A young colleague came to me recently with a shameful admission: Despite the lecturing of her friends and family, as well as her own best intentions, she had not yet signed up for the company 401(k) plan. She lives in an expensive city, and is nervous about tying up her money for the next 40 or 50 years.

Like any good retirement economist, I insisted she enroll immediately. I’ll help, I said. It will be fun.

And it was — until we got to the part where she had to decide how much to contribute from each paycheck. I told her not to worry about “maxing out” her contribution to take full advantage of the company’s generous matching program. It was OK, I said, to contribute however much she felt comfortable with right now.

Everyone within earshot was horrified. She was leaving money on the table. It was as if I had told her it was OK not to be on social media. In fact, I now wonder if I didn’t go far enough. Not only is it possible to contribute too much to your 401(k), it’s also possible to save too much for retirement.

Let me explain. Of course it makes sense to contribute to a retirement account. As long as the 401(k) still exists, it will come with tax benefits, though they will probably become less generous over time. At the very least, a 401(k) forces you to save. You (and society as a whole) will appreciate that money decades from now. And if you can afford a contribution to get the full match, by all means make it.

But “maxing out” is not the right decision for everyone — especially when you are young and in your lowest earning years, and especially if it means you can’t make your monthly expenses and have to resort to something like a payday loan (which has an even higher interest rate than a good 401(k) match). The point is, you shouldn’t be so overextended that you can’t afford anything that brings you joy.

It’s also worth noting that, while everyone feels as though they haven’t saved enough, 77% of retirees say they are “living comfortably.” (Younger generations have saved even more, so it’s likely they’ll be comfortable as well.) Having more money for retirement is better than having less, but retirement shouldn’t take up most of your financial life.

Too many people miss the point of life-cycle investing. It is not to have the most money at the end of your life. It’s to have predictable and stable spending levels throughout your lifetime.

I did not have a retirement account until I was nearly 30. It wasn’t offered to me before then, and as a graduate student I couldn’t afford to save anyhow (and my dissertation was on retirement saving). It would be nice if I had that money now. But I made a different choice, to invest in my human capital, which is still paying dividends.

That said, I did manage to save for retirement eventually — and by the time I wanted to buy an apartment, I had so much of my financial wealth in retirement accounts that I didn’t have enough cash for a down payment. So I committed the mortal sin of taking money out of my retirement accounts (a pandemic policy waived the penalty, otherwise I would not have done it).

My lesson is twofold: First, it’s never too late to start saving for retirement. Second, sometimes there are better things to do with your money than saving for retirement. I was able to diversify into another asset class, lower my housing costs and take advantage of other tax benefits.

There are hopeful signs that — despite the shock of my coworker’s colleagues — a lot of younger workers are taking a more chill attitude toward retirement. A startling 77% of Gen Z, more than any other generation, say they are on track for retirement. Can this be the same generation that famously complains about high rent, unattainable homeownership and overwhelming student loans?

The difference is that the survey, conducted by BlackRock, included only people who are saving at work. According to the Federal Reserve, in 2022, about 30% of Americans younger than 26 had a retirement account, and among that population they are good savers — the average balance is about $29,000 (in 2024 dollars). They are doing better than previous generations; in 2007, 28% of those under 26 had an account, and the average balance was just $12,000. It is great so many people are on track for a well-funded retirement (so long as they don’t invest it all in crypto).

And so far, retirement does not seem to be dominating Gen Z portfolios too much. On average, retirement accounts take up about 30% of net worth for people younger than 26 who have an account. That’s a sensible ratio, and time gives them some room for error.

As a finance professor I worked with often said: Investing for retirement is like sailing across the Atlantic. When you are starting out, you need only to be pointed in right direction. The closer you get to New York Harbor, however, the more precision you need.

If you are younger than 30, saving anything at all is an achievement. If you work at a company that offers a match and can afford to max out, do it. Otherwise, it is fine to balance retirement saving with other financial goals. Compound interest and tax benefits are great. But so is living your life.