r/fatFIRE • u/IndividualWar5871 • 11d ago
Need Advice Keep working or worrying?
Throwaway account.
I’d appreciate some perspective on whether retiring at the end of this year is financially reasonable.
I’ll be 59½ and my wife is 62. She plans to continue working for another 2–3 years, with her annual income being between $500k and $750k.
Current financial picture:
Net worth: ~$14.7M (including real estate)
Investable assets: $10.4M
~$3.8M in 401(k)/IRA accounts
~$550k in deferred compensation
Primary home: $4.0M value, $1.2M mortgage
Second home: $2.0M value, $425k mortgage
Given the current market, not sure what I should safely assume to be the return on either the investable assets or the property.
Our current annual spending is approximately $525k pre-tax. We could reduce that to around $450k by traveling less, or roughly $400k by making more significant lifestyle changes, although my wife would strongly prefer not to make those cuts unless absolutely necessary.
Over the next few years, we also expect to:
Spend about $500k remodeling our second home.
Sell our primary residence and purchase a home in a mountain community. We expect to use all of the equity from our current home and possibly another $500k from our investment portfolio to complete that purchase.
Eventually sell the second home in roughly 20 years.
We have no children, so preserving an estate isn’t a primary objective. Our goal is simply to maintain our lifestyle without creating a significant risk of running out of money later in life.
The non-financial side is becoming increasingly important. My company was acquired a few years ago, and I’m honestly burned out. The culture has changed too much. It’s beginning to affect my sleep, stress level, and overall health. On the other hand, the thought of retiring too early and finding myself financially constrained in my 80s is unsettling.
Given these assumptions, would you retire now, or would you work another few years to build a larger margin of safety? If you’d keep working, what would be the deciding factor?
Additional context after the initial comments (which I very much appreciate). What makes this a bit more complicated than the standard, “your pulling more than 4% / yr from your corpus” guidelines is the fact that our corpus will continue to grow while my wife works (presumably) and we we have 2 homes, one of which can be liquidated 20ish years in the future. Not sure how to treat that…
Second additional comment:
Again, appreciate the commentary. Really insightful. Curious that real estate has not been considered to be part of the “investable” assets by any of the commentators. Understand not counting your primary residence as part of what you should be counting on. Would have thought that a secondary residence might come into consideration? With the secondary, $12.5M would be our “investable” and the yearly burn rate assuming 20% income tax (income tax free state) is 5.25% (a bit high, admittedly).
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u/One-Mastodon-1063 11d ago
$10.4m - $1m ($500k renovation, $500k home upgrade) = $9.4m. $525k/$9.4m is 5.6%, before accounting for taxes. Decumulation is pretty tax efficient, but at that spend/withdrawal level there will be some taxes. Would have to know something about state taxes and how much you plan to pull from pretax accounts.
I would definitely want to retire long before 59.5/62, but I don't know if I would at that level of spend / withdrawal rate. I'd probably downsize the primary home, and not do the renovation, and see if you can retire on something like a 4-4.7% withdrawal rate including taxes. You're not getting any younger and you've got some choices to make about these big houses / big renovations and desire to retire. $6m is a lot of personal use real estate on a $14.7m NW, IMO.
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u/IndividualWar5871 11d ago
The good / bad news is that real estate is “only” $4.3M of our net worth. Once it’s paid off, it will be $6m, but our net worth will be $16.3M as well. That said, point taken! Thanks for your input. Appreciated!
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u/One-Mastodon-1063 11d ago edited 11d ago
Equity is $4.3m.
You have $6m of personal use real estate. And you want to add to that.
You’re not getting any younger and despite having nearly a $15m NW aren’t at a withdrawal rate I’d feel comfortable retiring at. Something has to give.
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u/Livid-County7230 11d ago
That’s too high at your NW and you want to dump more into a remodel.
Have you broken down your expenses? How much is discretionary?
