It\u2019s a good problem to have: having too much money saved for retirement and having additional money to leave to your heirs. Here\u2019s a look at the types of people who are saving a lot in their lifetimes and how you can be one of them.\n<\/p>\n
Who Saves the Most? <\/p>\n
A National Bureau of Economic Research<\/a> study reveals what types of people work and save the most.\n<\/p>\n According to the study, married men work in the labor force and save \u201csubstantially\u201d throughout their lifetimes. Married women\u2019s time in the labor market peaks in middle age.\n<\/p>\n Single men show a decline in working in the labor market and in their savings after age 40 compared with men who are married. Single women work less than single men and accumulate less wealth.\n<\/p>\n Both single men and single women without marriage prospects increase their participation in the labor force and increase their savings from an early age.\n<\/p>\n The study also found that couples have more than twice the wealth of singles at all ages and that a person\u2019s wealth decreases only modestly after retirement.\n<\/p>\n Small Decrease of Wealth After Retirement <\/p>\n The study reveals that people only spend a modest amount of their wealth<\/a> after they retire, and this differs from a life-cycle model. Wanting to save is one of the reasons why people have a smaller drawdown of wealth after they retire. The study found that, in particular, saving for medical expenses and saving money to bequeath<\/a> it when they die are two main saving motives for those studied.\n<\/p>\n Another factor to consider when looking at modest spending in retirement is the life expectancies of wealthy people. They live longer and retain their greater wealth as they age.<\/p>\n How to Save More Than You Need for Retirement <\/p>\n If you’re interested in leaving behind money to heirs or just want an extra cushion of money in retirement, consider these tips to save more for your later years.\n<\/p>\n Start saving early. \u201cIt\u2019s not only valuable for the sake of establishing a habit, but small amounts grow astronomically with compounding interest over the decades<\/a>,\u201d said Samantha Mockford<\/a>, a certified financial planner at Citrine Capital. How to Spend Down Retirement Savings Responsibly <\/p>\n
\nBut starting later is OK. \u201cIf you feel like it\u2019s \u2018too late\u2019 to have time on your side, think again,\u201d Mockford said. \u201cDo what you can in your current season of life.\u201d
\nBe aggressive. Don\u2019t be afraid in investing in riskier assets, like stocks, if you’re 10 or more years away from retirement. \u201cThis means that the account value\u2019s spikes would be higher, and dips would be lower, but the overall upward trend would be steeper over time,\u201d Mockford says. \u201cAs you near retirement, invest your retirement savings more conservatively.\u201d
\nAutomate retirement savings. Have money from your paycheck go straight to your Roth IRA<\/a> or traditional IRA<\/a>. \u201cMake a budget and set your paycheck deferrals to a percentage that is challenging but realistic,\u201d Mockford said.
\nMaximize tax-advantaged accounts. \u201cIncrease your 401(k) or 403(b) contributions, put more money in your Roth IRAs, contribute to an HSA<\/a> if possible, and open 529s for your kids. The earlier in life you do this, the better,\u201d said Tom Arasz<\/a>, lead financial advisor at Bmore Financially Fit.
\nWork with a financial planner. If you aren\u2019t confident in choosing investments on your own, enlist the help of a fiduciary financial planner to steer you toward a successful retirement.<\/p>\n