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Capitalhockey, you sound like you're a nerd like me. I too did all the spreadsheets and projections, I found it fun to dream that way.
Sounds to me like you are on the right track. Make sure you have some savings in something that you can get to easily in the event of an emergency. 3 to 6 months of expenses in a money market account should be enough. You may have that already but you don't specifically mention it.
Do you have any debt? If so, get that paid off as quickly as possible. Your greatest wealth building tool is your income and you can do so much if you don't have to hand out money every month as debt payments. You have college savings covered so then the only thing left is to get the house paid off. If the house isn't paid off, I would drop back in the retirement savings to about 15% of your income until the house is paid off, then you can pour it back into retirement savings.
One more important thing. Don't forget to be giving. I don't know any happy rich people who are hoarders. There is a big difference in saving and hoarding so make sure you are giving. Trust me, it will pay off in the long term.
One of my favorite books is, "The Millionaire Next Door," by Thomas Stanley. You sound like one of the millionaires that he studied; living modestly and building wealth. I would recommend you give that a read. I think it will be encouraging to you.
Sounds like you are enjoying some of your money by traveling and eating out. As long as you and your wife are in agreement with your lifestyle, you're probably right on track. If any of your broke friends are making fun of you, then you are definitely on the right track. Congratulations!
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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I vote yes (possible to save too much for retirement from starting during early yrs employment, especially if you and spouse are working / saving / frugal).
There are better ways to fund retirement than to save pennies under a pillow (especially in this current anemic economy)
Consider wealth building options that will assure (as possible) a recession / inflation proof wealth / income stream during retirement. And hopefully walk you out the 'employment' door very early, and have a sustainable cash flow for perpetuity. This can be from many different / diversified sources. (business, real estate, investments, lending) Or from one GREAT source! (gold mine / lotto / sale of business or treasure / inheritance...)
You have me concerned by your 529 goals... There are many other 'smarter' and more effective options to fund 'future' edu expenses. I personally am not a fan of those types 'college-funding options', they can be very costly to well intentioned parents. but.... then we could get into USA edu philosophy. (We homeschooled and lived internationally, not ez / perfect either). Think beyond traditional edu and funding.
Since I had been working off the farm since age 15, and then a caregiver for parent since age 18, I was 'dead' set on early retirement. Made it by age 49, on a single income hourly wage. and... I saved too much for retirement. (via company / deferred plans).
Enjoy the journey, retire early, retire often
if you need a couple more bucks....you can likely return to work after your kids leave. (That would have been my preference)
life happens, you COULD 'check out' LONG before retirement age. don't risk it!
At age 30, "Saving too much for retirement" is a false narrative, unless one's family is suffering, in order to fund a retirement still thirty years away. A different answer results if one asks, "Is it possible to have too much money in retirement?"
The financial industry and investment firms have spent huge amounts of time and money convincing people they need massive and irrational retirement $numbers ... to avoid having to eat cat food. This leaves many stressed and worried about 'having enough' -- when they are actually doing just fine.
It sounds like you are quite sensible and have things well under control. If you are living comfortably with what you are saving, why simply spend more on 'stuff' you don't really need or want? Continue to save and you will discover those who think you are 'over-doing' it now, will be envious when the unexpected expenses of life arise, which they will.
You did a good job of asking your question. Seems like you have also done a very good job of managing your finances. I would continue to live below your means but I would do some more thinking about the single family home. I think I would make the move.
The problem I have is I do not know what a lot of money means to you. Since you take two vacations a year I assume you are talking millions at retirement (this may not be a lot of money due to inflation).
You did not mention if you have life insurance, disability income insurance and long term care insurance. The first two you need now. Make sure the amounts are adequate. I think the long term care market is in disarray and I am not sure what to do. Probably wait until you are in your 50's unless you know of current problems. I would look toward term life insurance but you can also tie some life insurance with long term care so take a look at that now. Might work out well at your age.
What type of an estate do you want to leave your children? Let's say none for planning but your planning will probably assume a life expectancy longer than you live so you will be leaving a nice estate for your children.
Assuming you have some items you would like to spend some money on now, I would tend to do this. I am thinking of taking your non government retirement plan savings and invest that in dividend paying stock and using the dividend income for the extra's you want. In short use the earnings from your investments now.
I do not think the stock market is going to do as well as it did in the past so I would assume a 4 to 6% growth in assets.
