---
title: 'The Safest and Earliest Time to Stop Saving for Retirement'
source: 'https://youtube.com/watch?v=duIgsR-SFgM'
video_id: 'duIgsR-SFgM'
date: 2026-08-05
duration_sec: 985
---

# The Safest and Earliest Time to Stop Saving for Retirement

> Source: [The Safest and Earliest Time to Stop Saving for Retirement](https://youtube.com/watch?v=duIgsR-SFgM)

## Summary

This video explores when individuals might be able to stop saving for retirement earlier than expected, using a case study of a couple (Mike and Sarah) and leveraging AI (Claude) to model the variables. It introduces the concept of Coast FIRE and discusses financial and psychological factors to consider when deciding to halt retirement contributions.

### Key Points

- **The Problem with Over-Saving** [00:14] — The narrator shares a personal story about his father who saved too much and sacrificed life experiences, highlighting that there is a downside to excessive saving.
- **Six Key Retirement Variables** [00:40] — Identifies six variables needed to determine if you can stop saving: retirement number, net worth, expected returns, savings rate, anticipated expenses, and other income sources.
- **Withdrawal Rate and Retirement Number** [01:35] — Explains the 4% withdrawal rate rule: for $84,000 annual spending, you need $2.1 million saved. This is a starting point for a 30-year retirement.
- **Case Study: Mike and Sarah** [02:17] — Introduces a couple: Mike (45) and Sarah (38), earning $180k/year, with $895k in investable assets, wanting $7k/month in retirement. They need $3.79 million in 20 years (adjusted for 3% inflation).
- **Using Claude AI to Model the Scenario** [05:28] — The narrator uses Claude.ai to calculate when Mike and Sarah can stop saving. Claude determines they can stop after 12 years, when Mike is 57, with the portfolio growing to $3.84 million by then.
- **Coast FIRE Explained** [08:59] — Coast FIRE is a method where you save enough early so that with compound growth, you reach your retirement number without further contributions. For Mike and Sarah, their Coast FIRE number is $1.18 million (inflation-adjusted), but they currently have $895k, so they can't Coast FIRE yet.
- **What to Do with Excess Savings** [11:03] — If you stop saving for retirement, you can redirect funds to other goals like paying off mortgage, maxing 401k match, funding 529 plans, or spending on experiences and memories.
- **Financial Foundation First** [12:12] — Before stopping retirement savings, ensure you have an emergency fund, paid off high-interest debt, and saved for major upcoming expenses like college tuition.
- **Psychological Factors: Fear of Regret** [13:18] — Fear of regret can lead to the 'one more year' trap. Over-savers often die with $283k-$315k left, indicating they saved too much. Stress-test your plan with different variables.
- **Psychological Factors: Identity Shift** [14:27] — For high savers, saving is part of their identity. Stopping can feel like losing a piece of themselves. The narrator's father struggled with this, even when he had enough.
- **Psychological Factors: Opportunity Cost of Time** [15:07] — Every dollar saved is a dollar not spent on current enjoyment. Experiences with loved ones are often more fulfilling than material possessions, and you can't take money with you.

### Conclusion

Retirement planning is about maximizing life, not just net worth. If you can safely stop saving without sacrificing your future, you should consider it, but ensure your financial foundation is solid and be mindful of psychological factors.

