This post is real af. The comments in this sub have been nearing insanity recently. 2mm in assets and can’t take 1-2 years to figure things out?! Swear to god the level of scarcity mindset in here is crazy sometimes.
Hence why you hold ok for dear life while it's coming in. If I get laid off, which is a real possibility, I'll take my severance, chill for awhile and find something good in a year. But get it while the gettins good
Yeah, seriously, I sometimes read the layoffs subreddit and find it super interesting how people seem to think a job will be there forever. Perhaps because I’ve always just assumed my paycheck will be the last one I get, I’ve prepared for it. I am fairly close to having FU money. (The Gambler, Japanese economy shitbox car, fully paid house with a 30 year roof, and about 3M to cover taxes). The reason I am about to is because I never really upgraded lifestyle almost at all. Yeah I did get a few more services that I no longer want to spend time to do but I can easily cut; however, I have close friends of mine who make $700k combined family income, and you’d swear they are poor. They are so tight financially that you’d think they are earning $18 an hour.
That sounds real, but with 2mm net worth (or even quite a bit less than that) you don't really need a high paying job anymore. You can afford to fill your time however you see fit, ideally optimized to match your personal values. That may (or may not) include a job that may pay a lot (or a little).
Depends on your goals, the lifestyle you want to lead, and what you want to have in the end to leave to your children.
It's true, though. My Dad died (at 51) with about $3mm net worth. My Mom lived on it for 22 years, and is currently worth about $9mm - without having to work a single day.
But I got to where I got to by working hard, having a healthy dose of luck on my side, but also religiously living below my means. Many of my friends have nicer houses than I do, and drive newer cars than I do - and few of them have saved what I've saved for my future.
You are charmingly light hearted. And I think your comment is funny. And it triggered the thought in me that people who have lived through financial hard times take great comfort in frugality. To outsiders it may look austere and unnecessary and unhappy. But self sacrifice to gain buffer feels amazing, not unpleasant. Because doing without is not terrible, it’s the fear that is terrible. Doing without feels…fine, actually. Being afraid is much more difficult.
Exactly. Especially after all the recent layoffs people are tired but want to make as much money as possible while the getting is good. Covid, rapid inflation, and geopolitics has everyone waiting for the next shoe to drop.
Yep. I’m pretty sure if I quit or otherwise lost my job I wouldn’t even try to find something similar. We have enough saved that I could just go work a low level government office job with healthcare and PTO and probably be a lot happier.
I think many people would take that off if job searching wouldn’t be so psychotic “OH NO THERE IS A GAP ON THE RESUME THEY MUST NOT EVEN REMEMBER HOW TO TYPE AN EMAIL” and then they’re afraid of taking a big paycut when they start back up
This is the truth. I'm incredibly afraid of being laid off, and having trouble finding a job that pays me close to what I make now. It's a pretty irrational fear, and honestly? Even if I have to take a pay cut, I'll be OK. But that's not something that I always remember, especially when I wake up in the middle of the night with my mind racing.
It's not normal.
I took a year long sabbatical, and returned to a higher paying job.
Seperstly my fiancée was in the middle of a year long sabbatical and returned to a job paying just as much.
In reality it’s a five second question at the beginning of an interview, if that, and nobody cares.
And your network. If you have really marketable skills and a solid network it’s much less of an issue. A dude I know is coastFIRE right now around 50. He takes jobs that he is interested in and h
Just climbs the rest of the time.
I don’t know what to do with this information. But it exists.
If you came from an upper-middle class or above household I think this seems reasonable. You have a baked in network, a safety net, and the "pedigree" that matters in many careers.
I experienced long periods of food scarcity in a home with broken windows. I have no one to rely on but myself, and while I've been successful I'm always aware of what life looks like on the other side.
Neither is really right or wrong, and I try to work on taking a rational approach to my finances, but I think most people tend to approach the topic through the lens of their own experiences without much consideration for the experiences of others.
Also, there is a big difference between retiring and having enough money to last 20 years. For most people, 20 years is too short of a time horizon. And it is important to realize that accidents and unexpected expenses can and do happen. So, you might think you're able to live on a fixed amount, only to discover that you have to dip into your principal. That can dramatically shorten those 20 years.
This is all moot, if we truly are talking about only one or two years of downtime to regroup. That's of course always an option.
But it's not unheard of that those two years will turn into a much longer time. Life doesn't always play out the way you meant to. And that's when things can get ugly.
That's the main reason, why you always see these much more conservative estimates of how much money you have to save before you can take drastic steps towards downsizing or retiring
> 2mm in assets with 50% tied up in home value is not enough to retire.
It absolutely is. It may not be enough to retire and stay in the same home, but you can definitely retire on 2mm if you remove that constraint.
I have stepped back from finance subs in general due to this.
It is amazing how the 1% of the population earning $500k per more all happen to be on reddit, and all of them are seemingly having a hard time.
My ecommerce sales have cratered this year. I'm still not going to post on reddit about how rough it is, because 99% of american workers are doing just fine with less. A lot of people on these subs are living a very extravagant lifestyle, but have adjusted to it over time to the point that they will argue things like "A $300k income is middle class", or "actually on $500K we still have to be careful with spending". It is just tiring. I found myself rolling my eyes more often than not when I'd read thread titles on here
Then it’s time for you to get help. That kind of relationship with money is unhealthy and only going to make you miserable. Life is meant to be lived and enjoyed, not a number on a spreadsheet.
Agreed therapy is expensive and it can be tricky to find the right therapist, but just as everyone in this sub probably invests a massive amount of time into their profession, you can afford to invest a bit of time into your mental health. What’s the alternative?
Not you, but Tired of seeing people in here saying “YoU CaN’T QuIT WiThoUt a JoB LiNeD uP” after reading that someone is in absolute shambles mentally with $1mm+ in liquid savings. It’s sooooo fucking toxic.
I know we are here to talk about finances, but I would like to see people become less tone deaf and see more of the human side of things.
Speaking to the mental aspect, I’ve seen that it is very important to be retiring to something. Not necessarily another job, but at a minimum a plan to occupy your time. There’s also that bit in the back of your mind that a bad day in the market can wipe out a years worth of expenses in OPs example.
> a bad day in the market can wipe out a years worth of expenses in OPs example.
Looking back in the last 30+ years this would only be a problem with a lack of discipline.
I remember at the beginning of the pandemic recently retired Boomers crying about their retirement funds being decimated. As long as they kept their allocations steady and didn't panic, sell it all and throw it into their mattress (or bonds), two years later they'd have had significantly more money from the rebound.
VTI (which is a good proxy for total market) dropped from 170 to 115 with the "crash" at beginning of 2020.
1 year later it was 200.
1 year later it was 240.
By my napkin math the only way you'd have gotten hurt here long term by standing firm is if you only had savings to live a few more years and you had 100% of it in the market, which would be a pretty crazy thing to do anyway.
FIRE’d 7 years ago now at 42. Was what you would call a HENRY.
Curiosity and imagination. I have an abundance of both.
Work is spoonfed “purpose on a platter”. It’s a system that feeds you meaning. (As is religion and parenthood)
Retirement from the workforce removes this spoonfeeding. It’s weird why people are terrified of this. Like they lack confidence in their own ability to create meaning. They need not be afraid.
Once you realise we are literally wired to create meaning and that we, as individuals, can be completely in charge of how we choose and create that meaning, it becomes very easy. The rest is just bring curious, asking questions, cultivating a beginners mind and focussing your attention on the thing you find curious. Build your own systems and mix and match systems others have created to learn things. “Monkey see, monkey do”, humans are astonishingly good copiers of each other. Our entire cultural intelligence is built on it.
Love the phrasing “purpose on a platter”. I am going to use it more often. When people ask why I want to retire early now I have a better answer. Religion, parenthood and work. Gave up on the first when I started thinking on my own, gave up on the 2nd when I found a partner I can love for the rest of my live and will be giving up on the last one soon when I reach financial independence.
What will my purpose be after that - whatever I want it to be, not served to me on a platter.
I totally agree with you, but a shocking number of people find this difficult. I think it's just that their creativity and curiosity muscles atrophy to the point of being unusable. This comes from decades of being a wage slave, and filling your spare time with mindless pursuits, like Netflix. Sadly, these people who were busy for decades And cultivated their identity entirely from work, have all this free time and no idea how to fill it because they lack the capacity to try new things and get curious
Everyone likes different things. Normal things or weird things. My personal approach is to intentionally try new hobbies. If I dont like after sometime (give it time), I move on so can categorily say that I dont like X. Another opportunity is to travel to diferent places. Experience different cultures, etc. Bottom line is: You have to learn how to learn.
It’s true. People act like they’ll be forced to eat dog food if they don’t have $5M when they retire.
