Good morning everyone. I’m a 26 year old union electrician in north central Illinois. My fiancé is a 24 year old public school teacher. We both get pensions at 59 1/2. On top of that, I’ll be starting 2 Roth IRAs this year and a taxable brokerage account invested in index funds. My big question is am I over saving for retirement? I’ll be around 1.2 million in just contributions into my pension and annuity, not counting raises. We’re planning to max the IRAs every year so 408k in contributions. Then I’m planning to have 300k in contributions over the next 12 years to the taxable account then switch to real estate. By the math we’ll be almost 2 million in contributions plus compound interest over 34 years. It’d be very nice to retire early but we may decide to work to 60. What’s everyone’s opinion? Save like crazy or live more comfortably? Thanks!

@Charles Cowin

Great questions! I am also located in Central Illinois. In my opinion, it’s really going to depend on how long you want to work.

Personally, I want to retire early and enjoy life doing the things that I choose. So to me, passive income via rental properties is the solution. But some people love the comfortability of their W2 job, so rental property investing may not be as important. We can assume that since you are on BP that rental property investing may also be in your future?

@Andrew Meister I remember from the money podcast the phrase “budget for your future misery”. I’d love to have the opportunity to walk away when I’m tired of it and never work another winter outdoors. I’ll be funding the brokerage from 28-40 years old then dabbling in real estate depending on what the housing market and laws look like in 2035. The real estate will be pretty small potatoes in the grand scheme of things. More of a way to diversify away from just index funds. I don’t expect 300 properties but a hand full of multi family homes would be a nice semi retirement

@Charles Cowin - You mention contributions into a taxable account for index funds in addition to your Roth IRA contributions. These contributions buy you flexibility and can be accessed prior to retirement. They are relatively liquid when compared to your pension and Roth IRA. As such, if an opportunity comes along that has the potential for outsized returns, you can jump at it from a position of strength with the increased liquidity that these taxable account contributions give you.

I don't think you are over-saving for retirement because you don't need to wait until a traditional retirement age to use those funds! Hope that helps! 

@David Kramer that was my thought with the taxable. Either draw it down from 45-60 at the 4% rule to supplement me stepping back from the workforce or have the ability to sell off, pay the taxes, and chase opportunity

@Charles Cowin The easiest way I think you need to look at this is figuring out what your retirement life is going to cost. Then you can reverse engineer what it is going to take to pay for that lifestyle you want. That can be accomplished through real estate and retirement assets. The Roths are a great investment vehicle and perfect for tax-free growth, but a point to consider is the tax deductions and benefits that real estate provides for your higher income earning years. So I would suggest starting with an understanding of how much you need to pay for a retirement lifestyle you will enjoy and then figuring out a good combination of assets to get you there.