Ask the grumpies: How does not wanting to retire early affect your savings decisions?

Leigh asks:

How [does] having careers, not jobs and not wanting to retire early, while still having healthy retirement savings all ties in together. How does that affect how much you put into retirement accounts vs other accounts each year, etc.?

TBH it really doesn’t. But I do think it accounts for some of the calm we wouldn’t be feeling if we weren’t in good financial shape right now.

Back tracking a bit though…

As Leigh notes, we’re working because we want to, not necessarily because we have to.  We do like our high incomes, but a lot of why we work is because we’re trying to make the world a better place and in my case partly because of ambition.  We have no plans on retiring ever, though we may change our minds in the future.  Early retirement is definitely not in our plans.

Right now we’re maxing out all of our hassle-free retirement savings.  So I’m putting away my mandatory match, my 403(b), my 457, and DH’s 401(k) (now with Fidelity and a much better deal!  Asking for change works sometimes!).  We are on an “over-saving” track for retirement at this point given our lack of desire to retire early and my relative job security (though who knows what will happen in 30-50 years!).

The main reason we’re putting this much away is to take advantage of the tax advantage and to make it more likely that schools will give our kids financial aid.  We (as of this moment in our current situation) have plenty of money leftover to spend.  But there’s not much to buy around here and we don’t really have the time or energy to go looking for things to buy.  This is the first year that we’re starting to accumulate additional money after the targeted retirement/529/mortgage/sabbatical saving is done since before we bought a house.  If the US were stable, we’d be putting it in lump 10K sums into the stock market (with a 25K donor advised fund that we may still do), but instead we did one lump and now it’s accumulating in savings waiting to see what happens with DH’s job and the political climate.

(As we’ve expressed probably ad nauseum to our regular readers– we have more than enough to live on in our current low cost of living area, but not enough to safely buy a house in Paradise, even assuming we move to Paradise for a high paying job for DH.  But there’s always the chance we’ll want to move to Paradise with only one job and will be very happy that we “over-saved” even if we can’t afford to buy a house when we get there.)

I guess if we wanted to retire early we’d spend less.  I would probably have to actually sit down and figure out what numbers we could retire at assuming different draw down rates and stock market returns etc.  Depending on how early we wanted to retire, I’d have to figure out how to ladder accounts to draw down from (probably the easiest way is just to use the 457).  And I’d probably be freaking out about money more because it would matter for our “freedom” date.  But instead I’m expecting another 30-50 years of work so it’s easier to roll with uncertainty.  There aren’t money worries on top of everything else.

If we get more tax-advantaged space to save for retirement (because of changes to tax laws), I guess we’ll use it, but at some point we’d have to think hard about when to stop maxing it out.

So right now we’re just going with the max defaults because where else are we going to put the money?

Grumpy nation:  Do you have a career or a job?  Are you aiming for early retirement, not retiring at all, or something in between?  How does that decision impact your retirement savings decisions?

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10 Responses to “Ask the grumpies: How does not wanting to retire early affect your savings decisions?”

  1. eemusings Says:

    – Career
    – Regular retirement, but I imagine I would still do some income-generating activities … I just want choices, is all!

  2. First Gen American Says:

    We are a 2 income household and have been maxing out retirement for 21 years. We are in good shape because of 401K’s and Pension plans. I could stop contributing now if I wanted to but I don’t. 1) for tax reasons, 2) I’ve had too many friends get and die from cancer in the last year. The youngest was 43, the oldest 51 (which happens to be the age of my husband and I).

    The reality is that even if you plan on never retiring, there are things out of your control, like illness, an accident, the economy, that my make the decision for you some day. I also want the flexibility to be able to quit my job if I needed to, because the environment is too toxic at work or someone needs my help and time. As eemusings says, it is about having choices and options. Being a slave to an expensive lifestyle limits life choices and feeling stuck or trapped is a horrible feeling.