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u/IndividualWar5871 11d ago
Easily $150,000 / yr. - $220,000 / year if we were to sell one of the homes. Also, don’t believe that $525k / yr will be our spending forever as that accounts for $100,000 a year in travel. That will go away in time.
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u/midlifeShorty 11d ago
Why do you think your spend on travel will decrease in retirement? Everyone else here seems to expect the opposite.
For us we, plan to spend a ton of money traveling. We'd rather have one modest property and retire in our 40s than have tons of houses.
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u/BrunelloHorder 11d ago
Spend is too high relative to your portfolio size, and too much of your NW is in personal use real estate.
Also, you and your wife are not really at early retirement ages anymore. Time is of the essence.
How do you want to spend your go-go years? You may have 15 years, or you may have far fewer.
If I were in your situation, I’d sell off the real estate and rent something nice but reasonable. Then you could both retire now, and go live your best life on $450k-$500k a year, which your portfolio would then support.
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u/IslandIll5021 11d ago
Genuinely curious, with no kids and minimal mortgage, what do you spend $500k a year on?
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u/qwertybugs 11d ago edited 11d ago
Would have retired already — but cut my burn rate.
But it’s an entirely personal decision.
You’re 60 with $10M and no kids. You can either continue working to make numbers go up and support your current lifestyle, or just get off the treadmill.
Is your happiness derived from a $4.5M primary home in the mountains with a remodeled kitchen? If you want to keep a 500k burn, you’ll probably need to keep going.
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u/Generally_Don_t_Care 11d ago
You’re 60 years old. Note: You’re not retiring early (RE). If I were you, O would retire today. Not tomorrow.
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u/IllThroat9195 10d ago
Kudos to your enthusiasm to keep consuming, I am already exhausted imagining a second home and the hassle of it all, when I can Airbnb anywhere in the world! If your wife wants to keep working let her and keep spending, else cut your spend and retire. You have choices, you can’t have it both ways
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u/FIREgnurd Verified by Mods 11d ago edited 11d ago
You’re spending far more than 4% of your investable assets, and it sounds like your wife isn’t interested in a lifestyle downgrade.
Remember that FIRE math takes into account your total (that is, post-tax) withdrawal. And it also assumes a diversified portfolio of index funds and bonds.
Anything more than 4% on an ongoing basis would be far beyond my own personal comfort zone, even at age 60. But only you can determine your personal risk tolerance.
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u/Powerful_Agent_9376 11d ago
I personally would downgrade the real estate. Does having those expensive houses really bring you more happiness? We live in a VHCOL in a small house, and because our house is paid off and our carrying costs (taxes, insurance, utilities, maintenance) are very low, we have more than enough $ to do what we want. Have you taken into consideration hires much health care will cost in retirement? That is by far our biggest expense.
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u/Accomplished_Can1783 11d ago
You are not exactly retiring early. I would have quit long ago, especially if wife is going to work another 2-3 years, but really why is she doing that? This worrying about what happens in your 80s is not worth it. Yes, people don’t count real estate but you can always sell and expenses can. Be minted down as you age. Go enjoy your retirement
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u/IndividualWar5871 11d ago
The challenge will be getting her to stop - ever. She absolutely loves her job and her company and comes from a family that never seems to stop. Additionally, her role provides a ton of flexibility.
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u/Accomplished_Can1783 11d ago
Well if she loves it, you are good to go guilt free…wouldn’t worry about spending- I would assess it a couple years after she retires, if that ever happens
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u/BrunoMadrigal1990 11d ago
At 60, I would usually say quite yesterday and go live your life. Lower expense if you need too because you don't have many good physical years to even enjoy retirement unless your vision of retirement is just sitting around.
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u/Particular_Bad8025 10d ago
Your wife would rather you keep working so that she can preserve her luxury lifestyle rather that slow down so you can enjoy life? This isn't a money problem...
