Oversaving for Retirement: Advice from Real People Who May Have Saved Too Much [From NewRetirement] (Part 3 of 3) [4 Articles]
~ Tuesday, October 31, 2023 Blog Post ~
By NewRetirement Editorial Team, May 25, 2023
Are you “saving too much”? Are you “not saving enough”? These questions haunt people who are worried about funding retirement responsibly. However, it is important to understand that the only person who can really answer the query is you.
Are Savings Even the Right Retirement Preparedness Measure?
People tend to measure retirement preparedness as the value of their retirement savings.
However, it is entirely possible (albeit difficult) to retire on Social Security alone — with no savings. And, many people have more money than they know what to do with — which might mean that they have saved too much.
The reality is that savings are only one aspect of what goes into a secure and happy retirement. A solid retirement plan involves retirement income (and how that changes over time), whether or not the retirement income is guaranteed for life, retirement expenses (and how those change over time), how to anticipate unanticipated events and various economic assumptions that you have very little control over and — last but not least — how you will be spending your time.
Use the NewRetirement Planner to create a personalized plan. The comprehensive system helps you think through details of funding retirement, plan your legacy and create contingencies for unknowns.
When it Comes to Savings, It is Not Just a Number: Your Values Are Also Important
The reality is that there are not any right answers about how much savings is too much. There are only right answers for you and for what you value and need. You see, figuring out your financial plan is not entirely a numbers calculation, it is also a reflection of what is important to you, who you are and how you want to express your identity.
This reality was highlighted by a recent discussion on the NewRetirement Facebook group about this article: Are You Saving Too Much for Retirement? Opinions were varied about the judgements and ideas related to retirement savings and how much is the right amount.
Here is some of the the advice people — particularly those who seem to have more than enough for retirement — had to offer:
1. It is Only Too Much (or, Too Little) if You Are Unhappy
Joe said, “If someone is unhappy, sure, then their balance might be off. I just know. I don’t deny myself anything I really want or need. I don’t yearn for anything. And it’s not like we never splurge on things that we really enjoy and that matter to us. But, unless you see someone is unhappy, who are you to know if their balance is off?”
Nicholas agreed with a sentiment that is true for if you have too much or even not quite enough: “It’s all about the lifestyle you want. As long as you are comfortable and happy. Enjoy.”
2. Focus on What Makes YOU Happy — Even if That is Savings
Feeling financially responsible and accumulating money is not a negative. And, for many people, it is core to their identity and something that gives them peace and even joy.
As Kenneth pointed out, “In the end, your EXPERIENCE is almost all that matters. For example, you get to 70 years old realizing you saved WAY too much and could’ve drank more whiskey and chased more women, but how was your EXPERIENCE during that time? Did you feel really good about saving, did you get psyched every time you got an extra $100 and sent it into your account? Did you spend an hour a week going over spreadsheets and doing “what if’s” and liking what you saw?”
He continued, “Happiness is a conglomeration of things, really, and in the end, is what we’re after. LACK of money creates a lot of stress and diminished happiness, so is it better to err on the side of caution and risk doing without and saving too much?”
3. Retire Early
The real upside of “over saving” is that you can retire early.
Frank found that, he could retire much earlier that expected. “I have started to look forward to moving my retirement date up earlier than originally anticipated. It was 67, then 65, and then a firm 62. If things go well, I am now considering 60 at this point. I definitely don’t want to work a day longer then I have to. But as Richard stated, I need to feel comfortable and sleep at night without worry. So no matter when it turns out to be, most likely it will be much later than the minimum date, as I want to ensure I am comfortable.”
4. Find the Right Balance for You
Only you will know the spending and saving levels that are right for you now — and in the future.
Todd said, “While saving more is generally a good thing, some people who are savers have a difficult time making the transition to spending and might wind up depriving themselves from living the life they really want. Similarly, some people save so much of their income with a view toward tomorrow that they never get any enjoyment today — and tomorrow isn’t guaranteed. As with everything, balance is the key. The balance line is different for everyone.”
5. Be Aware That You May Need To Ease into Spending
It is a massive paradigm shift to go from working and saving to leisure and spending. And, for some people, old habits die really hard.
Sean concurred with this sentiment, “I think one issue is that some people have been disciplined saving and successful accumulating. So successful that they’ve got plenty to spend and plenty to leave to heirs. Yet they still struggle to breakout of their savings mindset. It’s another facet of making the transition to retirement.”
