The Pros and Cons of Oversaving for Retirement

Saving is generally a good thing, especially if you’re someone who’s gunning for a comfortable retirement. With the way the economy is going, it seems more and more necessary to put aside a set amount as a huge nest egg is going to be something you’ll be needing come retirement time. So, you’ve been stopping yourself from using your credit card, denying yourself certain luxuries, and generally been living a frugal life with a set focus on the future.

However, there is such a thing as oversaving. It means exactly what it seems to mean; living an excessively thrifty life. Many people believe that the amount of money a person saves is just the right amount, so what exactly warrants the term “overspending”? What specific amount of money exceeds the typical amount of conventional or normal saving?

Oversaving is basically when you scrimp so much that your basic lifestyle becomes affected. It depends on how much money you actually make. If the majority of the money you take home (minus the daily expenses and payment of bills and credit card debts, if any) goes into your savings and none go into any leisurely purpose—that may be oversaving. Anything that’s done in excess is bad, even a good thing like saving, and oversaving has certain pros and cons.

Pro: You will have a sizeable retirement fund.

Whether you invest your money in retirement plans or just hide it under your mattress, oversaving makes sure that when you get old, you’ll be well-taken care of, at least financially. You can conceivably live a more comfortable life in your twilight years if you oversave.

Con: You deny yourself today.

By choosing not to spend the majority of the money you make, you basically deny yourself of certain emotional benefits that come with enjoying the fruits of your labor. Oversaving usually means you opt not to take vacations, or buy yourself nice clothes or keep yourself from spending on material things that you want simply because they are things you think you don’t need. However, these things are crucial to your emotional and mental health. Indulging a bit from time to time relieves people of stress, and in today’s world, that’s definitely a need.

Pro: Learning to live with less.

By if you’re used to the idea of not spending, you get to discipline yourself in terms of knowing which things are essential and which aren’t. This means you’re less susceptible to marketing ploys, less dependent on status symbols, and more content with what you have. Your self-definition may rest on more substantial things, which is good.

Con: Scrimping may lead to higher medical costs.

The basic act of denying yourself certain higher-end items could lead to your retirement fund being blown away on medical expenses anyways, preventing you from enjoying the savings you worked so hard to accumulate.

For example, if you choose to low quality mattress to sleep in every night, instead of upgrading to something that has more effective back support, then all those years of sleeping uncomfortably may lead to complications of the back. Or purchasing a cheaper automobile that has less safety features than a newer model might be something you’d end up regretting, for obvious reasons.

Oversaving has, like other things, pros—and it, too, has cons. Both sides of the argument seem equally compelling, but at the end of the day, it’s about you enjoying something you worked hard for. Either it’s going to town on your credit card or resting comfortably knowing your future is financially secure, it’s always better to do what makes you the happiest.

This article is contributed by Money Hero, Hong Kong’s leading financial comparison website. Users can compare financial products, like credit cards side by side. This lets them compare financial products which enables them to make better financial decisions.