Key Points from 24/7:
-
- This Redditor wonders if they are on track to have a $7 million net worth.
- The plan is to retire in the next 14 years or so.
- There is a question about how much to anticipate spending on health insurance.
As I tend to do while surfing Reddit, I jump into one of the FIRE (Financial Independence, Retire Early) subreddits and look for some motivation. When I stumbled on this post, it captured my attention in all the right ways.
What caught my eye was that you have two Redditors, 36 years old, married with one child, are closing in on a $3 million net worth. They want to do a gut check on where their numbers stand compared to their goal of hitting a $7 million net worth before calling it around 50. By all accounts, it sounds like they are doing everything right by making smart, aggressive investments, earning a good living, and not overspending.
Among other questions, they are trying to decide how best to approach health insurance post-retirement. They wonder whether the Affordable Care Act will still be around and, if so, if a roughly $1200 monthly cost would be reasonable.
Before I give my take, let’s break down the numbers this Redditor provided.
The Numbers
When this post went live in September 2024, their net worth was around $2.8 million. To better understand this, we can look at the specific information this Redditor provided.
Annual Income
|
Salary |
$350,000 |
|
Bonuses |
$100,000 |
|
Total Income |
$450,000 |
Assets
|
HYSA |
$100,000 |
|
Roth IRA |
$50,000 |
|
401K |
$1,200,000 |
|
Brokerage |
$700,000 |
|
529 (college program) |
$150,000 |
Home Equity
|
Current Value |
$700,000 |
|
Outstanding mortgage |
$250,000 |
|
Total Equity |
$450,000 |
Monthly Expenses
Based on their current living situation, they are paying approximately $14,000 – $15,000 per month in living expenses, including their $3,600 monthly mortgage payment. They plan to maintain similar spending habits post-retirement.
Some Observations
I can make some immediate observations from the information the Redditor highlights. The one I’m most familiar with, since I’m not worth almost $3 million, is the monthly insurance costs. As someone who recently explored the ACA program, I believe that estimating around $1,200 a month for a good plan might be low, and they may need to increase their expectations by a few hundred dollars.
It’s also important to know that their income level will be a factor in ACA costs and if they plan to draw the same amount of money as their current expenses. Around $180,000 annually is enough to kill any chances at subsidy help with ACA.
Healthcare aside, another observation is that there isn’t any mention of debt outside the mortgage. This observation is significant for those who want to maintain their lifestyle. This means they should be able to take the current equity from their home, invest it into a larger home, and still likely hold a similar mortgage cost.
As far as their overall retirement plan, I am not a financial advisor and have not run any of the math beyond what’s provided. They appear in pretty good shape, and I recommend maintaining their current path for the next 15 years or so. If they do exactly this, a $7 million retirement plan would be feasible if they could continue as they are now.
The biggest unknown may be school, as they have a four-year-old child. With $150,000 saved, this is likely only around half of what they might need if their child doesn’t attend a state school. In addition, this number doesn’t account for potential private school costs before college.
The Takeaway
When it comes to where this Redditor and his family stand, they seem on a solid pace to be precisely where they want to be. Barring any unforeseen market conditions, they might even be well over the $7 million mark by the time they hit 50. There’s a caveat: They don’t mention major expenses like traveling, but they could likely handle a trip or two a year. In other words, the way I see it, I see these Redditors as being able to maintain their lifestyle without worrying about a 9-5 every day.
The healthcare issue doesn’t seem all that major as we’re not talking triple or quadruple their expectations. Going from $1,200 to $1,500 or maybe even $1,700 with dental and vision shouldn’t stress their financial situation.
Ultimately, as successful as they have been with investments, they can also contact a flat-fee financial investor to create an estate plan and understand how risky they can be in order to grow past their $7 million goal by the time they hit 50.
Top Gaining Stocks
Top Losing Stocks