Very high income… but how long to keep this up?

[growing_older]

I do not know how likely your excellent income is likely to continue or if there are external factors which could limit your favorable run. If your expenses really are 300K-400K, then you will need a very large capital base to sustain them. At least 10M, more if you haven't accounted for taxes which could be significant. With an opportunity to pull yourself into a much more secure situation financially, I would certainly tend to make hay while the sun shines and plan to keep at this occupation (whatever it is) for at least several more years. You say there is no going back once you leave this job, so I'd target savings comfortably above the minimum to sustain my lifestyle and make myself somewhat future-proof while I can.

[RE2Boys]

Quote:

Originally Posted by Ruminator At times I enjoy my job. It can be challenging in a good way, and I am having an impact on the world. However, much of the time I am miserable on Sunday night. My work is quite demanding, involving a lot of time away from family, and pretty constant background anxiety punctuated with periods of intense "foreground" anxiety! . So my fundamental question is: - Should I stop now, reduce expenses significantly and live a life without (or with way less) work? - Should I cut bait once I reach a reasonable FireCalc assumptions that put me at 100% historical likelihood of being able to fund my current expenses? - Should I try to get more joy from my work and hang in there? How long? I can imagine enjoying having the money to do outrageous things like pay off my parents’ mortgages, support charities I care about in a big way, buy a great vacation home for my extended family, etc. I also wonder whether if I quit too soon I will have regrets about not having pushed myself further (professionally or financially) after all the hard work I’ve put in to get where I am. If I stepped off this path it would be very difficult to get back on. Have heard a colleague of mine say “it is like winning the lottery every year” and therefore hard to stop, but I am also of the mind that money is of pretty limited utility past a certain point. I understand this ultimately comes down to questions like (a) how happy/unhappy I am (or could be) doing what I’m doing, (b) how happy I’d be doing something different (I have plenty of hobbies and can be very happy with a simple weekend… but is that because life is so hectic / would I be bored in 5 years?) and (c) the utility of money for luxuries beyond what I really need. But these are fundamental question many seem to be grappling with on this site, so would much appreciate perspectives…

All very good questions you present, and you've received many good comments to ponder. But one area that was defining factor for me wasn't really discussed. Your situation is likely different from mine, but little was mentioned regarding the impact your work has on your family life.

In my case, being an older dad, and pondering an opportunity to retire early, was the sudden realization that I'm being handed an opportunity to be very much a part of my children's life. Not a dad with a checkbook who visits a few hours each evening when not traveling, but to be the dad that is always there to be the soccer coach or scout leader or just be available. Don't know the age of any children you may have, but this was the factor that made the decision easy. The boys were 1 and 3 when I retired (I was 50).

It was the family life that was the deciding factor for me, and I'm struggling now with what do I want to do next as the boys are now 16 and 18, much less dependent, and I'm finding myself with much more free time than I'm accustomed to. And at 65, my old hobbies are getting more difficult (was an active runner, snow skier, backpacker). The past 15 years were priceless, but I'm also aware that they will be pretty much on their own within next few years. Maybe DW and I will RV/travel a lot more!

[pb4uski]

Looks like the OP has gone radio silent. Perhaps we sacred him off.

[REWahoo]

Quote:

Originally Posted by pb4uski Perhaps we sacred him off.

Sacré bleu, perhaps we did!

[pb4uski]

Ok, typing was not my strong suit... perhaps we scared him off!

[RockyMtn]

Quote:

Originally Posted by pb4uski Ok, typing was not my strong suit... perhaps we scared him off!

He's probably working.

[aim-high]

Lifestyle issues . . . being able to afford it is a terrible reason to buy it. Of the people I know who are living that large, most of them don't really know who they are. There's no real freedom -- even if they are FI or FIRE.

[Ruminator]

Thanks all for your thoughtful responses. Have been taking time to contemplate them…

A few questions you asked –
- Income – Confident it will continue / grow at roughly the level suggested. Know there are big error bars around both market returns and, to a lesser degree I believe, my income.
- Expenses – Several of you commented how expenses will tend to rise with income. Have definitely observed that … we are committing though to even off at current expense levels, which is more than sufficient for us to live very well.
- Kids – yes, 2 who are elementary / middle school aged. 529 plans are almost fully funded.
- Part time option – A few of you suggested this and I have definitely thought about it. While this is theoretically an option, the best opportunities tend to go away and in some ways, for me, that would lead to greater stress.

So my thinking on this is still a work in progress, but I’m netting it all out as follows:

- Back off by 5 or 10% at work on least value-add / least enjoyable obligations to mitigate stress by making more time for family, relaxation, etc. Loved the "take Mondays off" suggestion to address Sunday night stress... I tend to be a very hard driving person and think taking my foot off the gas just a bit can make life more balanced. Will use / get leverage where it can help (had to laugh too at the “get 4 assistants” suggestion someone made

- Keep our spending steady rather than rising with income, and save all the increases in comp. Will start keeping an actual budget in 2015 - not to stress myself out if we're off, but at least to stay more aware...