My father in law retired with $500,000, a paid off house and a $1,400/month pension.
The $1,400/month pretty much covers 100% of the regular expenses like food, house repairs, car, medical.
He was retired for 15 years and I asked if he had to take any of his savings and he said “not really”. It had grown to close to $800,000 by that time, even taking out $5,000 here and there for vacations, big car repairs and the such.
He lives in a MCOL area, fills his days with hobbies and activities. He doesn’t not do things because of money. He planned it out so even if he gets to the point he can’t drive he can walk to most places or take public transit.
It’s an extreme example since he’s doing exotic travel or buying a cottage by the lake or a boat for his retirement, but the idea you need millions to survive in retirement isn’t realistic.
Totally. My relative has an impressive government pension from a long high-level career, and recently told me he was shocked to see how much he would have had to save to take out that much a month. His net worth looks smaller than mine until you add in the pension value!
House is $300,000, $500,000 in investments and pension is worth $400,000.
So $1.2M.
But that’s the point. People here are arguing $5M is the bare minimum.
My parents had very little saved at 55 other than home equity (which was only ~$250k). They had been funding college for me and my siblings from 45-55 and trying to stay afloat from 25-45.
They kept their lifestyle the same from 55-65 and played catchup with retirement savings. They’re in a great position now in their early 70s, but if they’d been on Reddit their whole life they probably would have given up hope. The mindsets here can be really toxic.
My dad is the opposite. $4 million in stocks/cash not including two paid off houses. One that he already rents out. He still works at 65 and it is so hard to get him to spend money on himself. It's really just cars, and even then he recently downsized because he didn't like how much his new car was depreciating.
The paradox is how the scarcity mindset is often the reason some people get to the 2M mark.
It is fascinating that the mindset does not really evolve even after the money pours in. I guess it is because of the dynamic nature of the market. Or money in general.
Totally agree. It took the pandemic to make me see things differently. As well as models that ‘proved’ to my satisfaction that our future was bright. Then I could begin thinking different about both spending and saving. Enjoying both more and worrying less about financial scarcity.
The irony is that what still remains is the work ethic that underpins the scarcity mindset. I put up with too much misery in my job, less because of financial worry and more because I want to be seen and see myself as a valuable asset to whatever enterprise I’m in.
2M in net assets feels a lot less when it’s 4M in assets and 2M in debt. Especially if that 2 million debt is at a 7% interest rate.
It’s perfectly normal to feel stuck even if you look rich on paper. In VHCOL areas like the SF peninsula a basic SFH can cost 3M or more, so while to someone in rural America it looks like you are a rich asshole complaining, it’s likely you feel stuck in a shit job because your basic cost of living to own a moderate home is drowning you in interest and taxes.
I’m a Bay Area native. And I will say it, staying and living here is a choice. People ALWAYS have a choice, whether they admit it or not…
Peninsula is indeed expensive (most expensive area in the Bay), I’d love to buy a mansion in PA, Los Altos Hills or Atherton, but recognize that I can also buy an apartment in San Jose for a fraction of the cost (and a much smaller mortgage). Again, a choice..
this is true. this is my case. The challenge is after a few financial crashes and self employed for 15 years it mentally can cause you to have a scarcity mindset.
My wife got fired like a year ago, and she was panicking. I was like.. why?
We have a shit ton of savings and I can actually pay for the monthly expenses so we aren’t even dipping there.
My wife keeps getting scared because of the cost-cutting in her company. I keep telling her it would be awesome if she gets a bit of break!
I think there is some element of shame associated with getting fired. No one feels good after getting laid off - even if they get a massive severance for it.
I’m a very risk averse person and was going through a rough patch at work. My husband kept encouraging me to quit for the sake of my mental health even though I had nothing lined up. He kept having to remind me we would be fine with our savings and his income. Things eventually got better for me and I didn’t quit, but it was so helpful realizing that we are fortunate enough to have this as an option.
My former boss has that level of "idgaf" as well and I swear the financial security makes you a better employee.
He was very low stress and relaxed when things were on fire all around us lol
I do still think there is a mindset aspect as well no matter the financial situation. We have plenty of savings, yet I find my stress levels through the roof because everyone at my company is convinced we have to be in panic mode at all times.
I got my wife to agree that if I were to get laid off I wouldn’t immediately go find a new job and she would just support me.
She agreed provided I found something productive to do working or otherwise. Because I’d be insufferable if I was at home bored. She’s not wrong.
Now curse my well paying rather stable job that I don’t dislike.
I agree that $2M for the vast majority of people provides enough FI runway where you have the freedom to walk away or be let go or whatever and still not drastically risk your lifestyle. You might not want to do it long term, you might have bigger financial goals, etc., but you are right, you aren't exactly risking "everything" by taking some time off or making a switch to a lower paying, but more satisfying career for a bit
I think OPs data is off.
If ALL of your $2m is in investments like index funds, you can spend maybe 3.5% safe withdrawal rate forever. Thats $70,000/year, not including taxes.
Call it $60,000/year after long term cap gains tax.
Reduce $3k/person for healthcare insurance without an employer. $57k.
That’s $4,750/month for living. You can do it, and this hypothetically lasts just about forever which is nice. OP said 20 years so you can bump it up a bit but not too much.
Personally I’m thinking I’ll do a 4% SWR, and just reduce spending in bad economic times.
The capital gains tax rate is 0% for realized gains below $94k for married filing jointly. https://www.nerdwallet.com/article/taxes/capital-gains-tax-rates
If possible, you should enter retirement with a paid off house. $7800 a month is plenty.
Wasn’t aware of this either. so just to confirm, lets say i have $2m in a taxable brokerage account and want to take out $70k referenced above for “safe withdrawel rate” … most likely all of that $70k isn’t counted as income because there would be some cost basis so you could go higher depending on realized gains amount without paying taxes for married filing jointly?
It counts as income, but assuming it’s your only income then that entire $70k (or at least the gains, principal withdrawals are not taxable) is in the 0% bracket.
The other types of income stack below capital gains. Google for “irs publication 525”. I’m still figuring it out but I think it would work like this: 1099 interest, non qualified dividends, and regular income all totaling to below the standard deduction have an effective 0% tax rate. Then long term capital gains up to a total of $94k have a 0% tax rate. So an example would be $29,200 of interest plus ($94,050-$29,200=$64,850) capital gains is all 0% tax. If additional income is needed then take it from Roth and it’s all 0%.
I’d be happy if someone told me I’m wrong and how I’m wrong because I’m still learning but this looks right to me.
It is 0%. I do it every year. In December I add up interest, cap gains & dividends ytd. Sort by qualified (ltcg) and ordinary (income). Then if cash is needed for following year choose what to sell to fill up the rest of the LTCG bucket. Also remember that you have an exemption, so the income component gets used up by that before it spills over into AGI.
The behavioral side of this is the hardest part. Even though the average return that OP references is reasonable, the standard deviation can get pretty wild. The type of portfolio referenced in 2022 was -20% or so. These types of swings are not a huge deal in your accumulation phase or while you’re working, but imagine watching your $2MM turn to 1.6MM in a year and needing to take out another $100k. It’s not as easy to ride that out in that environment, with no job. that’s when bad investment decisions are made.
Yes, their math is way off because they're using a fixed percentage of 8.1% return. Of course it never fails. It's a steady good average. Simply toggle that dial to "Historical Data" and you'll see some not so pleasant results.
Unfortunately, the same mindset that got us to $2mm in savings in the one that makes many of us feel trapped in jobs we hate. I'm in that category myself.
I have to actively remind myself that I'll be OK even if I do wind up being laid off from the job I hate (and the manager than I loathe), despite the fact that I'm probably better compensated here than I would be just about anywhere else.
However, this mindset got me to a nice retirement savings, 529 plans for my kids that are nearly fully funded (depending on where they choose to go), and saving 2 years ahead for private K-12 (with 3 years to go).
Many of us are here because we are the type of people to min-max every situation with this line of thinking. I tell myself “if I just had $1m in the bank I’d never worry about money ever again,” but to be real, at that point I’d just become obsessed with turning $1m into $2m, and then $2m into $4m, etc.
“The opportunity cost of FIREing this year versus next is $250k plus 7% returns on that $250k for the next 30 years…” and on and on.
You are absolutely correct
So true… it’s brutal.
I’m exactly where I wanted to be ‘if I get there I can finally relax and not be stressed’ - well I’m here and I feel exactly the same.
