When do your account returns dwarf your contributions?

[Ganacel]

I'm just getting started, so right now my contributions are high even compared to my account total, let alone compared to my dividends and other investment returns. Just curious at what point your dividend income began to dwarf your contributions. And at this point, did you still continue to make contributions? To ask another way, when do you think continuing to fund your account becomes superfluous because your contributions are so relatively small? Or maybe that never happens?

If I use a tax-deferred account and assume a 5% return for the sake of simplicity, I'm getting that the "break even" point where my contribution equaled my investment return should be around $360,000, assuming I put in the (2015) max of $18,000/year. And for a Roth earning 5% with a $5500 yearly contribution, it should be around $110,000. Obviously my return could be way off, but assuming it wasn't, am I calculating the break even point right? So if your account earned nothing, you would reach that point in 20 years, or longer if your return was less (ex. 25 years for 4% return).

Thanks, and I hope these questions make sense.

[RunningRad]

I see what you are saying, and I do recall such a tipping point, not so much because the returns exceeded the contributions, but because I started to become less compulsive about making the investment the minute the funds hit an account. Of course, presuming you want your account to grow, contributions and returns will allow it to grow much faster than returns alone. Every month I add about 0.2% to my portfolios and have never considered this to be "superfluous".

[Texas hold em71]

Nit picking a little here- I don't think you are likely to make 5 percent in dividends and in a taxable account you would not want to. You want 5 percent returns (dividends and unrealized gains).

But I think you have concept right.

Just don't look for a dividend check - look at the beginning balance - ending balance- contribution and compare to the contribution. Of course in some years, you will have negative returns.

ETA: I have reached this point for tax deferred or exempt but for taxable I have not. So my taxable investments are still of consequence to me.

[Day9]

The rule of thumb is this happens when you have double your yearly income. This assumes ~7-8% returns and 15% retirement savings rate, which is what is often recommended.

Boglehesads often have higher savings rates than just 15% so they would need to save a higher multiple of their yearly salary before they get to the point where returns are larger than contributions.

However stock returns are so inconsistent that anything can happen in a single year.

[LongerPrimer]

I will tell you.that even in a balanced portfolio, the market and economic corrections of 2000, 2001-02, and 2008-09 will dwarf your contributions. Their recoveries also dwarfs contributions.

[Tanelorn]

When your investment portfolio is large compared to your incremental savings, you should do two things:

1. Care a lot more about how you're invested, and
2. Start thinking about if/when you can retire

[White Coat Investor]

First in good years. Then in most years. But if you're like me and thus far have had a reasonably steadily rising income, it takes longer than you might expect.

[fposte]

I look at what I'm putting away in terms of time rather than money--basically I put a year of retirement away every year. Even if my investments grow faster than that, a year of retirement is still pretty significant to me.

[Ganacel]

I look at what I'm putting away in terms of time rather than money--basically I put a year of retirement away every year. Even if my investments grow faster than that, a year of retirement is still pretty significant to me.

It would be to me, too. Thanks, I like this way of looking at it. Now if only I knew how many total years of retirement I had to fund, I'd be golden!

[livesoft]

Your account returns dwarf your contributions a few years after your account losses dwarf your contributions.

[Grt2bOutdoors]

Don't think you have it made when account returns either equals or dwarfs contributions, for what the market giveth, the market can taketh away too. Keep adding, you never know what lurks around the corner and that could include loss of employment. You'll be glad you kept adding all the while.

[dbr]

It's not about when one dwarfs the other. It is about when you have enough money that you can decide it is safe to stop saving or to save less. For a lot of people that is when they stop saving and start spending. A factor in this is that the last years before retirement are often the years when income outruns expenses by the greatest amount, especially if college costs are done, mortgages are paid off, etc.

[Ron]

To ask another way, when do you think continuing to fund your account becomes superfluous because your contributions are so relatively small? Or maybe that never happens?

Sure it does; just wait until retirement ...

I/wife cover most of our current expenses from our respective portfolios, which have grown substantially over the years (both by increase in share value and distributions) and haven't contributed a penny in years.

Just another way of looking at it.

- Ron

[Ganacel]

Sure it does; just wait until retirement ...

Sorry, I should clarify that I'm talking pre-retirement, since as you said, obviously you would stop making contributions to your retirement accounts once you're retired.