## Transcript

watching, you might be able to stop saving for retirement earlier than you think. And in this video, I'm going to share with you how to figure out when it might make sense to stop saving for retirement, especially if you're one of
money. Now, there is nothing technically wrong with having too much money or saving too much money. My dad, in fact, was someone who saved more than he needed to. But when he passed away earlier this year, it dawned on me that
he sacrificed way too much of his life for his nest egg, which ultimately he out, let's first start with the variables you need to understand about retirement. There are, in my opinion, at minimum six variables you need to figure
we'll be able to figure out if we're in a place to actually stop saving. Now, I know what you're thinking, six variables, man, that sounds like a lot. sounds scary, I know, but trust me, you already have the answers to the majority
through each one here. So, the first variable is your retirement number. So, how much money do you need to save to actually retire comfortably? Number two worth. Number three is what your expected returns on your portfolio will
be. So, what return rate can we actually reasonably expect? Number four will be our current savings rate. So, how much we save every single year. Number five would argue this is very important. So, your anticipated annual expenses in
retirement. And number six are your other income sources. So, social part-time work, et cetera. Now, traditionally the most important want to spend in your retirement per year and what your withdrawal rate is.
retirement number needs to be. The withdrawal rate is simply the percentage withdrawing every single year in retirement. And so, for a traditional 30-year retirement, a common withdrawal rate is usually between 4% and 5%, and
this is just a starting point. So, if you knew you wanted to spend $7,000 a month in retirement, which would be around $84,000 a year, you would take rate of 4%, and that means you would need $2.1 million saved in your
portfolio in order to withdraw 4% of it every single year. The idea here is that enough, you can withdraw from it, and because it's still earning you a return, the portfolio can sustain itself indefinitely, or at least through your
retirement. So, now that we know what the six variables are, let's actually put them into practice with a case study of a couple. Sarah is 38 years old, and her husband Mike is 45, and combined they make an annual income of $180,000.
Now, they know that they want to spend roughly $7,000 a month in retirement, which is quite convenient because that's about $84,000 a year, or we know that their retirement nest egg needs to be about $2.1 million.
assets. Both of them are quite big savers. Sarah has $380,000 in a 401k and savers. Sarah has $380,000 in a 401k and $42,000 in a Roth IRA. Mike has $272,000 $42,000 in a Roth IRA. Mike has $272,000 in a 401k, $60,000 in a Roth IRA, and
$60,000 in high-yield savings. They both own a home in Texas together. It's worth about $395,000, 315k of which is their equity, and they mortgage. Together, they also have a taxable brokerage accounts with about
$81,000 in it. That means their net worth is just north of $1.2 million, and combine it all, including the high-yield savings, is $895,000. So, let's actually fill out their six variables really quickly here. So,
million in retirement as of today's purchasing power using the 4% withdrawal rate rule. And if we actually want to account for inflation, let's say in 20 years, that means we'll need $3.79
million at the time Mike hits the age of 65. That allows them to withdraw the equivalent of $7,000 in purchasing power today on a monthly basis. If you're assumed a 3% inflation rate, and I plugged it into an inflation calculator.
Their second variable, which is their portfolio size, it's $895,000. Their third variable is an expected return. I'm going to assume a return of 6% in this case. This is conservative and also quite a blanket statement. I
than this or a little bit less than this, but for now, let's just assume they get 6% on their portfolio. Their current savings rate is about $36,000 their gross income. That's variable number four. Number five, we know that
they want to spend $84,000 every year in today's dollars, and so we'll figure out what that is in the future as well. And number six, they are actually expecting retire, for example, social security. According to the Social Security
Administration, the average retirement benefit for somebody as of January 2024 was $1,907 per person per month. So, we're just going to assume that they both get $1,900 per month. Uh that's just rounded
figure out if and when they can stop saving for retirement, but the idea here already compounding for them really well, are they going to be on track for contribute any more money into their retirement portfolio as of today? How do
a financial advisor, they would go through your cash flow summary, what you year, and assume different portfolio return percentages, and then project out balanced with your social security and any other goals. They would probably do
this manually, or they would do it via a model that they've built specifically you might have at your fingertips is to turn to a partner like Claude.ai to help us figure out this complex problem with all the variables required. I will
