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Old 12-08-2021, 01:31 PM   #41
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At 31, with 26 years to go, it is too early to think about saving too much . As others have said, you do not know what can happen in those years.

When I was 31 Megacorp offered a pension in the future that, given my salary at the time, would have been in six figures by the time i was 51. They also paid for retiree health insurance completely. It tempered my saving, after all, I had those great benefits, right?

Fortunately, I had older, wiser folks who counseled me that "a lot can change in 20 years..." 10 years later the fully paid retirement health benefit was gone, and the pension was cut by more than half (and had I been a year younger, I would have completely lost the pension). I was glad to have continued to save, as well as not ramping up our lifestyle to greatly increase our savings when we saw those things happening.

The major "penalty" is having "too much" in my 401K... with my contributions, Megacorp match, and its growth, my RMDs in 9 years will likely be 6 figures... but this is a "problem" I am happy to have .

Who knows what personal finance impacts may occur in the future... and looking at things like the deficit and the state of SS, it is not likely to be very pretty. Having "too much" is a good hedge against the future.
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Old 12-08-2021, 01:39 PM   #42
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It's kind of pointless to be looking at possible numbers 26 years from now. There are simply too many variables and too many years between 31 and 57.

Save/invest as much as you can without depriving yourself. In 15 or 20 years you'll have a clearer picture of things.

If you have extra dollars each month, I wouldn't use them to pay off 2% debt.
+1. Save as much as you can unless you have unavoidable expenses. LBYM. Spend wisely. Invest carefully to maximize returns and minimize fees.

I put every dollar I can into investments. With that said, at 40...I am planning on FIRE at 50 to 55 depending on how the world and my accounts and health and kiddos are doing in the next 9 to 14 years.

I doubt I will ever work past 55.

We save roughly 30% of our total yearly income. That doesn't include out mortgage payment which is a 15 year mortgage because I don't want to pay anymore interest from years 16 to 30 like the 30 yr mortgage would call for.

I might buy a second home sometime down the road. I think a lot of people who ponder the old argument, to pay the mortgage off or invest arent always thinking about the possibility of owning multiple homes. I might buy another one or two for my children.
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Old 12-08-2021, 01:50 PM   #43
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I might buy a second home sometime down the road. I think a lot of people who ponder the old argument, to pay the mortgage off or invest arent always thinking about the possibility of owning multiple homes. I might buy another one or two for my children.
We have two rental houses and that has been a really great way to diversify (for us). Houses are in a great neighborhood and have provided GREAT returns over the years.
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Old 12-08-2021, 02:21 PM   #44
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The tax deduction on the mortgage interest of 2.25% is not going to matter, compared to the difference between 2.25% and the 7.12% interest that the I-bond is paying now.

Even if the inflation subsides and the I-bond interest pulls back, it is not likely to be below 2.25%. And if it happens to be in the future and drops below the mortgage interest of 2.25%, the OP can wait till then to pay it off.
Agreed, but OP is limited to $10K investment in I-bonds per person, OP can also pay off the truck, with the remaining extra money.

In 2023 or whenever the truck is paid off, OP can again invest in I-bonds and then work on paying off the house. If I-bonds are still at a good rate.

Basically OP can do both, instead of an 1 or the other.
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Old 12-08-2021, 08:24 PM   #45
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But maxing out a Roth 401K and TSP, as well as one's salary is also likely to be tied to inflation, so it is likely the $2.4 million will be a higher number but equal to $2.4 million in today's dollars.



One of the many nice things about a Roth is that you can touch the principal before 59.5 without penalty, just not the gains.
It would only be true if your salary increase outpace the inflation and have promotions that you manage to save more since your spending also increases because of inflation.

It is a lot easier to increase salary I put and decrease the spending output when you can. When you are older, the chance for controlling the expense decreases (heath issue, relationship issue, child care, etc).
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Old 12-08-2021, 08:46 PM   #46
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It's a balancing act. Nobody wants to be forced to eat cat food in their old age. On the other hand, life is like a garden -- you need to harvest when things are in season. Likewise, you need to do things when you are physically able to do them. Only you can balance your desires for the present and your fears for the future. Personally, the young wife and I have experienced a very good life. We did the work we wanted to do, bought the house and other consumer goods we needed and wanted, went on interesting vacations and had a lot of fun experiences. At the same time, we did not waste our money on frivolous things and we invested wisely. I'm happy with where we are now. We probably have more than we absolutely need, but there was no good way to know that in advance. Plus, having an overabundance gives us peace of mind.