Don't think you have it made when account returns either equals or dwarfs contributions, for what the market giveth, the market can taketh away too. Keep adding, you never know what lurks around the corner and that could include loss of employment. You'll be glad you kept adding all the while.

True enough. I wasn't meaning to suggest that one should stop adding to their retirement account while they still can, as much as wanting to get a sense of when the compounding would finally kind of take over, if that makes sense.

[dbr]

Don't think you have it made when account returns either equals or dwarfs contributions, for what the market giveth, the market can taketh away too. Keep adding, you never know what lurks around the corner and that could include loss of employment. You'll be glad you kept adding all the while.

True enough. I wasn't meaning to suggest that one should stop adding to their retirement account while they still can, as much as wanting to get a sense of when the compounding would finally kind of take over, if that makes sense.

It doesn't make sense until you specify in numbers what you mean by "take over" and then when you know that you can do a calculation like the one you have done. An alternative calculation would be to compare how much money you can expect to have when you retire if you do or don't stop saving at a certain point.

My criterion would be to calculate when the difference in end point wealth is affected by less than 5%.

In practice it is only interesting if you think you are punishing your lifestyle with too much saving and not enough spending and want to rationalize saving less.

[Ganacel]

The rule of thumb is this happens when you have double your yearly income. This assumes ~7-8% returns and 15% retirement savings rate, which is what is often recommended.

Bogleheads often have higher savings rates than just 15% so they would need to save a higher multiple of their yearly salary before they get to the point where returns are larger than contributions.

But the problem with using this as a rule of thumb is that the maximum amount you can legally contribute to your retirement accounts isn't dependent on your income. What I mean is, even if you earn $1 million/year, you can still only put $18,000 into a 401k or 403b in 2015, and you can still only put $5500 into an IRA (maybe via a backdoor Roth). Of course what you can put into your taxable is unlimited, and then what you're saying makes sense since someone with a $1 million income could maybe save half of their income in a taxable account if they wanted to. It would take a long time for investment returns to dwarf a $500,000/year contribution!

[Ganacel]

It doesn't make sense until you specify in numbers what you mean by "take over" and then when you know that you can do a calculation like the one you have done. An alternative calculation would be to compare how much money you can expect to have when you retire if you do or don't stop saving at a certain point.

My criterion would be to calculate when the difference in end point wealth is affected by less than 5%.

In practice it is only interesting if you think you are punishing your lifestyle with too much saving and not enough spending and want to rationalize saving less.

I'm not really thinking about a target to stop saving or to rationalize not saving as much. I was more just thinking, right now, adding $5500 to my Roth IRA account would make a huge difference because I've just started investing and that's my total amount. So adding $5500 in 2015 will literally double my savings. If I had $1 million in my Roth, adding another $5500 would not make much difference. Somewhere in between, the yearly contribution stops making much difference. When is that? If it's at 5% like you suggested, then it would be around when I had $110,000.

Then I was thinking, it's not just a matter of how much is in the account, because at some point, the money already in the account will be earning more than $5500/year. When that happens, again, it makes contributing another $5500 have less of an effect because the compounding adds more to the account balance than the contribution does. That's not to say that one still shouldn't continue to contribute the $5500, just that it won't make as much difference later on as it would at the beginning. And again, I'm wondering when you guys think contributing another $5500 would stop making a big difference.

[Grt2bOutdoors]

It doesn't make sense until you specify in numbers what you mean by "take over" and then when you know that you can do a calculation like the one you have done. An alternative calculation would be to compare how much money you can expect to have when you retire if you do or don't stop saving at a certain point.

My criterion would be to calculate when the difference in end point wealth is affected by less than 5%.

In practice it is only interesting if you think you are punishing your lifestyle with too much saving and not enough spending and want to rationalize saving less.

I'm not really thinking about a target to stop saving or to rationalize not saving as much. I was more just thinking, right now, adding $5500 to my Roth IRA account would make a huge difference because I've just started investing and that's my total amount. So adding $5500 in 2015 will literally double my savings. If I had $1 million in my Roth, adding another $5500 would not make much difference. Somewhere in between, the yearly contribution stops making much difference. When is that? If it's at 5% like you suggested, then it would be around when I had $110,000.

Then I was thinking, it's not just a matter of how much is in the account, because at some point, the money already in the account will be earning more than $5500/year. When that happens, again, it makes contributing another $5500 have less of an effect because the compounding adds more to the account balance than the contribution does. That's not to say that one still shouldn't continue to contribute the $5500, just that it won't make as much difference later on as it would at the beginning. And again, I'm wondering when you guys think contributing another $5500 would stop making a big difference.

