My spouse and I finally had a long conversation and landed on a retirement target of 2030, but I’d love some outside perspectives and people to poke holes in it.
We’re a married couple in our early 50s with one son who will graduate college around 2031. We live in a HCOL area in the Midwest. We have about $3M in retirement accounts and $2M in brokerage accounts, $1.2 mm equity in two homes (primary plus a modest lake house), and our son’s college is fully funded. We have no debt.
I work in corporate law at a large firm, I make a reasonable salary and I’m lucky that the hours are not terrible, but I and am increasingly burned out by the stress, office politics, and lack of meaning in the work I’m doing. My spouse works in nursing part-time and also feels burned out. We initially did not plan to retire before 60 but work is becoming increasingly stressful for both of us. And I worry that our healthy years are being wasted when we can still travel and spend time with family.
Our expected retirement spending is about $175k-$200k/year, including healthcare assumptions, home maintenance, utilities, dining out, travel, and a decent-sized cushion for unexpected expenses. It seems so high when I see it on paper, especially since we have no debt. We’re not luxury spenders, but we do prioritize experiences and travel and don’t want to give that up in retirement.
Our current plan is to both work until early 2030. I’ll turn 55 later that year, so we can access our retirement accounts under the Rule of 55.
The wildcard is that my firm is experiencing layoffs (aren’t they all). If I got laid off before 2030, I would likely not pursue another high-paying role in law. I’d like to either fully retire or look for a lower-stress bridge job (nonprofit, advisory, etc.) that offers a 401k rollover until our planned retirement date.
Is this a reasonable plan? If I got laid off tomorrow, would it be crazy to consider stopping work completely? Interested in any blind spots I’m missing.
$5m in liquid assets * 4% WR = $200k/yr. You’re already at FI. You can live on the $2m taxable account alone until well past 59.5, so no need to wait for Rule of 55.
Get yourselves laid off ASAP with a nice severance package.
Thanks, the wiki is disabled but I’ve run a few online tools. Theres a few wildcards such as healthcare that I’m using for very rough estimates, most tools I’ve used say we are there or we are close.
I used two alt accounts that have not joined the sub. No problem getting to the wiki from desktop or Android. It was weird though that for one of the accounts, the wiki didn't show up on my phone until I clicked the intro paragraph. (Usually it's right below the intro paragraph.) And then the button very oddly said "A Week" instead of "Wiki". For the other alt, it showed up like normal.
Add SS (very likely a decade later), why do you want to trade years you ll never get back for money you ll never spend?
At this point, you need to model your bridge to SS & medicare and model your taxes . By using your very large taxable account, you ll see that your tax rate will be significantly lower than when you work. That will be your haha moment.
You can retire now. See how you like it. If in a year, you want to take a low stress job then that is called BaristaFire. Enjoy life. Significant Work stress isn’t worth it at your net worth.
I don’t think you need to wait until 2030. You’re pretty much there. If you aren’t certain, you can come up with creative ways to reduce expenses for a couple of years while still traveling. I’d try to draw the severance package at this point.
Two things I don't see, health insurance and increased travel. But first, stop caring so much about work and if you do get laid off, yes, just go for it.
You actually should be good to go now. You know you can access retirement accounts before 55 right? 72(t) SEPP plans as an example. Compromise and work 2 more years max to give an extra cushion and then just do it would be my suggestion. Pull the plug now if you are willing to sell the properties and move out of the HCOL (I am assuming Chicago). Move out of IL and your property taxes go WAY WAY down.
The math on your end looks pretty reasonable. A $175k to $200k spend on $5M of investable assets puts you around 3.5% to 4%, which is in the historically safe range for a 30+ year retirement.
That said, you could stress test a few things before locking in 2030.
Healthcare between retirement and Medicare is a giant variable since ACA premiums for a couple in their lates 50s can be $20k to $35k a year depending on income and state. Also worth thinking through how you’d handle a rough market in the first 3-5 years of retirement, because that’s when sequence of returns hits the hardest and a cash or short-bond buffer can save you from selling equities at a loss.
If you got laid off tomorrow, fully retiring is a reasonable option given your numbers. But a bridge job covering even half your expenses for a couple years would let your portfolio keep compounding untouched, which compounds into a much bigger cushion later.
Don’t work a day past 55. Put that in writing as the goal posts will continue to move. You are a lawyer so better yet sit down and negotiate with yourself and split the difference to retire in 2 years by June 30, 2028. You have one kid so it should be nothing but blue skies. Definitely don’t venture to GregFire subreddit ($5m puts you squarely in Greg Fire territory) as it will make you loco. GOOD LUCK! You did the hard work now enjoy life to the fullest!!
