I currently have a roth ira as well as a 401k from fidelity. I have around 350k in my 401k and another 10k in my Roth IRA. I just turned 40 recently. Am I saving too much for retirement and should I focus more on saving in say a regular savings account?

I have around 30k in a regular savings account along with another 30k for my children’s education fund (3 year old, 4 year old, 10 year old).

I have no car loans or student loans. My only debt is my house monthly payment around 1700 a month.

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    Can you clarify your question? It asks if you are saving too much in the title, but the body seems to be about where you should put future savings. I'm confused.
    – JohnFx
    Commented Mar 24, 2019 at 16:40
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    Related if not dupe: money.stackexchange.com/q/106895/26159
    – Ghanima
    Commented Mar 24, 2019 at 16:45
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    How old are the children? 30k for two children 17 and 18 is very different from a newborn and a one year old or not yet born. And how good your retirement and savings are depends on your income.
    – Brythan
    Commented Mar 24, 2019 at 18:02
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    That entirely depends on when you intend to die. Commented Mar 25, 2019 at 14:18
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    I don't see how this question hasn't been flagged for closure as it's clearly opinion based. But it looks like people like it, so fair enough.
    – Cdn_Dev
    Commented Mar 25, 2019 at 20:11

4 Answers 4


Let me focus on the retirement number. I wrote a blog post on just that, The Number. In which I offer an easily editable spreadsheet to help users see if they are on track. With a goal of having 20X one's final income(1) at a retirement age of 62, at age 40, you should have just over 5X your annual income saved. If your income is $70K or less, you are doing great, much over $100K, and you are falling behind.

If your question is about your investment mix, yes, it's good not to have all one's money in pre-tax accounts when retirement comes. I retired at 50 and will tell you first hand, it's a strange thing to look at a retirement account balance, and feel the pressure to avoid withdrawals that will be taxed at the next marginal rate, or phase out some tax benefit. I'd strongly recommend you consider a Roth 401(k) if available. If not, try to fund the Roth IRA every year. It with give you more flexibility at retirement.

More on Roth - The pretax accounts are great. While working, you get to take money 'of the top' i.e. at your current marginal bracket, but at withdrawal, you start at zero, literally, for a couple, the first $24K of income is not taxed at all, zero. That said, there is a point of diminishing return, as your withdrawals go up, your top bracket may be the same as when working or due to phantom tax brackets(2) even higher. If one can make use of the Roth during the saving phase, you get to decide when to withdraw from the account at retirement. The IRA/401(k) are subject to RMDs, by age 78, forced withdrawals are 5% of account value. This can have the nasty effect of pushing you bracket far higher than planned. Consider, you might be taking withdrawals to be at the top of the 12% bracket, but the next $1000 will be taxed at 22%. And you need a new roof. You might have more than enough money in your retirement account, but this means the $10K 'costs' you $1K more in tax than it might otherwise. Just an example.

(1) 20X final income. This is a 'rule' of thumb. It combines a 4%/yr safe withdrawal rate, and a desire to target about 80% of one's final years income as a retirement level of withdrawals. Why 80%? No FICA, and no 'saving'. If you save more, you are living on less, and that replacement ratio can be brought down. Using 20% towards the mortgage? Once paid off, you might consider 5% for home repairs, etc. It's a moving target.

(2) Phantom brackets are what happens when the next bit of income doesn't just experience your normal marginal rate, but also triggers a phase-in of another tax such as social security (at $32K, joint) or phases out a deduction such as Schedule E real estate losses (at $100K, joint). The effect, for example, is that the next $1000, potentially taxed at 22%, actually cost you nearly $400 in tax.

  • My question meant i had a roth ira it is not traditional roth.
    – JonH
    Commented Mar 24, 2019 at 17:27
  • Yes, a tiny fraction compared to the 401(k). Suggesting you keep the Roth going, and see if 401(k) Roth is an option. Commented Mar 24, 2019 at 17:32
  • Didnt know there was such a thing as 401k roth. Can you elaborate or send a good explanation. Will try to google it later today. Thanks
    – JonH
    Commented Mar 24, 2019 at 17:33
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    Could you elaborate on "flexibility" regarding roth? Is there anything more substantial / not psychological?
    – xiaomy
    Commented Mar 24, 2019 at 20:57
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    @user117529 - Yes, 15. Practically speaking, the number shifts for the fact that if you are a high % saver, you are living on far less than the full income. 20X means you will withdraw about 80% of your final income per year. In our case, 60-65% was fine. This is why rules of thumb are a guideline, nothing more. Not cast in stone. Commented Mar 25, 2019 at 9:11

Nobody ever got to retirement age and said "Wow, I saved too much".

