Is it possible to save too much for retirement? Here are the top 3 signs you're going way overboard

It’s still true that most Americans aren’t saving nearly enough for retirement, according to a recent Vanguard report. But saving to meet sometimes unrealistic — or unnecessary — goals in retirement could come at the expense of a life well-lived today.

As with many things financially, a measured approach is critical. Here are the top signs you may be going overboard with your savings.

Sign 1: Your plan lacks clarity

From a distance, vowing to go wherever life leads — a new boat, a waterside home, even #vanlife — looks romantic. But without some sense of what you want for your post-work life, it can be hard to know what you can afford versus how much money you’ll truly need.

Many investment experts suggest you should budget about 80% of your current salary each year to maintain your current lifestyle. Will you retire completely or work to pay some bills? If you’re retiring completely, you’ll need to meet your full goal first.

Consider future housing options as well. Do you plan to age in place or downsize to a downtown apartment or independent living?

Sign 2: You need a 401(k) refresher

Employer 401(k) accounts remain a primary retirement investment vehicle for millions of Americans. In 2022, workers under 50 can contribute a maximum of $20,500 to their plan annually. If you’re over 50, that jumps to $27,000.

Still have money to save? Consider a Roth IRA, which uses post-tax contributions to pay out tax-free in retirement. But contributions cap at $6,000 for younger workers and $7,000 for those over 50.

If your goal with any remaining cash is to simplify your investments, you may want to consider straight-up equity plays such as stocks or mutual funds. Just keep in mind you’ll be taxed on earnings.

Sign 3: You’re falling short on other money goals

Are you in debt? Check how much you’re putting in savings compared to paying off obligations like car loans, your mortgage and so on. If you’re contributing an amount that will put you above your retirement goal, kill off debt — especially high-interest credit cards and personal loans — before contributing to investment accounts.

Interest on debt will eventually drag on your savings, and potentially cause stress that can contribute to health and relationship issues. Almost half of couples with $50,000 or more in consumer debt say money is a top reason for arguments, according to a study from Ramsey Solutions.

Putting it all together: strive for balance

If you want to know whether you’ll have all you need to live the life you want, think in terms of balancing your life as you balance the numbers.

Will you retire completely or work a little? Combining Social Security with retirement and other assets, will you have enough, too much or too little? One common rule of thumb is to follow the 4% rule for withdrawals, but it’s always best to consult a financial adviser to design a plan that meets your specific needs.

Finally, do you find yourself postponing some short-term goals such as taking well-earned vacations or simply socializing at a restaurant with friends? While it’s possible to overspend on today’s luxuries, there is value in enjoying your life now by spending within your means.