That's not correct, it depends on asset location; tax deferred vs. tax free and also, time counts. Given you could place $5,500 away tax-free for the next 20,30,40,50 + years, especially if you leave that Roth to a heir and they in turn, stretch out those RMD's over the course of their lifetime, that measly $5,500 could take on a life of its own. I would not discount the value of a dollar saved today.

[midareff]

It's a sort of seasonal ... being the season of the market and your season of life, kind of thing. Keeping things realistic, a "new" investor has higher % returns due to youth and aggressive portfolios. Moving to the middle years your portfolio has grown, you have gotten more conservative, and have more to lose. Somewhere in these middle years it would be reasonable to expect average portfolio growth to start looking like annual contributions. Excluding years like 2013 when the S&P jumped 32%, you would be hoping growth runs greater than contributions in your near retirement years. Then it's all sequence of returns risk and luck.

[Iorek]

It's taken me about 20-25 years. It is a little bit of a good news/bad news situation that when I run retirement projections the results don't seem seem to change very much based on contributions for the next 10-15 years.

[The Wizard]

It's not just "returns", it's fluctuations from one day to the next, when stocks change by one percent or more.
But older folks are more likely to max out contribs at a higher level than younger people.
So it's just an amusing thing when your account's $10,000 one-day drop in value equals your contrib for a whole year, for instance...

[Ged]

It never happened for me. Late in my career I was socking away money like crazy. No mortgage, no college payments, and peak earning power. My income was 3x my expenses and anything that wasn't expenses was going into savings.

[TheTimeLord]

It never happened for me. Late in my career I was socking away money like crazy. No mortgage, no college payments, and peak earning power. My income was 3x my expenses and anything that wasn't expenses was going into savings.

The wife and I both work so our situation is similar. And now that I am contracting and using a Solo 401K, I doubt it ever will during my work life. So what convinced you to walk away?

[Watty]

To ask another way, when do you think continuing to fund your account becomes superfluous because your contributions are so relatively small? Or maybe that never happens?

It isn't just about the size of your accounts but also how long until you retire. I am near retirement so that I save like crazy and save an additional months expenses then that basically means that I can retire a month earlier since it will not be invested long enough to have any significant growth.

At this point the tradeoff between saving a lot and spending money on something like travel can go either way and I have started spending some more now since to me a large trip now is worth eventually working an extra month. I am also to the point where if I needed to I could probably retire OK at the lower end of my targeted retirement income range if I had to.

For the last couple of years I have only been contributing enough(6%) to my 401K to get all of my employers match.

[placeholder]

I'm not sure I understand the question as if I'm still working then I don't know what I would I do with the money as I'm not going to spend it on things I don't want or need.

[flyingaway]

Currently, the returns of our investments are more than our contributions, but not at the "dwarf" level. We still contribute about 40% of our pre-tax money (including matching) to pre-tax accounts, and some (not fixed) percentage to our after tax accounts.

[Ganacel]

I'm not sure I understand the question as if I'm still working then I don't know what I would I do with the money as I'm not going to spend it on things I don't want or need.

The question is about when you reach the point where, regardless of whether you put the money in your account or not, your account (and your investment income) is already so large that adding this relatively small amount more isn't going to change things much. You could do anything with the new contribution money; it doesn't really matter for the sake of the question. Maybe give it to charity.

It's taken me about 20-25 years. It is a little bit of a good news/bad news situation that when I run retirement projections the results don't seem seem to change very much based on contributions for the next 10-15 years.

That's kind of what I was figuring. Thanks, and congrats on getting there.

[Meg77]

I've been thinking about this as well! I thought I was getting close to the tipping point, but then I got married and was able to increase contributions (while not increasing the portfolio by as much), so even though I'm able to save more now, I'm further away from that tipping point goal. It's all relative - it's still good to save as much as possible!

You can figure this out by dividing the amount you contribute each year by whatever portion of return you define as being "dwarfed" by the total return. To me the term "dwarfed" implies that your contributions make up only a quarter of the total return on average. In that example, if you are contributing $23,500 to retirement accounts each year and you expect a total return of 8% including dividends, then you'd need a $1,175,000 portfolio for your returns to "dwarf" that contribution. The calculation is 23,500/2% = $1,175,000 (where 2% is one quarter of 8% expected return). With a $587,500 portfolio, your contributions will make up one half of your expected 8% return (23,500/4% = $587,500).

