I never made enough to do that.
You're exceptional in that regard.
I do read fairly often about people who are loaded in their tax-deferred accounts but lack enough in taxable to retire, or at least get to a certain age (60, 62, or 65, or something else) safely.
I don't know about "so many people," as I can only speak for myself. Everything I read or heard from others over the past 40 years suggested that all one needs to do to fund a normal retirement is contribute the maximum to a 401k or IRA. So that's all I did. When the contributions 401k hit the limit, the rest went in the savings account. I held way too much in cash. I had no interest in financial stuff. I did not read financial news or care at all about "investing." I did not hear talk of "retiring early." Those who did learned that saving in a taxable account is a pillar of ER.
What did you do with the money that went into your savings account besides sitting as cash? When money went into 401K were they also held as cash?
Yep - I planned for that particular milestone for at least ten years prior. Huge!
When I was w*rking, the most I ever made in a year was $71K, and that was near the end of my career. Most of the 10 years before that it was in the mid $50K range, and the 10 years before that, it was in the mid $30K range. So after contributing as much as I could to the 401(k), and eventually the IRA, there wasn't much left to put into "savings", other than keeping 6 months of expenses in case of an emergency.
Heh, heh, and we also got a very significant property tax exemption for being "old." Not worth getting old for, but nice to have when you're getting old anyway.59.5 was a non-event for me. I turned 65 recently and that's the only birthday that felt like a big one, because I went on Medicare, and that's for old people!
Not a silly question. In my case, I structured my retirement funds "wrong." IOW I made a mistake. Fortunately, I was eligible to use the rule of 55. If not for that, things would have been very different for us following early retirement. We would have delayed several expenditures, travels and home improvements.
The planet-alignment of the century. Nice when it all w*rks out that way. We got some luck as well - but not quite a planet alignment - more like a single conjunction.After I turned 59.5 is when I told my Megacorp manager that I would likely be retiring sometime the next year. At that point all the numbers aligned. If they had chosen to walk me out the door at that point, then it would have been a significant milestone
I did retire after turning 60 the next year, which was significant beyond just retiring. It was the last year for the peak acceleration of my pension benefit, our college payments for our kids ended, and it was the 35th year of me paying the maximum SS tax, so I will get the maximum SS benefit.
Eventually I started spending it. (And it occurs to me that starting to spend from my savings might have marked the point I "retired.")
No, of course not. I chose from the palette of investment options some mix of stock and bond funds, though in hindsight my choices were probably too conservative. I recall when I started my very first job out of college in the mid '80s, the HR person putting the 401k sign-up paper in front of me and, and likely responding to my blank stare, said something like "a lot of people choose this one" for their investment option. That was the extent of my financial education until some years later when I left that company and took on a FA to roll over the 401k. The FA stayed with me (on a AUM basis for that rollover IRA) for the next 30 years or so, and I figured I was in good hands and didn't need to bother learning about investing. Oh boy was I naive. The FA was focused on that rollover IRA and didn't proactively suggest any sort of systematic saving in a taxable account outside his control.
... so the dots were not connected... that cash were invested into "something" in 401K and that cash in savings account should also be invested. We had FA to manage our money because I was terrible. Finally we ditched them in 2021. Well, we all got here eventually!
Investment prioritization usually has taxable investing/saving at the end.
For me, it's not that I don't have enough in my taxable. I just don't have enough in my taxable to pull indefinitely. Just to 59.5. Also, I think most of us get in a mode of doing as much tax differed as possible when working and then, due to this long bull market, found we could retire earlier than expected, based on our total portfolio balance.
That's great for a W-2 employee. For anyone who is self-employed making a good income, the amount that you can put away in a SEP IRA far outpaces the 401k limits (for example in 2026 the max is $72,000 or 25% of your compensation, whichever is lower). Some years we hit the max and this is how we ended up with so much more in pre-tax than in taxable or Roth during our w*rking years.
I wish I had 4 times in taxable. I would be loaded. We have 40-45% in taxable. I didn't get serious about saving and retirement until 11 years before I retired. My 401k got a serious head start on the taxable account. I also had access to a non-qualified deferred compensation plan that let me defer something like 25% of pay and 90% of bonuses. I took full advantage of that.
When I retired we had about twice as much in tax deferred than taxable. While I would not say I did not have "enough", There are several reasons that contributed to this:
59.5 or 60 does not matter for most since only a small % retire prior to 59.5.
Yes, that's one of the stats that makes this group (as a whole - or on average) fairly unique. We DO retire early compared to the average age for all retirees.