variables of information, and let's see how Claude thinks deeper and asks us prompt. Hello, Claude. I have a couple, which is Mike, 45, and Sarah, 38, that are earning $108,000 per year. I want to figure out when is the earliest they can
stop saving for retirement. They have $895,000 in their retirement portfolio, and they want to spend $7,000 a month in retirement. I then listed these six variables that we came to a little bit earlier. And then I simply ask Claude,
how soon can Mike and Sarah stop saving for retirement? In other words, if they keep contributing $36,000 a year to their $895,000 portfolio, at what point can they stop completely and have their portfolio still reach $3.79 million in
20 years? Remember, that was the number that they needed to hit to have $7,000 worth of purchasing power in today's dollars at that time. And what other questions should we ask ourselves? So, let's ask Claude.
calculating this step by step and using some code to do so, JavaScript right see that it says, "Great news, Mike and Sarah can stop contributing after 12 years, when Mike is 57 and Sarah is 50." Here's what happens. After contributing
$36,000 a year for 12 years, the portfolio will grow to approximately $1.34 million. Then if we assume 6% annual growth on that, they will reach $3.84 million by
the time that they hit about 12 years from now, so when Mike is 57. I also do like that Claude poses some questions that perhaps I had a blind spot to. So, in section two, the important questions to consider, you know, it asked me if I
accounted for health care costs, which I obviously didn't in our case study, but about because Claude helped me do that. I would also encourage you, after you this, just to double-check your answers
it's really cool to see that we could stop saving for retirement earlier than and Sarah, they could stop saving completely in 12 years instead of perhaps 20 years when Mike wanted to retire. So, what I'm going to do is ask
want to consider. So, I'm going to prompt Claude with the simple, "What are some of the softer intangible psychological fact psychological factors of stopping to save for retirement we
may need to consider, right?" So, if I you just simply ask Claude this, let's see, it's already giving us some key intangible factors that Mike and Sarah should consider when it comes to stopping to save for retirement. So,
which we might talk about later. There's some spending psychology. There's some trust and verification needs, et cetera. I mean, this is quite thorough, and I really do enjoy the fact of how thorough Claude can be. Whenever you ask it
question, it always prompts you to really think deeper and challenge your is really great in that it doesn't just stop at the first response, and I like satisfied. And so, this is why Claude is one of my preferred AI LLMs. And even if
they weren't sponsoring this video, I actually use Claude on an everyday basis get different perspectives that will help you try to plan around these complex situations because, as we know, retirement is not just one variable,
it's usually a multitude of variables coming together. If you want to discover make sure to use the link in my description below, and thank you again this portion of the video. We'll talk about the psychological factors of
end of this video, but for now, let's explore another simple rule of thumb to quickly as possible. And this is a different type of method. This is called Coast FIRE. Coast FIRE is part of the financial independence retire early
in your retirement accounts that without any further contributions, it's going to retirement. The idea here is though, you're still going to work a little bit, might dial back your employment just to cover your expenses. To get your Coast
formula right here on the screen. First, we need to figure out your FIRE number and divide it by 1 plus your annual rate of return to the power of time in years. Mike and Sarah, so let's use $2.1
million in this case. And if you assume a 6% annual rate of return, as well as you have 20 years left until Mike hits 25, their Coast FIRE number actually 25, their Coast FIRE number actually comes out to $654,789.
saved today and never contributed another dollar, it should grow to their target of $2.1 million in 20 years. So, technically they can Coast FIRE at their current portfolio size already. But again, if we factor in an inflation rate
of 3%, we actually need closer to $3.79 million to have the same purchasing dollars. So, I figured out that the Coast FIRE number that we would need today is $1.18 million, which our couple
already have $895,000 right now in investable assets. Still though, it seems like even with Coast FIRE, we're still not able to stop saving altogether as of right now. However, it could be more possible, let's say, in 3 to 5
examples, Coast FIRE and the initial case study, you need to consider a wide range of variables, including if you want to work a little bit even after you change, the market returns could change, and your time horizon could change also
as well, which could alter your target portfolio sizes. Okay, but let's say you do stop saving for retirement because you've reached a certain number already. What should you do with all of your savings instead? There are a few
