I’m in my 40s and have millions of dollars but my NYC expenses have me stressed about money

Is it possible to have $30 million and still feel like you don’t have enough money? While it may seem hard to believe, this is a situation that a Redditor is in right now. The original poster (OP) is in his 40s and has a household income of around $2 million. He and his wife initially planned to retire once they reached this point but now think they may need $50 million to have enough of a cushion. 

So, should the Redditor keep working to hit his $50 million target, or will the $30 million he already has be enough?

Take a look at the numbers to see if your savings can fund your spending

While the OP has quite a bit more money than most Americans, the process for determining if he has enough doesn’t change. He’ll need to compare his spending with the income his investments can produce at a safe withdrawal rate to determine if he can retire now or must keep saving.

So, let’s take a look at his spending first. He explained that he currently spends:

• $60,000 to $100,000 on his property taxes, insurance, utilities, and maintenance. 
• $200,000 on private school tuition, camps, and extracurriculars for his three children
• $30,000 for two car payments, gas, and insurance
• $60,000 for child care, cleaners, and helpers
• $50,000 for food for four (or more if the grandparents come for an extended time)
• $50,000 on “shopping”
• $150,000 annually on travel including business class seats for the kids and grandparents who come along

He’s also anticipating that he will need $40K for health insurance one he leaves work. 

This adds up to a total of around $680,000 in spending. The OP’s net worth of $30 million includes a $5 million primary residence which he’s excluding from his calculations, so he has $25 million invested. He assumed a 4% withdrawal rate, which would give him $700K after taxes — so he has a little bit extra but not much. 

Does the OP have enough to retire?

There’s one big issue with the OP’s projections immediately. He is assuming a 4% safe withdrawal rate, but Morningstar experts recently revised their recommended withdrawal rate down to 3.7%. Since life spans are getting longer and projected future returns are lower, 4% may no longer be safe. If the OP can only withdraw 3.7% of his $25 million instead of 4%, he’d generate somewhere around $647K a year from his savings after tax – which is below his desired spending amount. 

Now, some of the OP’s expenses aren’t going to last forever. He isn’t always going to need $60K for child care on top of $200,000 for private school tuition. He also certainly could make some cuts, perhaps by having some of his family members fly coach when they go on trips instead of paying for everyone to go business class as he said he currently does. 

However, if the OP does not want to make lifestyle changes and hopes to continue spending lavishly — perhaps by giving his kids large cash gifts once they are out of school, then he is very likely going to need to invest more money.  While a $30 million net worth is a lot, spending $680K annually is a lot too — and a truly substantial nest egg is needed to make that lifestyle sustainable over the long haul.