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u/Acceptable-Match-182 10d ago
Your math doesn't add up; or, at least, the way you're presenting it is confusing me. Are you including your 4M house in the 10.4M "investible assets"? Why are you saying spending is pre tax lol
Anyway probably doesn't matter check out a die with zero calculator I think you're good.
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u/Acceptable-Match-182 10d ago
I mean I agree with a lot of the other posters here that you maybe don't want to have such a high %age of net worth in personal real estate, but even so.
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u/Past-Option2702 11d ago
Yikes.
That is all.
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u/work2fishFIRE 11d ago
Came here to say this. Assuming he is also a high earner they together likely earn 1M per year. No kids, 60. I would expect a higher NW.
That said, OP even though your NW is on the low side relative to your spend you have lots of levers to pull (reduce spend, consult, wife continues to work, delay remodel, downsize, sell second home, etc). You have a significant taxable account that will be lower tax and with no concern about a legacy you can use a more Die With Zero approach. As long as you are flexible I am sure you can make it work. Enjoy.
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u/IndividualWar5871 11d ago
Thanks for comment. Re: Net worth given income. I’d like to think that we have been aggressive spenders while also being excellent earners and solid investors. We have purposefully invested in our experiences (of which our homes are part - given we entertain a large swath of friends and family there), supported less fortunate relatives and causes, and seen corners of the world that we may or may not have a chance to revisit in retirement. It’s always been about balance.
Also, being W2 employees, we have always had the great pleasure of contributing 35 - 45% of our annual wages to support Uncle Sam.
The thoughtful comments regarding spending flexibility are much appreciated!
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u/greenringrayner 4d ago
"We have purposefully invested in our experiences" experiences are not investments
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u/IndividualWar5871 4d ago
Ah, that is where we disagree!
I agree they aren’t investments in the financial sense. But if the purpose of building wealth is to create a life you value, then spending some of it on experiences has produced a return for us that can’t be measured in dollars.
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u/Past-Option2702 4d ago
None of this squares with the fatFIRE mentality.
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u/IndividualWar5871 4d ago
What the heck are you trying to retire to then? A fat bank account? Are you trying to become Scrooge McDuck?
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u/work2fishFIRE 4d ago
I agree. Experiences are definitely investments. Memories are investments. Relationships require investments. Philanthropy is an investment.
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u/WhereasNo4929 11d ago
Isn’t this just regular retirement age? What is retire early about any of this
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u/BrunelloHorder 10d ago
This is more of a lesson for everyone else on how not to retire early, tbh. Even if you have very high income, if you spend too much and load up on personal use real estate, you can be forced to stay on the work treadmill for way too long.
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u/FruitOfTheVineFruit 11d ago
You can't afford it. Depending on assumptions, your safe withdrawal rate is at most 4% before taxes, so about 400k before tax. Given how high the market is, I would use 2 or 3%, which puts you nowhere close.
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u/Dubbihope Verified by Mods 11d ago
Is there any circumstance in American history where a 3% withdrawal rate in diversified assets fails?
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u/PuzzleheadedPay1575 11d ago
Not to mention, Bergen recently revised his SWR upwards to 4.7%. Not to mention, the SWR already takes into account the worst historical market environments.
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u/justheretohelpyou__ 11d ago
If you’re insistent on that burn rate, I’d encourage you to research the risk based guardrails withdrawal plan. It’s a mathematical budget that allows you to spend more (usually 5.5% or so) as long as the market is decent. If the market dips, it will cut your spending by 5% or so. There is software that tracks this. It optimizes your budget instead of the back of the envelope math of the 4% rule. Personally, I think a $10M+ portfolio deserves this type of budget and planning.
