Personal FinanceCanva : cyano66 from Getty Images and Burst from PexelsChristy Bieber
A Reddit user with a $30 million net worth is wondering if he has enough to retire.
He thinks he may need to keep working until he has $50 million invested to provide enough of a cushion.
While $30 million may seem like plenty, that’s not the case due to the OP’s spending needs.
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Is it possible to have $30 million and still feel like you don’t have enough money? While it may seem hard to believe, this is a situation that a Redditor is in right now. The original poster (OP) is in his 40s and has a household income of around $2 million. He and his wife initially planned to retire once they reached this point but now think they may need $50 million to have enough of a cushion. So, should the Redditor keep working to hit his $50 million target, or will the $30 million he already has be enough?Take a look at the numbers to see if your savings can fund your spendingWhile the OP has quite a bit more money than most Americans, the process for determining if he has enough doesn’t change. He’ll need to compare his spending with the income his investments can produce at a safe withdrawal rate to determine if he can retire now or must keep saving.So, let’s take a look at his spending first. He explained that he currently spends:$60,000 to $100,000 on his property taxes, insurance, utilities, and maintenance.
$200,000 on private school tuition, camps, and extracurriculars for his three children
$30,000 for two car payments, gas, and insurance
$60,000 for child care, cleaners, and helpers
$50,000 for food for four (or more if the grandparents come for an extended time)
$50,000 on “shopping”
$150,000 annually on travel including business class seats for the kids and grandparents who come along
He’s also anticipating that he will need $40K for health insurance one he leaves work. This adds up to a total of around $680,000 in spending. The OP’s net worth of $30 million includes a $5 million primary residence which he’s excluding from his calculations, so he has $25 million invested. He assumed a 4% withdrawal rate, which would give him $700K after taxes — so he has a little bit extra but not much. Does the OP have enough to retire?gonzalo_haro / iStockThere’s one big issue with the OP’s projections immediately. He is assuming a 4% safe withdrawal rate, but Morningstar experts recently revised their recommended withdrawal rate down to 3.7%. Since life spans are getting longer and projected future returns are lower, 4% may no longer be safe