Saving too much?

[NextInLine]

Have anyone ever felt saving too much? In my case, I have 15 more years (will be 58) to go working for a megacorp with define pension and heathcare benefit for retiree. This may be a classic case of "golden handcuff". It's hard to leave early and forgo that benefit. Pension and SS alone would easily provide us a comfortable retirement.

This month, our net worth hit $1M mark due to diligent saving 50% of our income, LBYM and some luck. Sometime it crosses my mind that if we don't have to save a dollar more, we still have double than what we need in retirement (give or take). But I know I just couldn't start being a spender overnight. LBYM is in our DNA due to our upbringing and reading from this forum .

Anyone have the same feeling of saving too much?

 

[heeyy_joe]

You are probably not saving too much in reality. There is just as good or a greater chance the company will say goodbye to you than vice-versa, so you best stick to your plan.

 

[gauss]

Anyone have the same feeling of saving too much?

Well the main alternative to saving the extra is to increase spending.

Increasing spending will cause a need for a larger retirement fund to sustain the spending indefinitely.

You might not need to work the full 15 years if your company freezes pension contributions and modifies the retiree health care contributions (either of which they can do at any time for any reason). This is what basically happened at my Megacorp and was one of the main reasons that I decided to call it quits 7 years before attaining the official early-retirmement age of 55.

Many folks thought my decision odd, but once the "golden handcuffs" were removed, my tolerance for work BS went down significantly. I suspect that they did not fully comprehend the results of these changes that the company made.

Also, one of my good daily lunch buddies (age 54) was within months of retirement and also had significant financial assets. Unfortunately he suddenly died prior to actually announcing a retirement and will never get to live it.

If you are not feeling seriously deprived in your lifestyle, I would not increase your spending unless just because you could.

-gauss

 

[ronocnikral]

the better question is, what you spend your money on if you didn't save it? And do those things have more value today than something else in the future (things, stuff, retirement security etc)?

I used to buy into the "run as fast as you can approach," but now I am slowing down and we are doing things we love to do. Admittedly, they are things we would want to do when and if we ever reach retirement. I still save between $50 and $60k per year, but we are also spending more.

 

[comicbookgujy]

I save a minimum of $30k a year and probably close to $50k a year.

Then when a co-worker dies in his 40's or the crap that happened at Boston today, I think I'm saving too much.

But then I look at my apartment and my AMEX statement and see that I spent $30k a year buying crap I don't need...

 

[UserRequested]

Need a good balance IMHO
If you consider yourself to have reached FI, then anything extra you can put away is a bonus.
It's a good position to be in, because you can pamper yourself with any of life's little luxuries that you may have done without, because you were earnestly saving for FI.
You only live once, so postponing living until retirement, does not make sense to me. Illness and other misfortune may strike at any time.

 

[Donzo]

What a nice concern to have!
I say unless you are denying your self things or experiences that would be needed or really enjoyed......keep saving. Having to much $ is better than the alternative.
As mentioned earlier - you may get a surprise from megacorp and be out before planned - save it while you can.

 

[bo_knows]

It's a complicated question.

If I were in your shoes, I would be doing the math to figure out how long it would take to retire on an income you're comfortable, without considering the defined pension.

Then, depending on how many years less that is than 15 (your golden handcuffs), you have to decide if your time is worth that money. Is 5 years of working worth it? What about 7?

Either way, it's a good position to be in.

 

[jon-nyc]

15 years is a long time. One could have felt pretty bulletproof at IBM in 1977 and been laid off before well before 1992.

Keep saving!

 

[Midpack]

I saved too much relative to my peers. I retired at 57, they're all still working and 'keeping up with the Joneses' and then some, and will be until age 65 or so. I don't talk to many of them much any more, they mostly just want to complain about work(ing at my former Megacorp).

I have no regrets, I learned early on that (spending) money doesn't buy happiness. If anything FI buys happiness IMO. "The most important things in life aren't things..." YMMV

 

[jollystomper]

Do not take that pension and health benefit for granted. 15 years before my retirement eligibility date my megacorp had a pension whose future value was growing based on the earnings formula and I had full health benefits. About 10 years before they changed the pension formula to grow at a slower rate and took away the retirement health benefit. 2 years before my retirement they froze the pension so that I only get credit for time worked and not earnings. I'm estimating it has made about a 20-33% difference in the pension I receive, and the loss of health benefits adds an additional costs. So you might spend and enjoy a little more today, but keep saving since that is really the only part of your retirement funding that you can fully control.

 

[H2ODude]

I pretty much lived out your scenario. Now, at 62, with a DBP that could support us with SS pretty much in our current lifestyle, we have IRA and investments that will generate over 60k more than we currently spend. Or something like that.

