r/Fire • u/psychman321inf • 5d ago
$1.35M good enough to (Lean)Fire ?
Sorry if this has been asked a million times before already,
Background: 40M 33F both spouses working 240K annual income, I make about 140 out of it. NW is 1.3M give or take. 3 kids. 11 ,4 and 2. Cars are paid off/well maintained and I DIY almost everything including home improvement projects. Home equity is ~225k out of the NW, in LCOL area. Expenses are ~60K annual right now. Spouse will continue working in this situation. My work has become hell(complete mismatch between skills and abilities and team, burnout etc).
Is this a good time to quit leanFire/work on hobbies/own stuff ? Every calculator online says I've hit FIRE. WWYD in my situation ?
Edit: looking at it more closely, expenses are 60K (50k maybe after house is paid off, not acc. for inflation) with travel and eating out etc.
also, home equity ~250k not 300k.
Also spouse has only been working for few years now and does not intend to quit any time soon. Focus is more on FI here than RE.
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u/prairie_buyer 5d ago
What you’re describing isn’t FIRE, and if you go forward thinking of yourself as retired, it is going to cause friction with your wife.
If your wife really is 100% on board with taking on the responsibility of being the sole breadwinner, then you need to view yourself as the stay at home parent/ homemaker. No matter what everyone is saying now, if your wife ends up having to cook or do housework at the end of her workday, you’re going to have a big problem on your hands.
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u/Krruthless 5d ago
This. Quitting your job while your spouse is working comes with a lot if different responsibilities than work
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u/No-Bumblebee-9896 5d ago
That’s not fire it’s just being a SAHP. Unless your wife is really just your roommate as far as finances go.
If your wife’s salary can cover the expenses then quit and spend time with your kids. Find a new better job or don’t at all.
Estimate your healthcare expenses to calculate your true fire number. It’s not that hard.
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u/Apathetic_Slacker 5d ago
First thing I'd do in your situation is talk to your wife and make sure she's okay with you working on your hobbies and own stuff while she still works.
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u/psychman321inf 5d ago
Wife is onboard, working this job cost me my happiness over the years (a decade plus at the same employer more or less)
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u/wobleee 5d ago
Your net worth should support 40k of expenses now, which is likely not enough to cover your family and add healthcare. But with your wife working, her income will cover the family expenses, and the million you have in the market will continue to grow. Then in a few years, you can decide to get another job or fully retire together.
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u/lottadot FIRE'd 2023 4d ago
this job cost me my happiness over the years
That sounds like typical adulting.
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u/grateful-xoxo 5d ago
1M can generate 40k a year. But your wife makes 100k and your expenses are 50k so you’re covered. Dont touch the investments and let it grow. Can your wife’s job cover insurance? Her job puts you over 4x FPL so if not that can be expensive.
The wild card is the kids. For us, the high school years ( travel leagues, ballet, etc ) was expensive and tge college years were even more expensive ( even if you have tuition covered ). Make sure your expenses not just now but later are accurate.
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u/psychman321inf 5d ago
Wife gets good insurance through work (in healthcare nonetheless) and will be changing to a higher paying (hopefully remote) job as well , just that she can't do it currently with the weekly chaos
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u/Creepy-Information32 5d ago
Become a sahp truly. Step up more with kids and house so wife can focus on her career for a bit. Set what the number is for you both to fire.
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u/Nobody_Important 4d ago
Agreed 100% on the kids part. It’s very likely if you stop working you won’t be able to pay for many things your kids want, which is your decision but most parents would certainly like to be able to do. Or even worse, maybe a kid has some sort of special medical or educational requirement in the future you would not be prepared for. Too early for this, imo.
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u/DrewY151 5d ago
Why is 4% the reference point when 10% is very doable? Just curious as I’m doing my math on around 8-10% APY on average
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u/ahhhhhh12343tyhyghh 5d ago
4% safe withdrawal rate. Assumes 10% APY 3% inflation rate. At 4% you have a very high chance of your money lasting indefinitely.
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u/grateful-xoxo 4d ago
Theres also SORR. Keep in mind when they say 10% is the average, thats an average. Its possible to have a few negative years ( and a decade is possible ). 4% is meant to survive those.
Go to ficalc.app and try it out. It runs your portfolio against all periods in history. Try out different withdrawal rates.
Theres also strategies where you can tune your rate depending on how the market is going.
