Too much in old age retirement funds

Mr. LL and I have been maxing out our tax-sheltered retirement accounts since we have been married (403(b) and pension/teacher retirement fund for me, 401(k) for him).  When we finally crunched the numbers the other day using FireCalc, we realized that we have all the “old man money” we need.  Even if we never contributed another dollar, our current stash would compound and be enough to last us until we’re well over a hundred if we retired in 2039, when Mr. LL is 65 and I am 56.

This was both a revelation and a catalyst for big decisions.  If we have enough for when we’re older, we can start focusing solely on our “young man money,” non-tax sheltered early retirement funds that we will be able to start drawing on within the next five years or so, and that can last us until 2039.

However, this does mean that the tax man takes a big bite of our potential savings.  We are currently able to save up to $42,000 tax free each year, and with our marginal tax rate we end up saving over $11,000 in taxes.  If we both stop contributing to our old man money, then we end up reducing our young man money savings by that much.

The day after we crunched the numbers, I canceled my 403(b) contributions, but I will not be able to change my teacher pension contribution to anything below 5% of my salary, so I will always have to save something toward old man money.  However, my husband is still mulling over whether he wants to take the plunge and stop or reduce his contributions, since it flies in the face of what he has always done, and also reduces our total salaries.  It would be a big step, but it would allow us to retire and pay off our house that much sooner.

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