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No, it doesn't pay to save for "retirement", with the nebulous understanding that sacrificing all the things you want now will somehow pay off "in the future".

Where many people go wrong in their saving and investing habits is they fail to have real, discrete goals and plans to reach those goals. Saving for an ill-defined "retirement" at some point in the future with no understanding of what you want retirement to mean for yourself, or what financial resources you will need, is worthless. Putting away every dollar you can and depriving yourself of any splurging or fun might add up to a big IRA balance, but is it worth it to be rich from 65-85 if the cost is being poor from 20-65?

Just as it is pointless to save with no reason, it is equally unwise not to save at all, since "you need to live for today" and enjoy life to the fullest. Living with no sense of the future, or plan to deal with contingencies may seem free-spirited but can quickly lead to financial stress and worry. Steadily increasing life expectancies and increasing financial pressure on social welfare programs could leave the unprepared with failing health and no money for care. A high price for "living it up" in their younger days.

The key is to define your goals, lay out a plan to reach them, and stick to the plan. If your ideal life includes working at a job you love for as long as you can, you won't need at large of a nest egg as someone who wants to quit as soon as possible and travel the world. Know what YOU want, and figure out how to accomplish it, rather than listening to blanket statements about saving every penny and stretching every dollar. Truly knowing yourself and what makes you happy is crucial.

Don't save for "retirement". Save for your dream, and enjoy every step of the way!

Learn more about this author, David Janke.
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