Should the amount you are saving for retirement impact your current quality of life?
I currently save 31% of my income and have about $500,000 in various retirement accounts (Roth, 403(b) and a few other accounts). I feel like I am living paycheck-to-paycheck because of the amount I am saving every month, and I have a hard time spending money. I am 35 years old. Should the amount you are saving for retirement impact your current quality of life?
It is great that you are saving for retirement and thinking through all these questions. A good financial plan should be balanced between living for the moment and planning for the future. Your plan should be efficient, effective and with limited downside risk (ie good risk management built in using tools like insurance etc). However, like an extreme weight loss program that is hard to maintain, if your savings and retirement plan is causing a lot of discomfort today, then your motivation to maintain the plan may dwindle over time. If you are worried and want clarity, you should make a formal plan considering expected inflation, expected rate of return on investments, expected age of retirement, expected expenses etc. Since you are relatively young this exercise will be imperfect as you have to forecast a long time into the future and you may also have several life changes between now and retirement-but it may help give you some guidance on how much to save. There are several calculators you can use such as https://schwab.com/public/schwab/investing/retirement_and_planning/retirement_planning_tools
Ask yourself how much more you need to spend to live comfortably- see how that impacts your plan in the calculator above. That could put things into perspective and could also motivate you to look for other sources of income to make up that difference.
All the best.
For starters I commend you for being 35 years old and having $500k in retirement savings. As for the question at hand it is a tricky one to say the least. You are definitely saving more than the average individual at 31%. Most places will tell you if you save 10-15% you will be OK. I am more of a believer of saving closer to 20% to be honest and you still are way above that. Now the real question at hand is figuring out what lifestyle you want now and what lifestyle you aspire to in retirement? Also I'd want to understand when you want that retirement to be? If you plan to retire early than certainly you need to save more aggressively. If you plan to work later like into your mid 60's I'd say you likely can afford to pull back. Balance is one of the hardest things to do in financial planning as it takes a lot to figure out the right mix between spending, and saving. There is no 100% right answer, but assuming you plan to have a normal working career I'd say it is likely OK for you to pull back so you can enjoy life a little more. I will say if you aren't going to be spending the money any way keep saving and maybe just save into a liquid investment account so you can have access to these funds sooner rather than later.
Yes. And no. :)
It depends on your goals for a retirement. Your savings at 31% is beyond exceptional.
However, if you said that your current and future standard of living required spending millions of dollars per year, then, perhaps it is not enough.
Yes, it should impact your current quality of life in that if you are not saving 15-20%, you should have a plan to get there.
If you are in your situation, saving as much as you are, and expect a retirement that is normal (rather than before something like age 39!), and a spending rate that is similar in retirement, then, no... you should not save as much if you have other goals.
But, I find it interesting you have a hard time spending money... that's an amazing quality! Good for you!
I find it hard to reconcile the idea of living paycheck-to-paycheck and not being able to spend though without knowing more. It sounds like a conflict here with trying to max out retirement accounts and current lifestyle.
The only response I can give is 31% is exceptional if your goal is for a very early retirement or other savings goals that require as much. If not, then, I would give someone in a similar spot (without knowing more) permission to spend.
This is sort of a trick question. If you start early and save a good amount, and invest ok (at least not like a total idiot) you should be in good shape. From what I can tell you started early, have a good amount saved up and I will guess are not investing like an idiot.
I feel you, I also save a huge amount of my income, and have issues with spending money. My spouse helps me get over this....but that is a story for another time.
You can likely lower the amount you save for retirement and still stay on track. This will mostly depend on when you want to retire, and how much money you will want to live on in retirement. You might fee better if you have a financial plan- where you set aside the money you need for retirment. But also set aside money you can spend on fun stuff. Essentially giving yourself permission to spend money on a trip or new clothes or whatever floats your boat.
Keep up the good work, but make sure to enjoy life a little bit along the way.