Are You Saving Too Much For Retirement? Maybe....

Are Americans saving too mcuh for retierment? It seems some people think so. Which is interesting considering the national savings rate is actually negative. Are we doing this all wrong? Laurence Kotlikoff is a professor of ecnomics at Boston University. He's among a group of economists and academics that believe people should be saving less and spending more when they are younger. Less Eisenberg is the author of the book "The Number" and says that Americans don't think enough about the quality of life they want in their golden years. Both appeared on "Power Lunch."

Kotlikoff says we aren't saving the right way. He says that companies like Fidelity Investments, have calculators that come up with very high financial numbers for retirement and that those aren't realistic. He says yes--some need to save but some are over doing it.

Eisenberg says that yes--some people might be "over saving" but they really need to think about the quality of life they want in retirement. If someone is "happy living in a tree and writing the great American novel," they don't need much. And he says that even if you save "too much" --that money is not going to waste. He says there needs to be some "gas in the tank" at the end and if someone doesn't use the money--it can go for college ( for a child or relative) or whatever someone wants to do with it.

Kotlikoff seemed to focus on the retirement calculators that people use or the problem. He says they make people save 5 times too much for retirement and 4 times too much when it comes to buying life insurance.

FYI: Eisenberg stated that 40% of Americans are not saving for their retirement and that the average amount in a typical 401(K) is only $60,000. Most calculators and retirement experts recommend saving at least 10% of a worker's salary toward retirement.

According to the Employee Benefit Research Institute's 2005 Retirement Confidence Survey, 51 percent of workers age 55 and up have saved less than $50,000 for retirement -- not including the value of a primary residence. And 39 percent of workers in the same age group have saved less than $25,000 for retirement. A separate survey by Thrivent Financial for Lutherans estimates that one in five pre-retirees age 50 to 64 has less than $5,000 accumulated for retirement. (Source: Bankrate)