Personal Finance

"I used to be very frugal": Man in his 40s spends $700k a year and wonders if he can retire now

David Beren

Published: October 14, 2024 10:30 am

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• This individual works a high-stress job but earns millions. 
• His net worth is over $20 million. 
• The family’s annual spending is growing out of control. 

As soon as you jump into the r/fatFIRE subreddit on Reddit, it’s almost instantaneously an opportunity to re-consider your savings habits. Nowhere is this more true than in this post, where you have a 46-year-old male with a current net worth of $21-22 million and debating whether to continue working. 

While his current role is undoubtedly fruitful financially, it’s also a source of significant stress. With a baby on the way, it’s almost as if the writing is on the wall to take a step back and reconsider what he’s doing for work with plenty of savings at his disposal. 

What I love about this post is that leaving a job is hard, even for those with significant wealth. More importantly, work-life balance impacts everyone, including the wealthy. 

The Scenario 

What you have with this Redditor’s post is a unique scenario, even by this subreddit’s standards, as the net worth is already pretty high. From the information the Redditor provided, he is a 46-year-old male who works a high-stress job and has the world’s worst boss. We know he also has one client who contributes the bulk of his income and is incredibly difficult to deal with. 

His wife does not work, and they have their first child on the way while living in a very high-cost-of-living area (VHCOL). His annual income is anywhere between $2 and $2.5 million, with a total net worth of around $21-22 million, which is comprised of the following: 

• $10 million in cash or cash equivalents
• $2 million in “quasi-liquid” investments like a retirement account
• $2 million in illiquid investments 
• $8.5 million in real estate investment property (all paid off). 

His primary residence is rented, while the family owns another house worth $1 million, which is also paid off. The family’s annual spending is between $600,000 to $700,000. He emphasizes that he used to be very frugal with humble beginnings and had a roommate until he was 36, which allowed him to save quite a bit of money. It wasn’t until his employer went public in 2022 that he made a ton of money and could best afford $130,000 annual rent, $150,000 in food, and around $100,000 in entertainment. 

The Recommendation 

Knowing that a child is on the way, the family has a few choices, and the good news is that they have enough money to handle all of them. I am not a financial advisor, so I can’t give financial advice, but I think if he’s worried about missing time with his children, it’s time to step away from work. 

As a working parent, I know how easy it is to miss those early days of childhood that you can never get back. Knowing this, his idea of considering a “total reset” of leaving for another city and changing their whole way of life sounds smart. 

The reality is that with his total net worth, he can easily retire at this point in life or, at the very least, slow down how much he is working. I agree with many commenters in this post, who indicate that he should consider opening up his consulting firm and growing it while limiting how many clients he is taking on. 

Given that he’s still unsure if he wants to give up working, the best way forward is to find something he enjoys doing completely. He’s in the right financial position to find a job that allows him to have a better work-life balance. 

The Takeaway

Undoubtedly, this individual is in a well-off position and can slow down his way of living. While the family is overspending, they can still enjoy life while cutting back. Spending $100,000 annually on entertainment is crazy, so cutting that back feels like a good first step. The same goes for dropping the $130,000 a year he’s spending on rent. 

He can work to cut his annual costs to $400,000 or even $350,000, which would undoubtedly allow him to live at a slower pace. Of course, what’s important is that if he keeps up his high-stress job, he’s one health issue away from being forced out of work and not of his own making.