lifestyle alternatives. So, first off, with the financial side, you could still you might have, like a mortgage. You can your savings up to your 401k employer match, since that's free money anyways,
up. And perhaps you could save for other goals, like maxing out your kids' 529 plans or if they have any other types of college education expenses. The whole your saving for retirement, it doesn't mean that you have to pass up good
your cash, for example, like the 401k you may actually want to redirect some of your savings towards more spending on experiences and memories with your loved ones. While money can always be made,
you will never be younger than you are right now. And for example, if Mike and Sarah had $36,000 a year that they could be using towards vacation on their perhaps even spent on something more meaningful and fulfilling, then by all
means I think that they should do that as long as they aren't sacrificing their saving for retirement altogether, you really want to make sure that you've actually checked the fundamental boxes of having a good financial foundation,
covered. The first is an emergency fund. It should go without saying that we want to make sure we can cover an emergency today and aren't directing all of our once we have our retirement goals hit, we just start our cash. The second
foundational thing is to pay off all high interest rate debt. You should have if you're saving for retirement, but you're neglecting paying off your high then I question your decision-making here because your dollars could be
paying off high interest rate debt. And third, if you have any major upcoming expenses, like saving for your kids' college tuition, you may want to not whole idea of this video is that you might be able to stop saving for
retirement goals because your portfolio size has gotten quite big, we still want financial life is still taken care of. If you for some reason took this video start spending all of your excess money
on sports gambling or perhaps at the blackjack table, that's not the point of we are reasonable here, so if you're stopping to save for retirement, hopefully you aren't just blowing that cash just for the sake of blowing cash.
Now, there will be some psychological factors at hand if you decide to stop touched a little bit upon this earlier, but let's go deeper. The first, I believe, is this fear of regret. There's always going to be a nagging voice that
asks you, "Well, if we stop now, what if we're wrong about our whole situation?" money in retirement feels so much worse than the pain of over-saving right now. so many people fall into the one more year trap. That's basically where you
say, "Okay, one more year of savings just to be safe." But then that turns years, etc. So, to overcome this, you want to stress test your potential plan. Try different variables out, such as a 5% return instead of a 6% return, or
perhaps a 4% inflation rate instead of a 3% inflation rate. You could also live a lot longer than you think, or you could live a lot less. But considering that the average retiree dies with anywhere from $283,000 to $315,000,
over-saver, you're probably going to end up in one of these scenarios where you have more money left over when you pass on. The second psychological factor is this shift of identity, like we touched upon earlier. For many high savers,
basically a core part of who they are and their lifestyle. Suddenly stopping this type of habit can feel like you're losing a piece of your identity, like irresponsible. My dad was exactly like that. He couldn't change his mindset
about spending money after being a saver for the majority of his life, even when he had enough assets to cover his retirement and then some, I would still, be eating a frozen meal. The mental transition here is actually going to be
the hardest thing out of all of this. And I actually see this quite a lot with of money, since those are the families that were conditioned to save all the time. And the third psychological factor is the opportunity cost of time. You can
you're so ahead on saving for your retirement, you should know that every savings is a dollar that you cannot use right now to enjoy your life as it currently is. Just like I said earlier, you may want to start enjoying your
you, like experiences and travel with your family and friends. At the end of remember the most. I'm not saying everyone's just going to be super fulfilled by experiences. Maybe you just want that Rolex, but for most people,
experiences really drive fulfillment. And remember, you don't take any of your this earth, so that is something to keep in mind as well. The truth is, retirement planning isn't just about maximizing your net worth, it's about
maximizing your life. And if you can get to retirement safely without having to sacrifice too much today, then you should absolutely take that scenario. I in the comments what you guys thought or if I missed anything. Once again, thanks
portion of this video. I couldn't have done it without them, and it is my you're interested in my video on how much you need to retire, exactly how much you need, I will leave up my video on the 4% rule, which will be right
a future one on the channel. Thank you for being here. Bye-bye now.