Market Returns and Stopping/Slowing Saving

[mistershankly]

DW and I have been investing aggressively in Vanguard index funds for years. Current market returns aside, our invested assets have been seeing the monthly gains exceed our monthly contribution by 3-4x. We would love to keep investing aggressively, but part of me would love to take the monthly money to be invested and splurge on a nice vacation or even buy a new car (my current vehicle is fine with 240k miles on it, but it's lost the new car smell ). For those in FIRE, did you ever stop investing, even briefly, once your monthly or annual gains significantly exceeded your contributions? Am I experiencing investing/saving fatigue now that I see that our portfolio is doing some heavier lifting for us?

Any insight and advice would be greatly appreciated!

[SecondCor521]

I did not, but that was because I wanted to reach FIRE ASAP and loathed any delay in reaching my goal more than I loathed the fatigue associated with the saving/investing grind.

But there's nothing wrong with taking a break or slowing down if that's what you want to do. In retrospect I might have been well served to do so as it would have evened out my happiness over the past 5 years or so in an overall positive way.

[OldShooter]

Quote:

Originally Posted by mistershankly DW and I have been investing aggressively in Vanguard index funds for years. Current market returns aside, our invested assets have been seeing the monthly gains exceed our monthly contribution by 3-4x. We would love to keep investing aggressively, but part of me would love to take the monthly money to be invested and splurge on a nice vacation or even buy a new car (my current vehicle is fine with 240k miles on it, but it's lost the new car smell ). For those in FIRE, did you ever stop investing, even briefly, once your monthly or annual gains significantly exceeded your contributions? Am I experiencing investing/saving fatigue now that I see that our portfolio is doing some heavier lifting for us? Any insight and advice would be greatly appreciated!

No specific advice, but I'd observe that what you have is what the behavioral economists call a "mental accounting" problem. (https://www.behavioraleconomics.com/...al-accounting/) Understanding this may help you think your way through to a solution. Depending on your tastes in reading you might enjoy Richard Thaler's book Misbehaving.

For ourselves, we saved like crazy our whole careers but paid little attention to annual gains. Our day-to-day luxuries were paid for from day-to-day money left after our savings program. Our mental accounting paradigm was that retirement savings dollars and balances were never to be questioned or touched.

[mistershankly]

Quote:

Originally Posted by OldShooter No specific advice, but I'd observe that what you have is what the behavioral economists call a "mental accounting" problem. (https://www.behavioraleconomics.com/...al-accounting/) Understanding this may help you think your way through to a solution. Depending on your tastes in reading you might enjoy Richard Thaler's book Misbehaving. For ourselves, we saved like crazy our whole careers but paid little attention to annual gains. Our day-to-day luxuries were paid for from day-to-day money left after our savings program. Our mental accounting paradigm was that retirement savings dollars and balances were never to be questioned or touched.

I've never heard of "mental accounting". Thank you for the recommendations. I will check out the book and link.

[RunningBum]

I definitely took vacations, and even a couple of splurge trips, while working (and since retiring), and bought new or newer used cars about every 5-7 years. I wasn't going to deprive myself of some nice things in retirement, so why should I do that while working? I figure a nice vacation now and then made work more bearable so I was able to continue to add to my savings instead of starting to draw from them.


I don't think I "stopped investing", but rather budgeted for them and set aside money so I wouldn't go in debt on those things. You might cut back, but if you cut it out all together it might be hard to restart.


I don't think I ever thought of it in relationship to where my savings rate was in comparison to portfolio growth. I don't know if it makes any sense to do that or not.

[mistershankly]

Quote:

Originally Posted by RunningBum I definitely took vacations, and even a couple of splurge trips, while working (and since retiring), and bought new or newer used cars about every 5-7 years. I wasn't going to deprive myself of some nice things in retirement, so why should I do that while working? I figure a nice vacation now and then made work more bearable so I was able to continue to add to my savings instead of starting to draw from them. I don't think I "stopped investing", but rather budgeted for them and set aside money so I wouldn't go in debt on those things. You might cut back, but if you cut it out all together it might be hard to restart. I don't think I ever thought of it in relationship to where my savings rate was in comparison to portfolio growth. I don't know if it makes any sense to do that or not.