Sean, continued, “A good number of people have indeed saved more than they’ll ever spend in retirement. One of the biggest difficulties is making the transition from accumulation to distribution. After living frugally for 50 years it can be very difficult to spend. That’s fine as a choice, but when it’s reflexive it can be helpful to let them know taking a cruise or buying that tractor is a realistic and affordable choice. Knowing that can be very helpful.”
If you want to spend, or think you might like to spend, run a scenario with The NewRetirement Planner to gain confidence that you can afford to spend.
Explore, 9 ways to overcome the terror of spending your retirement savings.
6. Save or Spend as a Reflection of Where You Stand Today
No matter whether you have saved too much or too little, it is important to address where you stand today and make any necessary adjustments.
Brad is philosophical about the fact that he may have saved too much and is careful to not focus on regret. He said, “I am a couple years into retirement and is starting to appear as if I saved too much or retired later then I could have. It is easier to judge these things in retrospect. Now, I could raise my standard of living quite a bit more. But I planned to raise it about 30% when I retired to travel. I can’t see the point of trying to see how little you can get by on in retirement as I have more time to do things. And, I chose not to be wasteful with my spending while I was working.”
Barbara’s values have shifted. She said, “I used to always think, in the back of my mind, when spending money, that if I didn’t spend it but saved it instead, my kids would appreciate me at my death at how much I sacrificed for them. Well, I am finding that they aren’t really appreciating me while alive so why do I care if they appreciate me when I’m dead? I am changing my mindset and going to work to “die with zero”. My husband and I worked for it, saved for it, so we might as well be the ones to spend it!”
Of course, as we age, our brains change and it is an interesting philosophical question to ponder — are the values you had when accumulating assets more important than the values you have today?
7. Too Much is Better than Not Enough
Philip makes a good point when he said, “I’d rather have too much than not enough. I retired at 71. I loved working. Only retired due to a new grand baby in a different state. I have plenty for spending in retirement. I plan to take it easy and put two grands through college. If I leave the children too much, that’s their problem.”
8. Better to Have and Not Need
Steve is another philosopher. He said, “It is better to have and not need than to need and not have. Enjoy the fruits of your labor as they say.”
9. Too Much Won’t Go to Waste — You Can Always Donate to a Good Cause
Barbara said, “I have no kids. And always planned to enjoy my money. And donate the rest to charities. Knowing it is helping others isn’t a bad way to end to it all either.”
Jolanda agreed, “Nothing wrong with saving too much and living simply. I know I could afford much more than I spend, but do I feel a need to? No. Do I want to? Not really. I’m pretty content with the way I live now. I’d rather see whatever is left of my money after I die doing good in the world.”
10. Won’t Have to Go Cheap on the Nursing Home
A HUGE reason that many people “over save” is that they want to anticipate anything and everything that can go wrong in the future.
Long term care is a potentially massive expense that you have a high chance of needing to fund. Having a plan for long term care is not something you want to overlook. Long term care is not covered by Medicare. You can run through all of your assets and then get the care covered by Medicaid, but it might not be the type of facility you would prefer.
Steve is happy he saved too much. He said, “I don’t want to have to go to the cheap nursing home.”
No retirement financial plan is complete without documenting how you want to be cared for and how you will pay for that care. Use the NewRetirement Planner to figure out the right plan for you (it doesn’t have to be long term care insurance).
Learn about 10 alternatives to long term care insurance.
11. Be Ready for Dementia Care
Long term care is expensive, but usually only lasts an average of between 6 months to three years, depending on the exact demographic. It will put a crack in your nest egg, but might not bankrupt you.
However, dementia care can be a significant cost for a significantly longer period of time.
Jordana pointed out, “What matters [with regards to how much savings you need] is that if you get dementia, the average time for care is 6–10 years and potentially it could be 20.”
She continued, “How can you say you have planned for retirement safely and securely if you haven’t planned for 20 years of nursing home care. I don’t have kids. I need to make sure I’m comfortable and happy no matter what happens– especially in elder life. That is when I want the most luxurious environment and conveniences — since I won’t be able to rough it as much as I can now.”
5 steps to take now to plan for the possibility of requiring dementia care.
12. Cover All Unknowns and Worst Case Scenarios
We simply don’t know what will happen in the future and it is best to make sure that you have enough savings to cover potential unanticipated possibilities.
This is one of the reasons why so many people feel like no amount will ever be enough.
Anticipating unknowns — and creating financial back up plans is a good practice for retirement planning. It is especially a good idea for those who are struggling with the idea of whether or not they have saved too much or not enough.
