We’re in our mid-30s with almost $3 million saved – are we realistically on track to achieve our financial goals?

A Reddit user with a stay-at-home spouse is trying to determine if he is on track to retire early. He is 34 now and hoping to leave work between the ages of 45 and 50. The couple has a three-year-old and is hoping for two more children. 

His current net worth is $2.88 million, excluding his 529 plan and real estate. This includes $37K in cash, $620K in a 401(k), $70K in an HSA, $762K in Roth IRAs, and $1.355 in taxable brokerage accounts. He also has a $700K home that he owes $560K on, a rental property that generates $1,350 per month in profit, $28K in a 529 plan, and makes $240,000 per year. His wife makes $50K but wants to quit in a year. He also wants to make sure he can pay for college for his kids. 

So, is he going to be able to retire in a little over a decade as he’s hoping for? 

Can the poster retire early as planned?

First things first, it’s helpful to see how much his current savings would turn into over the next 10 years — even without additional contributions.  With $2.8 million already invested, if he earns a 10% average annual return, our compound interest calculator shows he would end up with around $7,262,478.89. 

Assuming he followed a 3.7% withdrawal rate, this would give him $268,712 to spend. He said he is currently spending $120K a year, so even if his spending more than doubled over the next decade once he adds some extra kids and after accounting for inflation and health insurance, he’d likely be in a good position to retire. And that’s without adding any extra contributions. That’s also not taking into account the money he will get from his investment property, which should provide even more of a cushion for him. 

The Reddit user should get advice from a financial advisor to stay on track

Although the poster probably wouldn’t have to invest much extra money over the next 10 years to retire at his chosen age, he’s only spending around half of what he earns, so he should keep saving and growing his wealth.

The key is going to be deciding where exactly his money should go since he will want to have a good amount outside of retirement accounts to support himself until he can access his 401(k) and IRA. He’s also going to need to increase his college savings substantially if he wants to put three kids through college. 

Paying off his mortgage before retiring early could also help him to ensure that he can afford to live the lifestyle he wants as a retiree — although investing should be a higher priority since his interest rate is relatively low and he could likely earn a higher ROI by putting his money into the market. Still, going into retirement with no debt could be a huge benefit that allows him to live on less. 

A financial advisor can help him to decide how to allocate his funds among all of these different priorities so he can accomplish all of the goals that are important to him. With the right professional advice, he should easily be able to reach his early retirement goal, enjoy his family, and support his wife’s plan to stay home with the kids in the process.