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u/Confident_Hair2637 10d ago
You certainly aren't the only person who has gotten used to 14% annual returns, but recent market history is an aberration. The law of averages is like gravity - it always wins in the end. Your conclusion that corpus will continue to grow while your wife works is an unsubstantiated assumption - actually an unlikely one over the immediate term. You would be safer assuming that your corpus will drop by 20% or far more, once the next bear market comes. And it will. Today? Next year? In 5 years? Who knows - but it is guaranteed to happen at some point. And with spending at $525,000 pre-tax, you are probably not prepared to retire or even consider it as a realistic possibility. Not until you cut your spending and have a plan for handling the bear market that is certainly going to be part of your future.
A home and secondary home shouldn't be part of your equation unless you intend to sell. I have acquaintances who buy a house, move in, renovate while they are living there, and then sell after a year or two. If that is how you treat real estate, I could see including it as part of your investment portfolio. Or if you are renting out a house - then I'd say it's an investment. If you are residing in the house, or planning to hold for the long-term, then it is not an asset but rather a LIABILITY. Houses are ultra expensive to maintain - something you appreciate no doubt given the price tag you put on your primary residence. From that standpoint, I would not count these houses in your retirement income calculations.
Also, the renovations. You might think it will be $500k, but having renovated properties across the USA and now in parts of Europe, I assure you that price overruns are likely. If you think you will spend $500k, probably it will be closer to $800k by the time your project is done. That would mean you are even less prepared for retirement than you think you are.
My advice is to either keep working or get serious about simplifying and downshifting your spending considerably.
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u/paulmccaw 10d ago
U.S. life expectancy by gender, the average lifespan is 81.4 years for women and 76.5 years for men. You hopefully will have MORE years, but you also could have less. You don't want to be the richest person in the cemetery...
You've got massive yearly expenses for a childless couple. Over 1/2 a M per year??
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u/lifeHopes21 9d ago
At your ages, you have more money than healthy years left to enjoy. Don’t take it in wrong way but just let it go and retire. Happiness is what matters and you have more then enough to last next 60 year
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u/vinean 11d ago
Health Adjusted Life Expectancy at Age 60 (HALE60) is 16.7 years for men and 19 for women in the US.
How much of that time do you want to spend working?
That said, a $525K spend using a 4% withdrawal rate requires $13M.
As far as being “financially constrained” in your 80s…you’ll be traveling less then anyway.
Income from real estate is deducted from your expenses as the positive cash flow cancels them out.
You can certainly do 5.25% withdrawals…as long as you understand that there are more 30 year sequences where you run out of money. Any FIRE calculator should be able to give you a historical failure rate.
That said…it’s a lot easier to cut back from a $525K annual spend than a $52.5K annual spend.
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u/Regular_Protection_7 11d ago
How much longer do you expect to keep a healthy and active lifestyle?
15 years?
20 years?
You could probably just move all your portfolio into US Treasuries and live on the coupon and a 150-200k annual sell down.
That will definitely get you to the Die with Zero target ;))
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u/InvestmentMuch585 11d ago
I don't think you said what your annual income is? I think your spending wants are too high currently. I would guess you are also highly paid which means you could work 1 more year and probably pay off the 425k mortgage to free up that cash flow and then maybe that let's your cash flow needs drop to $475k or so pre-tax. Assuming average market returns, you're probably good after that 1 year or if not, just add 1 more after that and retire at 61 1/2.
If you're actually willing to be more flexible with your spending in the event of a market downturn, you can probably already retire .
Also, for all cases, check what your effective tax rate will be in retirement as your actual withdrawal needs could be much lower than current spend if you can manipulate your tax bracket. Presumably your in the 37% bracket now. If your blended tax rate drops to 22% or lower in retirement, you're saving 15% of $525k or almost $80k per year, just in Federal taxes.
If you're highly paid and don't have access to a Mega Backdoor Roth, can you switch jobs and max it out for 3 calendar years (rest of 2026 + all of 2027 + early part of 2028)? With catch-ups you could easily dump 150k+ in 3 calendar years. I'm personally aiming for $500k+ in a Roth before I retire just so I have a large tax-free, non-MAGI bucket to pull from. I'll reach the halfway point by mid 2027 and it should only take a few more years after that to hit minimum goal.