Your question can only be answered by an individual based on their comfort level and attitudes towards money. Until I hit about 50, I never really had much confidence I'd hit the DBP; it was then that I realized I could buy in 10 years (cost a good chunk of cash) and leave at 60. Having done so, it was a huge penalty to leave before 60. But, other than last year or two, I actually enjoyed my career. My father always said I needed to fund my own retirement, so that was my plan. The DBP was just a huge bonus.

We live in nice house we paid cash for 18 years ago, have a new truck and an old Acura. I sold the Porsche a few month ago because I needed the space and it just seemed....pretentious? We travel twice a year to see grandkids in London and son in Africa.

Because we care for MIL (well, wife does) we cannot travel more than that. As soon as that situation changes we'll travel a lot more.

So, yeah, we saved too much and unless we start traveling a whole lot (and buy first class tickets!), our kids will inherit our "mistake." But I'm really quite happy it's that way. I didn't really work longer than I wanted or enjoyed. We saved about 25% most of our years after 35, but have no idea how we would have spent more on meaningful things or activities. We traveled, drive decent cars, eat out when we want, yet watch where the money goes pretty carefully.
So currently we draw out ~2%WR, will defer SS until 70. We're trying to spend it more freely, but once you've lived your life a certain way it's damn hard to start throwing dollars away like they don't matter. It makes it really nice though to rest easy that the WR is not subject depletion. So for the life of me, I don't know how we'd have changed what we did during those last 20-30 years. We've always been conservative about money (but invested it fairly aggressively, to this day still ~55% equity MF, mainly index) and the end result is we can enjoy our retirement without too much concern for the money. Retiring earlier just didn't make sense as I enjoyed the job until the end and as the DBP began to materialize at 60, we just ended up a belt and suspenders plan.

 

[Shanky]

Pension and HC are not Guaranteed. We went from a fully funded pension and HC, 5 years later to a bankrupt Megacorp, PBGC for Pension and no HC. If you are enjoying life now, you are fine.

If you are miserable with no discretionary spending, then reconsider. What do you fear more? Being old and poor (but having fun while you overspent), or dying young and wealthy, never having enjoyed the wealth.

 

[NextInLine]

I pretty much lived out your scenario. Now, at 62, with a DBP that could support us with SS pretty much in our current lifestyle, we have IRA and investments that will generate over 60k more than we currently spend. Or something like that.

Your question can only be answered by an individual based on their comfort level and attitudes towards money. Until I hit about 50, I never really had much confidence I'd hit the DBP; it was then that I realized I could buy in 10 years (cost a good chunk of cash) and leave at 60. Having done so, it was a huge penalty to leave before 60. But, other than last year or two, I actually enjoyed my career. My father always said I needed to fund my own retirement, so that was my plan. The DBP was just a huge bonus.

We live in nice house we paid cash for 18 years ago, have a new truck and an old Acura. I sold the Porsche a few month ago because I needed the space and it just seemed....pretentious? We travel twice a year to see grandkids in London and son in Africa.

Because we care for MIL (well, wife does) we cannot travel more than that. As soon as that situation changes we'll travel a lot more.

So, yeah, we saved too much and unless we start traveling a whole lot (and buy first class tickets!), our kids will inherit our "mistake." But I'm really quite happy it's that way. I didn't really work longer than I wanted or enjoyed. We saved about 25% most of our years after 35, but have no idea how we would have spent more on meaningful things or activities. We traveled, drive decent cars, eat out when we want, yet watch where the money goes pretty carefully.
So currently we draw out ~2%WR, will defer SS until 70. We're trying to spend it more freely, but once you've lived your life a certain way it's damn hard to start throwing dollars away like they don't matter. It makes it really nice though to rest easy that the WR is not subject depletion. So for the life of me, I don't know how we'd have changed what we did during those last 20-30 years. We've always been conservative about money (but invested it fairly aggressively, to this day still ~55% equity MF, mainly index) and the end result is we can enjoy our retirement without too much concern for the money. Retiring earlier just didn't make sense as I enjoyed the job until the end and as the DBP began to materialize at 60, we just ended up a belt and suspenders plan.

+1 H2ODude,

Lately, I was given more responsibility at work. More challenging, but I enjoy it so far. Driving cars for at least 10 years, buy cloth at Goodwill. My house will be paid off in 7 yrs. It's nice to be in this situation. Can't see the future, but My pension and healthcare wouldn't likely to go away but more likely to be asked to contribute more or recompute with less generous formula. And that's still fine with me. At some good chunk of my life, I lived with less than $1 a day so I don't feel I scarify too much.

I may have to work for 15 more yrs because the benefit is too good to give up. However, I'll take an early out if offered.

 

[Chuckanut]

I would continue to save, though certainly use some of your earnings to enjoy life now. It's a question of balance. You may find you can do things today, that you will not be able to do in 15 years. Somebody once said " Once you sell a year to the man, you can never buy it back." Balance.