    My priorities have always been to pay things in this order:
    Save for Retirement – biggest goal that had to be started immediately
    Pay off Student Loans
    Save up for House Downpayment
    Pay off House
    Save for kid’s college

    It’s not the same formula for everyone but the way my brain works, it didn’t make sense for me to go into more debt before the prior debt was settled. For most people they do many of these items in parallel especially now when student loan debt is so astronomical.

    I would like to Semi-retire in my 50’s and start a little business of some kind. That is my current dream. In my profession, the really fulfilling work is also often emotionally and physically exhausting, so I think at some point, I’ll want to downshift a bit in my 50’s to avoid complete burnout but health insurance costs seem to still be the big wild card in the ability to do that.

  3. First Gen American Says:

    A follow-up ask the grumpies question to this would be: What are other tax advantaged places you can put your money besides retirement accounts for high earners? I’ve been paying Alternative Minimum Tax for quite some time now and it is a lot of cash being shelled out every year.

    • nicoleandmaggie Says:

      I think for this you’d probably be best off asking an accountant. And keeping an eye on the Trump administration as the number of loopholes only for high earners should probably start increasing like they did during the Reagan administration. But who knows.

  4. Nanani Says:

    Self employed, working from home in a low-impact job (it’s mostly typing and thinking, little physical wear and tear) that I can see myself doing well past conventional retirement ages.
    I make more like this than I ever did doing similar work in an office setting, fwiw.

    Depending on the state of the world when I hit the age where pensions can be accessed without penalty, I may or may not scale back, but I greatly enjoy what I do so who knows?

    Right now my retirement savings are mainly about the tax breaks I get for them rather than trying to hit a target to retire with.

  5. Leah Says:

    We are not planning for early retirement at all, but I wonder if our goals would change if we earned higher amounts and worked all summer. As it is, I feel like we get a pretty good deal as teachers. Not high enough pay, but a good chunk of flexible work time. I do work during the summer, but I do it on my terms (and often while doing other enjoyable things — I’ve done a lot of mental planning work while hiking or kayaking, tho perhaps that’s because I can see what I teach while doing these).

    What impacts my retirement savings plans more is a combination of our income and me trying to hedge both ways. I want to save for retirement. However, there’s some family health issues that seem to crop up around retirement that could lead to an early death (only for some family members; the rest live until their late 80s or 90s). So, I want to travel and enjoy life as well, which keeps me from putting as much into retirement as humanly possible.

    One of our family goals is to save money and consider taking a year of sabbatical/leave from our job when our kids are a bit older to do traveling. We debate whether that will be US travel (like in an RV or camping around the US) versus international or some combo. No rush to make the decision, so we’ll just see how much money we have saved up.

  6. bethh Says:

    I definitely have a job, not a career. I’d stop working now if I could – not that I hate the work, but I wish all my time was free to do what I want to do with it. Perhaps I’ll stumble into a career at some point, in which case I wouldn’t mind working into my 60s. Since I haven’t found work I love I hope to retire sooner than that, and when I get closer to knowing my retirement age (hoping/planning for mid-50s) I’ll look at saving outside of retirement accounts so I can bridge the gap until I am 59 1/2.

    Since I’m a single-income household I’m mainly focused on paying down my house (12 years or so to go) and saving for retirement. I’ve never maxed out my retirement savings but I’m still doing okay – I could stop saving now and would be fine to retire in my 60s.

    Between my regular and extra mortgage payments, about half my income goes to my housing costs, so I know I don’t need tons of post-retirement income once the house is paid off – with the caveat that health care will be a major deciding factor in my finances!

    Paradise is a place where the idea of renting forever makes a lot more sense to me than home ownership. Does that factor into your hopes/dreams/savings?

  7. chacha1 Says:

    “Early” retirement is moot since I’m already 50+ and not ready to retire. :-)

    I would stop working in my current field in a hot minute if financially able. No particular objection to having a job but I am damned sick of this particular kind of job.

