downshifting savings

[LivingAlmostLarge]

In the last couple of years with our change in income/job we've downshifted our savings. It's been intentional. We've had to. There was no way to keep up our savings rate at a much lower salary. I've been pretty uncomfortable with it to be honest but recently I've been reflecting on the now. Did anyone read the station before?

https://portal.clubrunner.ca/4363/stories/the-station-by-robert-hastings

Anyway it helped ease me as well. We often say do X, Y, Z. But once it's accomplished sometimes it's hard not to be prudent and save every extra penny. But now I ask myself what will saving that extra $1 do if i want something not on sale at the grocery? Will it break the bank? Or is it okay because i've been responsible for so long.

There is also the thought recently that it's okay, I saved a bunch for many years and we always lived below our means. But now is it the end of the world to save 15% to retirement 5% to short term and then enjoy the rest? Will we not retire because we are spending more to enjoy the now? Because we don't have more to save more?

i've been reluctant to change our lifestyle too much and I did a bit when DH changed jobs. We've always lived and saved on base salary, but until now we've had bonuses and stocks to save save as well. So we've put aside a lot of money in the past. Now we only have our salary and it's a weird feeling to only see what we save and not see more coming that we may not have used anyway but it made me "FEEL" more secure knowing we were saving it. Now I have to relinquish it's okay.

Did you guys hit this point? What did you do when you hit it? How did you feel when you did?

[kork13]

I've come to this point a couple times. My income shifts with every move, and or income had gone up & gone down. However, we're currently approaching a more notable one of those instances -- when I move to Japan in July, my income will drop by over $1500/mo. At the same time, my family will be maintaining 2 households on either side of the Pacific. So that'll be an uncomfortable change.

While I will try to reduce expenses to the extent feasible, I fully anticipate that the biggest impact will be on our monthly savings. We're currently saving around 40% of gross. This will drive us down closer to 30-35%. Still quite healthy, and our retirement accounts will continue getting maxed... But our taxable investments (contributions cut nearly in half) will grow much more slowly.

As it is, we'll accept the change pretty easily. We're still saving plenty, and we already have significant assets built up. But if we were to drop down below saving ~25% of gross, I think I'd become alot more deliberate about how we're spending our money. But 30% (or better) is my happy place... Anything above that, and I'm fine with being a bit more lax about spending.

[LivingAlmostLarge]

I think we are between 25-30% comfortably right now. Max out 2 - 401ks, Roth IRA, ESA, and an extra $750 a month savings. But it in excess of that do I need to save an extra $20k ibonds right now? 30% + feels a lot tighter now.

[disneysteve]

I think you're doing great. The fact that you saved so much when you could set you up for this very situation where circumstances changed and now you need to save less. And 25% is still plenty. If you can maintain that on top of what you've already built, you're in great shape.

[kork13]

I think you're doing great. The fact that you saved so much when you could set you up for this very situation where circumstances changed and now you need to save less. And 25% is still plenty. If you can maintain that on top of what you've already built, you're in great shape.

Exactly. Saving heavily during the fat years allows for lighter saving during lean years -- shoot, that's the very foundation behind "saving for retirement" !! Realistically, even if you're saving just 15% toward retirement + 5% for short/mid-term needs, I'd say that's probably suitably healthy for most families. That's a decent baseline, especially if you'll be able to ramp up again later on. Around here, we (I especially) tend to save more aggressively than most, which skews what seems to be reasonable/needed/normal. But do what works for your family, it's all about managing priorities & what's most important at any given time.

[LivingAlmostLarge]

I hate saving less. Makes me feel anxious. Although I know mentally it's more than reasonable and more than most people.

[AllyStreelman]

This is what you've been saving for! To enjoy the life you've created. Pat yourself on the back for being agressive early on - it will pay dividends in the future. I think it's smart to balance things out. Set a limit for your yourself and leave room for some desire spending in your budget!

[kork13]

I hate saving less. Makes me feel anxious. Although I know mentally it's more than reasonable and more than most people.

I'm totally with you, I'm the exact same way. But it's just something that you may kinda just need to start doing, then you'll get used to it. Besides, you can always go back, reassess, and make future adjustments again.

[bjl584]

I've had plenty of ebb and flow with the amount I've saved and invested over the years. Most people probably have.
I have a feeling that you're doing just fine and that you'll be just fine.
Have you sat down and figured out how much you actually need to have saved to enjoy retirement?
You might have already hit a goal and can easily take your foot off the gas.

[LivingAlmostLarge]

I've had plenty of ebb and flow with the amount I've saved and invested over the years. Most people probably have.
I have a feeling that you're doing just fine and that you'll be just fine.
Have you sat down and figured out how much you actually need to have saved to enjoy retirement?
You might have already hit a goal and can easily take your foot off the gas.

Not really. Mostly because I feel it's a moving target. I am not sure where we will end up so I'm a little cautious about how much I should have saved. I prefer more than less and I really think until the kids are done with college either way we are working. Now if we hit it big, then we'd reconsider. But it'd have to be so much money as to never worry again.