My horses cost me $20k a year — can I still retire early and keep my passion?

A Reddit user focused on retiring early recently asked an important question. The Redditor described herself as a “horse girl,” and said that her horses cost her $20,000 per year. She’s hoping to pursue the fatFIRE lifestyle, which stands for Financial Independence Retire Early with a fat nest egg. However, she’s worried that such an expensive hobby will make it impossible for her to achieve her dream. 

So, can the Redditor still keep her beloved horses while being able to retire at a young age? Let’s take a look at the details. 

What does it take to retire early with an expensive hobby?

Retiring early always requires a big nest egg if you want to be comfortable, as it comes with a host of costs. You must be responsible for your own medical insurance until you reach Medicare age, support yourself entirely without Social Security until you’re old enough to be eligible for benefits, and make sure your money will last a lifetime — and that’s all without having to fund a $20K per year hobby. For someone with such a luxury indulgence, having a huge account balance before retirement will be even more important.

The good news is, that Reddit user has a lot going for her. She is 27 years old, earning $105K per year after taxes, and has no kids. She also has $1.2 million in her brokerage account, $50,000 in a 401(k), and owns a plot of land worth $1.5 million that she leases to a farmer who grows soy. Horses are her only real expense outside of the basics since they take up all of her time when she isn’t working. 

Having $1,250,000 invested already across brokerage and 401(k) accounts has already set her on the path to having a substantial amount of money at a young age. Even if she never contributed another dime, she’d have over $5.2 million in 15 years when she’s 42, assuming a 10% average annual return — not including the inherited land. This should be more than enough to fund her lifestyle, including her horse habit. 

Why is the Redditor concerned about her ability to enjoy her hobby?

That may seem odd to anyone who is already retired with far less money than the poster has. The issue is, though, that the Redditor follows the FatFIRE ideology. Those who set this goal usually aim to have a really large investment account balance. In fact, although the specifics vary, people in the FatFIRE community often throw around numbers like $10 million or so. 

Still, even with a plan to retire early and an expensive habit, it’s important not to overestimate the amount of money that you’re likely to need as a retiree. The poster said she had an annual income of $105K currently. If she were to sell the $1.5 million land and add that to her $1.2 million already invested, her $2.7 million nest egg would produce around $99,900 in annual income at a pretty safe 3.7% withdrawal rate. She already has enough to come close to replacing the income she has — which is funding her lifestyle just fine. 

Rather than getting hung up on an arbitrary number or trying to adhere too closely to any particular financial philosophy, this Reddit poster, and others like her, should run their personalized calculations to figure out their needs and set realistic goals based on their projections. A financial advisor with knowledge of the situation can make this process easy and can help create goals that make good sense.