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Retirement Mistakes Responsible Savers Make

David Ning

With most data pointing out the inadequate savings levels of average Americans, it seems like almost everybody needs to save more for retirement. But it's also possible to take retirement saving too far, and ruin your current quality of life in the process. Here are a few mistakes that diligent retirement savers should strive to avoid:

Don't become obsessed with retirement guidelines. Many retirement savers are familiar with the 4 percent safe withdrawal rule. However, it's important to remember that while aiming for a fixed number aids the planning process, you may need to adjust this strategy in retirement. Coming up with a fixed withdrawal percentage the day you retire and then religiously taking an inflation adjusted amount each year no matter what happens in the markets is simply too rigid a strategy for most people to adhere to. There's also the danger that people who strictly adhere to the 4 percent rule will deem their portfolio as falling short whenever their expenses exceed 4 percent of the portfolio balance, creating anxiety in retirement, even when their portfolio is still likely to be able to support their lifestyle.

Don't sacrifice too much of the present for tomorrow. While saving too little for retirement can lead to disaster in later years, many savers sacrifice too much of today in hopes of a better tomorrow. Remember that today is also important, so take everything in moderation. After all, money is for spending too.

Don't call it quits too early. As a result of too much sacrifice, many savers will experience burn out. They may end up retiring from their job too early, and missing out on peak earning years that may also turn out to be the most satisfying working years of their life. Some people may even realize, after years of not working, that they need to get back into the game because they underestimated how much money a multi-decade retirement requires. Even if finances aren't a problem, some retirees simply miss the social aspect that work can bring. Sure, it's hard to imagine this right now, but can you guarantee that you won't miss work after not working for 10 or 20 years?

Don't start thinking money is all you need after retirement. A healthy retirement is much more than having enough money to live on. Many savers spend way too much time planning and thinking about money. Through the working years, they sacrifice their health for a bit more money. They sacrifice their time and their relationships just to work a few more hours. Family, friends, and hobbies are just a few things that are as important as money to a comfortable retirement. Don't neglect other areas of your life as you strive for more cash in the bank.

Most people definitely need to save more, so don't use this article as an excuse to spend excessively. But if you take saving and planning too far, your retirement may not be rosy either.

David Ning runs MoneyNing, a personal finance site that shares money moves you can make to significantly increase your chances of having a comfortable retirement. He likes to share simple changes that anyone can make, such as picking the best online savings account and figuring out whether a 0 percent balance transfer credit card makes sense.

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