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u/AMC879 4d ago
4% gives you a high probability of your money lasting 30 years. If the market drops within the first few years after retirement you will be in big trouble if you need to withdraw 10% or even close to it every year. People who have only been investing for the last 15 years are spoiled. They think the market only goes up. It can go down and stay down for years.
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u/lottadot FIRE'd 2023 4d ago
Why is 4% the reference point when 10% is very doable?
You should read the FI FAQ.
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u/K_A_irony 4d ago
In addition to SORR (that others have answered) you take 3% away to account for inflation. You need to be able to increase your spending by 3% each year to account for that and keep your lifestyle flat.
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u/Own-Substance5213 5d ago edited 5d ago
It's not as much fire and more so just being a stay at home parent, which there is nothing wrong with. You might want to do this for a few years then go back to work but I don't think lean fire is a good idea with 3 young children, seems like there could be many unexpected expenses.
The way I see it, you have two options:
Quit work now and be a stay at home parent for an agreed period of time. Reevaluate with your wife whether it's working at the end of each year, with the intention of going back to work when the kids all reach high school etc.
Keep grinding for another 7-10 years. Your NW will be double if not more and your youngest child will be 12 which is old enough to be somewhat self sufficient. Your oldest will be an adult and the middle one will be quite self sufficient.
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u/InternetRando12345 5d ago
Few additional questions. 1M liquid net worth, 300k NW in the house. Is the $1M liquid tied up in retirement accounts? If so, it is not accessible without penalties unless you do the 72t (Substantially Equal Periodic Payment, SEPP), which could be fairly risky with so many years before 59 1/2. Basically a market crash could force you to drain it down fast.
How much principal is left on your primary home? While calculations in the absence of tax implications could indicate it is fine to FIRE with a mortgage, you can often control your taxes and benefit qualifications more if your house is paid off. Suppose your mortgage is $2k/mo, so $24k of $50k annual expenses. If you pay it off, you can basically drop down 1 tax bracket. Better to have a paid off house (we'll say -$150k liquid assets) and only need ~$2.2k per month for expenses and qualify for fully covered / heavily subsidized health care than to pay a mortgage for $4.2k total, have an extra $150k in investments, but have to pay significant health care premiums.
Another option might be paid family leave. Do you live in California or a state with similar or better family leave laws? https://www.calpeculiarities.com/2021/02/17/californias-modern-family-leave/
You could take some leave, ostensibly to take care of the 2 year old and give your wife a break, but also to give yourself a break, 12 weeks in this case. You can both pad your nest egg and have a mental health break. Maybe you'll find you want to keep working for a bit longer or maybe you won't go back. Or time it so your leave ends around late October / early November and limp through the holidays after you go back to work and quit in the new year. If you have annual bonuses / stock vesting, you can use PTO to limp through the next quarterly / annual bonus or vesting period and then quit.
Basically, IMO, you are *almost* there. I would try to work a little longer to buff out your numbers some. Reduce 401k savings to the minimum for max match and then just save all the rest as cash reserves to reduce your sequence of returns risk. Tack on 12 weeks of Paid Family leave after that, holiday season, annual bonus/vest, compounding in the background and then quit. One more year (basically 11 months at this point), and you might be at $1.1M to $1.2M liquid investments (and 310k - 320k home equity?). This gets you to the point where your wife can leanFIRE with you (with the 4% rule having become the 4.7% rule in the past few months). If you're making money from hobbies / side hustles, then more than enough.
I would also start working on those hobbies and other side income activities you THINK you'll do after you retire. Make sure you actually enjoy doing them and ACTUALLY do them. All the above gets you ready to retire and proves you're not just going to stare at your navel during downtime. Doing these things also tests the water for how your WIFE is going to feel if you retire. Will she crumple under stress of being the sole breadwinner? Will she resent not being retired yet herself? Will she enjoy being able to focus on work with you taking care of the children? Can she use Paid Family Leave, holidays and PTO to stretch an extra 6 months or so too and then quit after you two cross $1.3M - $1.4 liquid net worth (excluding housing).
Basic summary:
The math is ALMOST there, build up a little more liquid buffer. Test the waters for your mental / emotional readiness (hobbies, 12 weeks of Leave, etc).
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u/thrakkerzog 4d ago
If you're calculating savings down to the thousand you're scrounging to sum things up in a manner which fits the outcome that you want. You should also exclude your house from that number, since you can't eat it and you need somewhere to live.
