Personal Finance

I'm 40 and spend about $250k per year - I think I have enough saved so I can finally retire early

Christy Bieber

Published: January 20, 2025 7:13 pm

A Reddit poster asked recently if they could retire despite their high spending. The original poster (OP) said he has turned 40, currently spends $250,000 per year, and has $19 million invested, which he thought should be enough to make his dream of leaving work early possible. 

While at first glance it seems obvious that he should be able to quit and live on his savings while continuing to spend $250,000 annually, there were a few more caveats to his story that made things a little more questionable. 

Can you retire early as a high-spender?

If the Redditor kept his $19 million invested and only needed $250K in income, it would be a no-brainer to say he could stop working at 40.

At a safe withdrawal rate of 3.7%, the OP would be able to produce $703,000 in annual income which is a lot more money than the $250,000 he says he’s spending. He’d easily be able to afford the extra costs that early retirement brings, like health insurance without an employer to subsidize the premiums. 

However, the OP also wrote that he was planning on making some big lifestyle changes. Specifically, he indicated that he wanted to buy a $6 million home. This would bring his $19 million in liquid assets down to $13 million and most likely significantly increase his expenses because of insurance, property taxes, utilities, and other costs of owning such an expensive home. 

With $13 million invested after accounting for the house, the income his accounts could safely produce would go down to $481,000. That most likely should still be enough even with the big new house, but there were a lot of other expenses he was uncertain of including the costs of schooling for his three children.

The new housing costs, plus the additional school expenses, plus added health insurance premiums after he quits work all combined with the $250K he’s already spending, might put him in a position where there isn’t really enough breathing room in his budget to feel comfortable quitting work so young.

The higher your expenses, the harder early retirement becomes

If retiring early really is a top priority of the OP’s, buying a $6 million home and committing to three expensive school tuitions may not be the right move.

Often, there is a tradeoff between retiring early and living lavishly.  The more big expenses that you commit to, the higher your nest egg needs to be for you to retire– and the more time it will typically take to save up enough. This is especially true if you are counting on your invested funds to support an expensive lifestyle for decades to come.

Now, the OP may still be able to make things work considering $19 million is a lot of money to start with, even if you are planning on spending a lot on a house. But, before he decides to leave work, he should talk with a financial advisor to run the numbers and make absolutely certain his spending will be sustainable if he retires at 40. 

The financial advisor can offer him advice on whether retirement is in the cards now even with the new home purchase, or can work with him to make alternate plans such as forgoing the big house or working a little longer to save more.

The advisor can help him define his goals, choose between competing priorities, and make the best possible decisions to preserve the financial security that his $19 million should easily buy him.