Tuesday, May 11, 2010

Are People Saving Too Much?

There are some media articles coming out every now and then stating that there are a group of economists out there who are suggesting that some people may be saving too much for retirement. I find this very interesting.

I find this interesting because I strongly believe that many banks, mutual fund companies, and other investment companies do their best to convince the public that if you don't sock as much money as you can into their investment products then you are going to end being a poor desolate person. Just think of those Freedom 55 ads showing that gray-haired individual sitting by his million dollar lake front property while his grandchildren swim in the water, his wife gives him a big kiss on the cheek, and his daughter smiles at him like he is the best person in the world. All because, we are lead to believe, he has saved for his retirement and is able to provide this for his family. Man, who wouldn't want that!!

That is exactly what the investment companies want you to think! You too can have that if you just give them your money so they can indiscriminately take exorbitant fees to overpay managers who do little more than meet the market (or worse - under perform the market). As a result, people are being guilt-ed into savings as much as possible - sometime too much - into their investment accounts and sacrificing things such as vacations or even going into debt just for the sake of saving.

However, even with all this said I think it is better to be saving more than less. I would rather end up with more money than I know what to do with as opposed to the alternative. I think the important thing is to realistically assess what you will need in your retirement, add some level of cushion to it that makes you comfortable and strive to get there through a regular investment and savings program.

This article was written by The Dividend Guy. To learn more about dividend investing, please follow my RSS feed or Twitter account.

1 comment:

  1. Considering the savings rate in North America is negative, the problem of people over saving is nothing compared to people under saving.


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