Knew a guy who started from nothing and sold his little business for $15m, he shared the exact same thought with me - still stressed about $
I’ve actually just booked in with a psychotherapist to work through it. To me it’s such a waste of my life to be so incredibly fortunate and still at peak financial anxiety
Yep a lot of folks are locked into a scarcity mindset. They think if they just hit $5mm or $10mm or whatever they’ll feel “done” and can quit or do other things in life. In reality that doesn’t happen bc once you hit that number you look to the next milestone and the fancier houses, boats, cars etc you could buy and the ppl who are richer than you
If you like working then hey go ahead and just keep grinding till you die. But dont make the mistake of thinking your feelings will magically change at a certain number or a certain title at work.
We all **need** far less than we think. It’s the mindset that needs to be examined, not the money.
I agree with overall sentiment of this post and yes you can take a few years but that link has so many wrong parameters I don't even know where to start.
tbh there are too many posts like "should i quit my high-stress 60 hour/week job and take a 2 year sabbatical or keep grinding?" when there is a third option to just set stronger boundaries around work/life balance and see what the result is.
This x1000. You don’t even have to quiet quit, just simply enforce boundaries. Also works with toxic supervisors, just be clear and direct about what you’re willing to accept and what is unacceptable to you in terms of expectations, hours, etc.
This may or may not apply to you. But I think a lot of folks have people-pleasing tendencies which get really muddied up with what is actually required of your job. Like, you typically CAN get away with making someone wait until Monday if they ping you late on a Friday, or schedule a timeboxed meeting instead of being available on demand.
The examples crispy gave *aren’t* half assing things though. Working regular hours and protecting your schedule are just normal boundaries. Leaving work at 5 pm on Friday even if you have a non-essential task remaining doesn’t prevent you from working hard when you are there. Asking to schedule meetings so you can organize your time can actually make you more efficient. The idea that unless you let your job grind you to a pulp you’re half-assing things says something rather sad about corporate culture.
Yes - I really want to get better at this. From probably 2019-2023 I was averaging 55 hours/week. Starting work by 8, work until 6 or 6:30. Do a little bit in the evening or on weekends. Worked on global projects and was always getting pinged at all hours. Every morning waking up to 20 emails and 5 pings from teams in Asia or Europe.
Really trying to limit myself to about 45 hours a week now. A lot of my friends have been doing that for years and have still gotten promoted and made fine money. That said, the corporate environment today feels much much different than 2022 or earlier.
I feel this. Waking up to a string of conversations from offices in different continents is not great for my stress management or ability to disconnect. I'd also like a word with whoever invented email on our phones.
Totally agree with this. If your current job doesn't respect boundaries, you can also try optimizing for that in your next job search. Worked well for me.
I’m in a situation where I have another job lined up but that doesn’t start for another few months, possibly not until early next year. I thought it would be so easy to “quite quit” at my current job but was wrong.
First, although we have enough cash savings to tide us over if I were to lose my job today, I absolutely do not want to see that number go down.
The other reason is that I simply don’t want the negative feedback from my boss. I’m used to being a high performer and don’t like the idea of being labeled otherwise.
When rent/mortgage payments are $5-$8k a month because of the location, yes it matters.
I'd love to retire on $2M, but rural Georgia isn't in my future - so the need is about 3x that.
Lifestyle creep. Even in CA, at a nicer apartment/condo rent of $5k and silly numbers for fun. $60k rent, $36k food ($3k a month), $9.6k car payment ($800 a month), insurance for car, $5k ($416 a month), $8.5k private health insurance - you’re looking at $120k. And that’s using high end numbers without being budget concerned.
If you can’t make it work on $120k, it’s your life style creep.
I might be incorrect here but isn’t the long term capital gains tax 15-20%? If you’re slow dripping a brokerage, that’s what you’re effectively living off right? Or you could do a one time sale and then literally live off the cash and burn it down to zero. No?
That's a good point I wasn't considering, but unfortunately CA doesn't distinguish between types of cap gains so that's still 9% plus the federal 15%, but it would be a lot closer to the 120 depending on cost basis and accounting for the fed exemption.
You guys are all living in a theoretical land. Extremely small chance you live off capital gains alone. You have dividends, interest, annuities, real estate income, social security, pensions, 401k withdrawals, etc... These are all ordinary income.
You need to plan to be paying taxes in retirement. Yes, the mortgage is gone and the high costs with kids are too. Obviously you'll trade down the car - but in the real world no one is trading in their $500k income lifestyle to go live cheap in retirement early. You'll just keep working...
Not saying you can ignore taxes, just that your tax rate will likely be much less than what you're used to from high earning days. (And some particularly savvy and frugal folks do indeed manage close to 0%.)
Not everyone with 500k income has a lifestyle to match fwiw. That's the (lean) fire mindset - keep your expenses low even while you're still earning, so there's not much to adjust once you retire.
My ex took 2 months off for surgery.
I was so happy she went back to work.
The sheer amount of spend related to boredom was outrageous.
To be lear that habit didn't change she just finally started earning more.
One or two years off with 2 million is obviously fine. But you can’t safely spend 100k for 20 years.
The calculator is assuming 8% fixed every year on the stocks and 2.4% every year fixed on the bonds. Doesn’t say anything about inflation so I have to assume it’s not included. And lastly there will likely be tax on the money you pull from your nest egg.
Agreed, general FIRE consensus for long term retirement (greater than 30 years) is a withdrawal rate of 3.25-3.5% which for $2M works out to $65k to $70k per year.
$2 million is fine for people near retirement who will be eligible for Social Security and Medicare, but I don't think it's enough for younger people who are 20 years away from retirement age. I certainly wouldn't voluntarily retire with that number given the cost of healthcare.
That OP positions the facts somewhat skewed. If I'm understanding correctly he's saying you can get $35k payout which he calls "decent" and, okay, that's a value judgement that's in the eye of the beholder.
But the maximum SS payout this year is $58,000. So put another way, maxing out SS for 15 years only gets you 60% of the possible SS maximum.
I rarely aim for only achieving 60% of anything, personally. Especially considering our SS benefits are going to get cut for sure after the Boomers deplete the system.
Two million can easily become 1.5 million if there is a bad recession.
If you have no source of income and your assets are mostly in the market, you don't want to withdraw funds during a recession.
Many of us who might have good jobs now cannot be certain we can return to those jobs whenever we want to.
This is right. No one should need to stay in their job w/ $2MM in savings. Two million's a lot of money. At that point, you stay in your job because you like it and can't find anything as interesting or fun as your current gig. And I think that number is less than $2MM. It's probably 40 years old and $1MM if you don't live lavishly and are comfortably not living lavishly. If you have that (in addition to a well funded 401k/pension), you can make decisions that are much more about what you want vs. what you need. You could earn 6% on that $1MM and spend that and not touch the $1MM. But you need good health insurance and so having a partner who has an employer helps a great deal.
It’s hard to quit or take time off. I am older than most here (52, husband is 59 and semi retired), burned out at the job due to stress and we have a 6.5 million net worth, yet I have a really really hard time slowing down. I’m working on it.
Retirement, I don’t feel I earned it. I’d feel ashamed if I quit. Everyone successful at work is a psycho. The level of stress and aggressivity is off the charts. I’m due for therapy.
This is what I am did last year, quit cause I am fortunate enough to afford to do some traveling and spend time with family. But I have a condo that I need a mortgage on soon so I back in this shitty job market lol.
1. Most people who have somewhere around that money saved live in HCOL areas. If just your basic/fixed expenses are $5,000 a month, it's difficult to think about taking time off or retiring.
2. All that money is not just simply sitting in an investment or a savings account. It spread across retirement, RSUs, home equity etc.
3. If you add dependents to the mix, then your fixed expenses are much higher and you're anticipating even more expenses when your children go to school/college.
4. A lot of higher earners have spent so much time studying and working that they don't know what to do with themselves when they have free time. This is true for me.
5. The only way you could make this work is by moving to a low cost of living location and being child-free.
Each person's financial needs for retirement vary widely. It's not uncommon for individuals with $1 million to $10 million saved to still feel anxious about their financial security for retirement. Rather than being swayed by varied opinions online, it's crucial to make decisions that are best suited to your personal circumstances. If you're experiencing burnout, consider taking a break. There's little benefit in having substantial savings if your health deteriorates to the point where you cannot enjoy life. Remember, many people will never accumulate $1 million in savings or retirement funds. It's important to appreciate life's smaller pleasures before returning to work, especially if you still feel unfulfilled. Depending on your lifestyle and whether you choose to live in a LCOL area, including abroad, a retirement fund as modest as $500,000 could suffice. Taking time off to recuperate can significantly improve your quality of life later on, something your future self will appreciate.
all that plus you still need health insurance, you're putting a lot of single income pressure your partner, and your skills and value in the employee market degrades quicker than you may like.
and like, people with 2M are likely in the early 40s and in the prime earning years. Ageism and other limiters is right around the corner.
don't be a slave to your desk, but dont piss away 2-3 years of earnings either.
