24/7 Insights

• This Redditor has a net worth of around $4 million. 
• His wife is eligible for full retirement benefits in 12 years. 
• It’s very unlikely they are ready to call it quits from working at this time. 
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

If something can be universally agreed on in the corporate world, we all want to get out of the workforce as fast as possible. It won’t come as any surprise to learn that corporate work can be grueling, and it’s not exactly an area where companies generally care about you beyond the amount of output you can provide. 

For this reason, we’re looking at this Redditor’s post on r/ChubbyFIRE and working through his situation. As a 41-year-old, he wants to exit his job as soon as possible before he goes crazy, a scenario which, again, is all too easy to understand. 

What I love about this post is just how relatable it is. As someone who has worked corporate jobs for over two decades, I completely understand this position on wanting to get out of this kind of work while you’re still young enough to enjoy life. 

The Scenario 

In this instance, we have a 41-year-old Redditor with a net worth of around $4 million. About one-third of this total net worth is in home equity. The non-residence assets are split, with about half being set in pre-tax retirement accounts. 

Married and with two small children, the family has a household income of around $550,000 and spends around $200,000 annually. The Redditor indicates the family is also saving around $200K, of which $60,000 is considered a pre-tax contribution. 

In this scenario, the wife will receive a pension of about $80,000 in 2024 and be eligible to retire in just over 12 years. The family owes about $600,000 on their primary residence and is paying around 2% interest, so the plan is to pay off the home completely by 2035. 

Last but not least, you have two children, ages 12 and 8, who already have $300,000 saved for college, a number not included in their net worth. 

The Recommendation 

Look, here’s the deal. This individual wants to be in a very specific financial situation in the next five years. He’s hoping to be able to support the family on a budget of $210,000 per year, which may be achievable but not yet. 

My take on this is simple, and of course, please note that I am not a financial advisor, so contact a professional for concrete answers on your financial future. That said, I firmly believe that wanting to retire at 45 or 46 will require a larger nest egg. You have to plan for the unexpected, which this Redditor does not mention, and I think it can’t be ignored. I also worry that he could wildly underestimate how much money is needed for taxes and college costs, which are more likely to be $300,000 per child, not in total. 

In addition, you have help to pay for a wedding, travel, help out with cars for the children, or any other big-ticket items that can arise as a part of life. The good news is that retiring young hopefully means you’re in good health, but it also leaves plenty of opportunities to find ways to increase your spending without increasing your income. 

We need to have this person consider staying in the workforce until he’s at least 50. As one Redditor points out, by 50, he will have passed the $5 million mark on net worth, of which half is investable and will earn interest. The alternative is lowering his cost of living and dropping his annual expenses well below the $200,000 mark, but I understand this is unlikely. 

The Takeaway

As someone who has spent so much time in the unforgiving world of corporate America, I want to get out. It’s soul-sucking in every way, but it’s also where this Redditor is currently earning a nice living. I think trying to retire before he is ready is very likely and will ultimately end up causing more stress on the family. 

In other words, he’ll be trading the stress of corporate life for kicking himself for retiring too early. This could mean re-entering the workforce, which will be an awful feeling. If this were me, and it seems like commenters agree with me, I would stay in the workforce for another few years before turning 45, add some additional savings, and retire closer to 50 when you hit your magic FIRE number. Until then, I think he’s selling himself short until he hits the right amount to live exactly as he wants. 

 

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