White Coat Face-off: Playing “Catch Up”

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The Internet is a wonderful thing. And one of its best features is that you can find people of like minds and interests to learn from.

I spend an awful lot of my free time reading about investing, and early retirement, and travel hacking. And I’ve learned so much in this pursuit.

The other side of the coin, of course, is that you can end up in an echo chamber, preaching to the choir, insulated from opposing points of view.

Which is all a long-winded way of saying that I love these Whitecoat Face-Off posts. They allow me to look at early retirement from a slightly different perspective. Namely from the point of view of a skeptic.

So without any further ado let’s proceed to argument number five…

5)      You don’t get to benefit from “catch-up” contributions.

Beginning at age 50, you can contribute an extra $1000 to an IRA (for each spouse), an extra $5000 to a 401K (for each spouse), and an extra $1000 to an HSA (after age 55).  The early retiree is more often forced to use a less-efficient taxable account to save.

There are a couple of different ways to tackle this argument.

The first and most obvious angle is that for an early retiree “catch-up” is completely unnecessary.

The whole justification for “catch-up” contributions, Is that the average American hasn’t saved enough by the time he reaches 50 years old to fund his retirement by age 65.

Clearly this concept is not terribly germane to the early retiree. By definition, if the early retiree has stopped working and, as such,  is no longer eligible for catch-up contributions then the early retiree has already “caught up.”

He has, in fact, already more than “caught up.” He has “surpassed.” He has “exceeded.” In the race of financial planning he has already crossed the finish line and is sitting off to the side of the course sipping a beer and maybe doing some fishing. The early retiree is a savant of finance. He is all the way on the right side of the bell curve. In short, he has already won the retirement game.


Hey Usain, wanna race?  Don’t worry if you fall behind I’ll let you “catch up.”

Offering an early retiree the opportunity to participate in “catch-up” contributions, is like offering a 12-year-old engineering school graduate the opportunity to catch up in math at his local middle school’s summer school.

If he’s done it right, the early retiree has already saved 25-33 times his yearly expenses. More importantly, he has whittled down his expenditures into something manageable (for this is what has allowed him to accumulate his stash in the first place.)

So there’s that.

But I’m not going to lie.

The white coat investor has landed a punch on me with this one.

Anyone who’s into saving a large percentage of their salary, preferably in a tax deferred fashion, will be at least a little bit bummed out to be missing out on the opportunity for “catch-up” contributions.

After all “catch-up” contributions allow you to:

1. Lower your current tax bill even lower.


2. Increase your allocation of funds to tax protected accounts that can compound tax-free into the future.


mmm… extra tax deferred savings

So yeah, it stings a little bit.

But I’ll try to comfort myself by reminding myself of this.

It’s not really about the money.

(I can’t believe I just wrote that.  Whenever I hear someone say that, there is but one thing that I am sure of;  and that’s that It is about the money.  It’s always about the money.  And it is doubly ironic when such a chestnut comes from someone like me who writes about money on an almost nightly basis. )

But here is what I meant….

Money is important only in proportion to the amount of happiness that it provides.

Endlessly chasing more money is an empty pursuit that I believe has the potential to take me away from the things that truly make me happy.  Things like spending time with people I love, and experiences, and learning new things, and the very feeling of freedom.

Besides, on my current trajectory I’ll still have a good two to five years to take part in catch up savings anyway. (And that’s only if I decide to hang up my white coat when I hit my number….)

By the way, If you missed the earlier posts in this series, you can find them here:





And while we are on the subject of the White Coat Investor, do yourself a favor and check out this excellent article he published yesterday on preparing for bear markets.  It is a lovely framing of the wisdom of passive investment, in which he uses the very destructive instincts that propel investors to try to time the market, to make his central point.  Bravo, Doc, Bravo!


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