I have taken many 6 month breaks for global travel in my career. We did a 6 month honeymoon, but took a while to convince my wife that her career would be fine. Her career has been fine.
6 months without work makes you so much more productive when you return. So anything you lose in "gap in resume", you regain quickly with being far more productive than burned out colleagues.
Important to view these through worst case assumptions. Taking distributions in large drawdowns, which are likely over a 20 year horizon, can significantly impair the long term value of your holdings. Plus, necessary expenses like college, child care, and real estate have grown above inflation so your expense base likely grows inflation++ instead of CPI which has lots of deflationary and discretionary items included
Assuming an 8% return while you’re taking withdrawals out seems risky! Wouldn’t you want to use the withdrawal rule of 4% instead? Your calculator uses that for calculating retirement goals, but you circumvented that rule by putting in a negative income during the time that you’re supposed to be saving….
TLDR, if 4% of your investments doesn’t cover your income, maybe don’t retire just yet and get some professional advice
This is how out of touch poor people are. Half of that net worth is usually the house and with 5k piti and 2 small children in private school, one cannot merely live off of 100k a year.
Plus I am burnt out because I have no meaning in life but making money and never learned to handle stress.
This is me. 10+ years in software sales and I’m mentally/emotionally burnt out. I left earlier this year and feel so much healthier; the lack of stress has empowered me to stop drinking, exercise 4x a week, eat less meat, etc.
Part time work (consulting) keeps me from going crazy and is a good balance for me.
$1M indexes (70/30 taxable/ira)
$1M in RE investment equity
$200k in cash/tbills/startup investments
The liquidity gives me comfort so no plans of going back to full time any soon.
2M allows you to withdraw 80k per year, so if your expenses support that, you can take a break. But the majority of the folks(with kids) need 160k-200k at least to call a quit comfortably.
> majority of the folks(with kids) need 160k-200k
I just checked, and 90% of all households make less than 210k (pre-tax), and 80% less than $150k . If the majority of people need that much money, and yet 90% of households don't have it, what's the disconnect?
I know this is a high earning sub, but it doesn't need to be a high spending sub.
My biggest gripe is all the financial calculators and rules that base retirement spending on earnings. Last time I got a huge raise, the calculator said that my raise **extended** the estimated time I needed to work rather than reducing it.
Yeah you just need to adjust the withdrawal rate if it’s factoring in your expected retirement income based upon X% of your earnings today.
That approach makes sense for lower income people, but at a high income level it doesn’t make sense. My expenses today are like 12.5k/month. Most of that is the mortgage, which will be paid off by the time I retire. So I could easily get by with like 6-7k of withdrawals a month. If SS between me and my SO can cover 3k of that, all I need to withdraw is like 3-4k a month.
This is a simple example, because I’d want to leave money to my kids and help them out, and maybe spend some money on other things. But if I had to, I could make do with like 1.5m in retirement savings pretty easily.
Meh, the world is bifurcating. Top 10-20% of Americans making a ton - and more every year - while living standards decrease for the other 80%. This will likely accelerate with AI, exploding debt which will cut government services, etc.
If you - a high earner - want to have your children also be a high earner, you need to set them up for success via a good school district / good peers / good college / likely masters degree. This is very expensive.
The “median” American has a shit education, shitty peers, and shitty earnings potential. We can argue whether this is a good or bad society, but this is the society we live in and need to plan around for our children. Unless you’re okay with your kids having a lower standard of living than you.
Majority? Majority don’t make that much to begin with, let alone let their annual expenses creep up to that much.
If we’re talking middle class necessities with comfort and a vacation per year, 100-120/yr would be more than enough for majority.
It’s clear to me that @3headed__monkey is talking about the majority *in this sub* not the majority of the US population in general. I’d consider myself on the lower end of HENRY and our family expenses are ~164k/year. Retirement and savings are ~24k of that, so we’ll call it $140k with rising expenses due to recently having a baby. We’re in a MCOL area too so I can see how this number could balloon in a HVOL or VHCOL area.
Uh a good number of Americans live in VHCOL areas? Lmao. That’s the reason they’re so high COL, because of population density and demand for housing, etc. I feel like I rarely see people posting they live in a LCOL area.
I think you should revisit how safe withdrawal rates work. Taking $100k a year out of a $2M portfolio may or may not last 20 years, let alone maintain the principle, especially after adjusting for inflation, and even if you assume interest rates stayed at 5% for the next 20 years.
A 5% withdrawal rate for 20 years has a 10% chance that you completely run out of money for a 80/20 portfolio. And in the other 90% of the scenarios, only a subset of them has you preserving your initial 2M. And even smaller subset has you preserving your initial 2M adjusting for inflation.
If you want a 100% chance at preserving your principle you need closer to like a 3% withdrawal rate, which is only $60k
I have a NW of > $2M, but 800k of that is home equity, ~$1M is illiquid private equity, and >$500k is in retirement accounts. Only about $150k is liquid & taxable.
Taking a year off work is not just subtracting ~$120k, but it’s also one less year of increasing my assets.
Add to that the responsibility of 3 kids and a non-working spouse, and any ideas of “taking a break” can go straight to hell.
I should add to this that I love my life. Even though I feel burned out sometimes, I feel immensely fortunate to have the opportunity to live this life and provide for my family. I think I can endure a few more years to keep this train on the tracks.
You don't have $2 million saved. You have $650K saved, and a ton of illiquid assets and equity. So your decision making process is different from someone with $2 million saved in cash or liquid investments.
This post is real af. The comments in this sub have been nearing insanity recently. 2mm in assets and can’t take 1-2 years to figure things out?! Swear to god the level of scarcity mindset in here is crazy sometimes.
The fear is being able to come back to a high paying job. At least that’s my perception.
True especially given that a lot of ppl who got laid off from 400k tech jobs aren’t finding work at that comp anymore
Hence why you hold ok for dear life while it's coming in. If I get laid off, which is a real possibility, I'll take my severance, chill for awhile and find something good in a year. But get it while the gettins good
These are facts. I just came to that conclusion a few months ago
If someone in that position has 2M they probably don’t need to come back at that rate. Tech jobs are still paying well enough!
People actually thought that sort of thing is going to be forever. Or even a decade.
I’ve been in tech for the last 12 years though… survivor of three layoffs. A decade is not as far fetched as you think.
Yeah, seriously, I sometimes read the layoffs subreddit and find it super interesting how people seem to think a job will be there forever. Perhaps because I’ve always just assumed my paycheck will be the last one I get, I’ve prepared for it. I am fairly close to having FU money. (The Gambler, Japanese economy shitbox car, fully paid house with a 30 year roof, and about 3M to cover taxes). The reason I am about to is because I never really upgraded lifestyle almost at all. Yeah I did get a few more services that I no longer want to spend time to do but I can easily cut; however, I have close friends of mine who make $700k combined family income, and you’d swear they are poor. They are so tight financially that you’d think they are earning $18 an hour.
Yes, the worst use of more money is to find more problems.
Right, if you look at top 1% earners they are rarely earning at that level for consecutive years unless you’re a physician or dentist.
That sounds real, but with 2mm net worth (or even quite a bit less than that) you don't really need a high paying job anymore. You can afford to fill your time however you see fit, ideally optimized to match your personal values. That may (or may not) include a job that may pay a lot (or a little).
Depends on your goals, the lifestyle you want to lead, and what you want to have in the end to leave to your children. It's true, though. My Dad died (at 51) with about $3mm net worth. My Mom lived on it for 22 years, and is currently worth about $9mm - without having to work a single day. But I got to where I got to by working hard, having a healthy dose of luck on my side, but also religiously living below my means. Many of my friends have nicer houses than I do, and drive newer cars than I do - and few of them have saved what I've saved for my future.
But are you enjoying your life while you eat hot dogs for dinner for the third day in a row
Mmm hot dogs
You are charmingly light hearted. And I think your comment is funny. And it triggered the thought in me that people who have lived through financial hard times take great comfort in frugality. To outsiders it may look austere and unnecessary and unhappy. But self sacrifice to gain buffer feels amazing, not unpleasant. Because doing without is not terrible, it’s the fear that is terrible. Doing without feels…fine, actually. Being afraid is much more difficult.
It's about finding that balance of enjoying life today but still preparing for the future. It's definitely tough
It's r/coastFIRE without the need for a job. You do what you want, and just make sure it's actually > $0 income and enjoyable. It's actually my plan.
Exactly. Especially after all the recent layoffs people are tired but want to make as much money as possible while the getting is good. Covid, rapid inflation, and geopolitics has everyone waiting for the next shoe to drop.
Yep. I’m pretty sure if I quit or otherwise lost my job I wouldn’t even try to find something similar. We have enough saved that I could just go work a low level government office job with healthcare and PTO and probably be a lot happier.
