Author Topic: What to do when your retirement account is fully funded?  (Read 3046 times)

mrmoneycleanshaven

  • 5 O'Clock Shadow
  • *
  • Posts: 44
What to do when your retirement account is fully funded?
« on: December 24, 2014, 12:38:28 PM »
Just doing projections and am at a loss on what to do with my surplus income.

Currently making $75k, that will double to $150k in three years, and then peak at 200k 3 years later. I am living very comfortable on $37k with no debt but including a mandatory 1600/m rent payment. I am socking away 20% of income towards retirement, and will do so until I retire in 20 years, at which point I'll have invested $500,000 into my IRA.

My pension will be $65k in today's dollars and will pay immediately after retiring and is much more than I spend now. 4% on my projected 401k would be $80k a year in todays dollars, and ss should get me around 36k in todays dollars (so without investing any extra I have nearly 6x my expected expenditures in possible retirement, of course one or more of those are likely to trend downwards, but even if the value of them drops in half i am still sitting pretty).

So thats all well and good, but what do I do with the $1.5 million in surplus earnings ill be making in the next 20 years?

I am not even factoring in the wages (surplus or 401k investments) I'll make post first retirement, which would be $250,000 in todays dollars, in a career I can do forever.

I love my job, love my lifestyle, and the planners I've talked to are clueless, so ideas please.


pbkmaine

  • Walrus Stache
  • *******
  • Posts: 8332
  • Age: 63
  • Location: The Villages, Florida
Re: What to do when your retirement account is fully funded?
« Reply #1 on: December 24, 2014, 01:41:34 PM »
Think of the extra as a contingency reserve. Stuff happens. Perhaps you won't work at your job for 20 years. You could become disabled before or after retirement and require assisted living or caretakers. You may have a spouse or children or parents who need extra help. You may find a charitable cause that touches your heart and decide to help financially. I am 58, FIRE with a very nice cushion. I sleep better with that cushion.

gobius

  • Stubble
  • **
  • Posts: 167
Re: What to do when your retirement account is fully funded?
« Reply #2 on: December 24, 2014, 01:53:22 PM »
A lot of people think they will love their jobs forever until they don't.  I would still put away a good amount in case you ever decide to do something else that pays less or, like the person above said, want to donate to a cause or family member.  You may as well build up while you are able and eager to do so.  A lot can happen over 20 years.

pdxbator

  • Stubble
  • **
  • Posts: 229
  • Location: Portland, Oregon
Re: What to do when your retirement account is fully funded?
« Reply #3 on: December 24, 2014, 02:40:10 PM »
This is where a taxable investment account comes in. You invest in low cost index funds and watch that money grow. If you enjoy your job keep working, if not you've got a big cushion to find another passion, or just be a ski bum.

sobezen

  • Bristles
  • ***
  • Posts: 374
  • Age: 890
Re: What to do when your retirement account is fully funded?
« Reply #4 on: December 24, 2014, 02:51:46 PM »
Congratulations on the solid income, a good pension, and awesome projected increase in three years!  If you don't mind sharing how young are you?  Also, since you are posting in this area, do you mind sharing what is your monthly spend?  And do you plan on having a family or buying a home?

You are certainly on the right track saving 20%.  Can you save more to other retirement accounts in addition to fully funding your 401k (IRA, HSA, ESPP, brokerage accounts)?  These are the steps I would focus on in addition to maxing out the 401k and gradually increasing savings rate to 50%+. 

Like other posters, I don't assume I will stay employed at for 20 to 30 years, companies lay off people through no fault of their own (I've been through two already).  That said, by saving more I feel it creates increased opportunities sooner and at the same time it increases my frugality muscles with some self-imposed hardship/discomfort. YMMV.

mrmoneycleanshaven

  • 5 O'Clock Shadow
  • *
  • Posts: 44
Re: What to do when your retirement account is fully funded?
« Reply #5 on: December 24, 2014, 04:48:49 PM »
Congratulations on the solid income, a good pension, and awesome projected increase in three years!  If you don't mind sharing how young are you?  Also, since you are posting in this area, do you mind sharing what is your monthly spend?  And do you plan on having a family or buying a home?

I'm 30, spend 1,700 a month (3,200 when you include mandatory lodging/utilities), family of four, stay at home spouse, can't buy a primary residence due to contract structure, but do have a dream retirement location

You are certainly on the right track saving 20%.  Can you save more to other retirement accounts in addition to fully funding your 401k (IRA, HSA, ESPP, brokerage accounts)?  These are the steps I would focus on in addition to maxing out the 401k and gradually increasing savings rate to 50%+. 

I am saving 50% right now, just 20% in retirement that over time will leave me with a huge chunk to draw on even at a conservative 5% growth, health care costs are zero, ira loses tax advantage soon, thinking about brokerage accounts, but my real question is "whats the point of saving even more than 6x projected needs", I should add that my contract provides excellent disability coverage

Like other posters, I don't assume I will stay employed at for 20 to 30 years, companies lay off people through no fault of their own (I've been through two already).  That said, by saving more I feel it creates increased opportunities sooner and at the same time it increases my frugality muscles with some self-imposed hardship/discomfort. YMMV.

my contract has me working 10 years, and I am cliff vested at 20, so its almost a got to do it situation, and I wouldn't go so far as saying my position is downsizing proof, its extremely unlikely that my contract would be ended early or not renewed at my request

Even after I retire at 50, I can't see myself not at least doing part time work as I am really passionate about what I do, although I do realize that burnout exists everywhere, oh crap, don't you love it when you answer your own question...

nothing to see here folks, thanks for your time.

NICE!

  • Pencil Stache
  • ****
  • Posts: 687
  • Location: Africa
Re: What to do when your retirement account is fully funded?
« Reply #6 on: December 24, 2014, 04:55:58 PM »
Are you in the military? The 20 year cliff vesting sounds like the military.

All the extra income? Charity + savings. Don't really understand the question. Perhaps you can allow yourself a luxury purchase of some kind, like a few big time vacations. For example, I believe I'm going to discuss season tickets for a football team with my wife. I already purchase them and actually make money off of them, but I'd like to upgrade them to better ones, meaning more would come out of pocket. I'm going to offer to work 6-12 months longer than originally planned to "pay" for this in extra cushion savings, even though I doubt we'll need it.