As far as your pension and medical benefits go, I would be cautious. Many people started this century thinking they had a nice DB plan only to find out they lost it through no fault of their own. Sometimes it was bankruptcy, sometimes it was a takeover, and sometimes it was corporate maneuvering aimed at getting cash out of the DB plan with little regard to how the retirees would end up. Read "Retirement Heist" when you get a chance.

 

[growing_older]

Life is not predictable enough to calculate the exact right amount to save. I am inclined to save too much, which means that if something adverse happens, I can still ER, even if not quite as early as I would have liked. In my experience I have already had some unexpected negative twists, and I don't doubt more are possible. If on the other hand things go well or better than expected, the "negative" result is I have to much money. That extra will allow me additional margin of safety even in retirement, so I probably won't think of it as extra even then.

 

[obgyn65]

Yes, sometimes I do and sometimes I don't. Like year I may have saved between $100k-$200k, which I know is quite good compared to others. However, save what you feel comfortable with while enjoying life. There is no rule.

Anyone have the same feeling of saving too much?

 

[jerome len]

One of the reasons I consider myself lucky is that I have my health. My Mom had a serious stroke in her early 50's and couldn't have ever worked again. So, do you have disability insurance? Add this consideration to all mentioned above and I'd keep working, saving but enjoying life as well.

Thinking about it, a million bucks wouldn't give you a great lifestyle if you had to live on it for 40 years or so. It wouldn't buy you much of an annuity at your age, so the good news is your ahead of most of your peers......today, but the race is far from over. good luck in the future.

 

[foxfirev5]

Have anyone ever felt saving too much? In my case, I have 15 more years (will be 58) to go working for a megacorp with define pension and heathcare benefit for retiree. This may be a classic case of "golden handcuff". It's hard to leave early and forgo that benefit. Pension and SS alone would easily provide us a comfortable retirement.

15 years is a long time to hang on to a job you may not like that much. Your saving and reaching FI may help however. When I hit 55 with over 30 years at Mega corp I was very close to FI. When I crossed the threshold into FI suddenly the job wasn't a hassle. I pretty much do as I want (remote field rep) and nobody bothers me.
But the most important consideration in my mind is to not forget about enjoying yourself along the way. Priorities and balance that only you can determine.

 

[FIREd]

Even though we already have "enough", I find it hard to stop saving a huge chunk of our income. So I don't think we can save too much. Ever. Without going into too much details, I think that our socio-economic background has a lot to do with our reticence to live it up. We feel awkward doing it, and it is just not us.

 

[NextInLine]

One of the reasons I consider myself lucky is that I have my health. My Mom had a serious stroke in her early 50's and couldn't have ever worked again. So, do you have disability insurance? Add this consideration to all mentioned above and I'd keep working, saving but enjoying life as well.

Disability insurance is built in as job benefit package.

Thinking about it, a million bucks wouldn't give you a great lifestyle if you had to live on it for 40 years or so. It wouldn't buy you much of an annuity at your age, so the good news is your ahead of most of your peers......today, but the race is far from over. good luck in the future.

Good advice here! thanks for all of you cool-headed. I know I won't change my life style. The best case scenario is early out offered 10 year from now which being offered from time to time for those close to retirement age.

 

[keegs]

not to sound too macabre..... but from time to time it comes to mind whether I'll be alive or healthy enough to enjoy what I've been saving lo these many years...

 

[someguy]

Disability insurance is built in as job benefit package.

Have you checked out the fine print on the DI? A lot of those work-provided policies are pretty lame. They may require full disability to get anything, and they may not be own occupation. One that is not own occ means that if you are a brain surgeon and have a stroke that leaves you unable to operate any more, but still able to flip burgers, you don't trigger the policy and go from earning $400K/year to $15K/year and the DI policy doesn't kick in.

 

[ronocnikral]

Have you checked out the fine print on the DI? A lot of those work-provided policies are pretty lame. They may require full disability to get anything, and they may not be own occupation. One that is not own occ means that if you are a brain surgeon and have a stroke that leaves you unable to operate any more, but still able to flip burgers, you don't trigger the policy and go from earning $400K/year to $15K/year and the DI policy doesn't kick in.

+1. My company just rolled out with a crappy LTD coverage. Luckily, since I had none prior to that, I have a guardian policy covering 70% of my income.

Here's what my company's LTD requires of you: you must terminate employment with them, you must qualify for SSDI, your benefit is capped at $3000/month, your benefit is offset by any income coming from SSDI (pssst....my SSDI benefit would be greater than $3000/month). In essence, I get nothing.

 

[jon-nyc]

Another benefit of buying your own plan - the benefits, should you need them, are exempt from federal income tax. Thus your 70% replacement is more like 100% or more in practice.