Remember pensions depend on how well the stock and bond markets do and how well funded the plan is. I would discount some of the pension payments or maybe all of it for now. You can revise your estimates as you get closer to retirement.
You might want to go to an hourly fee financial planner to see if you have missed anything. The only reason I would do this is to give you some assurance that you can spend some money now.
It is hard to say when you have too much money and most of us will probably always feel we MIGHT need more. We do not know how our health will hold up, how long we will live, what family needs may come up, how will the value of our assets hold up, what will inflation do, and if our pensions will be paid. But you are asking the correct question and I think you can make a good educated decision and split part of your savings off for current consumption.
PS If you can, consider being a landlord and renting the townhouse. For me I would not want to be a landlord but this could be a good investment if you do not mind working hard and risk.
Thanks for everyone's insight and wisdom. It's good to hear from folks that are 30 years ahead of me. This is better than any article that I have came across.
It can be hard sometimes to live our current modest lifestyle when we see our friends with similar means live very lavishly (big houses, extravagant vacations, luxury cars). Part of you know that you have the same capability but are choosing long term security (early retirement, etc) over instant gratification. From the outside looking in, I am sure folks think we are "just getting by" with how we live. For the most part, it doesn't bother us since we are not flashy people.
The nice single family home is something we have talked since we are starting a family of our own. It is a somewhat a point of contention between my wife and I. My preference is to stay in our townhouse and raise a small family (2 kids max). My wife would like 3 or more kids (she came from a big family and loved the experience). At that point, we would definitely need a bigger space. The mortgage is the only debt we have and it is a very manageable amount (purchased before housing boom) that allows us to have excess funds each month for investing.
We are conservative with our investments and diversified our portfolio. We indexed our retirement funds. For our outside account, we do blue chip dividends stocks. We hope to create a steady stream of dividend income and along with my work pension. We are not counting on any Social Security. Perhaps delay tapping into retirement funds until mandatory distribution age. Whatever is left when we are gone will go to our kids as inheritance.
I am in my mid-30s and have preparing for retirement since my mid 20s. I didn't come from much and have worked very hard to get into middle class. So has my wife. We both share similar values when it comes to savings and living below our means. I love reading retirement related articles, checking our investments and making a list of things I want to do when we get there (places to travel, volunteering, classes to take, etc). My wife and friends tease me a bit about my strong interest for retirement.
Long story short, I wanted to hear from people that are already in retirement if it is possible to save too much. My wife and I have maxed out all of our retirement accounts (401k, Roth, IRA, etc). We also invest extra money every month in a brokerage account. We are expecting a child soon and will max out a 529 account. I have a spreadsheet that projects our investment growth in the future under different scenarios. We should be in a good shape even in underperforming market. We will be in great shape in average or above average market. I also expecting a solid pension when I retire from work. On paper, we are well ahead of where we should be at our age.
My only concern is that we may be over doing it a bit with the savings. I wonder if I will look back at life when I am 60 with a big pot of money and wish I was a little more loose with our funds. After all, they say you can't take it with you to your grave. We currently live in a modest 3BR townhouse. We drive two entry-level sedans. We cook at home during the week/bring lunch to work and we go out to eat a few times on the weekend. We take two vacations a year (one beach, one international). I don't feel like we are depriving ourselves per se. At the same time, we have the capability to live more comfortably....like move to a nice single family home, etc. Part of me is also worry that we not may get to enjoy the money that we worked hard to save for whatever reason in the future (unexpected health issue, declining body, etc).
Any advice is appreciated!
Whatever you are saving now will work harder for you than what you save when you are older, so I think if you are able to save a lot now, this is not a bad thing.
Once you have a family, it becomes much harder to save.
The issue here, I think, is balance. You don't know really, if you will live long enough to retire. And, it is great to have some good things going on in your family's life as you go along. So, you need to spend some for these enriching things, in a wise way, but also save for that proverbial rainy day.
The trick is balance. How do you enjoy your life with your family during your working years, and how do you save. What things make your life worth living now, and what things are not as meaningful. How you make those choices is what will determine your quality of life.
I do think one can become so caught up in living frugally, that one cannot enjoy a dinner out, a nice vacation, or buying a nice bed to sleep in. I suppose in that case, one could be accused of saving too much.
However, I don't know of anyone who doesn't wish they had a little more in savings.
I also think these are personal choices.
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(We homeschooled and lived internationally, not ez / perfect either). Think beyond traditional edu and funding.
