It’s tough to over-save for retirement

Don Mecoy, Business Writer

Published: October 3, 2008

The personal savings rate in the United States is negative 1 percent, the poorest showing since the Great Depression.

While that figure fails to take into account some measures of net worth, such as increased equity in one’s home, it should stand as a stark reminder for those hoping to build a retirement fund, investment experts say.

“Everything points that we need to save more,” said Oklahoma City's Steve Lanier, a member of the Society of Financial Professionals and a certified employee benefit specialist. “Fidelity says the average 401(k) balance is $64,000. We're in trouble if that's what we're depending on.”

On the other hand, Lanier said he has seen young clients urged to cut their spending drastically by investment professionals.

“We probably oversell the need at the front end to the possible detriment of somebody not enjoying life to its fullest because you don't know when it's going to end,” he said.

Save, save now and keep saving is the message from Greg Biggs, a financial adviser with Biggs Financial/AIG Financial Advisors in Oklahoma City.

“I have yet to meet anybody that was upset because they had saved too much money,” Biggs said. “It's quite the opposite. I knock my head against the wall on a daily basis trying to get people to quit spending on themselves and start saving for their future.”

Oklahoma City financial adviser Brian Puckett said a number of his older clients reach retirement with vast pools of wealth gathered not through lucrative salaries but through compulsive saving.

“I've seen it several times where one of the spouses gets excessive with their compulsion to save every single penny and hoard and hoard without living now,” Puckett said. “It's a delicate balance.”

Recently Puckett discussed asset allocation with a client in his mid-80s who had not made a withdrawal from his account in a decade. The cash accumulated by such clients may wind up benefiting a charity, church or heirs, Puckett said.

But any suggestion that Americans should spend more and save less is met with scorn in some quarters.

So are Americans saving enough? There is no definitive answer, said Olivia S. Mitchell, professor of insurance and risk management at Wharton and executive director of the school's Pension Research Council.

Some studies, including one of her own, suggest Americans are not headed for the old-age catastrophe that many predict. But key factors, like the future health of Social Security, are impossible to handicap.

Don Mecoy: 475-3942, dmecoy@oklahoman.com

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