Is there a time where I can stop saving for retirement?

Submitted by [deleted] t3_12812le in personalfinance

Throwaway account… sorry if theres formatting issues I’m on mobile

Hello guys/ gals of personal finance, I have a question for you all today, that being is there a time where I’ve saved enough for retirement that I can stop investing money into my 401k & I can just let it grow

Background:

•23M •3rd year (out of 5) Apprentice Electrician •Currently have 37k in my 401k, with 21$ an hour being added •Investment rates will change to 22$/hr as a 4th year, 23$/hr as a 5th year, and then 17$/hr as a Journeymen •Other apprentices at the company I work for that have graduated the program say they have about 120k in their 401k upon graduating, others have less but they pulled for buying a home •Not planning to have kids, live in Northern California planning on staying in this area, M-HCOL •Not sure if it matters but my full package rate right now is 57$ an hour, 28.50 on check. Journeymen this year make $81 package $61 on check.

So at 26.5 years old im expecting to be Journeying out, w/ about 120k in my 401k, with $17 an hour going into my retirement is there a moment in my career where I should be able to stop contributing any more money to my retirement and itll grow enough for a good retirement?

If theres any important information I left out please let me know

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not_falling_down t1_jegqlq3 wrote

I will be retired as of May 6 of this year. I plan to stop saving for retirement on May 5.

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[deleted] OP t1_jegqti5 wrote

Congratulations! Reason im asking if I can stop early is because having no kids, I have no one to I will want to leave estate too. Maybe my friends kids if they choose to have any but im not planning on it, greatest outcome would be sum zero

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not_falling_down t1_jegsmb7 wrote

You are 23. You have no idea what the next four decades will hold for you.

It's better to retire with more than you need than with not enough.

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SatisfactoryFinance t1_jegrmyi wrote

No kids means no one to fall back on for living or care if you get health issues as you get older, which means you may need more money.

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paltum t1_jegtk31 wrote

Your life expectancy is not a precise number. You need to plan to be pretty old when you are waving your last dollar. You don’t want to save enough to get to 80 just to find you are good until 95.

The other factor to consider is the potential that the last few years of life can be insanely expensive. If you need help, it can easily cost $100k/yr today. There is no way to know if you need this care or for how long. Long term care insurance might offset this risk.

You also might not collect as much social security as you expect today. It is getting pretty likely that retirement age will be kicked further out. And Medicare may be a lot more expensive, as well. Both of these benefits are going to go under increased financial pressure.

My personal approach is to some day pay off my mortgage and use my home as a store of value to handle a major life change like assisted living.

In other words, you probably want to save enough to cover your expenses in retirement, maybe add a bit to give you flexibility for things like vacations, and have an extra pile to handle massive end of life expenses.

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tizzlenomics t1_jegq73n wrote

Just a rough estimate but at your age and where you live you’ll probably need about $4M to retire. Just something to think about.

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[deleted] OP t1_jegqn9x wrote

Guess the days of one million dollar retirements are done 😬 would that 4mil be what I would spend in retirement or what I would need in my retirement account to pull interest off of?

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tizzlenomics t1_jegsf57 wrote

Most people use the 4% rule. If you aren’t familiar with it then read up on it. Essentially it’s withdrawing 4% per year should last at least 30 years.

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[deleted] OP t1_jegt2du wrote

I appreciate the response, ill look into that

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TopImpact t1_jegz46b wrote

First of all, 120k at 26 is a great number. More than most people will have. Good job.

I encourage you to use a compound interest calculator and play around with numbers. I would use 7-8% interest to be conservative (using S&P 500 historical avg as a baseline). Find out what your monthly expenses are and what you expect them to be moving forward. Keep in mind that inflation will result in life being more expensive in the future. Use the 4% rule to determine what lump sum of money you need invested to keep things going. Once you reach that number you can stop contributing and let it grow. You have different options - check out CoastFire, FatFire, etc to see what appeals to you.

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EColli93 t1_jeh0f7h wrote

I use 4-5% to be conservative.

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TopImpact t1_jeh1u0z wrote

That’s very conservative… I’m not willing to go that far hahaha. I’d cry if I was averaging 4-5 but I see where you’re coming from

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sandingo1904 t1_jeh0hxw wrote

No even when you're retired you should still be trying to grow your nest egg

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Snoo-15335 t1_jegs78g wrote

Keep saving until you have enough to live out the rest of your life in the manner to which you are accustomed.

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IndigoTaco t1_jegvas7 wrote

Depends and your lifestyle and how you want to lie while retired.

Best way to look at it is calculate your comfortable monthly expenses (housing, utilities, groceries, eating out, car note/insurance/gas, subscription services, etc.) and multiply that by how long you think you'll live post retirement age without a job (hopefully a lot). This would be the minimum you should have in your account.

Example: If your monthly expenses now are $3700 for your lifestyle, you retire at 67 and want to live until 97, you'd want to have at minimum $1,332,000 to live your current lifestyle during that timespan. This doesn't include contributions to savings account, build emergency funds, medical expenses, and other discretionary spending. Bump up your monthly expenses and do the calculation again.

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Long-Regular-1023 t1_jeh0kp6 wrote

Why would you make a throwaway account for this question?

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[deleted] OP t1_jeh414c wrote

Because my main has posts about jobsites ive been on and this post could really start identifying the company I work for/ me as a person?

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Gorf_the_Magnificent t1_jeh1h87 wrote

OP provided a lot of personal financial information. What good reason can you think of for not creating a throwaway account?

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