The NewRetirement Planner is an excellent tool that enables you to model multiple scenarios. It can help you make sure you address the obvious unknowns: long term care, healthcare costs and home maintenance concerns. But, you can also make a list of everything that worries you — a grandchild who might need expensive medical care or a fire at your home for example — and create a plan that you can feel good about.
Not everything unanticipated will actually happen, but you will absolutely be more certain that you are prepared for what does.
13. Buy a Tesla
In 2018, Eric found an article that convinced him he had saved too much and he decided to indulge in a Tesla. He claims that the car has safety features that saved his life — multiple times in Atlanta traffic.
Eric said, “This is safest car ever. It dodged all attempts to destroy it with me inside.”
Who says splurges aren’t worth it?
14. Be Aware of Your Psychology
Joe said, “I retired at 60. My income is $100k without my wife’s salary. I invest as if I need the income but never take it. It just keeps building. Why? I dunno. I am so used to saving and living within my means, I feel guilty spending what I have.”
Money is emotional. We all have a money personality type that can be both helpful and harmful, depending on the circumstances. It can be useful to talk or think about your relationship to money and make sure that you are genuinely living the life you want to and can afford to live.
Dewayne is aware of where some of his attitudes about money come from. He reflected, “At 66 I look back and see the struggle my parents had. My Dad always (and loudly) fretted about where was the money going to come from. We lived in a nice home, we all went to college, yet there was always the issue of money hanging over our head. Getting married, I was a teacher, my husband a laborer. We experienced a similar life. I made very little money, and while he had a good salary, it seemed like 6 months out of every year, he was laid off. We learned to live very lean. We never over extended our credit, skipped a lot of travel. We saved and saved, always with the fear it wouldn’t be enough. It seems it will always be there. The fear of not having enough, comes through past experience, deeply ingrained thinking.”
15. Enjoy What You Enjoy
Judy doesn’t feel guilty or fearful about spending, she just doesn’t want to, her advice is to just enjoy what you enjoy.
She said, “What is wrong with contentment? It isn’t in my nature to live flashy and to have a lot of things, or to travel expensively. I enjoy hostels more than fancy hotels and street food more than fancy restaurants. Contentment with simple pleasures gives me serenity and joy. Of course, I also enjoy the security that comes from knowing I could spend more if I want to.”
16. Ignore Those Who Tell You You Can’t Retire
It is rare that you’ll find a financial or retirement planning news article that isn’t all doom and gloom. Headlines scream about low savings rates, a retirement crisis and the downfall of Social Security and Medicare.
The headlines aren’t always wrong, but they aren’t always right either.
Scott’s advice is to, “Ignore all of the sources out there scaring the bejesus out of everyone with their doom-saying about not saving enough, continue working to save $12 million (!) before you’re ready to retire, etc.”
He continued, “There are much better and more personalized resources now (like NewRetirement) that can give people a much better perspective on their situation — and that might just show them that they don’t need to save $12 million before they can retire from their crappy old job.”
17. Continued Work and Savings Are Enjoyable to Some
Robyn observed, “I know a past co-worker who is 70 and has two years on his mortgage left. He has said even if there is an incentive, he will not take it. He will get a wonderful pension and SS plus his deferred comp. Plus, he had a heart attack while on the job. Not married. I just want to yell at him and tell him to go enjoy already!!”
However, Jack pointed out, “Sounds like he is enjoying himself already. Some people are defined by their jobs and would be depressed without them.”
Work is scientifically proven to keep you vital. It is also hugely enjoyable to many.
There is no law that says you need to retire. If you want to work, go for it!
Explore 14 reasons why working in retirement is the best and 9 tips for avoiding retirement depression.
18. Enough to Help the Grandkids
For some people, saving too much means that they will have money leftover.
For others, a financial legacy– money leftover for someone — is something they plan for and is a big part of why they saved money to begin with.
Steve wrote, “We worked hard, saved, and planned early to leave our kids some money. My daughter’s a teacher and my son a musician. Neither will probably ever make enough to be considered ‘well off.’ We want them to have every chance at enjoying some of the things we worked for and enjoyed. And, we want our grands to enjoy things too. Kids were expensive. Soccer costs money. Swimming costs money. Gymnastics costs money. We want them to be able to try the things they want to try, and not being limited by what their parents could or couldn’t afford. Plus, I feel grateful that I’m able to help them out, and that they let us be a part of their lives.”
Explore financial strategies for helping your grandchildren.