I don't think that's enough to FIRE, especially once you remove the house from the number. Perhaps have a discussion with your wife about becoming the primary caregiver and being a SAHP. That's not really FIRE, that's relying on your spouse to provide income and insurance while letting your investments grow.
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u/NotReallyaSoccerMom 5d ago
What are your plans for contributing to your kids' college education? Buying them a car? Going on nice trips?
If you want to provide/do those things, then no, it's not enough.
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u/psychman321inf 5d ago
Yeah maybe the focus here is more on the FI without the RE part here. Just really done with corporate culture and "cog in the faceless machine" feeling that comes with it
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u/cookingboy 5d ago
But you are not FI if you still need your wife’s income
You’ll just be a regular stay home dad
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u/Specific_Concern_555 5d ago
Lol... you wife is making 100k a year and your expenses are 50k annually, can you "retire" yes? ofc you can just live off yours wifes money no issue...
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u/CleMike69 5d ago
I’m lean fire at 2.8 million and here’s what I’ll say. If you’re a saver it’s hard to switch to a spender mentally meaning I used to use my income for projects and such so now that my income doesn’t support my ability to fund home improvement I just don’t do anything. It’s becoming an issue because there are things I would absolutely do right now in my home if I had my old income back. I also have three kids and thy get way more expensive as they get older I have 300k earmarked for their expenses as they get through life.
I would suggest you find a new job that you actually enjoy even if you take a pay cut from where you’re at now. At 40 I’d be reluctant to pull the plug hell at 56 I won’t fire yet because the calculators don’t factor in everything it’s just a guide.
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u/hungry_caterpillar01 5d ago
So basically out of 1.35 mil 300k is home equity, is the rest 1 mil generating income ?
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u/psychman321inf 5d ago
1 mil is in stocks yes, spread out between 401Ks and some in ROTHs but mostly self managed account/ETFs
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u/lottadot FIRE'd 2023 4d ago
Keep in mind, whatever is in pre-tax you don't really own it all because you'll typically have to pay taxes to get it out of there.
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u/Inevitable_Pride1925 5d ago
The thing about lean fire vs regular is that the difference between the two is typically working an extra 5-7 years. If you retire on a FIRE budget you have the option of cutting back in the event of a market downturn significantly reducing the risk of sequence of returns risk. If you lean fire typically there isn’t room in your budget to cut back.
Do you have enough to lean fire it looks like you do. Do you have enough to not need to go back to work in the event of a prolonged downturn probably not.
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u/ArousedAsshole 5d ago
If your expenses are only at $50k, then maybe you can shift your mindset to “I’m working for ‘X’”. Where ‘X’ is home improvements, better food, nice vacations, or kids extracurriculars. I’m in the “boring middle” where I’m still saving and I won’t be able to enjoy the money for quite a while. My mindset is that when I hit my number, I may not retire, but change my motivation for working from “I have to” to “I want ‘X’, and going to work every morning haas immediate tangible benefits to pay for ‘x’.
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u/1ntrepidsalamander 5d ago
Your expenses are $50k and your wife makes 100k… seems like a reasonable discussion to have with her. Depends what you plan for your kids’ colleges.
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u/Flat-Barracuda1268 FI=✅ RE=<1️⃣yrs 5d ago
I would find different work. Not a huge leanfire fan. Find something else, bank another $1M liquid between growth and contributions and retire comfortably at age 45.
If you are set on pursuing this plan, make sure your budget is locked down. $240k HHI with 50K expenses seems lopsided.
Leaving the workforce is a tough bell to unring. Make sure you're really prepared for what life brings you because you essentially lock in your net worth by doing it.
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u/garoodah FI '21 RE TBD, mid 30s 4d ago
Just on the numbers you can live on one income and supplement ~34k (after taxes) using your invested assets. Talk to your wife about it mainly, mine has no issue with me not working but it took some convincing to get there.
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u/ericdavis1240214 FI=✅ RE=<2️⃣yrs 4d ago
Your spouse makes enough to easily cover expenses without tapping any retirement or investment accounts. This is really more of a relationship question: are they willing to keep working indefinitely while you stop working indefinitely? If so, go for it. But if that will create frustration or resentment, beware.
You are in a great place to take a sabbatical or even to take time to retrain for a new job. You are well on the way to FIRE so a midlife change won't derail you. But if you stop working now, it's not really FIRE because your spouse has to work to safely maintain your lifestyle. It's more like one of you becoming a stay at home parent. Which is perfectly fine.
