Personal Finance

I'm 42 with $2.5 million in index funds and we're not sure how much we spend per year and need help getting organized

Kristin Hitchcock

Published: November 21, 2024 12:17 pm

24/7 Wall St. Key Takeaways:

• Wealth is only part of the equation of financial independence. Saving for retirement, starting a family, and balancing work and life are all important!
• Financial independence happens when your money works for you, not the other way around.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

Financial independence retire early (FIRE) is a goal many of us chase, but it often comes with trade-offs. When you focus on retiring early, you inevitably have to make some sacrifices.

One Reddit post emphasizes this clearly. This 42-year-old Redditor, with $2.5M saved and a young family, exemplifies the tension between financial security and enjoying life in the present. He’s trying to decide whether to slow down at work and stretch out the timeline on his financial goals or buckle down to increase his income.

Many people reach a similar crossroads somewhere in their lives. Here are my suggestions for them:

(Remember, this is just my opinion and not financial advice. A financial advisor can provide you with personalized suggestions if you’re at a similar crossroads.)

1. Prioritize Mental and Physical Well-Being

Grinding for years takes a serious toll. The poster discussed their three nervous breakdowns along the way, and I’ve covered professionals going through serious burnout before!

It’s important to remember that money is important, but happiness and health are priceless! You can’t do anything if you aren’t taking care of yourself first. You are your biggest asset.

2. Reevaluate Your “Enough”

The Redditor has estimated that his family spends about $85K annually, and he plans to withdraw around $120K/year after he retires (not counting taxes). He is already in a very good position with $2.5M in investments.

While he does feel like he has to save tons to reach his retirement goal, I honestly don’t think the numbers show that. He could easily save less, let his current investments grow, and enjoy a relaxing retirement in a decade or so.

3. Quality Time with Family Is Priceless

You can always earn more money. However, you cannot earn more time. The Redditor’s wife suggests slowing down so he can spend more time with their family. He has young children, making these months even more precious.

As hard as it is, I suggest not letting the pursuit of “more” rob you of meaningful family time. Building memories is more important than building wealth.

4. Define Your Strategy

The Redditor may want to take another look at his retirement strategy and financial goals, especially if he plans to let off of the gas a little bit. This poster might find partial FIRE—working less but still earning a steady $150K—could provide the security he craves while reducing stress.

It wouldn’t technically be a retirement, but it would be far less stressful than what he’s doing now. Plus, many individuals who can retire early find that they still want to work.

Early retirement doesn’t have to mean quitting cold turkey. Now might be a great time to start transitioning into an easier work schedule.

5. Break Free from a Scarcity Mindset

The poster also emphasized that he has a scarcity mindset and often works more out of anxiety. He’s worried about being financially secure and having enough, which drives him to work even when he technically doesn’t need it.

These emotional considerations are just as important as the numbers. I’ve covered many posts revolving around people reaching financial independence and then not feeling confident enough to actually retire.