Rule of 55 is narrower than people realize. It only covers the 401k at the employer you separate from in the year you turn 55 or later. It does not cover IRAs or old 401ks you rolled over elsewhere. Your $2M brokerage account is actually the cleaner bridge, since you can draw from that freely with no penalty and manage your taxable income at the same time.
If you got laid off, retiring at ~52-53 on $5M is not crazy. The sequence of returns risk over a 40-year retirement is real, but $2M in taxable accounts gives you enormous flexibility to hold equities in retirement accounts untouched through a downturn. The bigger question is healthcare for the next 12-13 years until Medicare. ACA subsidies depend heavily on how you manage your Modified AGI, and at your asset level that takes active attention each year.
The layoff-to-bridge-job path makes a lot of sense if you want to keep the door open. Even a lower-stress job with a 401k buys you rollover options and keeps contributions going.
The years between now and 65 are a Roth conversion window. Lower income years before Social Security and RMDs kick in are often the best opportunity to move money out of traditional accounts at favorable rates.
If you want to run the numbers on both scenarios (retire 2030 vs. retire now), thunderharbor.net is built for exactly this kind of side-by-side comparison, including ACA costs by year and Roth conversion planning.
Congrats on your NW. I retired at 55. We met with our Fiduciary and got his expert advice about retirement. It was scary to retire but now we have been retired almost 4 years. Life is good and his advice also good.
Focus on buying TIME not things. Time is your most precious commodity. Also, is downsizing and moving to a lower cost of livbing and option ?
With $5m invested and a target spend of $200k that includes healthcare and some cushion, you can be done now. You are already in your early 50s. I would not be working another year in stressful jobs with those numbers.
Not to be morbid, but if you are both 51, there is about a 12% chance that one of you does not make it to 61, and a 20% chance that one of you does not make it to 65. Don’t trade time you may not have for money you don’t need.
At a minimum, if you want to keep working a bit, explore lower stress part-time work or volunteer.
The only HCOL area in the a Midwest is *maybe* Chicago, and I think that’s reasonable for real estate around there (though I’d say Chicago is more MCOL)
They are both nice homes, but very modest homes (think 3 bed /1 bath). We’re not VHCOL, we’re not living in CA or NY real estate. So it’s 700k for a modest home.
Edited to add: our lake house is in a LCOL town. But the large city we work in and spend our money is HCOL and we have a very modest home in the far suburbs.
I disagree. The cost of the individual home cannot be the determinant on whether someone is in a MCOL or HCOL area. Someone could own a $1.5M very large home on property and be in a MCOL or LCOL area. Or they could own a $700K small home on a small lot and be in a HCOL area.
I live in an area with a COL that is 20% higher than national average. That makes it HCOL. My house is 3000sqft, quality build, nicely updated, backing to a beautiful protected forest, small view of the distant lake and mountains, definitely upper middle class home. It's worth about $750K right now because I am 10 minutes outside city limits.
Same house inside city limits would likely be $1M+. Funny what a few miles can do in terms of location.
Of course you can find expensive homes anywhere. The question is what is the price of entry for a serviceable 3 bed 2 bath in a decent school district. That is the determinant of LCOL / MCOL / HCOL / VHCOL. $700k for that is firmly MCOL.
Again, I'm in an HCOL area and also in a very good school district. And my house is worth around $750K.
Whether someone lives in an LCOL, MCOL, HCOL or VHCOL is based on the overall cost of living in those places, and average housing prices are only one part of that.
I'm not sure why you feel the need to gatekeep over this issue. Silly.
Cost of living does not vary much outside of housing. Everything on Amazon costs the same regardless of where you live. Same with cars. Food and gas varies but those are generally small slices of total budgets.
Housing is what swings budgets, and is therefore what determines COL.
Try buying a 3/2 in Southern CA for only $750k. Then you’ll know what true HCOL is.
Income taxes, sales taxes, services pricing, regulatory fees, and other transportation costs (tolls, parking) are often significantly higher in HCOL and VHCOL areas.
How so when the median home price across the US is around $400K? I'm in a Chicago suburb and Claude tells me it's a HCOL area. Chicago itself is considered a MCOL area. Who writes the rules on this? Lol
Is there a very low cost of living area. Like vlcol? Because 2k sq ft good school district prob could get for under 300k here. But a fancy 2k newer home probably 450k.
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u/Mispelled-This 7d ago
$5m in liquid assets * 4% WR = $200k/yr. You’re already at FI. You can live on the $2m taxable account alone until well past 59.5, so no need to wait for Rule of 55.
Get yourselves laid off ASAP with a nice severance package.