Personal Finance

My wife and I have stashed over $5 million after working for over 20 years - can we pull the plug and retire?

Marc Guberti

Published: January 8, 2025 1:44 pm

A couple is thinking about retiring early after accumulating more than $5 million in their investment accounts. That doesn’t include the couple’s $900,000 in extra funds and $2 million in home equity. They shared all of the details in a Reddit post.

The husband is 48 years old while the wife is 43 years old. They have two children in middle school and spend $187,000/yr in the Bay Area. He calculating that following the 4% withdrawal rule would give them $234,000 per year.

Is it possible for this couple to pull the plug and start their retirement early, or is it better for them to work a few more years. I’ll share my thoughts, but it’s good to speak with a financial advisor if you can.

Expenses Will Likely Go Up

The math makes it possible for the couple to retire early. They would end up with roughly $200,000 in post-tax income if they rely on withdrawals, allowing them to cover current expenses. It’s also possible that their portfolio continues to grow, giving them more flexibility with the 4% rule.

However, expenses also tend to creep higher over time, and the bills will go up if the couple plans to cover their children’s college educations. Expenses can also jump up if they intend on putting their children into a private high school.

Even without the children going to expensive schools, costs tend to increase over time. Inflation typically holds steady at 2% per year. 

Work Just a Few More Years or Step Away?

The Redditor and his wife have different opinions about when it’s good to step away from their careers. The husband is ready to leave now, while the wife wants to continue working for another four years. It’s unclear if this four year arrangement means that only she wants to work or if she believes they should both work.

However, this situation becomes more complex due to a history of family health problems on the husband’s side. He doesn’t want to waste away his healthy years in a cubicle since he’s worked so hard to put his family in a good financial position. 

Working for another two years would make the husband 50 years old, while the wife would be 45. Part of the reason she may feel less prone to pulling the plug is that she is a few years younger. Plus, working for two additional years can help the couple see how their expenses will change once their children enter high school.

They have the finances to retire, but two additional years of work can add some more padding for college tuition and unexpected expenses. Furthermore, the husband would be 50 at that time, giving him time to enjoy the retirement lifestyle during his healthy years.

Life After Work

The moment you retire, you have to find new things to do that will give you a sense of purpose. Getting more involved in the local community can replace the social interactions the couple will lose from work. Granted, some people don’t miss their workplace conversations, as it depends on the culture. However, it’s still good to know what you will do.

Some people who retire early end up going back to work because they don’t have much to do after the initial honeymoon period. It’s also good for them to consider if they want to consider living in the Bay Area. They should stay put until their children graduate high school, at the minimum. However, when they get older, they may decide to move to a more affordable area or downsize. Either of those decisions will give their nest egg more mileage, which could support an early retirement with their current numbers.