I’m 41 and on track to have a $6M nest egg by 55 — even if I stopped saving for retirement today. How do you know when it’s safe to stop saving?

She’s healthy, debt-free and has an emergency fund tucked away, plus a health savings account (HSA) to cover future medical costs.

She’s picturing a retirement where she can travel a few times a year, maintain her current lifestyle and indulge in hobbies she’s always put off. She’s imagining long weekends in wine country, a small vacation home and occasional splurges on dining and entertainment. She’d also like to leave something for her family.

At this stage, Janice is wondering whether she still needs to continue contributing money to her retirement plan. She already looks on track to live comfortably during retirement with what she has already invested.

The $6 million question

Janice is in an enviable position, but experts caution she should weigh the risks before halting contributions.

A $6 million nest egg is impressive, but markets fluctuate, inflation continues to rise and unexpected expenses, such as health care or major home repairs, can crop up at any time to chip away at savings.

Assuming she withdraws $240,000 a year, Janice could cover the lifestyle she’s imagining, including vacations, dining and hobbies and still have a buffer for taxes, insurance premiums and the occasional big-ticket expense.

But what if her health care costs rise faster than expected, or a major economic downturn hits? Even small shocks could reduce the longevity of her portfolio.

Janice could come across any number of scenarios that would impact her nest egg.

Imagine the market drops 20% right after Janice retires. If she keeps withdrawing the same amount, her nest egg will shrink faster — and by year 20, she may have no choice but to cut back or dip into other savings.

Another risk is inflation spiking above projections and Janice’s spending power dropping. Suddenly $240,000 would buy less, and she’ll have to carefully budget to maintain her lifestyle.

These possible scenarios show that even for someone as well-prepared as Janice, it’s important to continue planning and building a safety net.

It’s understandable that Janice feels confident. Her current savings projections exceed most of the thresholds set by the experts, including Fidelity’s rule that retirees generally need about three times their annual salary saved by age 40 to maintain comfort in retirement. (1) However, there is a danger in assuming that acing one-size-fits-all tests guarantees never running into issues.

It’s easy to see the flaws in relying too heavily on the 4% withdrawal rule. While it can be a decent starting point, it’s far too rigid to base a full retirement plan on. The rule assumes the past will repeat itself and doesn’t factor in real-world details like taxes, fees, or how your investments are actually balanced.

Experts often suggest adjusting rather than stopping contributions. That could mean cutting down the amount invested or shifting investments toward more conservative options to protect the portfolio from risk.

And then there’s the question of what Janice would do with the money she frees up from investing? She could spend it on lifestyle upgrades or set it aside for large one-time purchases such as a new home or car, but each choice will have implications for her long-term financial picture.

A balanced approach

Here’s what Janice could consider to maintain a steady, risk-aware path while enjoying some flexibility:

Maintain contributions: Even a reduced savings rate keeps her portfolio growing and provides a cushion against market volatility.