Personal Finance

I'm 34 with a $5.5 million net worth currently looking to switch our two income family down to a one income family - can we afford it?

Christy Bieber

Published: January 14, 2025 8:55 am

If you have $5.3 million and three small children under the age of five, can one parent afford to stay home with the kids? This was a question posted on Reddit recently.  The original poster (OP) said that his household income has been around $500,000 for six years but will fall to just $220K in 2025 if his wife stays home as planned.

The OP has 60% of his money in stocks, 8% in fixed-income investments, 6% in crypto, and 6% in cash and money market accounts. His goal is to end up with $10 million invested. The family spends $160,000 currently, which means that they likely won’t be able to add to their investments once his wife quits work to stay home with the kids — but they also won’t need to draw from them either.

The good news is, his net worth should keep growing due to returns from his current investments. Still, he’s unsure if they should move forward with this plan, even though both spouses agree it would likely be best to have a parent at home with a five-year-old, two-year-old, and newborn. 

So, can mom go ahead and quit, or is that a bad move? 

Once you have enough invested, your assets can grow by themselves

While the OP may be worried about the income drop when his wife quits work, the reality is that he likely has no real reason for concern. With a net worth of $5.3 million, even if you remove the 20% of his net worth that’s in real estate, he has around $4.24 million in investible assets.

This money will keep working for him, even once he stops contributing anything additional to it. And it’s a lot of money. The returns that the $4.24 million earns will help his account grow very quickly. In fact, if he earns a pretty reasonable 8% return, his investment would make him $339,200 this year. As this money is added to his account, he will make even more next year as he’s starting with an even larger invested balance.

Because his money is earning so much on its own, he doesn’t really have to contribute more money to hit his goal. The $4.24 million in invested funds would hit $10 million in a little over 11 years, assuming that 8% return.  This is only around two years longer than if he’d been contributing $100K per year the whole time.

So, taking around two more years to hit his $10 million goal is likely well worth it to have a parent at home during those few precious years before the kids are in school all day. 

Investments can help you buy your freedom — and it’s up to you to decide how to use it

This couple has clearly done everything right to get to a net worth of $5.5 million by age 34. They are in a great position to enjoy the financial freedom they have worked hard to acquire.

While the traditional path is to work towards financial freedom and then retire, there’s no rule that says this must be your life path. Saving and investing a lot of money gives you the ability to structure your working life in a way that works for you. For this family, that could mean staying at home with the kids for a while. While his wife could always go back to work later, time with small children can never be recovered so his decision here seems like a no-brainer.

Of course, the couple may want to talk with a financial advisor to ensure they are still on a sustainable path and to get some advice on the best approach to building their ideal net worth. Still, reaching $10 million before age 45 will be a great place to be, and his wife and kids will have years of great memories under their belt by the time that day arrives.