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6 signs you’re investing too much for retirement

The balancing act: Assessing your retirement investments against your short-term finances.

There’s no denying that investing for retirement is a top money goal you should include in your financial planning. But can you take it too far by investing too much and sacrificing your shorter-term goals or quality of life?

Here are six signs that you may be spending too much on retirement compared to other critical financial priorities.

1. You don’t have savings.

You may invest too much for retirement if you have too little or no emergency savings. First, consider building a healthy cash cushion for short-term or unexpected needs, like buying a car or losing your job or business income.

Savings should never be invested but kept in a high-interest savings account so it always stays safe. A good target amount is three to six months’ worth of your living expenses (housing, food, utilities and debt payments). For instance, if you spend $4,000 monthly on living expenses, make a goal to keep at least $12,000 in savings.

Once you have healthy emergency savings, consider investing for medium and long-term goals, like paying for a young child’s education or retiring. Investing means taking some risks with the expectation of future growth. Since most investments can fluctuate significantly in the short term, they’re not recommended for achieving short-term financial goals.

2. You have high-interest debt.

If you have expensive debt — like credit cards or loans with double-digit interest rates — growing instead of shrinking, you may need to allocate more money to it and less to your retirement.

For instance, you could temporarily increase your debt payments or take out a fixed-rate personal loan to pay off higher-rate unsecured debt. The rate and terms a personal loan lender offers usually depend on factors like your income and credit. Remember that even though a personal loan may cut your interest, the shorter your repayment schedule, the higher your monthly payments will be.

You might move unsecured debt to a new or existing balance transfer credit card with a 0% APR promotion that may last up to 18 months. Every transfer is subject to a fee, such as 3% or 4%, which gets added to your balance.

Once a transfer promotion ends, your interest rate increases and could be very high. Therefore, it works best when you’re sure you can pay off the entire balance before the promotion expires.

Use a comparison site like Finder to shop for the best balance transfer cards with the lowest interest, transfer and annual fees. Choose an offer where you come out ahead, even accounting for the transfer fee.

3. You don’t have enough insurance.

If you have too little or no essential insurance protection, like renters, home, health, life and disability policies, you may be investing too much for retirement. Consider what insurance gaps you should fill to reduce any vulnerabilities.

RELATED: Compare insurance policies and get quotes online

4. You have enough invested by age.

One way to make sure your retirement planning is on track is using age-based goals, such as:

  • By 30: Save the equivalent of your annual income or salary
  • By 40: Save two times your yearly income
  • By 50: Save four times
  • By 60: Save eight times
  • By 66 or 67: Save ten times

That’s a rough guideline, and you may need more or less each decade based on your unique goals. Plus, you may have pension income or high expenses to factor into your retirement plans.

If you’re ahead of typical milestones, you may invest too much for retirement. For instance, you may be a super saver if you’re in your 30s and have invested two or three times your annual income.

5. You never reward yourself.

If you’re a super saver, you may also be super frugal and not likely to reward your financial accomplishments. While there’s nothing wrong with aggressive retirement goals, remember to enjoy your money by occasionally spending it on yourself.

6. You have too much money stress.

According to Finder’s Consumer Confidence Index, 75% of respondents feel stressed about their finances. In some cases, that may cause you to invest too much. For instance, if you worry excessively about future inflation and healthcare expenses, you may compensate by investing more than enough for retirement, sacrificing your current lifestyle.

Talk to a wise friend, family member or financial adviser if you have persistent money stress. If you need help deciding the right amount to invest based on your retirement goals, get help from a certified financial planner. They can help you set the right financial goals, choose the best accounts and investments, and achieve a realistic retirement.

About the author

Laura Adams is a money expert and spokesperson for Finder. She’s one of the nation’s leading personal finance and business authorities. As an award-winning author and host of the top-rated Money Girl podcast since 2008, millions of readers, listeners and loyal fans benefit from her practical advice. Laura is a trusted source for media and has been featured on most major news outlets, including ABC, Bloomberg, CBS, Consumer Reports, Forbes, Fortune, FOX, Money, MSN, NBC, NPR, NY Times, USA Today, US News, Wall Street Journal, Washington Post and more. She received an MBA from the University of Florida and lives in Vero Beach, Florida. Her mission is to empower consumers to live healthy and rich lives by making the most of what they have, planning for the future and making smart money decisions every day.

This article originally appeared on Finder.com and was syndicated by MediaFeed.org.

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Written by

Money Expert and Spokesperson

Laura Adams is a money expert and spokesperson for Finder. She's one of the nation’s leading personal finance and business authorities. As an award-winning author and host of the top-rated Money Girl podcast since 2008, millions of readers, listeners, and loyal fans benefit from her practical advice. Laura is a trusted source for media and has been featured on most major news outlets, including ABC, Bloomberg, CBS, Consumer Reports, Forbes, Fortune, FOX, Money, MSN, NBC, NPR, NY Times, USA Today, US News, Wall Street Journal, Washington Post, and more. She received an MBA from the University of Florida and lives in Vero Beach, Florida. Her mission is to empower consumers to live healthy and rich lives by making the most of what they have, planning for the future, and making smart money decisions every day. See full bio

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