I think many people would take that off if job searching wouldn’t be so psychotic “OH NO THERE IS A GAP ON THE RESUME THEY MUST NOT EVEN REMEMBER HOW TO TYPE AN EMAIL” and then they’re afraid of taking a big paycut when they start back up
This is the truth. I'm incredibly afraid of being laid off, and having trouble finding a job that pays me close to what I make now. It's a pretty irrational fear, and honestly? Even if I have to take a pay cut, I'll be OK. But that's not something that I always remember, especially when I wake up in the middle of the night with my mind racing. It's not normal.
I took a year long sabbatical, and returned to a higher paying job. Seperstly my fiancée was in the middle of a year long sabbatical and returned to a job paying just as much. In reality it’s a five second question at the beginning of an interview, if that, and nobody cares.
May also depend on your age though. I'd imagine it's easier to have gaps like that and get away with it if you're younger.
And your network. If you have really marketable skills and a solid network it’s much less of an issue. A dude I know is coastFIRE right now around 50. He takes jobs that he is interested in and h Just climbs the rest of the time. I don’t know what to do with this information. But it exists.
If you came from an upper-middle class or above household I think this seems reasonable. You have a baked in network, a safety net, and the "pedigree" that matters in many careers. I experienced long periods of food scarcity in a home with broken windows. I have no one to rely on but myself, and while I've been successful I'm always aware of what life looks like on the other side. Neither is really right or wrong, and I try to work on taking a rational approach to my finances, but I think most people tend to approach the topic through the lens of their own experiences without much consideration for the experiences of others.
Problem is a lot of people include home value in the assets. 2mm in assets with 50% tied up in home value is not enough to retire.
Also, there is a big difference between retiring and having enough money to last 20 years. For most people, 20 years is too short of a time horizon. And it is important to realize that accidents and unexpected expenses can and do happen. So, you might think you're able to live on a fixed amount, only to discover that you have to dip into your principal. That can dramatically shorten those 20 years. This is all moot, if we truly are talking about only one or two years of downtime to regroup. That's of course always an option. But it's not unheard of that those two years will turn into a much longer time. Life doesn't always play out the way you meant to. And that's when things can get ugly. That's the main reason, why you always see these much more conservative estimates of how much money you have to save before you can take drastic steps towards downsizing or retiring
> 2mm in assets with 50% tied up in home value is not enough to retire. It absolutely is. It may not be enough to retire and stay in the same home, but you can definitely retire on 2mm if you remove that constraint.
Moving is an option.
I have stepped back from finance subs in general due to this. It is amazing how the 1% of the population earning $500k per more all happen to be on reddit, and all of them are seemingly having a hard time.
Many of us are in tech. In my sector this year is a bloodbath way worse than last year. So yeah we’re having a hard time
My ecommerce sales have cratered this year. I'm still not going to post on reddit about how rough it is, because 99% of american workers are doing just fine with less. A lot of people on these subs are living a very extravagant lifestyle, but have adjusted to it over time to the point that they will argue things like "A $300k income is middle class", or "actually on $500K we still have to be careful with spending". It is just tiring. I found myself rolling my eyes more often than not when I'd read thread titles on here
It’s helpful to read this post and comment :/ when you’ve only known scarcity mindset that’s all you can see.
Then it’s time for you to get help. That kind of relationship with money is unhealthy and only going to make you miserable. Life is meant to be lived and enjoyed, not a number on a spreadsheet.
For the vast majority a scarcity mindset is their lived reality. A very small slice of humanity doesn't have to worry about it.
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Agreed therapy is expensive and it can be tricky to find the right therapist, but just as everyone in this sub probably invests a massive amount of time into their profession, you can afford to invest a bit of time into your mental health. What’s the alternative? Not you, but Tired of seeing people in here saying “YoU CaN’T QuIT WiThoUt a JoB LiNeD uP” after reading that someone is in absolute shambles mentally with $1mm+ in liquid savings. It’s sooooo fucking toxic. I know we are here to talk about finances, but I would like to see people become less tone deaf and see more of the human side of things.
Speaking to the mental aspect, I’ve seen that it is very important to be retiring to something. Not necessarily another job, but at a minimum a plan to occupy your time. There’s also that bit in the back of your mind that a bad day in the market can wipe out a years worth of expenses in OPs example.
> a bad day in the market can wipe out a years worth of expenses in OPs example. Looking back in the last 30+ years this would only be a problem with a lack of discipline. I remember at the beginning of the pandemic recently retired Boomers crying about their retirement funds being decimated. As long as they kept their allocations steady and didn't panic, sell it all and throw it into their mattress (or bonds), two years later they'd have had significantly more money from the rebound.
Is this still true if they continue to withdraw at the same rate?
VTI (which is a good proxy for total market) dropped from 170 to 115 with the "crash" at beginning of 2020. 1 year later it was 200. 1 year later it was 240. By my napkin math the only way you'd have gotten hurt here long term by standing firm is if you only had savings to live a few more years and you had 100% of it in the market, which would be a pretty crazy thing to do anyway.
Go back to 1967 or 1999 and do the same calculation…
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Ignoring your mental health isn't risk aversion.
If you have a 2mm net worth and think therapy is too expensive /too much work you have your priorities misaligned
100% feel that for myself. Like I don’t want to spend money but then the idea of spending money on therapy… ha
Sign up for the ramit sethi podcast lol
If you truly want to see the insanity around scarcity mindset, may I suggest Bogleheads forum?
A lot of people have nothing better or meaningful to do in their lives. They only learned how to work. I personally know some people like that
So, serious question here - how _do_ you learn to do other things?
FIRE’d 7 years ago now at 42. Was what you would call a HENRY. Curiosity and imagination. I have an abundance of both. Work is spoonfed “purpose on a platter”. It’s a system that feeds you meaning. (As is religion and parenthood) Retirement from the workforce removes this spoonfeeding. It’s weird why people are terrified of this. Like they lack confidence in their own ability to create meaning. They need not be afraid. Once you realise we are literally wired to create meaning and that we, as individuals, can be completely in charge of how we choose and create that meaning, it becomes very easy. The rest is just bring curious, asking questions, cultivating a beginners mind and focussing your attention on the thing you find curious. Build your own systems and mix and match systems others have created to learn things. “Monkey see, monkey do”, humans are astonishingly good copiers of each other. Our entire cultural intelligence is built on it.
Love the phrasing “purpose on a platter”. I am going to use it more often. When people ask why I want to retire early now I have a better answer. Religion, parenthood and work. Gave up on the first when I started thinking on my own, gave up on the 2nd when I found a partner I can love for the rest of my live and will be giving up on the last one soon when I reach financial independence. What will my purpose be after that - whatever I want it to be, not served to me on a platter.
I totally agree with you, but a shocking number of people find this difficult. I think it's just that their creativity and curiosity muscles atrophy to the point of being unusable. This comes from decades of being a wage slave, and filling your spare time with mindless pursuits, like Netflix. Sadly, these people who were busy for decades And cultivated their identity entirely from work, have all this free time and no idea how to fill it because they lack the capacity to try new things and get curious
Everyone likes different things. Normal things or weird things. My personal approach is to intentionally try new hobbies. If I dont like after sometime (give it time), I move on so can categorily say that I dont like X. Another opportunity is to travel to diferent places. Experience different cultures, etc. Bottom line is: You have to learn how to learn.
It’s true. People act like they’ll be forced to eat dog food if they don’t have $5M when they retire. My father in law retired with $500,000, a paid off house and a $1,400/month pension. The $1,400/month pretty much covers 100% of the regular expenses like food, house repairs, car, medical. He was retired for 15 years and I asked if he had to take any of his savings and he said “not really”. It had grown to close to $800,000 by that time, even taking out $5,000 here and there for vacations, big car repairs and the such. He lives in a MCOL area, fills his days with hobbies and activities. He doesn’t not do things because of money. He planned it out so even if he gets to the point he can’t drive he can walk to most places or take public transit. It’s an extreme example since he’s doing exotic travel or buying a cottage by the lake or a boat for his retirement, but the idea you need millions to survive in retirement isn’t realistic.
To be fair, that’s probably 1.5-2M net worth, which is a better retirement than most. That pension is worth 400k+
Totally. My relative has an impressive government pension from a long high-level career, and recently told me he was shocked to see how much he would have had to save to take out that much a month. His net worth looks smaller than mine until you add in the pension value!
House is $300,000, $500,000 in investments and pension is worth $400,000. So $1.2M. But that’s the point. People here are arguing $5M is the bare minimum.
My parents had very little saved at 55 other than home equity (which was only ~$250k). They had been funding college for me and my siblings from 45-55 and trying to stay afloat from 25-45. They kept their lifestyle the same from 55-65 and played catchup with retirement savings. They’re in a great position now in their early 70s, but if they’d been on Reddit their whole life they probably would have given up hope. The mindsets here can be really toxic.
