Top of Mind

Does Saving for Retirement ALWAYS Make Sense? Some Top of Mind Reader Feedback

First of all, I want to take this opportunity to acknowledge everyone who has been providing feedback to Top of Mind, as well as to my Twitter posts lately! When you write about a specialty topic such as retirement plans, you typically expect crickets when you solicit feedback. However, thanks to the amazing readers we have, feedback has been fairly frequent, which is wonderful. I am grateful to each and every one of you who has commented on Twitter, or emailed me at

In fact, one reader in particular took such a great deal of effort to provide feedback to my recent Top of Mind on When Saving for Retirement Might NOT Make Sense that I wanted to profile it here in this week’s edition, as he indeed may have changed my entire perspective on the subject. And when a reader does that, I think it is quite cool!

To summarize the reader’s detailed response to me, he generally disagreed with my premise that there could be scenarios where saving for retirement might not make sense; that, in fact, saving for retirement ALWAYS makes sense for the vast majority of employees. The key elements of his reasoning are as follows:

  1. Few employees are in a position where it is not necessary for them to save anymore for retirement —Outside of those who are already retired and are having difficulty decumulating their assets, most everyone else is likely not in a position that they can quit saving for retirement. In fact, the opposite is true, and most employees are well behind the curve in what they need to save.
  2. HSAs ARE retirement savings —Thus, when I made the statement that it might make for sense for certain employees to save in an HSA first, and then into a traditional retirement account, I wasn’t saying that retirement savings might not make sense for such individuals, since HSAs can be used for retirement as well.
  3. Employees should not choose to save in an HSA over a retirement plan but max out on both —Since both a defined contribution retirement plan and an HAS are retirement vehicles and offer distinct tax advantages, it makes sense to maximize contributions in both. If one cannot afford to max out in both (noting that the HSA limits are much lower than 401(k)/403(b)/457(b) limits), they should most likely be strategically dividing what they can contribute between the HSA and the qualified retirement plan based on several factors, including plan design. Of course, this assumes that an individual is eligible for an HSA in the first place.
  4. Everyone needs to save because the future is uncertain —Even for individuals with low incomes for whom Social Security is a “safety net,” it does not provide all that much income in retirement. And the future of Social Security and Medicare as it exists today is not guaranteed—even if it is present, the Social Security benefit could be reduced, Medicare expenses increased, or both, which is more reason for everyone to save to a qualified retirement plan.

Now, the reader did allow for a rare scenario where saving in a retirement plan might make less sense, but it was NOT one of the scenarios provided in my article. Let’s say that a retirement plan was poorly designed and thus provided for poor liquidity. If liquidity is poor, then the retirement plan could not be used as a fund for true emergencies, for example, and thus there might be a need to divert some contributions to an emergency fund. But for the vast majority of retirement plans, which offer an employer match, a choice of pre-tax or Roth contributions, high quality investments, low fees on core options and administration, and appropriate liquidity using plan loans with 21st Century functionality, the answer to the question “Are there scenarios where saving for retirement might not make sense” is almost always no.

In reading all the reader’s comments, I was tempted to defend my earlier positions, but it occurred to me that there was little in his positions with which I could disagree! Which is why I am sharing it with you.

Do you have an opinion of any of my Tweets/articles to share with me? If so, perhaps your thoughts could be featured in an upcoming Top of Mind as well! Just drop me a line on Twitter or at

Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

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