I’ve been pouring money into my 401(k) and it’s almost $1 million – but is it really too much?

A reddit post titled “Is There Too Much in 401(k)s?” caught my attention today. This post was in the r/ChubbyFIRE subreddit, which is for people who have a target portfolio of $2.5 million – $5 million and are upper middle class.

The author of the post is a 38-year-old man who is married to a 37-year-old woman. The couple has three children under age of three years, the youngest one month old. He has a net worth of $1.1 million. He already has $960,000 spread across three retirement savings accounts (a 401k, 403b, and an IRA) $22,000 spread across three 529s, $12,000 in a taxable brokerage account, and $120,000 in a high-yield savings account (HYSA).

The author’s wife is currently on maternity leave, but will soon be working one day a week to earn $45,000/year. She is the primary caretaker of their children. They live in a VHCOL (very high cost of living) area, have family almost assist with childcare if needed and own a $1.7 million home with a $1.2 million 5% mortgage.

The author maxes out his 401(k) in February of each year. He wonders what he should do about his wife’s retirement savings. Her employer does not have a 401k matching program. So he’s trying to decide if he should put 50% of her income into her own 403b,

Observations

Retirement.

It seems that the author feels the weight of having three children. His post look a bit frantic and worried for me. Having a new baby can indeed get that adrenaline going and you can indeed redirects anxiety to an unrelated problem. In the comments, he seems to frequently mention that his wife can easily return to full-time work to supplement her income.

Even with all of the various accounts combined, he only puts aside about 10% of his income. Usually the rule of thumb is 15%. He doesn’t depreciate his other retirement accounts, just his employer-linked 401(k).

Many people in the comments are warning him against RMDs (required minimum distributions), which is how the federal government collects taxes from accounts that are in tax-deferred retirement plans (like he did). Once you turn 72, you I have to start paying RMDs on Traditional IRAs, SEP IRAs, and SIMPLE IRAs. Most of the comments seem to be warning him to diversify his retirement accounts more or he could be pushed into a higher tax bracket and have to pay more taxes. Essentially, people counsel him about how to avoid paying his fair share of taxes in the future.

Key recommendations

The generic The consensus on one point in the author’s situation is that no matter how much money you make, maxing out your retirement savings accounts (however many you have) is always the best idea. The author never mentions how much his retirement goal is. When planning for retirement, it’s hard to know exactly what to do if you don’t understand how much you want to save and what lifestyle you’ll be able to maintain with that money.

The author may need to take another look at his to-do list and reprioritise it. With three children, one being a newborn and his husband being the main carer, it seems that he indeed he needs to focus more on helping in that area of ​​his life. Maybe he should worry about his retirement 30 years in the future and focus on his life right now. As I mentioned before, it’s interesting to me that he worries about this issue at such a stressful time in his life. Therapy is always a good idea, and talking to a therapist to figure out why he may be feeling so anxious about money would benefit him greatly, in my honest opinion.

Talking to a financial planner (which I assume he hasn’t done since he’s been turning to randoms on the internet for advice) would probably be a better idea than getting advice from strangers about something so important to him. It seems that if they were to consult with a financial planner who is an expert in all the information they are looking for, they might not sense so worried about it. He would probably spend a lot less time solving this problem so he could spend more time supporting his wife.

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