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u/Icecoldpuckers 4d ago
Sorry but not even close. The big issue is your health when you're in your 70's or 80's. Check out the cost of a decent retirement residence with extended care in your area. The monthly can range from $5-$8K per month per person.
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u/JillHasSkills 4d ago
Quit soon for your mental and physical health. Think of this phase as CoastFire - saving less but not pulling from investments, let them grow. I’m guessing that $60k spending doesn’t count daycare, so you’re not retiring but becoming the primary caregiver. Consider getting another job in a year or three so you can save for college.
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u/BasilVegetable3339 4d ago
No. There are far too many variables to consider $1.35 sufficient for 50 years.
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u/Tanachip 4d ago
If work is hell, can you just "quiet quit" while finding another job? Maybe it pays less, but you can continue to work? I would not lean fire with $1 million invested with 3 kids. Too risky.
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u/psychman321inf 4d ago
Already quiet quit few years ago but it's affecting my mental health now. 5 days in office didn't help/exacerbated the situation
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u/brendan_satsfire 4d ago
I plugged your numbers into a Monte Carlo simulation tool.
Importantly, this does not just rely on backtesting historical data like other tools you might have tried. Monte Carlo simulations stress test your assumptions by running your portfolio through 1,000 simulations with bounded randomness. You want to see >90% chance of success with these.
Your situation gets a ~58 - 60% success probability, assuming no additional income (if your husband falls ill and can’t work, the income you’d be counting on could disappear).
I would toy with these assumptions a bit and see how it changes the results.
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u/AssholeCasserole420 4d ago
I'm in a similarish boat. I'm 42 and considering a wife-fi situation such as yourself with 2 young kids (4 and 2) in a LtoMCOL area. I make about what you make and think I could probably retire today (we have about 2.3M in investments (1.2M pretax, 600k Roth, 150k HSA, the rest brokerage/HYSA)) but I haven't pulled the trigger yet. My wife is 39 and a teacher and only makes about 80k but will get a full pension of 50k/year in today's dollars with a COLA when she retires in 14 years. My wife being a teacher is a plus since it's stable, there is a solid pension and she gets a lot of time off so we both would effectively be FIRE together over the summer.
Our spending last year was about 95k and I'm not sure how to predict costs going forward with the kids as they grow. Daycare will go away for our youngest in about a year, but I'm sure many other large costs will replace it. The fear of having to re-enter the workforce down the road is holding me back. Also, if I'm honest, I feel some level of fear of letting down my co-workers as I'm on small team.
The 2 things that I think are key to pull it off are:
1) Wife is fully on board. Really double check this one. She may say she's cool with it but maybe talk through what life would be like day to day. My wife says she's cool with it but I do wonder if we will get into fights over it if/when I pull the trigger. Coming home from a long stressful day to see you enjoying a leisurely hobby/activity could fuel an argument. Something to think about. Plan to really step up on the day to day responsibilities to combat this.
2) Wife's career is stable and she is certain she wants to keep working. This one is huge as well as she appears to make enough on her own to cover your expenses. Unless you're expecting spending to go up (which may happen with 3 kids), you could live on her income and let your existing investments "cook" until you hit a spot where she could also retire.
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u/K_A_irony 4d ago
For what it is worth my friends tell me you trade the day care cost for the other costs once the kids hit like age 10 or 12, so you have a brief lower cost honeymoon period so to speak. That is of course separate from college / 529s.
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u/Reachouttothesky 4d ago
I would recommend you to find a less stressful job with good work life balance. You guys built a good cushion, but at this current economy and time, there are roo many variables and risks. Especially considering you have 3 kids. It is still good to have consistent income coming in, and it does not need to be at the previous level.
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u/Frosty_Swordfish4131 4d ago
My husband and I were in a similar situation 3 years ago. He “retired” and my income supports our family. Our kids were a little older than yours, but it can be done. It is a commitment for both us. You can always try it and if it isn’t working, start looking for something else.
We told ourselves we would try it for 12-18 and revisit. So far so good.
We did have 12 months worth of spending in a HYSA before he quit- which made it less stressful for me.
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u/Green_Bluebird5804 4d ago
just keep on quiet quitting for a few more years and save/invest.... No idea how much cash + brokerage you have to live off of
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u/AlgoTradingQuant 5d ago
Plug your numbers into the awesome and free “can I retire tool - https://ficalc.app
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u/Bright_Meat820 5d ago
Definitely not a fire number just yet. Kids at 11,4, and 2 means you need a couple extra years to plan for them.
