Personal Finance

I'm in my mid-50s and have $7 million saved retirement - what can I do to successfully transition into retirement-mode?

Joey Frenette

Published: December 3, 2024 10:30 am

It can be pretty tricky to transition into a retirement lifestyle, especially if you’ve been a career-oriented workaholic throughout your career. Undoubtedly, it’s not just the drastic lifestyle change that could be a shocker for many early on. It’s thinking about the opportunity costs of doing nothing rather than continuing to make exorbitant sums of money.

Indeed, you don’t just bank $7 million without putting your nose to the grindstone, with 60-hour (or more) weeks and even working on the weekends. Though $7 million is far more than enough for retirement (heck, it’s even enough to retire a spouse or, in some cases, an entire family), it’s tough to check out when you’re in your prime working years, likely making significant sums of cash.

By retiring a decade or more earlier than the average (think one’s mid-60s), the doubts about making the jump can set in, especially if you enjoy your job and can’t imagine doing nothing all day. In the case of this Redditor who took to the r/ChubbyFIRE subreddit (with close to a $7 million nest egg, he should be in fat FIRE, in my opinion), they’re seeking advice on how to shift gears into retirement successfully.

In this piece, we’ll look at a few areas that such an affluent prospective retiree should be sure to ask themselves (and a certified financial-planning pro) before retiring. While such noteworthy points are worth considering, I do not view them as anything to get anxious about. If you’ve got a $7 million net worth, you’re not only ahead of schedule with an early retirement, but you may even be a few years late!

Key Points About This Article

• A $7 million sum can retire more than one person. Despite the hefty sum, transitioning can still prove difficult.
• This Redditor needs to hire a financial advisor and consider a transition plan if they’re having difficulty switching gears.
• Also: Take this quiz to see if you’re on track to retire (Sponsored)

Transitioning to retirement can be easier said than done, even with more than enough.

Their humorous post on “How to get fired?” suggests they’re trapped in a pair of shining golden handcuffs with a fat $200,000 annual salary. That said, they plan to take them off, but they just want to get the timing right as they plan their career exit. Indeed, formulating an exit strategy before handing in one’s notice is always a wise thing to do.

Most notably, they’re wondering how they should proceed with liquidating their concentrated stock position, uncertainties about health care once they’re off the workplace, and, perhaps most importantly, how to transition and if there are any other concerns in their blind spot.

Undoubtedly, a financial advisor can answer most, if not all, of these questions and then some. With millions of dollars in the bank, some pretty well-rated financial pros can help such a person address concerns and follow through with an action plan as they make the big move. Specifically, they’d be better able to answer the tax implications of liquidating company stock, given the specific details they’ll need before providing advice. Additionally, health insurance products may be worth consideration if their retirement coverage isn’t sufficient. Either way, such insurance products won’t make a dent in a colossus of a nest egg.

Though an adviser can help you take care of the specific concerns, one area that may still prove challenging is dealing with the sudden lifestyle change.

In essence, retiring from a high-paying career (especially one with grueling hours) and not having to do anything can be like going from one to zero. And though many early retirees become bored of retirement in a hurry, having a plan for your first year can be a terrific starting point. Indeed, a lack of daily structure is something many new retirees struggle with.

Stepping back instead of stepping away.

For a prospective retiree, it may make sense to “step back” rather than jump head-first into a full-blown retirement. Whether that entails working fewer hours at the same employer, going for a lower-paid but more flexible work-from-home job, or volunteering for causes, it can pay dividends to transition from 100% effort to 70% and then, eventually, to less than 25%.

In prior pieces, I praised the “phased retirement” strategy primarily because it’s a less rattling (and likely more sustainable) transition. So, instead of stepping away or getting “fired,” as their post put it, perhaps it makes sense to step back if they’re willing, able, and would like a bit more cash for the spoils.

For this prospective retiree, stepping back isn’t about supplementing their income (it’s more of a nice bonus!), as they already have more than enough. It’s more about reducing the shock from a swift transition.