19. Don’t Neglect Enjoying the Money You Earned
Many people save their whole lives, then retire and some then become obsessed with growing their asset base.
Don thinks it is a good idea to understand why you want to grow your assets. He said, “If your goal is to match the indexes I ask, “Why?” How will your life change if you have $2.2 million extra instead of $1.7? It won’t. So what can you think of that would be a bucket list, that’s no longer out of reach financially? Attend the Super Bowl? Play every major PGA course in America? Pay off an extended family member’s college loans? Leave a thousand dollar tip at lunch? Or not. Just having this conversation could cause their financial insecurity and stress to nearly disappear.”
He continued, “I believe there are three ways to fail in retirement: not save enough, outlive your savings (a variation of not saving enough), or have plenty and not enjoy the financial independence you have earned. It’s a good problem to have but it’s still a problem.”
20. Retired, Not Retired, Too Much, Not Enough: Doesn’t Matter, Live Now
Dewayne urged people to live the life they want now — no matter their circumstances. He said, “Some people out there seem to think ‘life’ does not begin until they retire — that it’s important to save like mad, and live frugally so their retirement balances are maximized, the house is paid off, and so forth. So they postpone travel and hobbies, thinking they’ll pick that up during retirement. A lot of people never make it.”
He continued, “My parents had that mode of thinking, being very frugal, never going anywhere, and putting every excess penny into paying off the house. Due to major health issues with my Mom, my Dad had to take early retirement and became literally a full-time caretaker; and they never got to do anything during their ‘retirement’. I watched my Dad go slowly downhill and he died literally a broken man. Over and over he told me he wished they had gone to some of these places that he had always dreamed to see, while my mom was still healthy.”
Dewayne concluded, “There’s a balance there. I make sure to maximize our retirement contributions, put some extra in our cash/emergency savings, then spend the rest on travel. I have seen multiple friends die or have major health issues in their 50’s and 60’s and am all too aware as to how little time you might have to live the life you might desire.”
21. Max Your Spending
If you find that you have saved more than you need, you might want to explore what maxing out your monthly spending might really look like.
Sharon said, “I added to my monthly expenses on the site to reduce my legacy to my kids who don’t need it. It gave me the confidence to spend a bit more than the bare bones spending I was doing.”
In My Plan > Withdrawals, the NewRetirement Planner enables you to run a withdrawals scenario to max out your spending — given your existing anticipated expenses, income, and desired legacy.
22. Throw Off the Bowlines
DeWayne also offered this advice and a well known quote, “You cannot let that fear drive you too much — or you’ll end up with a lot of regret in your later years. There’s a quote, wrongly attributed to Mark Twain, that I’ve got pinned to my desktop: ‘Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines! Sail away from safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover!’”
23. Love — Not Money — is the Real Answer (For Some)
Finally, in the ever entwined relationship between money and emotions, Nancy offered this opinion, “I think the important thing is to do the things that are important to you and that bring you joy. This is the only life we get and my life will be judged by how much love I shared not how much money I left.”
Source:
Article #2: All About Oversaving, And Why Overcoming It Can Strengthen Your Business (From At Peace With Money)
Often issues with money stem from not having enough — so when you hear the word “oversaving,” it might not sound bad. However, oversaving can be a serious issue that may be blocking the potential of your business. It may also point to anxieties that need to be resolved. Let’s take a look at what oversaving is and what you can do to overcome it.
What Is It?
If you experience anxiety or guilt over spending money, even on basic necessities, you may have oversaving tendencies. You might struggle to spend money on your business or operating expenses. Alternatively, it might be hard for you to spend on something other than reinvesting in your business. Or, you might have a hard time parting with any money know you could save it for retirement or business emergencies.
Oversaving both stems from and enhances anxiety, stress, and burnout. It often comes from a fear of scarcity. While saving money is an important skill, if it’s taken to an extreme, it can keep you from spending money to solve urgent problems in your business and your personal life.
What Can You Do About It?
Saving money is a great habit, but the key to overcoming the oversaving habit is to get strategic about your saving. Rather than living in this panicked feeling of “I have to save every dime I possibly can,” create some money systems! Coming up with savings goals, establishing a spending plan, and automating your money are all great ways to introduce strategy and systems.
