BiggerPockets Money1 Nov 2024

Finance Friday: Signs You’re Saving TOO Much for Retirement

Are you saving TOO much for retirement (or early retirement)? Could you retire years sooner than you think? Will retirement expenses be even less than what you spend now, allowing you to reach FIRE faster with a smaller nest egg? Today, we’re getting into that exact question as Finance Friday guest Ethan asks how he can ensure he’s on the right track for early retirement by age fifty-five. And if you’re like Ethan, you could retire RIGHT NOW…but should you?

Ethan is spending a LOT of money every month. He’s got two kids in private school, extracurricular sports fees, pricey car payments, and a mortgage. The good news? He’s raking in cash at his high-paying tech job! His current expenses cost him nearly $20,000 per month, but this number could be cut in half (if not more) once his kids leave the house. This means that his FIRE number might be a fraction of what he thinks it has to be to retire early.

Speaking of early retirement, is it wise to leave such a high-paying career to sit on the beach all day? Ethan has the skills and the energy to make a sizable income, so what should he do instead of full-time work once he reaches early retirement? Should he transition to part-time consulting, focus more on rental property investing, or buy a business?

In This Episode We Cover

Why your FIRE number may be WAY off from what you need to retire early

The retirement expenses that disappear once your kids are out of the house

Making money in retirement and whether buying a hands-off business is your best bet

Planning for future weddings and how much you should set aside for your kid’s big day

Limiting your taxes by qualifying for real estate professional status (REPS)

Whether or not you’re keeping too much cash on hand (is the bank account interest worth it?)

And So Much More!

Links from the Show

Mindy on BiggerPockets

Scott on BiggerPockets

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Get on the Path to Early Retirement with “Set for Life”

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Dude ACTUALLY Withdraws From His 401(k) and Retires at 47 w/Eric Cooper

(00:00) Intro

(04:27) Money Snapsho

(12:44) Current Net Worth

(15:11) Work Less, Travel More?

(21:10) Early Retirement Expenses

(27:02) Buy Rentals for Retirement Income

(33:59) Paying Too Much in Taxes

(38:22) Downsizing Houses and Next Steps

(44:40) Saving for Future Weddings

(48:52) How Much Do You NEED to Retire?

Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/money-577

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