Is it possible to save too much for retirement?

You can always throttle back your savings rate in the future, but you can never go back and increase your savings.

Yes, I do believe you can save too much in one vehicle. What I mean by that is by funneling money into your 401k or Traditional IRA for the tax deferral could actually cause you to have a higher tax consequence later on in life when you begin RMD's.

In some occasions I believe it's better to bite the bullet and pay taxes now rather than pay potentially more taxes later in life.

For this year we're 60% pre-tax, 40% post.
Overall we're 95% pre-tax, 5% post.

I assume you already are saving for college for the two kiddos. Right?

That's my next focus. Paid debt down to acceptable levels, 401k is at modest levels, but I need to get a little better on college.

Yes....wife just received a check from her company for $2k+ because she had put to much into her 401k this year.

From an economic theory perspective, yes, you can save too much.

Savings is basically stored "utility" (how much enjoyment, usefulness you get from spending). By saving for the future and seeing your accounts grow via interest, you are delaying utility that could be consumed today with the hopes/expectations of being able to consume more utility in the future.

The issue is if you do not get to the future point in time when you are able to use the savings. If you die before you use savings, then it is lost utility (albeit, someone who inherits the savings receives the utility).

However, there is also "marginal utility" at play. While you are working and earning and income you could spend everything you earn but the more you spend the lower your marginal utility will most likely be (diminishing returns). But, when you are in retirement age, you have to have a minimum amount of savings to be able to survive and maintain a standard of living. In retirement, each dollar you have saved has enormous amounts of utility in helping you maintain SOL. This is why the scenario of "better to have too much than too little" plays out.

Therefore, the savings decision plays out as a risk/reward decision. Do you want to enjoy now at higher absolute amounts but lower marginal utility or save for later and have security against your current, less exorbitant SOL.

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i understand that. like i said, we live the life we want (not jet setting but you know, normal middle class style) and have toys/fun. I look at it like this if i die: a) i'll be dead so who cares and b) i'll leave something to my kids. Either way, i'm dead.

It's when i hear folks say "i've got $40k-$50k-$60k in my account to put towards a house/car/camp/etc" i wonder if i'm doing something wrong. My most liquid accounts never get over $10k and that is pretty much just a revolving door in/out.

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I wouldn't worry about what the Jones' are doing. Those same people could have $50k cash and have nothing in the 401k.

I think it would only be considered too much if it is negatively affecting your shorter-term financial obligations and goals.

i'm doin work now so when i get to 50, i won't be worried about scrambling for retirement and when i retire, i won't be bagging groceries. I should hit $1,000,000 in the next 10-12 years then i can cruise and let that compound for 10-15 more years until i reach retirement age. All the while at that age i'm having fun: buy camp, boat, large scale vacations when my kids are of age to enjoy large scale vacations (yellowstone, europe, etc, holly beach.)

getting back to the main question, what's the benefit of having a large amount of liquid assets from ages 25-45?