A simpler way to think about it may be to take your annual contribution and divide it by your portfolio balance to get an idea of what percentage of the total you are contributing. If you contribute $20,000 per year and have a $200,000 portfolio, your contribution represents 10% of the total - more than you're likely to make on average each year. If you're adding $20K/yr to a $2,000,000 portfolio, you're only adding 1% to the balance each year - your returns are likely to dwarf that addition.

[Ganacel]

Thanks, Meg, this is exactly what I was trying to get at (and apparently not explaining very well).

May I ask, why are you farther from the tipping point now than you were before you got married? Even though you can contribute twice as much, you and your husband together have a lot more income than you did by yourself, right? Or are you guys not maxing out all of your accounts? Or is it that he didn't have as much saved up as you did so now you're farther away from your combined tipping point because you didn't double your account balance when you got married?

[Ged]

It never happened for me. Late in my career I was socking away money like crazy. No mortgage, no college payments, and peak earning power. My income was 3x my expenses and anything that wasn't expenses was going into savings.

The wife and I both work so our situation is similar. And now that I am contracting and using a Solo 401K, I doubt it ever will during my work life. So what convinced you to walk away?

Two things. The first was I had hit a point where my savings, pensions and SS were more than adequate to pay for a generous retirement and second changes at the company I was working for took out all the fun. If it weren't for the job changes I'd still be working.

Retiring when I did has turned out to be a great decision.

[fposte]

But the problem with using this as a rule of thumb is that the maximum amount you can legally contribute to your retirement accounts isn't dependent on your income. What I mean is, even if you earn $1 million/year, you can still only put $18,000 into a 401k or 403b in 2015, and you can still only put $5500 into an IRA (maybe via a backdoor Roth).

Though many people can put more than $18,000 into DC accounts. Some have a blend of elective, non-elective, and after tax that bumps them up to the $53k limit, some have a 403b and 457 and can put away $36k base and $54k if eligible for over 50 and 15-year additions. That's a contribution that adds up pretty quickly.

[dbCooperAir]

But the problem with using this as a rule of thumb is that the maximum amount you can legally contribute to your retirement accounts isn't dependent on your income. What I mean is, even if you earn $1 million/year, you can still only put $18,000 into a 401k or 403b in 2015, and you can still only put $5500 into an IRA (maybe via a backdoor Roth).

Though many people can put more than $18,000 into DC accounts. Some have a blend of elective, non-elective, and after tax that bumps them up to the $53k limit, some have a 403b and 457 and can put away $36k base and $54k if eligible for over 50 and 15-year additions. That's a contribution that adds up pretty quickly.

Don't forget many of those people who have 403b's and 457's also have a pension plan they and or employer sends a chunk to. I'm amazed at the amount of tax advantaged space our local school district offers.

[placeholder]

The question is about when you reach the point where, regardless of whether you put the money in your account or not, your account (and your investment income) is already so large that adding this relatively small amount more isn't going to change things much.

But I don't that such is true as putting 30k into my investments even if that is only 2% of total holdings is STILL 30k and represents another half year or more of expenses advancing retirement by that much and it doesn't become insignificant amount just by being compared to some other amount.

[czeckers]

If you are making steady contributions, it usually happens in 7-10 years. This of course depends on how well the markets have done and your asset allocation so it is impossible to give you a more specific answer. It can take longer if the market does poorly (a good thing for an early saver) or if you have a conservative asset allocation.

The significance of this tipping point depends on how far from retirement you are. If you are 30 years old, and have been saving since 20, you can stop saving and still end up with slightly more money than the 30 year old who is just starting and continues to save until retirement. Of course the first person can just keep on saving, and end up with twice as much money as the latter.

-K

[ralph124cf]

Even though some people have "enough" in their retirement accounts as they approach retirement, they still contribute the max to save on current taxes, because they may well be in a lower tax bracket after retirement. Also, in my state, income from retirement accounts like IRAs and 401(k)s is not subject to state income tax at all. Running the contribution thru the 401(k), even if withdrawn the next year, (subject to age limits) changes state taxable money into state never taxed money when withdrawn.

Ralph

[tbradnc]

When the markets moved up or down substantially and the dollar column of my account balance changed by 4 or more decimal points - that's when I knew I had real money in the market - to me anyway.

