Give Me Back My Five Bucks

Is it possible to save too much for the future?

DSC00843Back in December, I shared my panic about not saving enough for early retirement. I was putting away $950 each month back then, and once employer contributions kicked in, that increased to $1,200. Because of my little panic attack, I increased it again to $1,350/month for January, and then in another surge of panic in that same month, increased it yet again to where it currently sits at $1,685/month.

And even though I’m not stretching myself thin by contributing $1,685/month (which includes employer contribution), I couldn’t help but ask myself two important questions:

  1. Could I be saving less into retirement and more into my general savings? If I don’t actually need to be saving this much money to reach my goal of early retirement, would I be better off setting that money aside for a down payment on a future home? Or spending more of it on life (which basically means travel)?
  2. If I continue saving at this rate, could I potentially retire earlier than the 55-57 age that I’m currently targeted?

Even though I’ve been saving for retirement for 10 years already, and early retirement is my number one financial goal, I really don’t think I’ve ever grasped the actual reality of retirement. I’ve just kind of been wildly throwing money into my portfolio in the hope that it would fund whatever lifestyle I choose to have. But the thing is, I’ve always known what I want. Maybe I can’t picture the details exactly, but I know the feeling.

Related: What does retirement mean to you?

I wrote this back in 2013 and it still feels so true to me:

Retirement to me means having the freedom to do whatever I want to do, without the obligation to work for a living. I guess you could call it financial independence, rather than retirement. Who knows what I’ll be up to! But whatever it is, it’ll be my choice, and it won’t be based on the need to bring in an income.

Most experts say you want to replace 70% of your pre-retirement income in order to live comfortably. Which is what I’ve always been aiming for. 70% of my income right now would conservatively be about $55-60k. But the issue I’m having is, that number seems really, really high. And I’m beginning to realize that your retirement calculations should be based on your pre-retirement SPENDING, rather than your income. Right?

Because, come on. I’ve never in my life spent $55-60k in one year! I’m living quite comfortably right now on 35-40% of my income (and that includes paying rent) in Canada’s most expensive city. So if I have no rent/mortgage to pay during retirement, and I live a good life right now, why on earth would I ever need 70% of my current income during retirement?

Related: Why 20-somethings might have difficulties retiring by 65

Sure, unexpected costs will always creep up on you. So let’s say on the high end, I’ll want 50% of my income during retirement. I’m a cautious person, and there’s always a degree of uncertainty to life – so the extra padding would be nice. But that’s still a lot less than the 70% I’ve been stressing myself out to obtain.

My goal for this month is to take a really good look at my retirement plan, my current contribution rate, and what that means for my goal of early retirement. I don’t know if I’ll end up changing anything, but I do think it’s an important exercise. And if anything, it might calm me down a bit. :)

Do you have a favourite online retirement calculator?

Author: Krystal Yee

I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.


  1. That’s an interesting outlook Krystal! I’m always so amazed with how much you are putting away in savings every months it’s great. I really wish I could put away that much, I just love to travel too much ;)

  2. Great post and nice to hear the perspective from another Canadian as most information is US based. Glad you can save for retirement or financial independence. In our case we are still having a year of debt repayment first and are in our late 40s now so not easy. But hey if you had talked to a younger me I would only have scoffed anyway and not listened. Better late than never I always say. Life is good and we keep on pluggin’.

  3. I have these moments of doubt when I think about the future. Am i saving enough? Are we spending too much? Ahh!!! :)

  4. Leigh says:

    Have you played around with Firecalc at all?
    It’s a pretty good retirement calculator. I inputted some of your numbers into it and it suggested you would have enough to retire in 2034 if you continue saving at your current rate. I would recommend playing around with it!

  5. Hannah says:

    Hi Krystal, interesting post and thanks for giving so many details. I was wondering, you put $950 into your pension plan each month – is that your only savings account?

    • Krystal Yee says:

      Hi Hannah. Right now I’m saving an average of $3,700 each month – $1,685 of which is auto-deposited directly into my Retirement accounts. The rest of it goes into a general savings fund. I’ll end up using some of that savings to pay for taxes on my freelance income, but likely not a significant amount.

  6. Guest says:

    Great post! I do have a question when you say “So if I have no rent/mortgage to pay during retirement” does that mean you expect to be a homeowner by retirement, if so, shouldn’t some of your savings go toward a downpayment?

    • Krystal Yee says:

      Yep, I do expect to be a homeowner by the time I retire! :) I’m currently saving outside of my retirement accounts as well. I don’t expect that we will buy anytime in the near future, but one of the main reasons for examining my retirement contributions is if I should be diverting more towards a house and less towards my retirement – while still achieving my goal of early retirement.

      • KC says:

        Krystal, there are still occupancy costs such as property taxes, etc so I would still budget 20% for “rent” if you are a homeowner. Also, what happens if you won’t be a homeowner, you may have to be for rent elsewhere? I would still be conservative there.

  7. Anonymous says:

    Hi Krystal,

    I began reading your blog in 2007 on and off. Imagine my surprise when I plugged in give me my five bucks back you were still blogging. I have started reading about your journey from the very beginning. I am now at 2009.(you still have not revealed your identity) It is such an addicting read with all challenges and accomplishments. I find myself applauding the accomplishments not able to stop reading when a challenge approaches. I have to finish reading until I find out how the challenge was resolved. I find myself reading your blog and a few hours at a time with a cup of tea. As a forty something mom getting her spending under control and working on my fico score its very refreshing to know I am not the only who has faced these challenges in regards to money and work. Keep up all the good work. I cant wait to see how things unfold.

    Forging my way to a debt free lifestyle one payment at a time.

    Best Regards,

    • Krystal Yee says:

      Hi! Yep I’ve been blogging for a long time. :) Thanks so much for coming back after all those years and reading! Congrats to you for working hard and getting your spending under control! It’s definitely not easy, but worth it over the longterm.

  8. ARBM says:

    Your savings rate is super impressive. I wouldn’t be surprised if you can achieve retirement or financial independence much sooner than you plan. That being said… I don’t know that I would divert money from your RRSP to other savings quite yet… We all know the wonders of compounding interest, so if you get your RRSP filled up sooner, it’ll have more time to grow, right? And once that’s working, I have no doubt that you’ll be able to quickly save up whatever down payment you need to buy yourself a place.

  9. I haven’t actually used many online retirement calculators but I think there is I think that there is value in that. I believe that there should be a balance between saving for the distant future and saving for closer needs. But I think the most important thing is that you are comfortable with you plan. It is good to re-evaluate your plan from time to time. With the life change of saving for a house your priorities will change and it’s great that you are thinking about it differently. Good luck with your review.

  10. Peter says:

    hi Kystal

    Please be aware of investment fees. I wrote a blog about mutual funds and the upcoming CRM2 in July 2016. If you are saving and budgeting everything, you should be aware of potential savings in investment fees.

  11. LJ says:

    I base my every day savings on my spending rather than my take-home pay. However, when thinking about retirement savings, isn’t it important to factor in the cost of elder care (e.g. nursing homes, in-home care, etc.)? Perhaps it’s different in Canada, but I’ve heard extremely expensive numbers in the US.

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