I completely understand what you're saying. I think the problem we are running into is that we've been saving very aggressively to the point that saving/investing was nearly 100% of our disposable income at times. We have worked ourselves into an all-or-none corner with either saving very aggressively to get out of the career game or considering stopping investing to breathe a little bit and smell the roses. I'm sure there is a healthy middle ground but it always looks less attractive to the unhealthy grind of a high-stress career that we desperately want to get out of.

[joeea]

Quote:

Originally Posted by mistershankly For those in FIRE, did you ever stop investing, even briefly, once your monthly or annual gains significantly exceeded your contributions?

I don't see how "annual gains exceeding contributions" has any relevance.

Why is that significant to you?

[Koogie]

I understand what the OP is saying about saving fatigue. It is a real thing.

We're unusual in that DW and I are that strange, reviled retirement hybrid, the semi-RE. Neither worker nor retireee be..

I still work part time and those funds are exactly enough to maintain the lifestyle that we've had for the last 10ish years (and is also the amount we have budgeted for in retirement. Coincidence ? ha).

We have also reached our "number" so don't feel the pressure to save for retirement anymore. So, we are leaving the retirement funds alone to grow "organically" (or is it free range.. who can remember) while we spend EVERY PENNY of the working income.

It is the healthy middle ground. Or middle grind.

[athena53]

Quote:

Originally Posted by RunningBum I definitely took vacations, and even a couple of splurge trips, while working (and since retiring), and bought new or newer used cars about every 5-7 years. I wasn't going to deprive myself of some nice things in retirement, so why should I do that while working? <snip> I don't think I "stopped investing", but rather budgeted for them and set aside money so I wouldn't go in debt on those things. You might cut back, but if you cut it out all together it might be hard to restart.

I agree with this. I saved a lot when I was working but left some fun money in the budget. I was married the second time when I was 50 and he was 65; I knew that postponing fun till I retired would be a bad idea. Fortunately, my work involved enough travel that I racked up airline miles and hotel points that gave us wonderful vacations while remaining within our budget. I ended up retiring at 61 and DH died last year at 78. I am SO glad we did so much travel together. If we'd waited till I retired I'd have more money but would have missed out on a lot of wonderful memories.

What I'd do in your situation is take a look at what you're likely to have accumulated at the age you plan to retire, given your current and projected savings, and some reasonable expectations of investment returns and inflation. I had a simple Excel spreadsheet that showed what I was likely to have at 65, expressed it in current $$, then multiplied it by 4% to approximate what I'd be able to withdraw annually. I updated it with real numbers every year. It's held up pretty well and gave me the confidence to quit at 61. If you see that you'll have some insane amount at your projected retirement age, it may be time to dial back the savings and enjoy some of it now. There are no guarantees in life.

[Luck_Club]

I call what you are experiencing marginal utility dynamics. It is very similar to what many here face when they have to decide to keep working or retire. Eventually your returns exceed your income.

Do you keep working for $50,000 a year when your investments are throwing off $150,000 per year?

You're asking yourself do I continue to contribute lets say $10,000 a year for the future, when I'm earning $30K a year in gains, and my car is old and I haven't had a vacation in 3 years?

The answer is it depends. For me I my car is closely tied to my income so I always keep them relatively new. I never vacationed much, but my wife insisted several times, and I'm glad she did.

[flintnational]

We tended to increase savings every year and never stepped back. However, we had two good incomes and a fairly good standard of living. Our goal was to FIRE by 55. We did that and were able to save and spend along the way.

I think your choice is a balance between spending now and spending later or accelerating or delaying FIRE. No wrong answer. It is a personal decision.

[W2R]

Quote:

Originally Posted by mistershankly For those in FIRE, did you ever stop investing, even briefly, once your monthly or annual gains significantly exceeded your contributions?

No, never. If anything, I doubled down.

[audreyh1]

Sounds like the OP is suffering from a lack of balance. You clearly have to enjoy some splurges while saving like crazy. What if you don’t get to enjoy those later years? Make sure you do some living now too.

[VanWinkle]

Before retirement, I received yearly bonuses that were on top of my 401K match. I was maxing out on the after 50- 24000 per year 401K and putting 6500 for DW and I into Roths. I would save 1/2 of the bonus in my brokerage account, and we would splurge on the other half. This led to some nice vacations, new furnishings, and time spent just enjoying some non-frugal times.

It worked out fine for us, and it would likely work for you as well.

Best wishes,

VW

[jollystomper]

Quote:

Originally Posted by audreyh1 Sounds like the OP is suffering from a lack of balance. You clearly have to enjoy some splurges while saving like crazy. What if you don’t get to enjoy those later years? Make sure you do some living now too.