Savings goals can be especially helpful, because they can lend purpose to all that saving, but they also create an end point you’ll eventually meet. Limiting and directing your savings in this way can help curb the habit and assuage your anxieties. When you use the Profit First system, you put aside money to pay yourself first, but you also save for taxes, put aside money for operating expenses, and also distribute profits every quarter, which are meant to be spent by YOU so you can reward yourself for your hard work. If you’re interested in learning more about the Profit First System, check out the first 5 chapters of the book here.
Doing some emotional work around money can also really help you clear up your oversaving. I recommend reading Bari Tessler’s The Art of Money for more ideas about this. She helps you unpack your feelings around money and combining the practical with the emotional. If you’re interested, check out my book review.
Oversaving can be a sneaky habit, difficult to catch and overcome, but I believe in you — you can do it! And anyway, saving is so much more effective when it’s done in order to meet a goal. If you enjoyed this article, I suggest looking into Profit First. If you want to chat more about these ideas and take a look at your money, you can take a look at my service packages and book a call. Doing a year-end review could help you identify a couple goals to save for!
Source:
Article #3: BOOK: “The Cure for Money Madness: Break Your Bad Money Habits, Live Without Financial Stress — and Make More Money!”
By Spencer Sherman
Published on February 3, 2009
The Cure for Money Madness makes a golden promise: stress-free prosperity and a lifetime of financial peace.
When financial advisor Spencer Sherman found himself crossing a police line to retrieve his work files from a burning office building, he realized he had money madness. He noticed it in his clients, too: those irrational feelings about money that make otherwise rational adults behave foolishly — buying high, selling low, overspending, lying to their spouses, equating their self-worth with their net worth. Money madness stresses us out, poisons our relationships, and keeps us from making as much money as we can. So Spencer invented the cure. Now, in The Cure for Money Madness, he gives us the tools that have helped thousands of people find greater peace of mind — and make more money.
Money madness, Spencer shows us, comes from unproductive messages that we received long ago. “It takes money to make money.” “Paying rent is just throwing money down the drain.” “Don’t talk about money.” When you challenge the messages, you can transform all aspects of your money life: earning, spending, saving, investing, giving, borrowing. More money will flow to you. Your relationships will improve. You’ll enjoy your money more. And you’ll be more generous, too.
In The Cure for Money Madness, you’ll discover:
How much your money madness has been costing you
How wealthy you truly are, by using the revolutionary Actual Net WorthTM statement
How “small and boring” can help you outperform the top investors — without watching the market
How to communicate about money in ways that create deeper connections with your spouse, parents, children, friends, and colleagues
How to know what is truly enough
Money madness keeps us from living as richly as we might and enjoying the wealth we have. In these tough economic times, The Cure for Money Madness transforms fear and stress into prosperity and peace.
Source:
https://www.amazon.in/Cure-Money-Madness-Financial-Stress/dp/0767928555
Article #4: Saving Too Much for Retirement Won’t Make You Happy (From The Fioneers)
By Jessica, January 17, 2022
“FI and saving became something to hold onto as a cheap stand-in for happiness.” — Laura Freyman
Within the FIRE movement, people too often treat FI and saving as a cheap stand-in for happiness. People consistently think, “If I only get to the next milestone, then I will be happy.”
Unfortunately, we’ve seen enough examples to know that it doesn’t work this way. People who were miserable before they reached FIRE are often just as miserable after they reach it. They simply realize that they can no longer use time or money as an excuse.
Today, I’m bringing you a Slow FI interview with Laura about how her family decided to question this approach. Laura’s husband Mike was extremely burned out after working for a number of years in retail management. Being in a pandemic dramatically exacerbated it as well.
In 2021, he quit his stressful job, took a few months off to recover from burnout, and found a new job that was much less demanding. This change has had a dramatic positive impact on his life and his family.
Before giving away their full story in the introduction, let’s get into the interview.
1. Tell me a little bit about you.
My name is Laura. I’m 35 and my husband, Mike, is 42. We have two children, ages 7 and 5. We had very different upbringings, so we came into our marriage with very different views of money.
I grew up in a small town in Iowa. As a pastor’s kid, I watched my parents follow their calling while also knowing we had limited financial resources. As a result, I developed a scarcity mindset.
Mike grew up in the Chicago suburbs with seemingly unlimited resources. Mike’s mindset is exemplified by this statement: “I can always make more money tomorrow.”
We both started our careers with lower salaries and brought in $50–60,000 per year combined. After paying off my student loans, we started investing in earnest around my 29th birthday.
Since then, we’ve both made career shifts that have increased our income. Most of my career has been spent working in non-profit development. When I worked in non-profits, I worked 32 hours/week and spent time on my painting side hustle. Now, I work full-time at a university and am enrolled in an MBA program (that’s free for me!).
