With a 6-year-old in public school, can I quit my high-paying job without downgrading our lifestyle?

A 48-year-old Reddit user is wondering if he’ll be able to quit his job soon to spend more time with his family, as he has a genetic predisposition to heart disease and wants to stop working sooner rather than later.

He has a $2 million home with $4 million left on the mortgage, and the home has high carrying costs but he wants to stay until his 6-year-old son graduates from high school because living in the home provides access to a good public school. 

So, does he have the money to stop working and start enjoying time with his family, or will he be cutting it too close with his finances?

Running the numbers is key to deciding whether retirement is possible 

To determine if he can continue to fund his lifestyle with no downgrades if he retires, it’s important to look at the investments he currently owns. Right now, the Redditor explained that he has:

• A $2.8 million in funds and stocks 
• $700K in bonds
• $1.2 million in retirement accounts
• $100K in Bitcoin
• $20K in T-bills
• $120K in a 529 account for his son’s education

The family’s living expenses are $200,000 per year, so in order to be able to retire, his investments would need to produce that amount of income. He shouldn’t count the 529 account since that money is earmarked for college and not to live on, which means he has around $4.82 million to work with. If he maintains a safe 3.7% withdrawal rate, then $4.82 million in investments could produce $178,340 in income for him.

That is not enough to continue to spend $200K a year, much less to absorb any increase in spending that could become necessary to cover his family’s healthcare expenses once he stops working and no longer has an employer-provided benefit. 

Having a high net worth doesn’t mean you can retire early if you spend a lot of money

While having $4.82 million saved might be enough for some people to retire, it’s not going to be enough to consistently fund the expensive lifestyle that the Reddit user is currently living.

When you have high spending needs, like spending $200K per year, you need to really make sure that you have a lot of money invested in order to be able to continue spending. Specifically, at that safe 3.7% withdrawal rate, the poster would need to bring his savings up to a little over 5.405M — or perhaps even higher if he wanted a buffer instead of cutting it close. 

The good news is, he’s not too far from that, and he said he is earning close to $1 million per year right now, so if he works and saves diligently for another year or so, he should be able to get where he needs to be. That’s not a huge sacrifice to make. 

Ultimately, his best bet may be to talk with a financial advisor about the current amount he has invested, as well as about his spending goals for the future, so that he can ensure he’s truly ready to leave work before he retires. With the right professional advice, he can make sure his money is invested in an appropriate mix of assets before he stops working, and ensure that when he finally quits, his family will be able to maintain their comfortable lifestyle without being worried about the money running dry.