[Peter Foley]

You might think of this in terms of the rule of 72 . . . how long it takes money to double at a given interest rate. Since "dwarf" is an inexact term, maybe looking at the time it takes money to quadruple would be the answer.

[z3r0c00l]

I have been building my investment accounts gradually for 8 years. The daily changes in value are still relatively small, rarely more than a few thousand dollars either way, however starting with this most recent dip in stocks, it has become clear that my net worth is now dominated by market performance. It is beginning to exceed my annual saving rate, in other words. That is perhaps more dramatic than exceeding my few thousand dollars of quarterly investing in any given week. It is a new feeling but so far I have maintained my commitment to this AA and the buy and hold strategy. Have not seen a really bad year though!

[wshang]

The sensation is akin to learning to ride a bike and realizing the training wheels are off and you are flying. (not off the handlebars)

For some, the sensation that the daily fluctuation is greater than your monthly pay or a new BMW is a weird feeling.

At some point, seeing no substantive effect of annual contributions on ones net worth makes one realize in a crowning moment that financial knowledge or acumen is actually worth more than accrued professional or earning related knowledge - a truly disorienting realization.

That is the incisive difference between a multimillionaire who got there via the lottery or inheritance and one who invested to the same point.

[555]

assume a 5% return for the sake of simplicity,

If you have any volatile assets like stocks then your account balance fluctuates wildly up and down. It's absolutely nothing like the steady "bank interest" type increase you describe.

I've seen this before, but this whole "account returns dwarfing your contributions" picture really doesn't make sense.

[nashirak]

To me this is all academic. My wife and I will contribute to retirement (assuming financially able) until the day we retire. Given our current DINK status enables us to squirrel away 40-50% of our annual income and still enjoy life. Like someone said earlier, why would I waste money on things that we don't want or need? We have a set budget we allocate for splurging and vacations, we budget our monthly expenses, everything else gets shifted to savings/401k/ira/etc.

[basspond]

As we got close to 7 figures. If you are not saving then you are spending which it will be harder to curtail your costs in retirement. Also consider the tax advantages of 401k and Roth conytributions you will be losing if you stop contributing.

[jimb_fromATL]

Yes, there should come a time when your gain per year will exceed the amount you’re contributing.

That is interesting gee-whiz information, as long as your realize that it does not mean that you can stop contributing. Virtually all calculations/estimates for retirement contributions are based on continual contributions until retirement time. While it is not mentioned as often, bear in mind that you also need to plan on increasing contributions regularly to keep up with inflation and increases in salary.

Here’s a way to do the math:

• At 7% earnings with contributions of $1500 per month ($18000 per year) your gain per year will equal your contributions when the balance is $18,000/7% = $257,143.
  
  Using the NPER (Number of Periods) function in a spreadsheet to solve for the time required:
  • =NPER(7.0%/12, 1500.00, 0, -18000/7%) … returns 119.2 months.
  As a double-check:
  • =FV(7%/12,119.2, -1500) … returns $257,143.
  The interest that month will be 257,143 x 7%/12 = $1500 -- which is the same as your monthly contribution.

The common rule of thumb of contributing about 15% of your income to retirement is based on continuing contributions for your entire career. Another common suggestion is to strive to have 23 times your salary in your retirement savings in order to clear around the same amount in withdrawals after retirement.

If you have a pension or other sources of income and feel that you can count on social security to be there, you could probably make do with a lot less. By the way, social security is a tax, not an investment. It is weighted toward making sure that lower income people will be able to survive. So the social security retirement benefit for lower income earners will be a larger percentage of their average salary.

Here’s an example showing why you shouldn’t stop contributing too soon:

• Ignoring pay increases and inflation to keep it in terms of today’s dollars, if you were making $120,000 and contributing 15% of your income ($18,000/yr, $1500/mo) earning an average APY of 7% for perhaps 35 years until retirement, it would grow to $2,760,000, which is 23 times your annual income.
  
  Using the rule-of-thumb safe withdrawal rate of 4% you could withdraw $110,400 per year, which is 92% of your salary.
  
  At 7% earnings with contributions of $1500.00 per month ($18000 per year) your gain per year will equal your contributions when the balance is $18,000/7.% = $257,143.
  
  So the time required is
  =NPER(7.0%/12, 1500.00, 0, -18000/7%) … which returns 119.2 months.
  
