I have a confession to make, and it’s going to sound absurd coming from someone who hosts a money podcast for a living.
I saved too much in my 401k.
I know. I know. In a community that treats “max out your retirement accounts” like a sacred commandment, saying you saved too much sounds like complaining that your lobster is too buttery. But stick with me, because in about 20 years I’m going to be staring down Required Minimum Distributions (RMDs) that are going to force me to pull out more money than I need, whether I want to or not, and pay taxes on all of it. And the kicker? I saw this coming. I did the math. I knew my accounts were going to be more than enough. And I kept contributing anyway. I maxed it out, year after year, well past the point where “enough” had already showed up in my spreadsheet.
So today I want to ask the question that FIRE folks almost never ask out loud: when do you stop investing?
Wait, People Stop Investing?
In the FIRE world, we talk endlessly about how to save more, invest smarter, and optimize every dollar. There are entire podcasts (mine included) built around squeezing more efficiency out of your money. What we don’t talk about nearly as much is the other side of the coin: the point at which more saving stops helping you and starts working against you.
That sounds like heresy, so let me explain what I mean. Saving isn’t the goal. Saving is a tool you use to reach a goal, which is usually something like “have enough money to live the life I want, for as long as I need it to last.” Once you have enough (which is something you’ll need to define for yourself), continuing to pile up more money in the same accounts, in the same way, isn’t extra safety. It’s often just extra taxes waiting to happen, plus a chunk of your present life you didn’t get to enjoy.
My Own Math Problem
Here’s my story in a nutshell. Carl and I ran the numbers on our 401(k)s years ago and realized that we were FI. So he retired. But I liked my job and maxing out my 401k had become a habit. (I mean, Scott and I talk about this on the podcast all the time.) So I kept maxxing out my traditional 401(k) to reduce my taxable income in the current year.
Fast forward to today, and my calculations show that when RMDs kick in, I’m going to be forced to withdraw more money each year than I’ll actually need to live on. That extra money gets taxed at my ordinary income rate whether I want it or not. I don’t get a vote. The IRS set up RMDs specifically to stop people like me from using a 401k as a permanent tax shelter, and honestly, fair enough. But it means my past self handed my future self a tax bill that didn’t need to exist.
If I had redirected some of that money into a Roth 401(k) or taxable brokerage account instead, I’d have the same net worth, roughly, but way more flexibility. I could control when I realize gains. I could take advantage of the 0% long term capital gains bracket in low income years. I could gift appreciated shares instead of cash. A traditional 401k gives you almost none of that flexibility once RMDs start.
Okay, So When Do You Actually Stop?
This is the part everyone wants a clean answer to, and I’m not going to pretend there’s one number that works for all of us. But there are some real questions you can ask yourself, in order, that will get you close.
Question 1: Have you hit “enough” in your tax advantaged accounts?
Run the numbers. Take your current retirement account balances, assume a reasonable growth rate (7% real is a common, if debated, assumption), and project forward to age 73 or 75, whenever RMDs will start for you. Compare that projected balance to what you’ll actually need to withdraw each year to live comfortably.
If the RMD math shows you’ll be forced to pull out more than you need, that’s a signal. Not necessarily to stop contributing entirely, but to seriously reconsider whether more money belongs in that account or somewhere more flexible.
Question 2: Is the tax deduction actually still worth it?
A lot of us fell in love with the immediate tax deduction from traditional 401k contributions and never stopped to ask if that trade still makes sense. If you’re already sitting on a mountain of pre-tax money, adding more just defers the tax bill to a future where you might be in the same bracket, or even a higher one once RMDs and Social Security stack up together. At that point, the deduction today isn’t saving you nearly as much as you think.
This is usually the moment to pivot toward a Roth 401k or Roth IRA if you’re still eligible, or toward that after tax brokerage account, where growth is taxed at capital gains rates instead of ordinary income rates. AND, no obligation to withdraw at any time.
Question 3: Do you actually need more money, period?
This is the harder, squishier question, and it’s the one I avoided for years. It’s not just “have I hit my number in this account.” It’s “have I hit my number, full stop, for my entire life.”
If your investments, across all accounts, could already support the lifestyle you want, including some cushion for healthcare costs, inflation, and the occasional – or not so occasional – trip with your friends, then every extra dollar you invest isn’t buying you security. It’s just buying you a bigger number that you may never spend. Putting it into tax advantaged accounts is just pushing the tax bill down the road, when there are more tax-advantageous options for you.
