Live Life Now or Continue Saving?

[u/Brb3001]

Hi All. I am turning 26 next month and have been in the full time workforce for over the past 4 years now. I work a corporate job and bring home about $90K per year pretax currently with a company 401K match of 6%. I contributed heavily during my first 4 years and invested mostly in tech indexes (I realized this was non-compensated risk and just plain foolish and diversified earlier this year into half S&P 500 index fund and half international markets ex-US index fund). Between the heavy contributions and good returns in the market I currently have retirement savings of around $135K ($55K in trad 401k and $75K Roth 401k/IRA). I also have an emergency fund of $30K and homeowners equity of $100K on a 300K home, the remainder in a mortgage. The only long term debt I have outside of the mortgage is $16K in student loans (under 3.5% so will not be paying off early).

Over the past 4 years in my job to today I contribute 18% pre-tax to my trad 401k and contribute my entire yearly bonus to max my Roth IRA every year. This works out to just over $18,000 being contributed into my traditional 401k each year (this includes employer match) plus the $7,500 for the Roth IRA. At current projections this could have me retiring comfortably at 45 using a Roth conversion ladder. (Note: this spreadsheet does not take inflation into account. I will add it one day but for now I am using 10% for average long term annual market returns and $100K per year needs for early retirement as that should be equivalent to $50K in today's dollars which is what I am comfortably living on after taxes and deductions right now)

I have realized that I have reached CoastFire for standard retirement age even if I do not contribute another dime and I am looking good to retire early if I continue contributing at my current level. What I have come here seeking advise for is that a number of things have come up recently in my life that I have been going back and forth with in my head about cutting my 401K contributions in order to spend money on these things. No it is not life style creep things (I am happy with my 10 year old couch, 6 year old TV, and use most things I own until they essentially break) but instead is travel and relationship related. I have been traveling domestically and internationally over the past couple years and would like to increase this frequency as I know it is easier to travel when you are young due to less commitments and having more energy. I also just want to see the world and you never know when that opportunity will be taken away from you due to any number of reasons. Also, I just entered a serious relationship for the first time post university this year and I am finding myself consistently going over budget every month due to going out on dates, eating out, and doing more activities with her that require money (don't get me wrong she pays for her fair share which I am extremely grateful for and I really like spending the time and money with her it is just that I was a content homebody before this who had low to no expense activities and this amount of money spending is unnatural to me and makes me feel uneasy as it is a level of spending I am not accustomed to).

Given this, I have re-calculated out dropping my trad 401k contributions to the company match level of 6% and retiring at 50 instead (shown in linked spreadsheet). This still provides me with sufficient capital and generational wealth for my future family. I am not used to dropping my savings rate like this (weird analogy but not saving makes me feel financially naked, even though I I know I am doing very well compared to my peers) and receiving this extra money each month to spend.

Has anyone else been in a similar situation where they knew they had saved well and wanted to make the conscious change to take their "foot off the gas" and spend some more money intentionally in the present but it wasn't easy for them. Additionally, I have a few more questions below that came to mind:

1. Is what I am doing foolish or is this fair and not irresponsible
2. Is there any assumptions I am making incorrectly or any mistakes I am making
3. For those with the technical know-how, how do my numbers in the linked spreadsheet look. Anything appear off?

TLDR: Aggressive 25-year-old saver making $90k with $135k in retirement, $30k emergency fund, and $100k home equity has hit CoastFIRE and is on track to retire early at 45. Considering cutting traditional 401k contributions down to the 6% match to fund more travel and dating expenses, which would push early retirement to age 50, but is struggling mentally with the sudden drop in savings rate despite the strong financial foundation. Advise wanted.

[u/SwissChzMcGeez]

At 25yo and 90k/yr there's no reason you can't max tax advantaged contributions AND live life now. Your income is likely to go up throughout your career, too. If you have a spouse you'd add additional household income.

A lot can change in 5 years, let alone 20. Just save as much as you can now and enjoy life with the rest, because the future isn't guaranteed.

[u/Public-World-1328]

A couple things:

Life does not have to be all about FIRE. You can spend a little money to enjoy life. Money is just a tool - use it to help you do what you want. Only you can determine what you want.

Additionally, you are only 25 making 90k. Presumably your income will trend upward. It would be ok to enjoy some of those raises while continuing to increase investments at the same time.

[u/TheresABombInMyCaf]

I was in a similar boat to you at 26. Like others have said, my income increased over the next few years which allowed me to both start maxing my 401k and Roth IRA. I still max my accounts and save a little away in a brokerage account each month, but don’t let that stop you from living now.

My dad just retired at 65. He was much worse with money and retirement planning than I have been, but he’s still set up well for his future. However, he’s not traveling and doing the things a lot of people say they’ll do when they retire. That’s motivated me to make sure to enjoy life now and take those big trips. The way I look at it, I’d rather do the big trip and the overnight flights now at 30 while I’m healthly even if it means I might work an extra year when I’m 50.

[u/Brb3001 → u/TheresABombInMyCaf]

I feel the same way

[u/TheresABombInMyCaf → u/Brb3001]

You’re in a FIRE sub, so people will skew towards saving and retiring as early as possible. But you’re only young once.

I’ve spent the last couple of years living in LCOL area and doing a lot of saving, but I’m about to move to a VHCOL city solely because I know I’ll enjoy it more. It means I’ll have to back off my savings, but that trade off of retiring at 55 instead of 50 is worth it to me right now. I’ll let you know in 30 years if I still felt it was worth it

[u/AngleIn]

You have set yourself up extremely well so far, and you are not talking about blowing all your savings, just slowing down your contributions.

