Advice about saving money has been woven into our consciousness since we were kids. For generations, American youngsters have heard the same well-worn advice: “Save for a rainy day!” “A penny saved is a penny earned!” “A fool and his money are soon parted!” The translation is clear – the key to happiness and security is, apparently, money in the bank.

Or – perhaps not. Last year we came across this insightful article from Fortune in which reporter Anne-Lyse Wealth – her real name, apparently – explains that, for some seniors, saving money almost becomes a kind of fixation, a mental disorder along the lines of obsessive-compulsive behavior. Fortune calls it “extreme frugality,” and as we’ll see, it can rob seniors of a joyful retirement and instead leave them fearful and fixated on hoarding money for no apparent reason.

When the Impulse to Save Goes Too Far

According to Wealth, much of today’s most common personal financial advice boils down to a few basic precepts. Don’t live above your means. Budget, don’t overspend. Make sure that you’re saving more than you’re spending, and that sort of thing.

But in her Fortune article, she adds, “While there is value and peace of mind in saving and investing for the future and being prepared for potential emergencies, it is also possible to take it too far. On the opposite end of the financial spectrum is the issue of extreme frugality. Advice for overly frugal people who don’t know how to spend money, sometimes at their own expense, is harder to find.”

Being hyper-cautious about saving isn’t just a personality quirk, Wealth explains. The American Psychiatric Association actually has a definition for frugality, and, as noted above, it’s related to obsessive-compulsive personality disorder (OCPD). It is defined as a person adopting “a miserly spending style toward both self and others.”

Wealth explains, “Extreme frugality is an amplified version of that, and it often involves viewing spending as a bad thing no matter how much money you have. Examples of extreme frugality include always choosing the cheaper option even when you can afford and benefit from the higher quality one or focusing on saving money at all costs no matter how much time you must sacrifice.”

Extreme Frugality Robs Retirees of Joy

There’s a difference between being wise with money and being afraid to ever spend it, because you see it as a finite resource that must be hoarded. “But when you are excessively frugal,” Wealth writes, “you miss out on one of the critical things money can do for you: simplify some aspects of your life and give you access to things and experiences you care about.”

In her article, Wealth introduces us to Bill Perkins, a hedge fund manager and author of Die with Zero, who has his own experience with extreme frugality. After reading Your Money or Your Life by Vicki Robin and Joe Dominguez, he found himself obsessing over the money he was wasting – and that obsession soon took a turn.

Wealth writes, “Perkins became so conscious about not wasting his money that he stopped spending altogether. Then, one day, as he proudly shared how much of his expenses he had cut to maximize his savings, his boss made him realize that the point of life wasn’t to save as much as possible to survive but to also live.”

Saving doesn’t have to become an obsession. Before getting to the point where Perkins found himself, Wealth gives the following tips to encourage even extreme savers “to spend for a more enjoyable life.”

Know Your Survival Number

First, bring things back to financial basics. “Your survival number includes rent, bills, food, transportation, child care, and anything else you need for your day-to-day life,” Wealth explains. “You can calculate this number by adding all your necessary monthly and annual expenses in a spreadsheet.”

That number is very freeing. Once you know it, you can use an online resource or a financial planner to help you “determine how much you need to have at retirement and how much you need to save and invest every month to hit that goal. Any money that you have leftover is disposable income,” Wealth writes.

Take Time to Ask Yourself the Right Questions

Once you have your survival number, plus whatever needs to be set aside for other costs and goals (retirement, buying a home, paying for college, and so on), what’s left over is disposable income. “Ask yourself questions to help you decide how to utilize your money to make your life better,” Wealth suggests. “What do I want to do? Do I want to travel? Do I want to renovate my home? Do I want to be able to support my parents in their old age? Do I want to send my kid to private school? Is there something I would love to do five years from now? What about 10 or 20 years from now?”

Perkins adds, “Many people have discretionary income, but they have a scarcity mindset that they won’t be able to survive. So, they stay on autopilot, thinking I’ll keep working and saving more just in case. But now you’re becoming an insurance agent.” 

Get Your Money Management Off Autopilot

Automated payments for bills and other costs can be convenient, says the Fortune article, but they can also force you into a sort of autopilot with your savings, causing you not to question how much you really need to be saving vs. spending. As Perkins puts it: “Saving has its purpose. It’s for future consumption.” 

As Wealth states, it’s time to get off of autopilot and optimize your lifestyle to make it more fulfilling. You need to have a grasp of what season of your life you’re in right now, and what you most value about that season.

Perkins explains, “Some people live it up too much in their current lives and waste away their future lives. Our lives have seasons. We go through different stages in life; whether it’s college, marriage, or having kids—certain experiences are better had during certain seasons. So you should allocate your money toward your net fulfillment throughout your life and maximize your experience and memory dividends.” 

A clear plan that includes all of your goals and dreams can help you not to obsess so much about your spending. Wealth writes, “Take extra care to make sure you have some in the short-term bucket so you’re not always pushing off having fun and spending money to the next stage of life.”

Bring Your Game Plan to Reality

“Now that you have a game plan, you need to see it through,” Wealth writes. “This can be the most difficult step. Breaking out of the habit of extreme saving can be hard. Take baby steps and keep your goals top of mind.”

Focus on what Perkins calls “memory dividends.” These are the irreplaceable emotional aspects of spending money on things you enjoy and care about. “Focus on what you will gain,” Wealth urges, “and if you’re still struggling with guilt, remind yourself of your plan.”

Be Intentional About Leaving a Legacy

Perkins’ book and work are not meant to make you spend your whole life savings before you die; instead, he mostly focuses on maximizing your life experiences while also being aware of what you’ll leave behind. Wealth writes, “The focus is on not delaying gratification so much into the future that you can’t enjoy it as much as you should have because the best time to do it has passed. That also allows you to be more intentional about passing down assets to your heirs.”

Perkins explains, “You don’t want to give a random amount of money to random people when you pass. You don’t know which of your siblings or heirs or people you want to give money to will be alive after your passing. You want to be deliberate about this. If you’re trying to make a maximum impact on the life of the people you truly care about, think about when the perfect time is to give them the money you want to give them.” 

He adds, “It’s about being intentional and optimizing along the curve. You’re trying to maximize the net fulfillment of your kids, yourself, your charity, or whatever it is. There is a way to think about these things that get you closer to maximum optimization and maximum impact, and get in touch with what you want out of the arc of your life.”

Breaking News: Rajiv’s New Book is Here!

We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public.  As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.

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Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.

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(originally reported at www.fortune.com)