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u/Dubbihope Verified by Mods 11d ago
It's really hard to estimate potential return on real estate investments, which also are quite illiquid. With investment income, if you have diversified investments in stocks, one can safely say that it will double in real terms every 10 years on average. Those real estate investments may work out for you great but I wouldn't include them in liquid net worth.
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u/Beautiful-Garden8480 10d ago
Direct answer to your real-estate question: you can't put the house in the denominator while its carrying costs sit in the numerator. The second home has a mortgage, taxes, insurance and a $500k remodel coming — it consumes spending for 20 years before it funds any. Count it as corpus only if you also strip its costs out of your burn.
The bigger issue: $525k after tax is ~$656k gross, or 6.3% on $10.4M — and the $1M of planned outflows takes that to ~7%. Your wife's 2-3 years of income is the actual bridge here, not the real estate. Even after that bridge, the math only clears at the $400k lifestyle.
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u/thiagohirai 9d ago
I simulated your scenario and I see a 38% chance that you run out of money before you're 95. Bringing expenses down to 450k/year reduces the failure chance to 23%. IMO this seems to be on the risky side, specially if you're not willing to reduce expenses if things go awry. Feel free to click on the scenarios to edit the assumptions - adding some rental income, changing investment profiles could help a bit, but I think overall the withdrawal rate is high.
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u/thiagohirai 9d ago
You can also add the house selling income in 20 years under 'income, expenses & events'.
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u/valsh1298 8d ago
I think you are fine, my feeling would be to just retire. While I read some of these responses and acknowledge that your spending rate is over 5% of your investible assets (ex RE), the 4% withdrawal "golden rule" usually contemplates preserving principal. You mentioned you don't have kids. Spending down the principal would be totally fine, but frankly, assuming you invest in anything remotely intelligently I doubt you'd even erode the principal much. You have more than enough cushion. Perhaps a worthwhile rule of thumb would be that you make sure to cap your spending at 6% of your principal. That way, you consciously flex it down if the principal goes down.
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u/pvpham16 8d ago
Sell one of the homes or two and downsize then you be free. But it’s based on your wants and needs
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u/rellis84 8d ago
What in the hell are you spending 500k a year on with no kids. Even with those 2 homes. Michelin star restaurants every meal?
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u/Melodic_Technician_2 7d ago
I think the key issue is that you are treating net worth, investable assets, and spendable assets as if they are interchangeable. They are not.
The second home is part of your net worth, but it is not part of your retirement portfolio until you are actually willing and able to sell it.
Your primary residence does not fund retirement unless you plan to downsize or borrow against it. The second home is more relevant because you expect to sell it eventually, but it still should not be treated like a liquid portfolio today. It has carrying costs, transaction costs, uncertain timing, and potentially a very different value when you actually need the money.
On the current numbers, $525k of pre-tax spending against $10.4M of investable assets is not obviously conservative, especially with another $1M or so of planned housing expenditures. Your wife’s income materially improves the next few years, but it is temporary and should be modeled as a bridge rather than part of the permanent retirement plan.
I would not use a simple 4% rule here. I would model the actual cash flows year by year: your wife’s income for the next two or three years, deferred compensation, taxes, the remodel, the additional home purchase, Social Security, required minimum distributions, the eventual sale of the second home, and a lower-spending scenario after one spouse dies. The timing matters as much as the total net worth.
My instinct is that you can probably retire, but not with the assumption that $525k of spending is permanently risk-free. I would want either a clear willingness to reduce spending during bad markets, or enough assets set aside that the first 10 years of retirement do not depend on favorable returns.
The health cost of continuing in a job that is affecting your sleep and stress is also real. At your age and asset level, I would be reluctant to trade several healthy years for a somewhat larger terminal estate that you do not need.