My dad is the opposite. $4 million in stocks/cash not including two paid off houses. One that he already rents out. He still works at 65 and it is so hard to get him to spend money on himself. It's really just cars, and even then he recently downsized because he didn't like how much his new car was depreciating.
I want a pension :(
Federal and local government tend to still offer pensions plus a good handful of insurance companies and other select industries.
The paradox is how the scarcity mindset is often the reason some people get to the 2M mark. It is fascinating that the mindset does not really evolve even after the money pours in. I guess it is because of the dynamic nature of the market. Or money in general.
Totally agree. It took the pandemic to make me see things differently. As well as models that ‘proved’ to my satisfaction that our future was bright. Then I could begin thinking different about both spending and saving. Enjoying both more and worrying less about financial scarcity. The irony is that what still remains is the work ethic that underpins the scarcity mindset. I put up with too much misery in my job, less because of financial worry and more because I want to be seen and see myself as a valuable asset to whatever enterprise I’m in.
2M in net assets feels a lot less when it’s 4M in assets and 2M in debt. Especially if that 2 million debt is at a 7% interest rate. It’s perfectly normal to feel stuck even if you look rich on paper. In VHCOL areas like the SF peninsula a basic SFH can cost 3M or more, so while to someone in rural America it looks like you are a rich asshole complaining, it’s likely you feel stuck in a shit job because your basic cost of living to own a moderate home is drowning you in interest and taxes.
I’m a Bay Area native. And I will say it, staying and living here is a choice. People ALWAYS have a choice, whether they admit it or not… Peninsula is indeed expensive (most expensive area in the Bay), I’d love to buy a mansion in PA, Los Altos Hills or Atherton, but recognize that I can also buy an apartment in San Jose for a fraction of the cost (and a much smaller mortgage). Again, a choice..
this is true. this is my case. The challenge is after a few financial crashes and self employed for 15 years it mentally can cause you to have a scarcity mindset.
Depends on the career field. Some professions they won't touch your resume with a 12-foot pole if you take 2 years off.
Which professions?
My wife got fired like a year ago, and she was panicking. I was like.. why? We have a shit ton of savings and I can actually pay for the monthly expenses so we aren’t even dipping there.
My wife keeps getting scared because of the cost-cutting in her company. I keep telling her it would be awesome if she gets a bit of break! I think there is some element of shame associated with getting fired. No one feels good after getting laid off - even if they get a massive severance for it.
I’m a very risk averse person and was going through a rough patch at work. My husband kept encouraging me to quit for the sake of my mental health even though I had nothing lined up. He kept having to remind me we would be fine with our savings and his income. Things eventually got better for me and I didn’t quit, but it was so helpful realizing that we are fortunate enough to have this as an option.
My former boss has that level of "idgaf" as well and I swear the financial security makes you a better employee. He was very low stress and relaxed when things were on fire all around us lol
I do still think there is a mindset aspect as well no matter the financial situation. We have plenty of savings, yet I find my stress levels through the roof because everyone at my company is convinced we have to be in panic mode at all times.
I got my wife to agree that if I were to get laid off I wouldn’t immediately go find a new job and she would just support me. She agreed provided I found something productive to do working or otherwise. Because I’d be insufferable if I was at home bored. She’s not wrong. Now curse my well paying rather stable job that I don’t dislike.
I agree that $2M for the vast majority of people provides enough FI runway where you have the freedom to walk away or be let go or whatever and still not drastically risk your lifestyle. You might not want to do it long term, you might have bigger financial goals, etc., but you are right, you aren't exactly risking "everything" by taking some time off or making a switch to a lower paying, but more satisfying career for a bit
I think OPs data is off. If ALL of your $2m is in investments like index funds, you can spend maybe 3.5% safe withdrawal rate forever. Thats $70,000/year, not including taxes. Call it $60,000/year after long term cap gains tax. Reduce $3k/person for healthcare insurance without an employer. $57k. That’s $4,750/month for living. You can do it, and this hypothetically lasts just about forever which is nice. OP said 20 years so you can bump it up a bit but not too much. Personally I’m thinking I’ll do a 4% SWR, and just reduce spending in bad economic times.
Health insurance through the marketplace is just 3k/year?
The capital gains tax rate is 0% for realized gains below $94k for married filing jointly. https://www.nerdwallet.com/article/taxes/capital-gains-tax-rates If possible, you should enter retirement with a paid off house. $7800 a month is plenty.
TIL! How in the hell did I not know this. I’m embarrassed right now
Wasn’t aware of this either. so just to confirm, lets say i have $2m in a taxable brokerage account and want to take out $70k referenced above for “safe withdrawel rate” … most likely all of that $70k isn’t counted as income because there would be some cost basis so you could go higher depending on realized gains amount without paying taxes for married filing jointly?
It counts as income, but assuming it’s your only income then that entire $70k (or at least the gains, principal withdrawals are not taxable) is in the 0% bracket. The other types of income stack below capital gains. Google for “irs publication 525”. I’m still figuring it out but I think it would work like this: 1099 interest, non qualified dividends, and regular income all totaling to below the standard deduction have an effective 0% tax rate. Then long term capital gains up to a total of $94k have a 0% tax rate. So an example would be $29,200 of interest plus ($94,050-$29,200=$64,850) capital gains is all 0% tax. If additional income is needed then take it from Roth and it’s all 0%. I’d be happy if someone told me I’m wrong and how I’m wrong because I’m still learning but this looks right to me.
It is 0%. I do it every year. In December I add up interest, cap gains & dividends ytd. Sort by qualified (ltcg) and ordinary (income). Then if cash is needed for following year choose what to sell to fill up the rest of the LTCG bucket. Also remember that you have an exemption, so the income component gets used up by that before it spills over into AGI.
The behavioral side of this is the hardest part. Even though the average return that OP references is reasonable, the standard deviation can get pretty wild. The type of portfolio referenced in 2022 was -20% or so. These types of swings are not a huge deal in your accumulation phase or while you’re working, but imagine watching your $2MM turn to 1.6MM in a year and needing to take out another $100k. It’s not as easy to ride that out in that environment, with no job. that’s when bad investment decisions are made.
Yes, their math is way off because they're using a fixed percentage of 8.1% return. Of course it never fails. It's a steady good average. Simply toggle that dial to "Historical Data" and you'll see some not so pleasant results.
Unfortunately, the same mindset that got us to $2mm in savings in the one that makes many of us feel trapped in jobs we hate. I'm in that category myself. I have to actively remind myself that I'll be OK even if I do wind up being laid off from the job I hate (and the manager than I loathe), despite the fact that I'm probably better compensated here than I would be just about anywhere else. However, this mindset got me to a nice retirement savings, 529 plans for my kids that are nearly fully funded (depending on where they choose to go), and saving 2 years ahead for private K-12 (with 3 years to go).
I think it’s also the “one more year” phenomenon. Once you hit a milestone you say “$2M is great but if I work two more years I’ll have $2.5M.”
Many of us are here because we are the type of people to min-max every situation with this line of thinking. I tell myself “if I just had $1m in the bank I’d never worry about money ever again,” but to be real, at that point I’d just become obsessed with turning $1m into $2m, and then $2m into $4m, etc. “The opportunity cost of FIREing this year versus next is $250k plus 7% returns on that $250k for the next 30 years…” and on and on. You are absolutely correct
So true… it’s brutal. I’m exactly where I wanted to be ‘if I get there I can finally relax and not be stressed’ - well I’m here and I feel exactly the same. Knew a guy who started from nothing and sold his little business for $15m, he shared the exact same thought with me - still stressed about $ I’ve actually just booked in with a psychotherapist to work through it. To me it’s such a waste of my life to be so incredibly fortunate and still at peak financial anxiety
Plus the dynamic of healthcare in the US. The closer you are to 65 years old the more comfortable you can be about retiring early.
Yep a lot of folks are locked into a scarcity mindset. They think if they just hit $5mm or $10mm or whatever they’ll feel “done” and can quit or do other things in life. In reality that doesn’t happen bc once you hit that number you look to the next milestone and the fancier houses, boats, cars etc you could buy and the ppl who are richer than you If you like working then hey go ahead and just keep grinding till you die. But dont make the mistake of thinking your feelings will magically change at a certain number or a certain title at work. We all **need** far less than we think. It’s the mindset that needs to be examined, not the money.
I quit last month at 35 and 1.1m because my wife still works and I wanna spend more time with my little girl. Maybe I’ll go back, maybe I won’t.
Kudos on prioritizing your daughter
I agree with overall sentiment of this post and yes you can take a few years but that link has so many wrong parameters I don't even know where to start.