Mike spent the first 12 years of his career working with children with disabilities. Things changed in 2017 when the state made huge budget cuts. Mike’s job was eliminated, and he started working at a large retail giant. Little did we know that in just 3 short years, he would receive multiple promotions and be managing a team of 150 people!
What began as a stopgap quickly turned into a lucrative but physically and emotionally demanding job. By the time COVID hit in early 2020, we were succeeding financially, but it felt like our family was coming apart at the seams.
2. What deliberate decision have you made to slow down and improve your life?
Let’s talk about the why before we talk about the what.
By the late spring of 2020, Mike’s work became even more demanding. Supply chain issues exacerbated early pandemic fears. Retail managers bore the brunt of angry customers and less than safe working conditions. Mike was managing his own mental health while trying to promote a healthy environment for his team.
Although his company offered increases in income and paid time off for COVID, this was paired with increased productivity standards due to the increased demand. Managers were expected to do more with fewer employees. Pick-up orders surged to thousands in a day!
At the same time, my university job went remote, and I was working from home full-time with two children. We were exhausted, but we somehow made it work.
By December 2020, Mike was physically drained and emotionally spent. He had spent a full year leaving the house at 4:30 AM and returning after 6 PM. The holiday season brought on even more demands and angry customers. He came home quiet, sullen, exhausted, and unable to interact with us.
We knew something needed to change. We barely saw each other, and when we did, we were too tired to offer much more than a brief recap of our days. It felt like we were married to our jobs, not to each other.
In early 2021, we spent time weighing our options.
We were in the best place we’d ever been financially, but we began to ask ourselves, “What is all this money for?” We had all the money we could want, but we were miserable.
Even without knowing how everything would work out, we knew he needed to leave his job.
Mike liked the idea of someday returning to social work, but we knew he’d need time to rest and recuperate first without the pressure of finding another job.
We set our sights on May 1st and later dubbed his intentional break as the “Summer of Freedom.” We even added a line in our budget called the “Freyman Freedom Fund.” Between January and May, we added $15,000 to this fund which doubled our existing emergency fund.
This allowed Mike to leave his job on May 1st.
At the end of the “Summer of Freedom,” Mike was able to secure a job with the same nonprofit he left in 2017. The job is meaningful and a lot more flexible than working in retail. He now gets to be on the same school schedule as our kids. While this change came with a nearly $50,000 pay cut, it’s been worth it.
3. How did the decision for Mike to quit his stressful job impact your family’s quality of life?
To be honest, the transition wasn’t always easy. When you go from running full speed ahead to taking a break, it can dredge up serious physical and emotional pain.
Mike spent much of his summer going to physical therapy to heal his back and elbow from overwork. We later discovered that he has a degenerative disk disease that was exacerbated by all of the walking he did on concrete at work. He also started seeing a counselor.
As much as the summer was challenging, it provided him with time to heal.
When I asked him about this, Mike said, “My mental and physical health have improved. My overall willingness to interact with family and friends has increased. I feel less pressure. I’m not as fatigued. I actually want to be social! And, I’m more patient now, especially when I’m at home with family.”
For me, the best benefit has been that I feel as if I’ve gotten my husband back. We are now being intentional about weekly date nights, committed to setting (my) work aside to talk at night, and are in general more on the same page than ever.
One incredible bonus is that Mike is now on the same school schedule as our kids. He gets to pick them up after school and will have time off with them each summer. For the first time in years, we get to have winter break off together when my University closes. And, Thanksgiving will be a time to enjoy each other’s company, rather than a rush to work for Black Friday.
Finally, Mike recently re-enrolled in school to finish the bachelor’s degree he started many years ago, something he would not have had the time or energy for previously. His employer will reimburse us for half of his tuition. We’re both in school now and are excited about the chance to learn and grow together.
4. How did the decision to downshift impact your financial goals or timelines?
Our financial timeline has shifted, but so have our goals. Now, we are less focused on achieving early retirement as quickly.
When Mike left his position, we anticipated using the “Freyman Freedom Fund” in the short term to replace his income. We ended up needing to use less of the fund than expected.
After Mike quit, he received three extra paychecks for vacation and sick time payout. He started working again in August. In September, I received an unexpected raise, which helped to balance out the change in our family’s income.
We ended up being able to use the leftovers of our “freedom fund” to do some landscaping, enjoy a few family trips, and save toward a basement remodel.
