Sports Betting

Visit our Video Center
Having an “overfunded” retirement isn’t a bad problem to have, but it does raise the question: what are your goals for your finances, the
present and your future, and are you meeting them? A big pile of money
is great, but it’s even better when you get to use it the way you want.
There is no one right answer here, as the situation differs from person
to person.

There is a balance between saving for the future and living for today,
and sometimes, people do overcompensate in one area.

“It is important for each person to think about this and determine where their balancing point is,” said Mark Beaver, partner and senior
financial adviser at Keeler & Nadler. There are scenarios where people
do so much planning and saving for the future, and then they’re robbed
of that future for unforeseen and devastating reasons. Or they live it
up in the moment and spend more than they save in the present, only to
end up with little to no money to rely on in their old age, he said.

Your colleague isn’t wrong to suggest that some people do “postpone” their lives in the name of aggressively saving, but that could only
happen if you’re living so frugally today that you’re not enjoying your life now. Some people save aggressively because they’re afraid of
running out of money later in life, said Christopher Woods, a financial
adviser and founder of LifePoint Financial Group. “There are also others
who are happy with their lifestyle and don’t see how spending more will
make them any happier,” he said. “And that’s perfectly fine.”

But now for the good news: In your particular situation, it doesn’t
appear that you’ve saved “too much,” said Joel Cundick, a financial adviser at Savant Capital. “If this couple has never felt like they are missing out and have had a full life thus far while accumulating a
seven-figure balance sheet, that is the textbook definition of financial success,” he said.

The balancing point, Beaver said, lies in how you feel about the present
while you save for the future. “If it’s keeping you from living the life you want right now because you’re only looking at tomorrow, that is
probably too much,” he said. You should aim for financial security, but
also put your money toward your values, which may include experiences,
said Ashley Gragtmans, a behavioral financial adviser at Parsec
Financial. “In general, I think it’s hard to ‘save too much,’ but if you
lack joy along the way, something needs to be re-evaluated,” she said.
You noted you have not had that problem.

So, what can you do from here?

Your colleague may be right about setting yourself up for hefty tax
bills in the future. How much is owed will depend on many factors,
including how much you withdraw in a given year and how you diversify
the accounts you withdraw from.

For example, you can use traditional retirement plans, which are funded
with pretax dollars, as well as Roth accounts, which contain after-tax
dollars. When it comes time to withdraw from those assets, the money
from the traditional account will be taxed at ordinary income rates,
while the latter will be a tax-free distribution. There are pros and
cons to using these accounts though, so you have to see what is best for
your situation. There are various alternatives and supplemental accounts
as well to save money, such as taxable investment portfolios and life insurance. A financial adviser could help you avoid excessive tax
burdens and strategize so that you’re getting the most out of your money.

Although you seem to have your nest egg in order, there are questions
you can ask yourselves so that your retirement plan is well-rounded,
said Nadine Burns, president and chief executive officer of A New Path Financial. Questions to consider include: do you have additional income
to supplement your retirement, like a pension? When do you plan to claim
Social Security and how does that fit into your expected retirement age?
(If you retire before you claim, you’ll have to draw down some of those assets before you start receiving benefits.) Are there any health issues
in the family, such as dementia, that may warrant long-term care
planning? And what do you want to do with your retirement, so that the
money you’ve been saving is used well?

Aside from planning accordingly for the rest of your years, if you
intend to leave money to loved ones or charities, you should have a
clear estate plan written up so that your wishes are met, Cundick said.
Some advisers have seen their super-saver clients become “super-givers,” like Leon LaBrecque, chief growth officer at Sequoia Financial Group. “I
love saving,” he said. “However, money is nothing but a piece of paper
with a picture of a dead president on it until you get rid of it. You
can save it for you or save it for others.” Charitable giving can also
lessen the burden of tax obligations.

Also see: All the tax-friendly ways retirees can donate to charity

Having an estate plan ensures your hard-earned savings are being used
the way you intended them to be used. However, you should consult with a financial professional, especially as rules can change. For example, the
Secure Act passed in December eliminated the stretch IRA provision for inherited accounts, which could force loved ones to pay much more in
taxes than you’d like.

But back to the present: Make sure to continue enjoying life now while
you save and prepare for retirement, said Michael Simmons, director of financial planning at Transitions Wealth Management. “At some point, you
may have the financial resources but lack the health or even the desire
for things such as travel,” he said.

In the meantime, you should pat yourselves on the back, said Liz
Gillette, a financial adviser at MainStreet Planning.

“For most of us, investing versus spending is a competing priority that
we work to manage. Living life in the now because life is uncertain but saving/investing enough so we don’t compromise our future selves,” she said. “As long as that money can be used in ways that serves their
values and priorities, I certainly wouldn’t say they have saved ‘too much.’”

---------
Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com.

More from MarketWatch

New Labor Department rule changes default retirement plan disclosure
from paper to electronic
Social Security is under pressure, senior citizens are battling a health
crisis — it’s not easy aging in America
Worried about going back to the gym? Here’s a guide to staying fit at home About the Author

Alessandra Malito
Alessandra Malito is a retirement reporter based in New York. You can
follow her on Twitter @malito_ali.

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)