Good luck on your journey, and remember that happiness is not some mystical destination at which you will someday arrive. It is how you pass through life every day.
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Old 12-08-2021, 08:53 PM   #47
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You can never save too much if you are trying to retire ASAP. But then you are going frugal extreme. I was never there. Not MMM style at all.

But you don't want to die at the desk either eh?

Yeah, somewhere in between.
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Old 12-09-2021, 05:39 AM   #48
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Another thought on over-saving: it gives you options along the way. When I was 53, my company was acquired. Some of my coworkers jumped ship as soon as they knew it was going to happen because they panicked at the idea of maybe losing their jobs. I had enough savings that I could handle a few months of unemployment (and there were enough opportunities in my field that it wouldn't extend much beyond 6 moths or so) and decided to stay on. It was a very good decision and I was glad I could take the risk.

More money can free you up to do other things, too, such as start a business or go back to school to re-train in another field.
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Old 12-09-2021, 06:08 AM   #49
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......

More money can free you up to do other things, too, such as start a business or go back to school to re-train in another field.
I'll second that. I quit work entirely to go to law school in my early 30s. I was able to pay cash because I had saved a lot of money in my 20s, when I was working as an engineer.
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Old 12-09-2021, 07:30 AM   #50
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Back in the early 1990s my wife and I were starting to move full steam ahead on our intense saving/investing plan for FIRE. We had close friends who cautioned us about "living for tomorrow instead of today." They once asked if we shouldn't have an intervention by friends to get us back to our senses. :0

But we were undeterred. We were enjoying our life with simple pleasures occasionally dotted with luxurious splurges. Our greatest joy was working together toward our shared goal and watching the nest egg grow. We never felt majorly deprived. The thought of us both being very old with declining strength and likely some illnesses made us more determined than ever to be sure we at least had the finances to make our lives easier.

Skipping ahead a few decades, we have been happily FIRE'd now for more than 6 years and they are still working. They now say, "You guys were so right. We're sorry we didn't pay attention to what you were doing and learn from you!"

So, I suggest you save as much as you comfortably can, and don't worry about saving too much. It takes a lot of worry off the table.

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Old 12-09-2021, 07:32 AM   #51
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.... Skip ahead a few decades, we have been happily FIRE'd now for 6 years and they are still working. They now say, "You guys were so right. We're sorry we didn't pay attention to what you were doing and learn from you!"....

Your friends are very unusual in that regard. Most people will do almost anything to avoid admitting that they were wrong.
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Old 12-09-2021, 09:00 AM   #52
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You're doing great! When I was 31, we had a negative net worth and $30K in credit card debt!

But, I worked for a great company with a pension and retiree health. Ten years later, (at 40) my company got bought out and my 80% pension value suddenly turned into a measly $12K added to the new company's cash value pension plan. Oh, and the retiree medical disappeared too. That's when we finally got serious about saving.

So, keep up the good work. You've got a great start. Save as much as you can while still having a quality life.
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Old 12-09-2021, 10:52 AM   #53
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I don't plan on leaving the fed prior to 57 due to the fact that my significant other has some medical issues which would make her healthcare pricey and by waiting until 57 I'll be able to keep my health benefits into retirement.
Her medical issues, i.e. pre-existing conditions, should have no effect on the price of any of her insurance options in the future, assuming she is insured by an ACA compliant plan (whether employer based or not). Of course, this assumes the ACA regulation that pre-existing conditions cannot be used for underwriting is not tossed away at some point in the future.

In my opinion, the main value of an employer based health plan to someone with pre-existing conditions compared to someone without pre-existing conditions is that, depending on where you live, exchange based health plans may have more limited provider networks than employer-based plans. This may be if critical importance if her medical condition is something where maximum flexibility to pick providers is desired, including traveling outside of local area.

My point is I agree employer based health benefits can be very valuable especially to someone with complex medical issues. But her pre-existing conditions should not affect the cost of her health insurance in the future.
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Old 12-09-2021, 12:39 PM   #54
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If you are happy with the lifestyle you have keep saving. If you aren't then loosen up the purse strings. Sometimes it's not about retiring early. Sometimes the extra $ allows you to take risks and do something you wouldn't normally do. Being responsible allowed us to take a year sabbatical and move without income and switch careers. It has allowed us to now do a startup and live on a much reduced salary for DH. So sometimes it's not about retiring.

