Saving too much early to retire can be limiting – Altoona Mirror

Gwen Merz was fresh out of college in 2014, working an information technology job she hated, when she decided early retirement was the answer. She socked away every dollar she could, saving as much as 70% of her income so that she could quit when she was 35.

Now 30, Merz thinks she may have saved too much. Her job and life goals have changed, but most of her $300,000 savings is in retirement accounts that cant be touched without tax penalties. If she could do it over, she would either save less aggressively or put some of the money into a taxable investment account with less strict withdrawal rules.

I would pay a little bit more in taxes on my salary, but I would have that money available for me, says Merz, who lives in St. Louis.

Some people save prodigious amounts so they can retire early or because theyre worried they wont have enough for a comfortable retirement. But aggressive saving can have significant and sometimes unexpected costs, which is why its important to strike the right balance between saving for the future and living your life today.

Many people struggle to save anything for retirement, so the idea of saving too much may seem absurd. But there is a movement known as Financial Independence, Retire Early, or FIRE, that promotes saving enough to gain control over how you spend your days long before typical retirement age. Some FIRE bloggers retired in their 30s from well-paying jobs by dramatically cutting their expenses and saving 50% or more of their incomes.

Saving for a 20-year retirement is difficult enough. Planning for one that lasts 50 years or more often requires extreme frugality both before and after retirement, as FIRE adherents try to make their money last.

The FIRE movement inspired Merz to set her initial early retirement goal. After finding a more enjoyable job and buying a house, however, Merz has throttled back her savings goals and now plans to retire at 55. One unexpected bonus from saving less aggressively: Shes less stressed about money.

I always felt like I could do more since there were people online doing more than me, Merz says. I really put myself under a lot of unnecessary stress and strain.

Certified financial planner Malcolm Ethridge of Rockville, Maryland, doesnt try to talk his clients out of the idea of retiring young. Many work in high-paying but demanding jobs in technology or finance and are feeling burned out by 80-hour workweeks.

Youre getting compensated well for the time youre putting in, but its not sustainable, Ethridge says. Theres only so long you can burn both ends of the candle before it disappears.

Instead, he encourages them to save enough so they can switch to work theyre more passionate about, such as teaching, working for a nonprofit or starting a business.

Its not so much I hate the job as The thing that I do for a living takes a ton of my time and I dont feel like it makes the world that much better off,' Ethridge says.

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Saving too much early to retire can be limiting - Altoona Mirror