Ridofranz / iStock.com
Commitment to our readers
The GOBankingRates editorial team is committed to providing you with unbiased reviews and information. We use data-driven methods to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our review methodology for products and services.
20 years
help you get rich
trusted by
millions of readers
For years, frugality, when not confused with being cheap, was considered the gold standard of retirement planning. Save aggressively, spend as little as possible and you’ll be set, otherwise the financial advice supposedly goes away.
However, after decades of careful budgeting and sacrifice, many retirees are now asking whether too many cuts were made at the expense of enjoyment, health, and meaningful experiences during their golden years. For example, Agnes P. saved every penny she could for retirement, and now, at age 80, she has more money than she knows, but fewer happy memories than she’d like.
“I was so focused on saving that I forgot about actually living,” Agnes said. His story shows three big reasons why being too frugal can be harmful.
1. Missing out on life
Agnes spent her entire life looking forward to what she saw. Growing up without much money instilled in him the idea that he had to save every penny. She packed lunches, kept her old car and rarely took time off. While her friends were vacationing, Agnes put every spare dollar she had into her retirement accounts.
“I thought I was doing the right thing,” she said. “But I gave up a huge part of my life for a future that was not guaranteed.”
Agnes shared that probably the number one thing she missed was having fun with friends – even in her retirement. She said no to expensive dinners with friends, Broadway shows, and trips (even to nearby locations) to save money.
“I lost touch with a lot of people because I always said no,” Agnes shared. “Now I’m retired with fewer friends and I don’t have as many good times to look back on.”
2. Too much money, too late
Agnes now has a problem that many retirees will love: more money than she needs. Due to years of savings and compound interest, he was left with a huge capital.
“I have a lot to live for the rest of my life,” he said, “but I can’t buy back the time lost or the opportunities missed.”
3. Health problems come in the way
Agnes didn’t think about how health problems might limit her retirement plans — especially as she got older. He now has the money to travel, but his body can’t keep up with it.
Agnes said, “I wish I had taken some bigger trips when I first retired and had more energy.” “Now even short walks take it out of me. I’m trying, but it’s not the same as before.”
9 ways to find the middle ground
Agnes learned the hard way that it’s important to balance saving for the future with enjoying the present. You need financial security, but not at the cost of a good life.
On both sides of the middle ground, here are nine important financial lessons he learned along the way.
1. Spend on experiences, not stuff
Agnes realizes that her best memories come from experiences, not things. “I should have spent less on things and more on making memories,” he said. “Things grow old, but the good times stay with you.”
2. Treat yourself sometimes
Agnes now asks people to include some “fun money” in their budget. “It’s OK to splurge from time to time,” she said. “If you’re careful with money overall, a few gifts won’t ruin your retirement.”
3. Keep your friends
Agnes regrets that the friendship ended because of her frugal spending. “Hold on to your friends,” he shared. “They’re really important, especially as you get older.”
4. Don’t wait for your dreams
Agnes’ biggest regret is postponing her travel plans. “Don’t save all your big goals for retirement,” he warns. “Try to do things when you’re younger and you can enjoy them more.”
5. Talk to a professional
Agnes wishes she had gotten financial advice earlier. “Any expert could have told me I was saving too much,” she said. “They might have encouraged me to relax and enjoy life more.”
6. Adjust your savings
“Even after I had enough money, I kept saving like crazy,” Agnes said. “I should have checked my progress and perhaps saved less so that I could enjoy life more in my later working years.”
7. It’s OK to spend more sometimes
While people often warn against lifestyle inflation, Agnes realized that a few increases in spending could make life better. “As you earn more, it’s OK to upgrade your lifestyle a bit,” she said. “You don’t have to live like you’re broken forever.”
8. Save for health care
One area where Agnes’s savings were successful was in covering health costs. “Medical bills in retirement can be overwhelming,” he warns. “It’s really important to have extra money for this.”
9. Giving back gives purpose
Agnes shared that what she loves about having a larger bank account is that she can give back to the causes she loves. “I just want to give it all to good causes!” He said.
Kaitlyn Moorehead Contributed to the reporting of this article.