Personal Finance

I'm 50 with a $12.5 million net worth and plan to retire in 5 years—am I covered from every angle?

Marc Guberti

Published: January 14, 2025 8:43 am

A Redditor recently posted in the Fat FIRE subreddit about his plan to retire in five years. He has a net worth of $12.5 million at 50 years old and has paid off his house in an HCOL area. 

Furthermore, he’s single without kids but is in a serious relationship, although he doesn’t plan to marry. He also has a secondary home in a state with no state income tax. He plans to sell the property in the HCOL area for a more affordable residence soon.

These are some of the other numbers to keep in mind:

• $4.3 million in investment accounts
• $1.4 million in retirement accounts
• $1.5 million in equity from his employer
• $2 million primary residence
• $2 million secondary home
• $800,000 in a rental property
• $250,000 angel investments
• $540,000 boat

He currently spends $22,000 per month and will cut it down to about $16,000 per month after he sells his primary residence. He doesn’t spend excessively on travel or eating out, but he puts a lot of money into his boat and fishing. 

He feels like he is covered from all angles and can make the move after five years. I’ll share my thoughts, but it is always good to speak with a financial advisor if you can.

Following the 5% Rule

The Redditor isn’t sitting on debt and can withdraw a lot of money using the 5% rule. His base salary already covers his annual spending, while his bonus gives him extra cash to spend on boating and other hobbies. 

His financial advisor suggested that he can have $300,000 in after-tax spending money if he withdraws 5% of his portfolio each year. That gives him enough money to cover his current living expenses. He can also lower his withdrawal rate to 4% when he moves out of the HCOL area.

His investments are likely to grow at more than 5% each year. The S&P 500 has delivered an annualized 13.9% return over the past 15 years, based on the SPY ETF’s performance. The Redditor can also get more defensive and opt for dividend stocks and CDs to generate respectable yields. 

Spending Will Decrease Over Time

The 50-year-old has mentioned that his spending will decrease over time. Lower monthly expenses will allow his money to last longer.

It’s also good to keep in mind that the individual will eventually receive Social Security distributions, but he can retire long before he’s eligible for Social Security. It serves as a nice bonus that can help him reduce his annual withdrawal rate and still receive the same amount of cash each year. 

The only spending that may go up is health-related expenses. Maintaining a healthy lifestyle is the best way to keep those costs low, and the Redditor already prioritizes fitness, which gives him an edge. 

The Redditor Has Fewer Obligations

A $12.5 million portfolio is enough for a family with a few children to retire, but the Redditor is currently single, and heplans to stay that way. He doesn’t have to worry about paying for other people’s expenses, and he can decide at any point if he wants to spend more or less than his current budget.

He only has to cover his own groceries, and he doesn’t have to worry about college tuition or other expenses that families have. The fact that he doesn’t have any debt makes it even better, and since he’s still going to work for a few more years, his portfolio can still grow.