A Reddit user with $7.1 million is wondering if he has enough to retire.
He also stands to inherit around $20 to $30 million.
While he can’t count on the inheritance since he doesn’t know when it’s coming, he should have plenty of money to retire now.
A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here.
A Reddit user is considering retiring but is trying to determine if he’s likely to run out of money.
He currently has $7.1 million in overall net worth, including $2.8 million in equity in his primary home, $1.5 million in non-retirement investments that is currently in company stock, and $2.5 million in retirement investments that are managed by a financial advisor. He’s also on track to inherit $20 to $30 million from his parents, who are in their 70s and who he says are in excellent health.
He’s currently in his 50s, out of work, and unmotivated to look for another job. He feels like he could easily fill his days with gym, tennis, travel, photography, boating, and scuba but he’s just concerned about the potential to run out of money.
So, is he safe to stop working, or should he try to find another job to pad his retirement accounts?
The Redditor clearly has a high net worth here, although a lot of his money is tied up in his primary home. Still, with around $4.3 million in assets outside of his home equity, his investments should produce around $159,100 in annual income assuming he follows a 3.7% withdrawal rate.
Since his fixed expenses are only $2K a month and the rest of his spending is discretionary, he very probably could live off his retirement investments without facing a lot of financial struggle. This is true even if he doesn’t take the inheritance into account — which he likely shouldn’t, since it could be many decades until he receives that money since he said his parents are still in good health.
Since his $1.5 million in non-retirement accounts is in company stock, though, he may want to consider putting that money into ETFs to provide more diversification and reduce the risk — especially since he is going to need to live on that money for around a decade until he is able to access his retirement investments.
fadfebrian / Shutterstock.com · fadfebrian / Shutterstock.com
While this Redditor understandably wants to be cautious, the reality is that he has saved a good amount of money and if he is unmotivated to work, he doesn’t have to continue to do so.
He’ll want to make sure he has a plan to fill his days, of course, and confirm that he can comfortably live on the amount of money that his investment accounts will produce. But, once he’s done that, he doesn’t need to let unfounded fears about running short of money keep him in the workforce longer than he desires.
If he wants to make sure he’s in a good position to leave work, talking with a financial advisor could be a smart move. The advisor can help him decide what to do with his non-retirement funds and can work with him to make sure that he’s going to be able to support himself for the long haul.
This professional advice may be just what he needs to put his mind at ease and start enjoying the fruits of his labor without concerns about forcing himself back to work when he doesn’t want to go.
Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.
And no, it’s got nothing to do with increasing your income, savings, clipping coupons, or even cutting back on your lifestyle. It’s much more straightforward (and powerful) than any of that. Frankly, it’s shocking more people don’t adopt the habit given how easy it is.