Key Takeaways

• After saving for decades, you might find yourself spending modestly in retirement—so modestly, in fact, that you’ll end up having enough funds to leave money to your heirs.
• Starting early and maximizing tax-advantaged accounts are key strategies for building retirement savings.

It’s a good problem to have: you’ve saved too much money for retirement, so you’ll need to leave funds to your heirs. In fact, it’s not a problem at all. Here’s a look at what the data says about people who get to this point, and how you can be one of them.

Who Saves the Most?

A National Bureau of Economic Research study reveals who typically saves the most money for retirement. According to the study, married men who work save “substantially” throughout their lifetimes. Married women save too, and their time in the labor market peaks around middle age.

Single men typically save less for retirement than married men do, especially after age 40. On average, single women work less than single men and accumulate less wealth.

The study also found that married couples, on average, have more than twice the wealth of single people. This trend holds at all ages.

Only Slightly Less Wealth During Retirement

According to the study, people typically only spend a modest amount of their wealth after they retire. There are two main reasons for this, the study found: retirees wanted to focus on saving for medical expenses, and they wanted to have money to bequeath.

How to Save More Than You Need for Retirement

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.

• Start saving early. “It’s not only valuable for the sake of establishing a habit, but small amounts grow astronomically with compounding interest over the decades,” said Samantha Mockford, a certified financial planner at Citrine Capital.
• Starting later is okay, too. “If you feel like it’s ‘too late’ to have time on your side, think again,” Mockford said. “Do what you can in your current season of life.”
• Be aggressive. Don’t be afraid to invest in riskier assets, like stocks, if you’re 10 or more years away from retirement. “This means that the account value’s spikes would be higher, and dips would be lower, but the overall upward trend would be steeper over time,” Mockford said. “As you near retirement, invest your retirement savings more conservatively.”
• Automate retirement savings. Set up your paycheck so some funds are deposited directly in your retirement account, like a 401(k). “Make a budget and set your paycheck deferrals to a percentage that is challenging but realistic,” Mockford said.
• Maximize tax-advantaged accounts. “Increase your 401(k) or 403(b) contributions, put more money in your Roth IRAs, contribute to an HSA if possible, and open 529s for your kids. The earlier in life you do this, the better,” said Tom Arasz, lead financial advisor at Bmore Financially Fit.
• Work with a financial planner. If you aren’t confident in choosing investments on your own, enlist the help of a fiduciary financial planner to steer you toward a successful retirement.

How to Spend Down Retirement Savings Responsibly

Once you’ve made it to retirement with more than you think you’ll need, here’s how to manage your hefty nest egg.

• Make conservative choices with your investments. “Invest more conservatively while drawing down your accounts—that means a higher proportion of bonds to equities in your diversified portfolio,” Mockford said.
• Establish a new budget. Rethink your spending now that you are in retirement. Make a spending plan that includes your regular and irregular expenses, from food to spoiling your grandkids. Adjust this spending plan every year to keep pace with inflation.
• Give to charity from your IRA. “If you make regular donations to a registered nonprofit, consider making those same donations directly from your IRA. These ‘qualified charitable distributions’ count toward your annual required minimum distribution, and it is better for you and the charity’s bottom line,” Mockford said.
• Work a fun job. “Many people find it fun and freeing to supplement retirement income with some earned income from a fun, low-pressure job,” Mockford said. Other people “want to work for fun and delay beginning distributions,” she added.