This is actually a thing – saving too much for retirement is not only possible but an epidemic among physicians.
Too many of us obsess over having enough for retirement and end up retiring with too much. Wealth tends to grow as we get older – that’s the power of compounding and well-acquired spending habits.
Saving too Much for Retirement Costs Time and Energy
Saving your money and investing it doesn’t come for free. You had to set the money aside and forgo spending.
Next, you had to decide where to invest the money and where not to invest it. How to rebalance it and when to rebalance it.
This is exhausting as hell, I know it. I managed my own finances and savings from 2012 until now. It’s only been a few months since I finally decided to stop saving.
Retiring with too Much Money
It might seem harmless, but there are consequences of having too much retirement wealth. Not only do required minimum distributions (RMD) come into play but also wealth taxes and overall risk.
The US doesn’t have much of a wealth tax, unlike Spain and other countries. But it’s possible it might come up in some future election.
The natural solution is to give the money away early and often. But this is a learned skill, something I suck at and am afraid to learn.
Building a Sustainable Retirement Portfolio
A healthy retirement portfolio has a balanced and diversified mix of assets. But it also isn’t excessive for the person who will use it.
“You can never have enough!”
Of course, you can. Anything can be done to excess and give you a false sense of security.
The goal in retirement for a physician should be to feel fulfilled and challenged if necessary. There should be activities I’m engaged in that inspire me and things that offer me a feeling of community.
A sustainable retirement portfolio is one that earns me a steady income – assuming I don’t have other income in retirement. It’s large enough to cover my spending but leaves enough room for me to feel connected to the struggles of society.