Personal Finance

We're in our mid-30s with $5 million in the bank and no debt - can we afford to stop working?

Marc Guberti

Published: February 1, 2025 9:46 am

Having a large net worth doesn’t guarantee that you can retire. While a Redditor has a net worth of $5.5 million, they aren’t sure if they can retire quite yet. The Redditor posted financials and shared their situation in the Chubby FIRE Reddit group. 

They have two kids under four and spend $13k-$15k per month. Daycare costs $2.5k per month right now, but this won’t be an expense for much longer. The Redditor lives in a VHCOL area and is wondering if it is too early to FIRE.

I’ll share my thoughts, but it is good to speak with a financial advisor if you can.

Using the 4% Withdrawal Rule

Many investors use the 4% withdrawal rule to tap into their retirement portfolios. The idea is that the retirement portfolio grows by at least 4%, resulting in a net positive even after you withdraw from it.

The couple has a net worth of $5.5 million, and that does not include their fully paid-off house and cars. An annual 4% withdrawal rate results in $220,000. A more conservative 3% withdrawal rate yields $165,000. 

While a 4% withdrawal rate results in a sufficient $18,333 per month, a 3% withdrawal rate only results in $13,750, which is cutting it a little too close.

It’s better for this couple to use the conservative 3% withdrawal rate as their gauge since they are in their 30s. If the couple was in their 60s, it would be easier to follow the 4% withdrawal rate.

Anticipating Future Expenses

Although daycare expenses will go away, it’s good for the couple to consider other expenses. College tuition is a big one, but they have front-loaded their children’s 529 plans. Those 529 plans are not included in their $5.5 million net worth.

However, costs should gradually increase over time due to inflation. Your kids might also take up more expensive hobbies as they get older. These expenses won’t be astronomical, but it’s a good idea to anticipate how monthly costs can change over time.

Do You Enjoy Your Job?

35 is a young age to retire. You have many years of life ahead of you, and work offers a sense of purpose. People who retire at 35 often take that route because they have made millions and can’t stand their jobs anymore.

If the Redditor enjoys their job and finds the schedule manageable, it makes sense to stay put. It’s easier to make an annual salary at a job that you already have than it is to try to re-enter the workforce 10-15 years later.

For the couple to already be this well off, I imagine if they work for another 5-10 years, they will have a $10 million net worth. That’s my guess based on compounding returns from their $5.5 million portfolio plus their income. 

If you want to stay home with the kids, it may be a good move for one of the spouses to retire or opt for a part-time job. It’s a little too early to FIRE right now in a VHCOL area. However, I can see the couple reaching a higher net worth in a short amount of time, which makes FIRE at 45-50 very plausible.