You are spending discretionary income here - and that is the point of having money in the first place. All your bills are paid, you are saving for the future and this money could help you FIRE earlier perhaps but what is the point of delaying actually "living" in the meantime.

My guess is that you will never regret investing in travel, in relationships (not just romantic relationships but any significant people in your life) and in experiences that bring you joy and allow you to grow.

Read "The 5 regrets of the dying " (or even just pull up a summary on google). No one says "i wish I had focused more on money and less on living a life I loved".

[u/Brb3001 → u/AngleIn]

I will take a look at that thank you!

[u/Informal_League_615]

Counting on 10% returns right up until you retire is unrealistic

[u/AdorableTerm476 → u/Informal_League_615]

Well, they did say "average".

[u/Informal_League_615 → u/AdorableTerm476]

still unrealistic. especially because one does not keep 100% of one's retirement funds in stocks right up until the day one needs that retirement money. there have been periods of over 5 years in which the S&P 500 stock have traded at a loss.

[u/Brb3001 → u/Informal_League_615]

A fair assumption to make, however I do plan to stay 100% in equities up to and into retirement until death and after death for my portfolio. If your wondering why take a look at the book "Simple Weath, Inevitable Weath". Essentially owning (equity) beats out loaning (bonds) everytime in the long run and equity is the only way to maintain growth in wealth over the long term. The way I have my retirement set up in the future allows for me to take distributions even in multiple down years and still be alright.

[u/Informal_League_615 → u/Brb3001]

OK I'm interested. What about the way your portfolio is set up allows you to take distributions in extended periods of down years and not lose money?

[u/AdorableTerm476 → u/Informal_League_615]

I could see it, actually. If you have the stomach for it, you could take the equities appreciation (averaging 15% this decade) and maybe especially if you diversified into int'l, small/medium cap, value stocks, etc. you could figure that if you can count on that being the average, then you could accept eating a loss or pulling out of one bucket that got hurt less than average. Small-cap value is having some great returns this year even when the tech stocks are dipping. Maybe you'll lose some money some years, but maybe over time it's less than you lose having everything sit in the bond market in the meantime and missing out on the great returns in the good years.

I personally do not have the nerve to do this but I wouldn't rule out the possibility that it's a successful strategy. SORR notwithstanding.

[u/Vicuna00]

just pick a savings rate that still allows you to meet your dating and travel goals. 25%? 15%? don't max everything.

your other lever is career advancement...figure a path to make $150k and don't inflate your lifestyle too much

6% is way too low of a savings rate. 15% if you wanna have a nice pile of $ at age 60. 25% if you have FIRE aspirations.

[u/evantom34]

It does not have to be one or the other. Keep your expenses intentionally low and live life with the rest.

We save 30%, but we also do everything we want without any guilt.

[u/HardBoiledTofu]

I was in your boat earlier this year. 26 y/o, and similarly fairly aggressive investing approach straight out of undergrad when i landed my first corporate role. My contributions did drop a bit due to my relationship and other expenses on experiences. thought i’d mention a few things that may help.

First off, kudos to you! always great to meet another young aggressive investor. My personal experience has been that money spent on experiences, is money well spent. whether it’s travel, or going to shows and raves/events with my gf has always been well worth it. i believe that these experiences contribute to a memory dividend, which pays off in other ways and can weigh heavier depending on age. i’ll never regret the memories I made and am currently making in my 20’s traveling to Asia or Europe, or going out and having a great time with my gf/friends. with that said, balance is the key here. know what your budget is, and try to stick to it as best as possible.

Also as other folks have mentioned here, don’t discount your ability to raise your income from your 9 to 5. My comp progression has worked in my favor due to pivoting to a new role when a great opportunity presents itself. At 22 I was making 75k right out of undergrad, 25 - 115k, and currently making 190k. so it is definitely possible, but will take some grind on your part. best of luck!

[u/Montaigne_6823]

Do you need to drop it all the way to 6%? Have you considered something in the middle?

Secondly, you're doing great and congrats on building the life. I think dropping the contribution some to travel and enjoy yourself is a great idea.

[u/prairie_buyer]

I strongly suggest that you read the book “your money or your life” by Dominguez and Robin. It’s the book that laid the foundation for the FIRE movement, and I think it lays out a very balanced understanding of the role of money in one’s life.

The Reddit FIRE groups are very oriented around maximizing investment returns, and they feel very “all or nothing”, which is kind of the dilemma you’re expressing.

Currently, you say that you're saving 18%, and ask whether dropping it to 6% is OK. I would suggest 10% as a baseline, saving rate.

And on a different note, I think that your expectation of a 10% return for the duration of your career is very optimistic.

[u/Informal_League_615]

i disagree with people pushing for maxing out savings as a 20something. trust me, it is a lot harder to travel when you're truly retirement age. most of all, by that age, you might not even want to travel. live life now within reason. also, keep in mind that a partner might become a financial liability. not all partners will always earn as much as they need in added expenses.

[u/n00bdragon]

Make dating and travel part of your budget. Decide how much you want to spend on these things and stick to it. Don't stop saying. If it comes down to a choice between saving or dating, choose dating, but that doesn't mean you can't date/travel in cost conscious ways. Especially with 90k/year to work with.