Personal Finance

I'm in my mid-40s and have been able to save around $4 million - do I have enough to take some time off and reflect on what's next?

Joey Frenette

Published: November 29, 2024 5:45 pm

Many posters on the r/ChubbyFIRE subreddit are more financially flexible than they think. In the case of a poster in their mid-40s who has nearly $4 million banked, they’re wondering if it’s all right to take a bit of a mid-career break of sorts. Given they’re posting in the FIRE (financial independence, retire early) subreddit, it’s more of a late-career break as they wind down for a comfortable retirement several years before the traditional retirement age.

Key Points About This Article

• A net worth north of $4 million grants one a tremendous amount of financial flexibility. But taking time off or stepping back could come at the cost of millions more saved over the years.
• There’s no shame in taking a break in the midst of one’s career.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

Mid-career with a nice nest egg, seeking the green light to “cruise.”

With a respectable more than $4 million invested ($2.2 million in a taxable account, $1.6 million in a retirement account, and $300,000 in a 529), and some real estate (one primary residence with one rental property) that has a manageable amount debt remaining, I’d argue the high-income earner who’s pulling in half a million per year can afford to step back a bit or “cruise” into a more “chill” type of lifestyle.

As always, there are opportunity costs of taking on a less stressful, lower-paying job amid your prime earning years. By doing so, you’ll forego a lot of incoming cash flow. As noted in prior pieces, the time-for-money trade-off will vary among individuals. Everyone values time differently. As such, nobody else other than the individual can make the right call.

In any case, I view nearly $4 million worth of net assets as more than enough to be free to consider one’s options. In the case of this poster, they’re looking at potentially taking on a position that’ll pay a fraction of the amount ($100,000 annual income, down 80% from their lofty $500,000 income) but will grant them more time with family.

Indeed, it can be incredibly difficult to adjust to earning just a fifth of what you normally make. That said, if one’s lifestyle expenses are relatively modest and one hasn’t taken a liking to luxury goods and sports cars, such a hefty pay cut can work without having to eat into one’s lofty retirement accounts. Further, a $100,000 per year income (around the same as their annual expenses) is still pretty good, especially if there’s some passive income trickling in from the investment portfolio.

This poster has more financial freedom than they think. However, the longer-term risks are still worth consideration.

In any case, it’s my opinion that the well-off individual has the flexibility to shift gears backward and still achieve a chubby or fat FIRE type of retirement. Perhaps taking a few years off before stepping into a lower-stress, lower-paying job can also make sense, provided the poster will be able to get back into the industry without too much difficulty.

Of course, it’s impossible to tell how the job market will look in a few years. A potential economic recession, though unlikely, is still a possibility. In any case, I’d argue that there are enough assets in place such that difficulty re-entering the job market shouldn’t be too much of a concern. However, it may justify a downgrade in lifestyle (perhaps a less chubby version of FIRE) as the individual finally does gear up to retire early.

The bottom line

Indeed, $4 million seems like more than enough to fund a reasonably early retirement in most places. Still, there are some unknown variables that the poster should disclose to a personal finance adviser before they take time off.

Most notably, the poster’s children will be off to college in a couple of years. And the costs of tuition, dorm rooms, and all the sort are going to add up very quickly. Even if the poster plans to cover education costs, they still look to be in great shape. In any case, this millionaire poster has options and should look to exercise them, perhaps after consulting a qualified financial adviser who can crunch the numbers and give the green light.