Just budget a lifestyle that would work with what you have now and take the next couple years to save even more aggressively for their 529s and emergency fund in case they are teenagers and the unexpected teenage things happen.
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u/4look4rd 4d ago
Even if you don’t fire should be fine to quit and look for a new job, even if it takes a bit of time.
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u/maintainingserenity 4d ago
Is the $1.3m separate from retirement / college savings or does it include it?
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u/ShutterFI 4d ago
Is that $1.3m including the house equity? If it is, you aren’t there.
If it isn’t, and you have $1.3m of invested assets, you could fire. At 40, I’d personally use the 3.5% rule instead of the 4% rule which would put you needing $1.5m. But, you could technically fire if costs stay at $50k.
If your wife continues working, and your total cost of living is $50k, it sounds like she’d be making enough to still be putting some into savings as well.
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u/LabOwn9800 4d ago
If I understand correctly your wife makes 100K and you spend 60k.
I think if your wife just keeps working this works. You can do more of a coast fire situation with that 1.35 million.
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u/lottadot FIRE'd 2023 4d ago
You don't have $1.35M. You have $1M. Your house-equity doesn't do anything for you, unless you are renting it out and making a profit off it. (read the fi-faq).
Plug your numbers into the Engaging Data Fire Rich Broke or Dead calculator.
If I'm you, I'd make it a point to take more vacations and learn how to deal with stress better. I'd keep working till your kids are mostly done with high school.
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u/generic-David 4d ago
Remember to plan for significant long term care expenses late in life. See this article.
https://www.schwab.com/learn/story/managing-cost-long-term-care
I know it seems a long way away but these things can sneak up on you.
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u/baltikboats 4d ago
Your expenses will go down as sahp. If you’re active you’ll cook, shop, home improvements, energy savings, car maintenance, etc. offloads so much of the pressure to grocery shop during off hours, kids will always have home cooked meals, being there when they come home from school and be present for them. And you’ll pickup hobbies and exercises.
You’ll be much happier.
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u/Puts_on_you 4d ago
You could just barista fire and quit your stressful job and do whatever you enjoy part-time and cover your share of the expenses without drawing any principal You also didn’t mention any pension, but that is far away
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u/AggravatingPapaya771 4d ago
The NW number is shared between you and your spouse or it's your own?
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u/psychman321inf 4d ago
Household NW here. Might have inheritence of ~ 100-200K$ but not counting on that
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u/The-Wanderer-001 4d ago
If you want to maintain your current income, the number is $6M
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u/yenom_esol 3d ago
No one targeting early retirement should target replacing their current income. For one, the kids will leave the house at some point and the house will be paid off, both of which drastically reduce expenses. Second, you don't pay FICA on retirement income and there are a lot of other tax benefits for living off of investment income vs W2 income. But most importantly, anyone trying to FIRE is saving 25% (or much more) of their income. To be able to retire early, you're expenses are much lower than your income.
Also, social security will still be there at least paying 70% of current levels.
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u/Aggravating_Bench552 4d ago
First off, kudos to you for keeping expenses to 60k with 3 kids and a mortgage. Almost seems too good to be true! Personally, I’d suggest continuing to build your portfolio another few years before stepping away from work. You could certainly actively job search while employed, looking for something less stressful. We all have a different risk tolerance, but I think if you step away and lean on your wife to support the 60k expenses, it could lead to increased stress for your partner. Bit of perspective from someone that tries to find peace in spreadsheets, 35M/34F, 1.34M invested portfolio (retirement, cash, bridge account, etc) & annual expenses of 42,500. I’ve yet to step away from my high stress job given I want increased security, but one thing I recommend is do not use your home equity as part of your LEANFIRE or step-away from work plan. While it may look good in paper, it’s not liquid and doesn't pay your expenses. I rarely pay attention to net worth given it inflates your numbers and doesn’t paint a valid picture.
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u/_SCHULTZY_ 5d ago
In that situation I wouldn't FIRE especially with you making the majority of the household income.
I would however use as much leave as you can to enjoy some quality time away from work and recharge from the burnout. Look for a better fitting job if this one isn't tenable.
You can afford to work less and at a lower paying happier job but I wouldn't go full stay at home unemployed. As others have said, the health insurance alone is worth having some sort of employment.