Why You Can't Save Too Much for Retirement

You will find a way to spend any amount you save for retirement.

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Your retirement savings often competes in importance with your current expenses. Money isn't just for hoarding, it's for spending too. But it’s nearly impossible to save too much for retirement. You will always be able to find a way to spend more and may develop surprise expenses. Here are six reasons you can never save too much for retirement.

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You can inflate your lifestyle extremely quickly. Some people avoid saving too much because they don’t want to have too much money left over. But you can easily inflate your lifestyle to spend any amount of money. Consider the people who have spent every cent of their lottery earnings. No matter how much you save and how luxurious your lifestyle, you can easily inflate your lifestyle even more to use up what's left of your savings.

You might be forced to retire early. There could be another great recession, the company you work for could decide to eliminate your division, or your boss might all of a sudden not like you because you work too hard and he's afraid you will end up replacing him. Whatever the reason, it's always possible that you could be a few years short of your retirement age and have a tough time finding work. If you save more than your plan dictates, being forced to retire early might actually work out in your favor.

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Inflation could be high. No one really knows what will happen with inflation, but it's a good idea to be prepared just in case. There are many ways to combat inflation, such as buying stocks or commodities. But all of the strategies require capital, which for most people can only be accumulated through diligent savings.

Past performance does not guarantee future returns. Whatever asset allocation scheme you based your retirement portfolio on, it's likely influenced by statistics about historical asset performances that are made available publicly on a daily basis. But history doesn't always repeat itself. That fact that stocks outperformed other asset classes over the long run in the past century suggests that they will do so in the future, but there is no guarantee. Since you cannot control what ends up happening to your investment performance, you might want to control what you can, which is upping your savings rate.

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You can leave something for others. If your retirement portfolio does extremely well and you amass much more than you will ever need, this isn't a bad thing. You can leave assets to your heirs upon your passing or give some away to a charity.

Frugality has many merits. Many people who can't save think of living below their means as a sacrifice. But frugal living can be a valid lifestyle choice. Having lower expenses actually enables you to have more choices because earning an extra dollar isn't as critical as it once was. Want more freedom? Give spending cuts a try.

David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.