Maybe your wife gets sick and you want a year off but can hang onto job but not income? savings = time off.
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Old 12-09-2021, 01:00 PM   #55
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I don't want to not max out my retirement accounts though as it doesn't hamper our lifestyle. I feel like I'll have FOMO of not investing. We live in a typical lower middle class neighborhood and are very happy with our current luxuries we do have. We are really trying to abide by The Millionaire Next Door way of life. As most of my coworkers live in homes 2-3x the value of mine.
We have also always been Millionaire Next Door fans. We bought a nice house in a good location as that has been an appreciating asset, and tried to avoid spending a lot on depreciating assets. Now that we are retired, if we decided to downsize, we could live well from the rent on our current house alone.

During our working years we had fun and still saved money. Before kids we belonged to an adventure co-op at a college with volunteer instructors for activities like canoeing, kayaking and whitewater rafting and cheap equipment rentals. On weekends we'd go hiking, camping or overnight paddling trips on some scenic river. We both had tech jobs in the Bay Area so it wasn't hard to try to live mostly on one income. It always amazed us the coworkers who had two decent incomes like us yet were always broke from overspending. We were able to retire a decade early and still have fun hobbies, though they are a bit more sedate now, like going wine tasting in Napa with a Groupon or seeing a play in the city on discounted seat filler tickets.

A real money saver for me is reading books on happiness studies. Most of the things that science shows make people happy like good friends, getting out in nature, music, keeping a gratitude journal, being a part of the community and social connections don't have to cost a lot. Studies actually show that people who are more materialistic tend to be depressed and unsatisfied with life.
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Old 12-09-2021, 02:40 PM   #56
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Using the 4% rule of thumb I'll be able to draw down 96k a year from my retirement accounts which combined with my pension will be much greater than my current income.
FWIW the 4% 'rule' has come into question lately given the current state of things (inflation, Covid, low bond yields). Think there are threads here about it. One mentions a particular Case-Schiller index as I recall to serve as a guide, based on the year you ER. In my case the suggested SWR is more like 3.2%. Times change, so do 'rules'. As an example, the classic "Your Money or Your Life" advised setting up a bond ladder to provide ER income. That worked when the book was first published but not so much now (even the Better Road Map Foundation behind YMOYL has acknowledged it). Personally I erred on the side of being conservative, since I don't have any COLA pensions and have some doubts about SS in the future. Only time will tell if I over saved
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Old 12-09-2021, 07:59 PM   #57
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At 31, you can’t over save. .
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Old 12-09-2021, 09:25 PM   #58
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I'll second that. I quit work entirely to go to law school in my early 30s. I was able to pay cash because I had saved a lot of money in my 20s, when I was working as an engineer.
That must be a really good journey. I have no kids but I contribute $4000 a year into my 529 so if my niece (she is 3 and my 529 has 30k now) won't use it 15 years later, I can enroll into a college myself and be a full time student. That will be pretty cool. My current work involves troubleshooting and providing guidance to PhD level customers. Getting organized education would be a great vacation for me...
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Old 12-10-2021, 06:23 AM   #59
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A real money saver for me is reading books on happiness studies. Most of the things that science shows make people happy like good friends, getting out in nature, music, keeping a gratitude journal, being a part of the community and social connections don't have to cost a lot. Studies actually show that people who are more materialistic tend to be depressed and unsatisfied with life.
My late DH and I made travel a big priority before I retired and I don't regret that at all- he was 15 years older and died 2 years after my retirement so it would have been a bad decision to postpone all the good travel till I retired.

I agree with those studies, though. I've been doing fine and just inherited money from my Dad that increased my invested assets by about 7%. When a large part of it hit my Fidelity account yesterday I joked about test-driving Porsches this weekend but really I have a good life. More money won't make it better. I'll be giving away the inheritance over the next 10 years, mostly to my grandchildren's 529 accounts and the rest to charity. THAT will make me happy.
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Old 12-10-2021, 06:26 AM   #60
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I'm 60 and retired. In hindsight, I guess I did save too much, but I have no regrets. The comfort level of not having to worry about money now - that's worth a lot to me.

The thing is, I never deprived myself of anything while working. I was lucky to have a job that paid well, I enjoy having a pretty simple lifestyle, so everything extra went into my 401K. If I had spent more just because I could, I don't think that would have made me any happier.

So if you can easily save money, without feeling like you're depriving yourself of anything, then keep saving and don't ever think that it's too much - like others have said, a lot can change.
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