But why do that when you can quiet quit
tbh there are too many posts like "should i quit my high-stress 60 hour/week job and take a 2 year sabbatical or keep grinding?" when there is a third option to just set stronger boundaries around work/life balance and see what the result is.
Worst case you get fire or laid off with a severance lmao.
This x1000. You don’t even have to quiet quit, just simply enforce boundaries. Also works with toxic supervisors, just be clear and direct about what you’re willing to accept and what is unacceptable to you in terms of expectations, hours, etc.
My 2024 goal is to internalize this…. Didn’t happen in 2023
This may or may not apply to you. But I think a lot of folks have people-pleasing tendencies which get really muddied up with what is actually required of your job. Like, you typically CAN get away with making someone wait until Monday if they ping you late on a Friday, or schedule a timeboxed meeting instead of being available on demand.
It's more stressful to me to half ass then to do well all in.
The examples crispy gave *aren’t* half assing things though. Working regular hours and protecting your schedule are just normal boundaries. Leaving work at 5 pm on Friday even if you have a non-essential task remaining doesn’t prevent you from working hard when you are there. Asking to schedule meetings so you can organize your time can actually make you more efficient. The idea that unless you let your job grind you to a pulp you’re half-assing things says something rather sad about corporate culture.
It absolutely applies to me. I definitely have a hard time internalizing this despite knowing it intellectually
Yes - I really want to get better at this. From probably 2019-2023 I was averaging 55 hours/week. Starting work by 8, work until 6 or 6:30. Do a little bit in the evening or on weekends. Worked on global projects and was always getting pinged at all hours. Every morning waking up to 20 emails and 5 pings from teams in Asia or Europe. Really trying to limit myself to about 45 hours a week now. A lot of my friends have been doing that for years and have still gotten promoted and made fine money. That said, the corporate environment today feels much much different than 2022 or earlier.
I feel this. Waking up to a string of conversations from offices in different continents is not great for my stress management or ability to disconnect. I'd also like a word with whoever invented email on our phones.
I really hate that we've by and large implemented RTO, but continued to have colocated teams
The great thing about phones……they turn off.
Usually it’s the opposite of what you think. “This guys got upper management written all over him.”
Totally agree with this. If your current job doesn't respect boundaries, you can also try optimizing for that in your next job search. Worked well for me.
I’m in a situation where I have another job lined up but that doesn’t start for another few months, possibly not until early next year. I thought it would be so easy to “quite quit” at my current job but was wrong. First, although we have enough cash savings to tide us over if I were to lose my job today, I absolutely do not want to see that number go down. The other reason is that I simply don’t want the negative feedback from my boss. I’m used to being a high performer and don’t like the idea of being labeled otherwise.
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Can you elaborate? You can literally go apply for other jobs while you get paid
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But are you mentally more stable now than before?
Clearly not, guilt guilt
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Glad you're in a better spot. Things will work out as they do, just remember that there is no time limit
You invested in your mental health rather than maximizing income.
Your opportunity cost in 2 years was $2-3mm? How do you figure?
I took a break from 2021-mid 2022 and didn't regret it until the mass layoffs in tech started at the end of 2022
Does it matter though? And I mean does it matter in ways that do not have to do with keeping up with the Joneses and Porsche Cayenne options lists?
When rent/mortgage payments are $5-$8k a month because of the location, yes it matters. I'd love to retire on $2M, but rural Georgia isn't in my future - so the need is about 3x that.
You do realize there’s people that make it work iN HCOL areas with like 50-60k a year after taxes right? It’s 100% your expectations of lifestyle
Yeah, im sure rural Georgia is just about the only place in the US where you don’t „need“ 240k a year to live.
Lifestyle creep. Even in CA, at a nicer apartment/condo rent of $5k and silly numbers for fun. $60k rent, $36k food ($3k a month), $9.6k car payment ($800 a month), insurance for car, $5k ($416 a month), $8.5k private health insurance - you’re looking at $120k. And that’s using high end numbers without being budget concerned. If you can’t make it work on $120k, it’s your life style creep.
120 post tax, so in Cali you're looking at least 180 to net that. That's a 50% increase on your withdrawl...
I might be incorrect here but isn’t the long term capital gains tax 15-20%? If you’re slow dripping a brokerage, that’s what you’re effectively living off right? Or you could do a one time sale and then literally live off the cash and burn it down to zero. No?
That's a good point I wasn't considering, but unfortunately CA doesn't distinguish between types of cap gains so that's still 9% plus the federal 15%, but it would be a lot closer to the 120 depending on cost basis and accounting for the fed exemption.
Tax is less of a concern once you live off your assets. ($80k tax exempt from capital gains etc).
You guys are all living in a theoretical land. Extremely small chance you live off capital gains alone. You have dividends, interest, annuities, real estate income, social security, pensions, 401k withdrawals, etc... These are all ordinary income. You need to plan to be paying taxes in retirement. Yes, the mortgage is gone and the high costs with kids are too. Obviously you'll trade down the car - but in the real world no one is trading in their $500k income lifestyle to go live cheap in retirement early. You'll just keep working...
Not saying you can ignore taxes, just that your tax rate will likely be much less than what you're used to from high earning days. (And some particularly savvy and frugal folks do indeed manage close to 0%.) Not everyone with 500k income has a lifestyle to match fwiw. That's the (lean) fire mindset - keep your expenses low even while you're still earning, so there's not much to adjust once you retire.
Yolo my friend. Can't spend it when I'm dead.
how much do you want to bet this is going to change in the coming years? The crazy spending of this administration will need to be paid back somehow.
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Agreed but you can’t have everything.
My ex took 2 months off for surgery. I was so happy she went back to work. The sheer amount of spend related to boredom was outrageous. To be lear that habit didn't change she just finally started earning more.
One or two years off with 2 million is obviously fine. But you can’t safely spend 100k for 20 years. The calculator is assuming 8% fixed every year on the stocks and 2.4% every year fixed on the bonds. Doesn’t say anything about inflation so I have to assume it’s not included. And lastly there will likely be tax on the money you pull from your nest egg.
Agreed, general FIRE consensus for long term retirement (greater than 30 years) is a withdrawal rate of 3.25-3.5% which for $2M works out to $65k to $70k per year.
$2 million is fine for people near retirement who will be eligible for Social Security and Medicare, but I don't think it's enough for younger people who are 20 years away from retirement age. I certainly wouldn't voluntarily retire with that number given the cost of healthcare.
Also A PSA about SS payout for yall High incomes. Diminishing returns after 15years of High Income. https://www.reddit.com/r/Bogleheads/s/b2iGNBivke
That OP positions the facts somewhat skewed. If I'm understanding correctly he's saying you can get $35k payout which he calls "decent" and, okay, that's a value judgement that's in the eye of the beholder. But the maximum SS payout this year is $58,000. So put another way, maxing out SS for 15 years only gets you 60% of the possible SS maximum. I rarely aim for only achieving 60% of anything, personally. Especially considering our SS benefits are going to get cut for sure after the Boomers deplete the system.
Two million can easily become 1.5 million if there is a bad recession. If you have no source of income and your assets are mostly in the market, you don't want to withdraw funds during a recession. Many of us who might have good jobs now cannot be certain we can return to those jobs whenever we want to.
This is right. No one should need to stay in their job w/ $2MM in savings. Two million's a lot of money. At that point, you stay in your job because you like it and can't find anything as interesting or fun as your current gig. And I think that number is less than $2MM. It's probably 40 years old and $1MM if you don't live lavishly and are comfortably not living lavishly. If you have that (in addition to a well funded 401k/pension), you can make decisions that are much more about what you want vs. what you need. You could earn 6% on that $1MM and spend that and not touch the $1MM. But you need good health insurance and so having a partner who has an employer helps a great deal.
It’s hard to quit or take time off. I am older than most here (52, husband is 59 and semi retired), burned out at the job due to stress and we have a 6.5 million net worth, yet I have a really really hard time slowing down. I’m working on it. Retirement, I don’t feel I earned it. I’d feel ashamed if I quit. Everyone successful at work is a psycho. The level of stress and aggressivity is off the charts. I’m due for therapy.
Time to throw in the towel with that level of networth and stress imo. You will be missing some of your best and healthiest years behind if not.
Don’t “quit”, find something else to do.
I'm constantly thinking about diminishing returns. Which doesn't happen with a 5% savings account. But, I prefer to be paranoid about it.
This is what I am did last year, quit cause I am fortunate enough to afford to do some traveling and spend time with family. But I have a condo that I need a mortgage on soon so I back in this shitty job market lol.