+1

My parents, who were definitely LBYM, always advised to make sure we got some current enjoyment from our finances. So I would recommend you spend some money on something enjoyable now. You'll still be LBYM. It is good to save for the future, but too much focus on that in place of enjoying some of the present in not a good thing. As audreyh1 said, you need a balance.

[kcowan]

Our trips to Hawaii and the Caribbean in our early 30s were indeed memorable. It stimulated us to achieve great heights early so we could have choices later.

[exnavynuke]

Quote:

Originally Posted by mistershankly DW and I have been investing aggressively in Vanguard index funds for years. Current market returns aside, our invested assets have been seeing the monthly gains exceed our monthly contribution by 3-4x. We would love to keep investing aggressively, but part of me would love to take the monthly money to be invested and splurge on a nice vacation or even buy a new car (my current vehicle is fine with 240k miles on it, but it's lost the new car smell ). For those in FIRE, did you ever stop investing, even briefly, once your monthly or annual gains significantly exceeded your contributions? Am I experiencing investing/saving fatigue now that I see that our portfolio is doing some heavier lifting for us? Any insight and advice would be greatly appreciated!

Run a calculator (FIRECalc etc) and see what changing your current strategy would do to your plans. How much longer would you have to work if you cut back on your savings in order to splurge a bit (or a bit more)? Do you think that's a fair tradeoff? If so, save less and spend more.. if not, don't.

I've adjusted my savings rate twice in the past 3 years alone; increased it due to more income and dropped it some to afford some lifestyle inflation to make my working years more enjoyable. I now budget for 3-4 trips out of the area (at least two international) per year as opposed to taking 1 trip out of the area every 1-2 years that I used to do. It costs more, and that's money I can't save, but I think it's worth it (in both money and additional time working) for the enjoyment I get from it.

Where your investment growth is coming from doesn't really matter. The bottom line is you're asking if you should save less to enjoy life more now. That's a personal decision. I said "yes" at one point but I don't plan on cutting my savings rate again so currently I'd be a "no" if asked again. Some people say "no" even if their vacation budget only affords for a staycation eating Ramen noodles and mac-n-cheese... everyone has to make that decision themselves.

[YVRRocketSurgery]

I think we're kind of lucky that we have enough income that supports a balance between spending and saving that works well for us. But everyone's got to make their decision on where that balance point is based on their circumstances, values, and goals.

[EvrClrx311]

I felt similarly up until a few years ago... here is what I did to fix it: I started setting aside 7.5% of my salary for "living"... which is everything and anything I want to do beyond my LBYM lifestyle. I see this as money that gives me happiness and value in life. Most of it is spent on travel (road trips and hotel stays mostly... so I can go hiking). The rest on hobbies. None of it on material things. I estimated that this means I'll be working one extra year (I have about 15 to go till I FIRE) but it means that I'll get a lot more value and depth in life between now and then. I figure, what's the point to grinding myself to retirement a year sooner... if I'll be lost once I get there (having lived my whole life just to get there, and not doing things I'm passionate about along the way). I view a healthy lifestyle as a necessity to having something to retire for in the future. Along the way I've really benefited from quarterly vacations and have gotten into photography (just bought my 4th lens). I feel a lot happier now than I was 4 years ago... a large part of it I attribute to this change.

[thumbs]

Quote:

Originally Posted by mistershankly DW and I have been investing aggressively in Vanguard index funds for years. Current market returns aside, our invested assets have been seeing the monthly gains exceed our monthly contribution by 3-4x. We would love to keep investing aggressively, but part of me would love to take the monthly money to be invested and splurge on a nice vacation or even buy a new car (my current vehicle is fine with 240k miles on it, but it's lost the new car smell [emoji23]). For those in FIRE, did you ever stop investing, even briefly, once your monthly or annual gains significantly exceeded your contributions? Am I experiencing investing/saving fatigue now that I see that our portfolio is doing some heavier lifting for us? Any insight and advice would be greatly appreciated!

Do you like your job? What if you had to work an extra year or two so you could enjoy life more now? My vote would be to take a vacation and enjoy yourself. Reevaluate when you get back. Time away is really important to us...but the new car, not so much. We take a couple decent vacations a year, but I drive an 02 Honda, and my wife drives an 05 Toyota. All personal preference. Either way... I'd be very interested to hear what you decide to do.