I want to be really clear here: I’m not saying more money is bad. I’m saying that once you’ve crossed the “enough” line, the next dollar you save has a much smaller return on your actual life than the first dollar you saved back when you had nothing. That first dollar bought you freedom from anxiety. The ten millionth dollar mostly just buys you a bigger RMD.
But What About “One More Year” Syndrome?
One More Year Syndrome is when you’ve already hit your FI number, but you keep working (and saving) for one more year. And then another. And another. It feels responsible. It feels safe. What it actually is, most of the time, is fear wearing a spreadsheet as a costume.
If you like your job and don’t plan to quit, One More Year Syndrome doesn’t really apply to you in the same way, since you’re not white knuckling your way through a job you hate just to pad the numbers. But the underlying question is the same: is this extra saving buying you something real, or is it just a habit you haven’t examined?
So When Do You Stop Contributing to Retirement Accounts?
Here’s my honest, non-CFP, non-CPA, “I host a podcast and made this mistake myself” answer.
You stop maxing out your traditional 401k, or at least stop increasing contributions, when your projected RMDs will exceed your actual spending needs in retirement. At that point, the tax deferral you’re chasing isn’t deferring anything, it’s just guaranteeing a future tax bill on money you didn’t need to withdraw. Remember, the “R” in RMD is REQUIRED.
You shift toward Roth accounts and after tax brokerage accounts once you’ve filled up your tax advantaged buckets to the point where they’ll comfortably cover your future needs on their own, with room for growth. This gives your future self options: pull from the brokerage account when you want to keep your taxable income low, pull from Roth when you need extra cash without triggering more taxes, and let the traditional accounts do exactly what RMDs will eventually force them to do anyway.
You stop saving for retirement altogether, in the sense of actively directing new money there, when your full portfolio, across every account type, can support your desired lifestyle indefinitely, accounting for a real margin of safety. That doesn’t mean you stop earning or stop having a job you enjoy. It means the money question stops driving your decisions, and you get to decide what to do with your time and your paycheck based on what you actually want, not based on a number you’re still chasing.
I will concede that continuing to contribute to get the full company match makes some sense. Just know that those dollars will be contributing to your RMDs, as well.
Have I Actually Stopped?
Have I looked at my own portfolio and decided I don’t need to grow it anymore? Honestly, yes, for the tax deferred piece. I’m not adding more to my 401k because more traditional money at this point just means bigger RMDs I don’t need. I’m not chasing a bigger number in an account that’s already going to force feed me withdrawals in 20 years. In fact, I’m actively looking for ways to pull money out of those accounts, through Roth conversions, 72t’s, and selling the big winners in the 401k, buying them in the brokerage account to both reset the cost basis and still continue to hold them (in most cases) and rebalancing my tax advantaged accounts to be more stable.
I’m still investing, just differently. Mainly in an after tax brokerage, and honestly, spending more freely on the stuff that matters to me now instead of assuming Future Mindy needs every dollar more than Present Mindy does.
The Objection I Know Is Coming
I can already hear some of you typing up an angry comment, so let’s address it now. “But Mindy, what if you get sick, what if the market crashes 50%, what if inflation goes bananas, what if, what if, what if.” I hear you. Uncertainty is real, and nobody, including me, has a crystal ball.
But here’s the thing about that logic: it never has an ending. There’s always another “what if” that justifies saving one more dollar, working one more year, padding the account one more time. At some point you have to decide what level of cushion is enough cushion, run your numbers with a reasonably conservative assumption, and trust the math you already did. If you build in a margin of safety, say, planning for 25 to 30 times your annual spending instead of the bare minimum, and you still find yourself well past that line, more saving isn’t protecting you from a real risk.
What This Looks Like in Practice
If you want a concrete way to check yourself, try this. Pull up your retirement accounts, add up the totals, and grow them forward at a conservative rate until the age RMDs kick in for you. Then compare that number to 25 times what you actually spend in a year. If your projected balance blows way past that number, you’re in my old shoes. That’s your cue to start considering changing your contributions plan.
Your Turn
So I’ll ask you what I wish someone had asked me 10 years ago. Have you actually run the numbers on your own RMDs? Do you know, with real math and not just a gut feeling, whether your tax advantaged accounts already have “enough” in them? And if they do, what are you going to do with the next dollar you were about to invest?
You don’t have to stop saving. You don’t have to stop investing. But you might want to stop investing the exact same way you’ve always done it, on autopilot, without asking if it’s still buying you anything you actually need.
I wish I’d asked myself these questions a decade earlier. I’m asking you now instead.
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