    I think once you have done a job for 20+ years you have to accept that for you, doing that job is a career. Even if it’s not a “career” in the what color is your parachute, follow your bliss sense. This job is a job (in the sense that I get paid by the hour and I feel little sense of accomplishment or satisfaction consequent to what I do), but it’s a job I am good at, for which I needed to acquire a lot of specialized knowledge, and continue improving my skills over time, and change employers as needed to cope with market changes, so for me it’s also a career.

    There are two scenarios in which I do not retire at all, i.e. keep working and not by choice till I physically/mentally cannot work any more. 1. DJT starts a war; 2. DJT provokes another serious recession. My work is not recession-proof and my risk of being laid off is high. And, where I live is right in the crosshairs for any major military action. It is second only to New York City as a high-value target, and may not even be second anymore. In the event of a non-nuclear war, our best option may be to move up to the mountains, ready or not, and do whatever minimum-wage and subsistence activities we can. In the event of recession, our best option may be to sell the mountain property, hunker down in our soon-to-be-inexpensive rental, and just work at whatever we can work at, for as long as we can. This is the “welcome back to the 1930s” scenario.

    There are two other scenarios in which retirement is severely affected by failure-to-plan by other parties. 1. My MIL comes to require skilled attendants, i.e. not my BIL who can’t organize his way across a room. In this scenario, DH and I both have to give up our jobs in LA and move to SF for the duration (and kick BIL out of the house). On the plus side, we live rent-free, on the minus side, we are 24/7 caregivers until MIL dies. She is 82 and her mother lived to 95, requiring full-time though unskilled care for the last 5 years of life. 2. My own parent(s) have a legal or medical issue that requires my, or our, presence for an extended period of time. In this scenario I and possibly also DH have to give up LA and move to Florida, because my parents have no estate plan, no POAs, and no healthcare directives, and if we have to fight with the state over their property or their care, it’s going to be impossible to do from California. These scenarios effectively constitute “retirement” in the sense of “no longer earning a wage or able to save” for one or both of us. In either scenario, we possibly end up with an inheritance that makes up for the lost income, but it’s by no means guaranteed. Lawyers cost a lot of money, and most of the money – in both parental cases – is tied up in property. Based on a friend’s recent experience, we may have to pay out our own money to take care of a parent.

    Given the high degree of uncertainty, we are not actually “planning” to retire. We are planning to reduce our living expenses, and continue saving as much as we can while maintaining a lifestyle that provides the relatively simple pleasures that make slogging like this seem like an acceptable choice. If nothing goes horribly wrong, we’ll be out of LA in around 11 years and in our mountain house. DH will be at least 68 before this no-disasters scenario comes to fruition.

  8. Revanche @ A Gai Shan Life Says:

    I have a career but this may be a short-lived one.
    Always used to think I’d work forever but most events in my life thus far point toward an early exit so I’m doing the math on how that might be possible. I don’t think it’s on any horizon yet, but I’m fairly sure that I’ll figure it out. I have to. If my health carries on the same rate of deterioration over the next 15 years, I won’t have any choice.

    I’d love to have the choice and I’d love to be able to factor in a plateau during that time but that’s all wishful thinking. Best to do my best to stash big amounts now while hoping for the best.

  9. Rosa Says:

    I have a job, my spouse has a career. We’re not planning on retiring early – spouse is convinced the kid is going to be a dependent adult. But I do worry that one or both of us will have to – high tech careers are not always kind to older people, on his side, and on my side having various part time and short term jobs makes me more vulnerable to age discrimination. So it depends a lot on how the economy is when I go for full time permanent again. Which depends on the kid needing me less (which I am confident will happen and spouse is confident will not. Different innate optimism setpoints.)

    We are currently spending a chunk of the “savings for spending” account – car got smashed in a random accident and it totalled out, so we’re newer-car shopping right as the kitchen remodel hit the “hire someone to do the last bit” stage. If we were really set on early retirement we might go with spouse’s urge to put off one or the other since they happened to happen at the same time. Even though the money’s in the account for both these eventualities. But I think if we were focused on early retirement we wouldn’t have had a kid, which would have changed every single part of this situation from my work to even owning a car.


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