Some people think about walking away from work long before they reach the traditional retirement age. This option is usually reserved for people who have accumulated vast fortunes during their working years, including a Redditor in their late 40s.
In a recent post on the FatFIRE subreddit, the individual mentions they have a $15 million net worth and earn about $2.5m-$3.0m per year at their W-2 job. The individual is married with three kids and lives in an MCOL area. One of those kids is in college, while the other two are in high school.
He’s considering an early retirement to pursue more challenges. He still wants to work but isn’t interested in a full-time corporate role anymore. The Redditor needs to spend $325,000 per year to maintain their lifestyle.
What do the numbers say? Can this Redditor retire now, or does it make more sense to stick it out for a few more years? I’ll share my thoughts, but it’s always good to speak with a financial advisor if you can.
Is a $15 Million Portfolio Enough?
A $15 million portfolio is likely enough for the Redditor to maintain their current lifestyle. The Redditor only has to withdraw 3% of their portfolio each year to end up with $450,000 in pre-tax withdrawals.
Achieving a 3% annualized return is very feasible, so it’s likely that the Redditor never runs out of money. Furthermore, with one kid in college, it’s possible that some of his costs go down as his children get careers.
Sticking It Out for a Few More Years
However, it still may not be a good idea to leave right away. The Redditor even entertains this, wondering if he should wait until they have a $20 million portfolio before retiring.
It’s important to consider a few things before walking away. First, what are you going to do when you retire? Some people leave their corporate jobs only to become bored by the amount of free time they have after the honeymoon phase.
The Redditor has expressed a desire to work, even if it’s for a lower pay. However, it’s good to have an idea of where you are going before you take that leap.
Also, do any of your children want to pursue the career that you have? Holding onto the job will give your children a distinct advantage and can help them climb the corporate ladder faster. It seems like the Redditor would have to stay on board for another 5-10 years for this scenario, but not everyone may want to do that. The Redditor has already worked very hard for the type of money that can produce generational wealth.
Have More Money with Fewer Years to Stretch It
Staying at the corporate job for a few more years ensures some additional years of $2.5m-$3.0 million. The portfolio will get bigger, and the Redditor can still use their salary to cover living expenses.
Waiting a few more years before touching the portfolio allows it to grow much more. While each person is different, it’s possible that the Redditor still considers 55 as a good year for retirement. In that case, they have a higher net worth, and they are far more unlikely to outlive their net worth. They could even withstand a stock market crash at that point and be financially stable.
The Redditor can then assist their children with getting the same career through their connections if the individual desires. However, if the Redditor leaves now, they’ll lose touch with key connections and not make any additional connections that can make it easier for the children.
It makes more sense to ride it out for now. The Redditor has mentioned seeking a new challenge, rather than the job being overwhelming. Many corporate workers leave because they are burned out, but that doesn’t seem to be the case for the Redditor. Sticking it out reduces long-term financial risk, and it may not be easy to find another job that offers the same pay and pace.
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