Opinion: The moment I realized we’re saving too much for retirement

Opinion by Bill Perkins

(CNN) — When you’re planning a vacation, you probably think about where you want to go, how you’ll get there, and what you want to do once you’re there. When you know all that, you can easily figure out how much money you’ll need to make this vacation a reality.

But when people are planning the biggest, longest vacation of their lives — their retirement — most don’t do any of that. They’re thinking about how to save money, where to invest these savings, and how to minimize their tax burden, and yet they have only a vague sense of how they want to spend their free time or what their health will enable them to do as they age.

That’s the big error people make in planning for retirement: They’re focusing on the money, without nearly enough thought to the activities that they will actually be doing.

Watching my dad in the last decade of his life brought this point home for me. My dad, who had played football for the New York Jets before becoming a lawyer and a politician, was a big, strong guy even in his 70s. But by then his knees bothered him, to the point where getting up and moving was too much of a hassle.

I remember my older sister urging me to visit him and to say I was downstairs — she knew that that’s what it would take to get Dad to come down. He just didn’t want to leave his room for anybody else, not even for the physical therapy he needed.

What really brought him joy at that point in his life was looking at an iPad I had filled with footage of him from his years as a college football star. As I watched him reminisce with pleasure about the glory days of his youth, it hit me: You don’t retire on your money — you retire on your memories! It was then that I realized I’d better create some meaningful memories now, and I’ve been doing that ever since.

Planning your activities with timing in mind is essential for making the most of your money and your life now and into your retirement years. If you don’t think about your future activities, how can you possibly know how much money to save? You’ll either save too little, or you’ll risk becoming one of the millions of Americans who keep accumulating wealth well into their 60s and beyond.

I know it sounds strange to call that a “risk,” as most people don’t think of accumulating wealth into old age as a negative, but that’s exactly my point: People need to realize that saving for too long is a waste if you delay gratification to the point where there is little to no gratification to be had.

Federal Reserve Board data shows that US households’ median net worth peaks when the head of the household is between the age of 65 and 74. That tells me that many people will die before they get to spend all the money they’ve given their life energy to acquire. These big savers will be rich in dollars, but poor in what the dollars are actually there for: acquiring positive life experiences.

I of course understand why people focus less on activities than on money when they plan for retirement. The future holds some big unknowns, including how long you will live and what health crisis might hit you. And it’s of course wise to save for a rainy day.

But many Americans save too much, as we can see from the data showing late-in-life net worth peaks. And when people die without having used all their savings, the remaining money often goes to their heirs, who are most likely to inherit from parents when the “kids” are in their 50s. What prompts people to save more than they can spend in their lifetimes? I believe it’s that they try to cover every worst-case scenario, which is what insurance is for. Unless you’re a billionaire, you won’t have enough to cover every worst-case scenario on your own anyway, so trying to save more for that is a losing game. Sure, insurance won’t cover everything, either, just like a seatbelt won’t always save your life in a car crash — but it’s still better to drive with a seatbelt than to never get in a car.

Some focus on saving a lot of money because, they say, they want to leave a legacy for their children and grandchildren. My book has a whole chapter on the “What about the kids?” question, and my short answer is this: Deliberate planning and intentional living mean giving your kids money when the money has the most impact, which is well before you die.

If you want to make the most of your retirement, whoever you plan to spend it with, you of course must invest in your health now so you can slow your rate of biological aging. But know that no matter how fit you become, you won’t stop age-related physical decline completely.

Muscle strength and aerobic capacity dwindle steadily but surely with age for everyone, as do most other measures of physical health. As a result, most people become more sedentary the further they get into retirement, as was certainly true for my dad.

For every Mick Jagger still rocking at 80, thousands of people in their 70s and 80s spend their days in quieter, much less physically demanding activities close to home. Sedentary activities like lunches with family and friends usually cost less than more active experiences like skiing and international travel.

That’s why many of these activities are better done earlier in your life, when you’ll be in better shape to enjoy them to the fullest. I’m 54, and when I visited St. Petersburg in 2017, I didn’t see any older people atop St. Isaac’s Cathedral — probably because most retirees aren’t up for climbing the narrow 262-step staircase that is the only path to the magnificent 360-degree views of the city. It’s not that retirees can’t enjoy their trip anyway, but it’s probably a less fulfilling trip than if they had taken it earlier.

I believe this is why, even including health care expenses, retired people spend less than working adults. When you stop to think seriously about what you’ll be doing when you retire — not just in the early years, but for the rest of your life — you’ll most likely see that you’ll need less money than you thought. If you tell a financial planner that your goal is to maximize your fulfillment, rather than maximizing the size of your nest egg, they can help you determine the right numbers for your individual circumstances.

Thinking about old age can be scary. You can have fear — or you can have a fulfilling life. The choice is yours.

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