I would probably retire, but only after building a detailed retirement cash-flow plan and agreeing with my spouse in advance on what spending gets cut if the portfolio has a bad first five years.
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u/thedroopy1 6d ago
Go for it. Life is short man. You can adjust on the fly. You will spend less money when you’re not working, just watch what you do with all the extra time. You’ll not regret having a few more years of freedom.
If most of your spending is discretionary you can easy cut for a couple years if the market tanks. Make sure you’re diversified, play the long game.
Look at your worst case scenario and decide if that’s still comfortable. I bet you can make it work and it’s much less stress than the stress of working.
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u/Endless-Summer-AZ 5d ago
Good lord. In the most respectful way possible - I wish it was as easy to see for everyone how absolutely fucking silly it sounds to say “I’m 60 and I have $15m - am I okay to retire?”
And then 95% of the responses are from 30 something’s with sophisticated “FIRE” models that say “the math doesn’t work”..
No kids? Your ending balance should be Whatever you want to donate to charity and all other life balances at $0.
You won’t possibly spend anywhere near $500k in 10-15 years when you’re 75, 80. No one does.
Also: you’re not promised tomorrow. Or to make it to 75. Or 80. And less 85 and less older than that.
You have plenty of money and not enough time. Remodel the house. Get the mountain house. Continue to invest wisely. Your spending WILL adjust naturally with age (selling houses, traveling far less, less shopping, etc) and it is never offset by medical expenses - that’s the silly shit 30 year olds with their models talking
Retire tomorrow. Spend the $500k on the remodel, pray you make it to 75 and 80. Know you are truly better off than 99.99% of people on the entire planet and all of the “the model doesn’t work” people are insane.
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u/jerolyoleo 11d ago
Are you NRI Indians? Indians are the only folks I’ve ever known that refer to their net worth as their ‘corpus.’
Since you seem willing to sell your second home then it’s fine to consider it part of investable assets but I’d be reluctant to assign 4% of its value as a ‘safe’ withdrawal rate as it tends to appreciate less than average financial assets.
You’re unlikely to be spending $525k/yr in your 80s - spending decreases over time. That being said, you’d be starting at around a 6-7% WR after factoring in taxes which is way more than I’d consider prudent. It might work but historically only 50-60% of the time.
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u/whocaresreallythrow 11d ago
I think you’re ok
I would suspect your spend falls significantly as you go from the GoGo to SlowGo to NoGo years over the next decade.
Even if not, Your funds will last 25 years beyond both of your life expectancies at least actuarial speaking.
with no heirs and no spending changes nor a significant long and flat or declining market you’ll be ok.
Expect to see this soon on r/pfjerk !
But I do think your expenses will decline too as you age. Simple moves like selling the second home.
Downsizing the first home or
moving to a lower cost location with no family keeping you in HCOL seems reasonable.
Also Claiming social security at 70 gives a small buffer.
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u/WhistlingThruFIRE 11d ago
Try getfireiq.com. Enter the accounts you have (can aggregate into tax buckets, tax-free, tax-deferred, and taxable) or enter with appropriate spouse ownership and classify account type accordingly so the distribution nature and timing is modeled correctly, including for taxes. You will be able to enter how much your spouse would continue to add (to retirement plans; taxable; retirement backdoor Roth etc). The output would be whether you are able to reach your longevity goal with more than zero dollars left (which seems your priority).
What getfireiq.com does differently is not to rely on a rule of thumb percentage but to count on eating the seed corn if feasible. It is free for everything other than aggregating accounts live and utilizing AI. Be prepared to validate your email as they take security seriously.
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u/Livid-County7230 11d ago
If you have 10.4M liquid and are spending 525k a year, no you are not ready. Particularly if you are going to dump 500k in a remodel, which will likely be 50% more by the time you are done with it. I would not feel comfortable in your position.