It’s hard to compare our long-term goals from before and after the transition. When Mike was working in retail, I became hyper-focused on financial independence. FI and saving became something to hold onto as a cheap stand-in for happiness. We’d think, “As long as we hit our financial goals, what does it matter if we aren’t happy?”
Now, I feel lighter and less anxious about money. I now realize that all the money in the world didn’t matter if my family wasn’t healthy and, most importantly, able to be present together.
Contributing to our 403Bs will be optional in a few years from a savings standpoint, but we plan to continue to max out our Roth IRAs as long as we are working. Mike will be work-optional by 52, which is 10 years from now. I will likely continue working until age 52 (when Mike turns 59).
We now also don’t feel as strongly about paying off our mortgage early. We have a low mortgage interest rate, so we’re choosing to prioritize our investments right now.
5. What enabled your family to downshift?
There were a few things that enabled us to make this decision.
The first was our frugal lifestyle. Even though Mike took a $50,000 pay cut, we were able to make it work. We’ve lived in the same house since we got married ten years ago. We’ve always paid cash for our cars, and we never truly upgraded our lifestyle.
There were also many costs that we were able to easily cut once Mike quit his job, including:
- Gas costs from his commute
- Snacks and drinks at work to help him stay awake
- Convenience dining
Our daughter also just started Kindergarten this past fall, so our childcare expenses were also reduced significantly.
Mike also needed to work through the emotions of leaving his job. He shared, “I’ve never felt the need to be the provider; it’s always been about both of our jobs. I worried more about the fairness of you needing to work more and make more money and how that might impact our relationship.”
The fact that we combined our finances when we got married was very helpful when making this decision. We’ve worked hard to have an “our” mentality surrounding financial decisions. Now, I actually feel more aligned in our decisions than ever before, regardless of who brings in what.
Building up the “Freyman Freedom Fund” also provided Mike with the confidence he needed to quit. Mike shared, “Because we had a plan, it gave me permission to leave. I knew everything would be fine financially, even if I was still trying not to panic about my income being gone completely and then cutting it in half when I took the new job.”
6. What changes did you make so you could continue working toward your goals?
One interesting by-product of Mike’s career change is that he’s actually become more budget-conscious. And, I’ve become more comfortable spending money on things that really matter!
Mike shared, “Being more active in our budgeting helps me to be aware of what I’m spending instead of thinking, ‘Oh, I can always make more money.’ I’ve now realized I can still live the way I was living at half the salary by being more intentional and conscious of my spending.”
We’ve also started spending more on medical expenses and date nights. When I was obsessing over FI, I tried to minimize spending on everything, including these important things.
One thing that we’ve also done was to increase our individual spending cash. I was normally the one to run the budget (and get annoyed if we went over). Now that I make more money, it changes the power dynamic a bit. I definitely don’t want him to feel punished for making less since this was our collective choice (and I couldn’t do my job without him being more active at home). This is simply another reminder that our money is ours to spend as we please, not just mine or his.
7. How did your pursuit of FI help or hinder the decision to downshift?
Our pursuit of FI both helped and hindered our decision.
Let me start with how it helped. Because of our pursuit of FI, we’ve always lived below our means and had a long-term plan. Being in a good financial position allowed Mike to quit his stressful retail job, take time off, and choose to accept a lower-paying job when he went back to work.
Because we were pursuing FI, we’ve also long understood that our way of life is slightly counter-cultural. We’ve become accustomed to making choices that fit our lives, not the lives of our family, friends, or neighbors. We’ve intentionally quieted the naysayers and resisted being guilted into living in a way that is not authentic to us. FI gave us a mindset to feel like Mike’s decision to leave his job was most of the most authentic decisions our family could have made.
On the other hand, pursuing FI hindered the decision as well. It’s so easy to have an all-or-nothing mentality when it comes to pursuing FI. This mentality tells me that I’m either FI at 35 or destitute. I’m either saving 50% of my income, or my retirement is doomed.
I read two books over the past year that helped me get more comfortable with making an intentional decision to earn and save less.
The first book was Die with Zero. It helped me take a second look at our savings goals. Did we really need $5 million at age 70? Probably not! $5 million would give us the ability to spend $200,000 each year without ever running out of money. In our most extravagant spending year ever (which included full-time daycare, all new floors, and a kitchen remodel), we spent $86,000.
I realized that I didn’t want to over-save while my kids still wanted me around. I wanted to prioritize time together and family vacations during those fleeting years.
