We’re in our mid-30’s were making over $1 million annually but my partner just lost her job

A Reddit user with a big income — but with big spending needs — turned to the Internet to ask what to do when his partner lost her job The original poster (OP) explained that their income was pretty variable, as the couple earned $700,000 in 2022, $900K in 2023, and $1.2 million in 2024. However, with the OP’s partner losing her job, they expect to cap out at around $700,000 again and any extra will be treated as an unexpected win.

Their goal is to be financially independent so they don’t have to worry about a job loss again. However, they are currently spending around $354k and he isn’t sure if they’ll have to make changes to that in order to be able to save enough to get that independence they crave. 

Is cutting spending going to be necessary?

To understand if they need to cut spending, it’s essential to take a look at where they are starting from, and what goals they are trying to achieve.

They currently have $2.4 million in a brokerage account and $1.36 million in retirement plans. They also have $100,000 in cash, $30K in an HSA, and $50K in a 529 plan. They own a rental property that brings in $750 per month and they owe $270,000 at a 2.75% interest on that property. They also owe $1.1 million on a mortgage for their $2.1 million house with that mortgage at 6.1%. 

In order to maintain his $354,000 in spending, he would need a nest egg of around $8.85 million assuming he followed the 4% rule to withdraw funds. Since he will need to add health insurance costs if he stops working, and since he’s hoping to be financially independent at a young age and may want to opt for a more conservative 3.7% withdrawal rate instead, he may want to aim higher and set a target of around $10 million to give him enough to maintain his spending plus add insurance costs at the lower withdrawal rate. 

Since he’s starting from around  $3.89 million invested, not including the 529 plan, if he invested just about $5,000 per month at 10% average annual returns, he could end up with $10 million in nine years. With a $700,000 income and current spending of around $354K, investing $60,000 a year should be more than doable. In fact, he may be able to invest around $100K a year after accounting for his taxes and spending, which would put him at $10 million almost a year sooner. 

You can spend a lot with a big income — but the more you save the better

In the OP’s case, the loss of his partner’s job isn’t a huge problem because the couple has a solid start toward building wealth and is still earning a lot of money. They don’t necessarily need to make any changes to their spending because they are already living well below their means — which isn’t too hard to do when you’re earning $700K a year. 

Of course, just because the OP can spend $354,00 a year doesn’t necessarily mean he should. With his partner losing their job, their income is now less stable since it is coming from one source. Committing to spending a large amount of money can make life complicated in the event of a job loss or serious pay cut. If the OP really wants to get into a position where he is financially independent and doesn’t need to worry about that, cutting spending to save more would be helpful both because he’ll build his nest egg faster and won’t need such a large nest egg. 

A financial advisor can provide invaluable guidance on how to balance spending and saving so the OP can prepare for early retirement while still maintaining his financial obligations today.