  As a double-check:
  =FV(7%/12,119.2, -1500) … returns $257,143
  
  However, if you stopped contributions when your earnings every year equaled your contributions, then at the same 7% earnings, the $257,143 would grow to $1,508,571 in the remaining 304 months.
  
  =FV(7%/12, 304.2, 0, -257142.86) … returns $1,508,571
  
  That's $1,251,429 less money (45% less) in the account, and only 12.6 times your pay. Using the same SWR of 4% you could withdraw $60,343 per year which is only 50.3% of your pay.

Also consider that if you have a pension that you can count on, you probably don't need as much income from your own retirement funds.

Assuming you believe that social security will be there as promised, bear in mind that social security is a tax intended to make sure that people will have enough to survive; not an investment. So people with lower income levels get a bigger percentage of their average pay in social security retirement benefits.

Another consideration is that you don't pay FICA tax on pensions, social security, and withdrawals from retirement accounts, and you aren't contributing to retirement. In lower income levels a lot of people pay no tax on social security benefits, and you'll never pay tax on more than 85% of it as the law now stands. So chances are you won't need nearly as much income in order to have the same net amount to spend.


jimb

[Ganacel]

Thanks, jimb. So basically it's 10-20 years, obviously depending on a lot of factors. But that's a reasonable starting place. And I wasn't meaning to suggest I'd stop contributing. If nothing else, it makes sense to at least keep contributing to your tax deferred accounts so you can defer the taxes while you're still working.

[The Wizard]

Some people MIGHT stop saving for the long term if they loved their job, but cut back to part time basis the last few years prior to quitting entirely.
40% of normal income could be enough to live on nicely but without a surplus to fund savings...

[kaudrey]

I get what you are thinking. We are in our 40s, and about 4 years, ago, I came to the realization that even if we saved less, if we get anywhere close to our projections by the time we retire (in 12 years), we'll be in very good shape.

I'm not sure if the returns "dwarf" the contributions, but they do make a bigger impact. Maybe they do...I just looked at my spreadsheet and last year our accounts rose more than our two salaries combined...

[Bacchus01]

This is a tough one. The more I make, the more I save.

I would say that in 2014 my contributions have been about $62K and my returns have been about $97K. Does one dwarf the other? I guess maybe 1.5X is dwarfing, but I'd say neither is where I'd like them to be.

2015 will look like contributions of $154K and returns of maybe $125K. Still, neither is where I want them to be

[sesq]

The good year effect of 2013 gave me a sense of being dwarfed. But at this point, being mid-to-high 6 figs, at 42, I am really only saving for early retirement or a more comfortable retirement. If I stopped now a retirement in my mid sixties with SS is very likely.

In a more normal year, or a volatile one (like this one), my contributions still scratch my psychic itch to save.

[DVMResident]

It's taken me about 20-25 years. It is a little bit of a good news/bad news situation that when I run retirement projections the results don't seem seem to change very much based on contributions for the next 10-15 years.

I noticed the same thing on my simulations. If you consider saving rate (%):years of retirement purchased ratio, there are diminishing returns. Based on my numbers and target, each +5% in saving rate over 25% only bought an additional ~1.5 years of early retirement.

Like many Bogleheads, still over saving though. Never know when disaster in it's many forms (job lose, illness, etc.) will hit and may as well "make hay when the sun shines."

[goblue100]

I'm just getting started, so right now my contributions are high even compared to my account total, let alone compared to my dividends and other investment returns. Just curious at what point your dividend income began to dwarf your contributions. And at this point, did you still continue to make contributions? To ask another way, when do you think continuing to fund your account becomes superfluous because your contributions are so relatively small? Or maybe that never happens?

If I use a tax-deferred account and assume a 5% return for the sake of simplicity, I'm getting that the "break even" point where my contribution equaled my investment return should be around $360,000, assuming I put in the (2015) max of $18,000/year. And for a Roth earning 5% with a $5500 yearly contribution, it should be around $110,000. Obviously my return could be way off, but assuming it wasn't, am I calculating the break even point right? So if your account earned nothing, you would reach that point in 20 years, or longer if your return was less (ex. 25 years for 4% return).

Thanks, and I hope these questions make sense.

Interesting question, but what is your definition of dwarf? To me, it would be like an 8 to 1 ratio. You calculated the tipping point. I'm past the tipping point, but never thought about changing anything.