The second book, Your Money or Your Life, made me realize how much “life energy” I was exchanging for the false sense of security that over-saving provided me. In the book, the author posits that we “pay” our life energy to get money. Then, we use that money to pay for things. Ultimately, we are paying for things with our life energy.
This inspired me to think about a few questions:
- What did we truly need to be happy?
- How much money would we really need in retirement?
- How much is truly enough for us?
Being able to answer these questions allows me to trade just the right amount of my life energy for money.
I’ve also begun to challenge my assumption that I will feel or be different once I reach a specific financial milestone. I no longer think, “When I have $1 million in net worth, I’ll be happy.” Yes, a certain amount of income and financial security has made financial stress go way down, but anything above that threshold hasn’t improved our happiness significantly.
I know that I am speaking from an incredible place of privilege. Now, though, it feels better to spend and give intentionally rather than to continue obsessing over accumulation.
8. How do you plan to continue designing your life?
Mike and I are committed to our marriage, our children, cultivating a sense of community, and serving others.
We’re emphasizing our mental health through counseling, prioritizing alone time and time with friends, and doing the things that make us happy (gardening for me and building intense Lego sets for him).
Our family is also relearning to be fully present with each other in the stage where we are all at.
I am interested in slowing down too. Mike didn’t quit his job just for us to switch roles. Intentionally downshifting is both of our responsibilities.
I’m continuing to pursue my MBA because I enjoy the classes and love meeting other students. That said, I’m being intentional about setting work boundaries and accepting that not everything has to be perfect. I’m also looking at what I can outsource and delegate. I’m also choosing to remind myself that “my job existed before I knew about it, and it will survive long after I’m gone.”
9. Why and when do you think someone might consider “downshifting?”
Mike says this best: “When it becomes physically, emotionally, and mentally too much it’s time to downshift. By the end of 2020, I was burnt out. I wasn’t enjoying my job. I wasn’t enjoying my home life. The only thing I was getting out of it was money, and that just wasn’t enough anymore.”
10. What advice do you have for someone considering a similar decision?
Mike advised people considering a similar decision to take their time and not rush back into something right away. “Just remind yourself that it’s okay,” he said. “You don’t have to work yourself to the bone. It’s okay to downshift to take care of yourself.”
Shifting careers can also make a huge difference. Mike says he feels re-energized. “I feel like I’m doing the work that I’m meant to do. I love the fact that I can leave at the end of my day, and it doesn’t come home with me. I feel valued and appreciated. I’m also around like-minded people–people who want to do good and who feel that their work, taking care of others, is their life calling.”
I would encourage someone to run the numbers and consider, what can you live without? If you can, start saving your own “freedom fund” before you need it. That way you’ll know if you can truly live on less before you have to and have money socked away to make changes.
Finally, I would encourage you to look at your motivations. Ask yourself: Are you staying in your job because of a scarcity mindset? Are you staying because you’re afraid of the unknown? Or could you leave to take better care of yourself and find a better job that works for you?
Laura and Mike, thank you so much for sharing your story with us!
I absolutely love hearing about the positive changes that people are making in their lives! Mike was able to quit his demanding retail management job and take several months off to recover physically and mentally from burnout. After recovering, he was able to return to work in a field he was passionate about, even though he needed to take almost a $50,000 pay cut to do it.
Laura and Mike’s family were able to do this for three important reasons:
- They built the “Freyman Freedom Fund.” In addition to their regular emergency fund, they build up a pot of F-You Money that would cover them during a time of reduced income.
- They lived frugally. As they increased their income, they didn’t inflate their lifestyle at the same pace on the large budget items like housing and transportation. When you can keep your spending low on the big three expenses (housing, transportation, and food), you don’t need to worry as much about smaller expenses.
- Working less allowed them to spend less money. After Mike quit, they started spending less on gas, snacks/drinks, and convenience dining. When I downshifted, we saw that same exact thing happen.
One thing I love about Laura’s reflection is her focus on figuring out what enough really means for their family. When Laura read Your Money or Your Life, she realized that we “pay” for money with our time. Saving too much for retirement meant that they were spending a lot more time and energy working than they needed to. Instead, they could invest that time in other ways, including being present together as a family and building a better, happier life.
Once they did that, reaching FIRE as quickly no longer felt quite so urgent.
If you’d like to learn more about Laura and Mike’s journey, you could find them in the following places:
- Website: laurafreyman.com
- Laura’s Portfolio: https://www.laurafreyman.com/portfolio/
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