Your wealth has a direct effect on your quality-of-life in retirement - how much you travel, whether you go to movies vs. the opera, for instance. Near to endlife, it decides how good your situation will be: the quality of your independent living, assisted living, skilled nursing or hospice care. That matters. My parents despite being middle class, did very well in that department because they saved well.

Given that you are now gettng cold feet about further retirement investing, I recommend you focus on Roth IRAs (and possibly Roth 401Ks). Roths have a slick feature relevant to your concerns. Your intitial contributions (I call it the corpus, the term is actually from endowments) can be withdrawn at any time. Which means when you contribute, your money starts earning right away (properly invested). You can't take out the growth/dividends, but you can yank the corpus back out anytime you please without penalty. (Other than the passive penalty that the money is no longer multiplying for you, and it can't be put back later). The confidence of knowing this is like money in the bank -- literally, you can use it as an "emergency fund".

If you are above the income limits for contributions to Roth IRA (or even if not), then you use the "Back-door Roth" method -- deposit into a non-deductible IRA (a traditional IRA but don't claim the deduction on your taxes) then immediately convert it to Roth.

Note: the legality of the Roth backdoor is clouded since you are doing in several steps what would be illegal if done in one step. However, there is other evidence that lawmakers and IRS know and approve. They reasonably should be aware, since it was an extremely obvious side-effect of the law which enabled it. It's also very widely discussed in the media and use in plain view, and IRS hasn't prosecuted people for it. Shrug...

I can't comment on Roth 401Ks, I have not worked with them.

  • 31
    I could see myself oversaving for retirement, then regretting I no longer have the physical/mental capability to enjoy my money. We took my Grandmother on a holiday with us, and she got too tired out walking around to experience the place properly, for instance. Commented Mar 25, 2019 at 0:05
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    @Adam Barnes If you no longer "have the physical/mental capability to enjoy" your money, you may instead need money to cover health care costs, modifications to your house and/or vehicles because of disability, home care, or nursing facility. If you saved a lot for retirement, you could consider early retirement as an option (like JoeTaxpayer, I retired at age 50).
    – njuffa
    Commented Mar 25, 2019 at 1:08
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    @AdamBarnes That argument only applies if you were saving earlier in life at the expense of experiencing it then. If you are enjoying your life now and not limiting your travels and experiences because of money, then there's no such thing as saving too much. If you find yourself not going on a holiday because you can't afford it because all of your extra cash is going into savings, then you should re-evaluate whether you need to be saving that much or whether it's better to spend it and enjoy it now.
    – David K
    Commented Mar 25, 2019 at 12:34
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    @DavidK - people who have enough money to keep 350k in 401k and still enjoy life to the fullest now aren't really asking questions here.
    – Davor
    Commented Mar 25, 2019 at 13:23
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    @Davor Sorry but you are incorrect; there are plenty of people on this site with that much and more in their 401(k)s and still taking breaks from their fully enjoyed lives to ask and answer questions. Especially since 401(k) has a contribution limit, "all" it takes is maxing it out from age 22 to 40 (OP's age). Scare quotes because I acknowledge you need an above average income and dedication to saving, but you don't need to be in the 1%.
    – stannius
    Commented Mar 25, 2019 at 18:16

What do you Want from your Money?

I hate to answer a question with a question, but really we don't have enough information to tell you if you are "saving too much."

Do you want to retire early? You might not be saving enough!

Do you want to put your kids through Ivy League college debt free? Maybe you need to shift some of your future savings to a 529 education plan.

Do you want to drive a fancy car? Maybe you should put some of that extra pay in regular old savings.

It's all about what you want from your money.

If you don't know what you want, well, over-investing in your retirement is probably a safe thing to do while you figure it out!

  • No Ivy League school I'd be comfortable they attend a local university, I dont mind them actually going to a community college the first two years and transferring credit but I will leave that with them when they are at the appropriate age. Don't really care about fancy cares...I think you guys answered my question and that is only I know what I need to do with my money. Based on the feedback I am going to build my personal savings account and roth ira a bit more. Goal is to retire by 50-52.
    – JonH
    Commented Mar 26, 2019 at 15:28

I would argue that in a world of compounding interest, that is, where time beats interest rates (as long as your investment vehicles don't fail to beat inflation) there is no such thing as "saving too much". Without knowing your goals (maybe you're up to an early retirement?) it is impossible to tell.

I have around 30k in a regular savings account along with another 30k for my children’s education fund.

The key question here is therefore not if you have saved too much for retirement but are your other financial goals are in line with your expectations, i.e. are you comfortable with the amounts in your savings account and the children's education fund? (Even a State College can run $50K for the 4 years). Nobody can tell but you yourself.


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