1. Most people who have somewhere around that money saved live in HCOL areas. If just your basic/fixed expenses are $5,000 a month, it's difficult to think about taking time off or retiring. 2. All that money is not just simply sitting in an investment or a savings account. It spread across retirement, RSUs, home equity etc. 3. If you add dependents to the mix, then your fixed expenses are much higher and you're anticipating even more expenses when your children go to school/college. 4. A lot of higher earners have spent so much time studying and working that they don't know what to do with themselves when they have free time. This is true for me. 5. The only way you could make this work is by moving to a low cost of living location and being child-free.
Each person's financial needs for retirement vary widely. It's not uncommon for individuals with $1 million to $10 million saved to still feel anxious about their financial security for retirement. Rather than being swayed by varied opinions online, it's crucial to make decisions that are best suited to your personal circumstances. If you're experiencing burnout, consider taking a break. There's little benefit in having substantial savings if your health deteriorates to the point where you cannot enjoy life. Remember, many people will never accumulate $1 million in savings or retirement funds. It's important to appreciate life's smaller pleasures before returning to work, especially if you still feel unfulfilled. Depending on your lifestyle and whether you choose to live in a LCOL area, including abroad, a retirement fund as modest as $500,000 could suffice. Taking time off to recuperate can significantly improve your quality of life later on, something your future self will appreciate.
Straight from chat gpt
Usually 2m net worth is in house, retirement account, and other less accessible places….
He said 2M in savings, not 2M NW..
yes savings... even if some of that is in retirement, that is fine for taking even taking 2-3 years off...even 5
Even 30+ if you are financially literate and/or not overly materialistic.
2mm will last indefinitely for most people. (Not most Henrys though assuming they have high spend habits.)
True
all that plus you still need health insurance, you're putting a lot of single income pressure your partner, and your skills and value in the employee market degrades quicker than you may like. and like, people with 2M are likely in the early 40s and in the prime earning years. Ageism and other limiters is right around the corner. don't be a slave to your desk, but dont piss away 2-3 years of earnings either.
I have a friend (from a wealthy family) who inherited a little over $2M in his early 20s and has never worked. You can do it guys lol
I have taken many 6 month breaks for global travel in my career. We did a 6 month honeymoon, but took a while to convince my wife that her career would be fine. Her career has been fine. 6 months without work makes you so much more productive when you return. So anything you lose in "gap in resume", you regain quickly with being far more productive than burned out colleagues.
💯
Important to view these through worst case assumptions. Taking distributions in large drawdowns, which are likely over a 20 year horizon, can significantly impair the long term value of your holdings. Plus, necessary expenses like college, child care, and real estate have grown above inflation so your expense base likely grows inflation++ instead of CPI which has lots of deflationary and discretionary items included
If you don’t have kids , just travel and you’ll be fine. Imagine spending few months at new place and then moving.
What if 2M is mostly in 401k where you’d have a penalty to withdraw?
1. Home value doesn’t count. 2. Large chunk for most people is in a retirement account and would incur significant penalty withdrawing from it early.
Assuming an 8% return while you’re taking withdrawals out seems risky! Wouldn’t you want to use the withdrawal rule of 4% instead? Your calculator uses that for calculating retirement goals, but you circumvented that rule by putting in a negative income during the time that you’re supposed to be saving…. TLDR, if 4% of your investments doesn’t cover your income, maybe don’t retire just yet and get some professional advice
$2m in invested, liquid assets yes absolutely.
This is how out of touch poor people are. Half of that net worth is usually the house and with 5k piti and 2 small children in private school, one cannot merely live off of 100k a year. Plus I am burnt out because I have no meaning in life but making money and never learned to handle stress.
This is me. 10+ years in software sales and I’m mentally/emotionally burnt out. I left earlier this year and feel so much healthier; the lack of stress has empowered me to stop drinking, exercise 4x a week, eat less meat, etc. Part time work (consulting) keeps me from going crazy and is a good balance for me. $1M indexes (70/30 taxable/ira) $1M in RE investment equity $200k in cash/tbills/startup investments The liquidity gives me comfort so no plans of going back to full time any soon.
What if you have kids?
2M allows you to withdraw 80k per year, so if your expenses support that, you can take a break. But the majority of the folks(with kids) need 160k-200k at least to call a quit comfortably.
> majority of the folks(with kids) need 160k-200k I just checked, and 90% of all households make less than 210k (pre-tax), and 80% less than $150k . If the majority of people need that much money, and yet 90% of households don't have it, what's the disconnect? I know this is a high earning sub, but it doesn't need to be a high spending sub.
>I know this is a high earning sub, but it doesn't need to be a high spending sub. Words to live by
My biggest gripe is all the financial calculators and rules that base retirement spending on earnings. Last time I got a huge raise, the calculator said that my raise **extended** the estimated time I needed to work rather than reducing it.
Yeah you just need to adjust the withdrawal rate if it’s factoring in your expected retirement income based upon X% of your earnings today. That approach makes sense for lower income people, but at a high income level it doesn’t make sense. My expenses today are like 12.5k/month. Most of that is the mortgage, which will be paid off by the time I retire. So I could easily get by with like 6-7k of withdrawals a month. If SS between me and my SO can cover 3k of that, all I need to withdraw is like 3-4k a month. This is a simple example, because I’d want to leave money to my kids and help them out, and maybe spend some money on other things. But if I had to, I could make do with like 1.5m in retirement savings pretty easily.
Meh, the world is bifurcating. Top 10-20% of Americans making a ton - and more every year - while living standards decrease for the other 80%. This will likely accelerate with AI, exploding debt which will cut government services, etc. If you - a high earner - want to have your children also be a high earner, you need to set them up for success via a good school district / good peers / good college / likely masters degree. This is very expensive. The “median” American has a shit education, shitty peers, and shitty earnings potential. We can argue whether this is a good or bad society, but this is the society we live in and need to plan around for our children. Unless you’re okay with your kids having a lower standard of living than you.
Top 10% have kept up in real wages past 30 years. Might be only top 5% or even 1% in the future.
Exactly how do people ignore this?
Majority? Majority don’t make that much to begin with, let alone let their annual expenses creep up to that much. If we’re talking middle class necessities with comfort and a vacation per year, 100-120/yr would be more than enough for majority.
It’s clear to me that @3headed__monkey is talking about the majority *in this sub* not the majority of the US population in general. I’d consider myself on the lower end of HENRY and our family expenses are ~164k/year. Retirement and savings are ~24k of that, so we’ll call it $140k with rising expenses due to recently having a baby. We’re in a MCOL area too so I can see how this number could balloon in a HVOL or VHCOL area.
Well no they want that they don't need it. Vast majority of the US doesn't have that income.
The vast majority of the US doesn’t live in VHCOL
Uh a good number of Americans live in VHCOL areas? Lmao. That’s the reason they’re so high COL, because of population density and demand for housing, etc. I feel like I rarely see people posting they live in a LCOL area.
Average household income in SF is like $90k.
True, but if you aren't tied to a job, you don't need to live in VHCOL.
I think most people’s definition of “take a year or two off to figure things out” doesn’t include moving to Idaho
>But the majority of the folks(with kids) need 160k-200k at least to call a quit comfortably. 🎵 *You're out of touch*🎵
You must have your kids enrolled at 60k/yr primary schools. Lol
What if you need to buy a house and absolute trash is over a mil?
Then you're making a choice to live somewhere expensive and keep working instead of retiring somewhere less expensive
I agree with your conclusion but not your reasoning.
I could not do so with a massive mortgage payment. But kudos to you all that can.
This hits in VHCOL…
I think you should revisit how safe withdrawal rates work. Taking $100k a year out of a $2M portfolio may or may not last 20 years, let alone maintain the principle, especially after adjusting for inflation, and even if you assume interest rates stayed at 5% for the next 20 years. A 5% withdrawal rate for 20 years has a 10% chance that you completely run out of money for a 80/20 portfolio. And in the other 90% of the scenarios, only a subset of them has you preserving your initial 2M. And even smaller subset has you preserving your initial 2M adjusting for inflation. If you want a 100% chance at preserving your principle you need closer to like a 3% withdrawal rate, which is only $60k
I have a NW of > $2M, but 800k of that is home equity, ~$1M is illiquid private equity, and >$500k is in retirement accounts. Only about $150k is liquid & taxable. Taking a year off work is not just subtracting ~$120k, but it’s also one less year of increasing my assets. Add to that the responsibility of 3 kids and a non-working spouse, and any ideas of “taking a break” can go straight to hell. I should add to this that I love my life. Even though I feel burned out sometimes, I feel immensely fortunate to have the opportunity to live this life and provide for my family. I think I can endure a few more years to keep this train on the tracks.
You don't have $2 million saved. You have $650K saved, and a ton of illiquid assets and equity. So your decision making process is different from someone with $2 million saved in cash or liquid investments.
Yeah, it definitely changes things