Many people save for retirement through RRSPs, TFSAs, pensions (if they’re lucky) but Shea recently told me about the concept of “oversaving” where people become so focused on saving that they find it hard to switch to spending those savings as retirement approaches – especially if you’re still in good health and feel like you have to stretch your savings in case you live a really long time.
She pointed out that neither of us had missed a month of investing since we were 18, even early in our careers when money was tighter, how we’d fully maxxed both kids’ RESPs and how we’d been able to also utilize some windfall gifts/non-work sources of income to maximize other investment opportunities. (Heck, I bought some Apple stock on a lark when Sasha was born and that’s grown by 1000% since then!).
(I had heard of the concept of “oversaving” previously but not by that name. When I went to my parents’ financial advisor with them, I asked how many of his clients (who are relatively high net worth individuals) began spending and/or gifting money while still alive/before getting too old to use/enjoy their savings. He said maybe only 20% of his clients were able to succcesfully switch from savings to spending on themselves and the ones they love.)