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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75878  
Subject: Re: Is this a sin, or being practical? Date: 2/28/2014 5:31 PM
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DeltaOne81: "I've always been a big saver. Even as a kid. I just like having things squirreled away just in case and I definitely don't want to work until I can't stand. Straight out of college I started funding my 401K and a Roth IRA, and not too long after working, I started maxing out my 401K. I'm 32 now, so I've probably been maxing it out for 6 or 7 years.

But life changes. I moved to the NY metro area 5 years ago where expenses are high (and took a slight paycut in doing so). I bought a house 2.5 years ago in NJ with my $12K in property taxes for 1/3 of an acre (*after* I got it knocked down on appeal, heh). And now, I have a kid on the way and am finding out the cost of child care around here... lets just say many colleges are less.

I'm faced with the internal crisis of actually considering scaling back on retirement savings. My wife and I make a good living, and it feels like it should be enough, but everything costs so much. Nevermind saving for college, and all the 5-digit periodic home owner expenses (new roof, new porch, repaving the driveway, etc). I do some things around the house, but I'm not about to start cutting walls open.

I'm looking at cutting back on some expenses - like I don't think we'll be doing much expensive traveling for a while, and we could stand to eat out less, and bring lunches to work - but there's not much I can do about mortgage, taxes, forthcoming child care, etc.

Retirement calculators tell me I have a good chance of being able to retire at 55 with meaningful income even under less than ideal market conditions. Scaling back contributions don't seem to hurt those projections. So I guess it's good that it feels wrong to me to consider cutting back on savings, as opposed to so many Americans who feel wrong saving at all. But it still does.

It is wrong to think about cutting back for other life priorities? Am I sinning against Fool-kind? Or is that just the way life goes?

I am not your priest, and this is just another Fool's opinion, but I think not.

Life happens.

You have a huge headstart.

Maximum 401-k contributions for the last 6 years would total almot 100k, plus earnings. Maximum IRA contributions for the last 6 years would total 30k, plus earnings.

You also note that you were contributing before you maxxed out. I would SWAG that you have 200k+ in your accounts. At 8% CAGR that would grow to 800k by the Time AARP reaches out to you. Plus another 5 years to 55, it should be 1M+.

And your post is unclear whether your DW has been doing the same.

In addition, you are still planning on contributing and your expenses feel more like noral change in family status expenses rather than huge extravagances. As long as you do get caught up in "Keeping up with Jones" in North Jersey and NYC, you should probably be fine.

One would also hope that you woudl seem some progress on the income side that might let you add back some the decreases, plus when you hit 50, the "catch-up" contributions are currently allowed under federal law.

Saving a lot in the first few yeasrs out of school while young and single is a huge advantage. All that early money has been workin for you, and will continue to work for you. I am sure that you are smart enough to contribute at least as much to the 401-k as is necessary to grab any company match ("free money"), plus likely more given yoru first paragraph.

Past of life is "living" now and as long as ome is thoughtful and prudent, rearranginig saving and spending for awhile is not necessarily disastrous.

Just my $0.02.

Regards, JAFO
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