- Put my head down for the next 5 years and then think about where I am financially and personally. Ultimately your responses on this thread reminded me how fortunate I am to have this income/savings potential. I do think I will really enjoy the level of financial freedom I can get to over time, and it’s worth the "unavoidable" bit of pain that comes with my work…

Will check in again sometime and let folks know how it’s coming along. Thanks again all, really appreciate all the ideas.

[Jerry1]

I make nowhere near your amount of income, but I make good money and I don't know of anyone who makes good money no matter how you define it without being stressed. There's been a lot of good responses but I will add one. Right around your age, I felt the same way. Something about 40 that makes you wonder "is this all there is?" "what is the meaning of life?" . . . Obviously you will have to work this out for yourself, but keep in mind that you are going through something that many have. For me, the only way to answer it is to keep a couple things in mind. I forget who the quote is from but it was in Covey's Seven Habits - basically, no one on their death bed ever said they wish they'd have spent more time at work. Try to find the balance that suits you and your family. Making money and raising a family are both worthy of your time but the balance is what you need to find. I knew one partner that seemed to have the right idea. He worked hard and made good money but he never missed his son's soccer game. He drew a line and people respected it. Firm up your core principles and some of the answers you seek will be self evident.

[Texan1636]

My situation bears some similarities to yours (very high paying job), but there are differences (when I posted here, I cited career stresses and real decision of whether to stop now or keep going a couple of years to hopefully get to $8mm or so). One thing I would note from my experience, having been exposed to many highly-compensated people: jobs with that kind of pay are not secure - ever. Maybe you are in some unusual career and I'm not understanding it, but jobs I've seen that earn anything like $2 million or more are, by nature, insecure. Examples would be investment banker, C level executive (you might have parachute but the job itself is not secure), hedge fund or private equity fund professional, small number of high-end consultants and Corporate lawyers. It also has been my experience that jobs in this pay range tend to be very consuming in terms of personal life and ordinarily don't lend themselves well to "cutting back" voluntarily.


Second thing I would note is that, if you have only fairly recently started to make and save large amounts, you probably have the vast majority of your investments in after-tax accounts. While this is a "bad" thing in the sense that you could have accumulated more if you could do it on a tax-deferred basis, it's a "good" thing in the sense that you may pay very little in federal income tax in the early years of your retirement (as you will have lots of basis to use up in various investments). I could end up spending over $300k per year in early years of retirement if all goes well, but may pay less than $20k in federal income taxes in those early years.

[Big_Hitter]

Quote:

Originally Posted by Texan1636 One thing I would note from my experience, having been exposed to many highly-compensated people: jobs with that kind of pay are not secure - ever.

especially if it's in the energy industry...

[aida2003]

Quote:

Originally Posted by pb4uski Ok, typing was not my strong suit... perhaps we scared him off!

I don't think so. Didn't he admit that he's really in a sweet spot of making millions? Member here said all he needs is to accumulate $10-12MM to fund his future. With the progressing earning scale in his OP, he's plunged back into the pool to catch more fish I bet. Hopefully he'll be back next year to update on his increased salary and retirement savings. I bet he's too busy to type, but he'll be an occasional lurker.

[pb4uski]

Aida, he came back, see post #28.

[aida2003]

Quote:

Originally Posted by pb4uski Aida, he came back, see post #28.

Yeah, I know. Yesterday I was reading on the laptop and for some weird reason the threads on this forum kept showing up much much shorter than they should be. That was the first time I've seen it happening. If a discussion/thread consists of a few pages, I'd see maybe 4-6 posts on one page when I know there should be more like 20-25 at least.

However, I just glanced at his post, and it was posted on the X'mas Eve. When I wrote yesterday I remembered this 2nd post of his vaguely and said that he has fully plunged back to work. So, I'd love to hear about his progress about the number of millions he'll save/grow over the next half decade.

[RockyMtn]

I too was in a high pay ($2m+ per year when I left), high stress job. Non stop travel, phone calls at all hours and basically on call 24 hrs a day. At the point that I had enough of all of it, I set a date, told the big boss that when this contract was over I was done. Backing off really wasn't an option. It was either all in, or all out.

I saved well, didn't over do it with an extravagant lifestyle. The number that I wanted and attained was similar to the OP's.

That was almost six years ago. I truly enjoyed my job but I was not defined by my work. I probably spend more now than when I was working because now I have time to spend and enjoy the $$$. I have no more stress, travel on my schedule as opposed to someone else's and am enjoying life more than ever.

It's all about priorities and what you want to do with your life. In my case I came to realize that work was highly overrated and I didn't care if someone called me CEO, President or my first name. Funny, but now most of the folks I hang around with have no idea what I did for a living nor do they care.

Do I miss it? Some days yes, most days not one bit!

[Ruminator]

Thanks again to all who contribute to this forum and to those who thoughtfully replied to my earlier posts... now 1.5 years ago!

That point in my life marked the beginning of some big changes, in part inspired by this board (which I continue to stalk daily . We sold our expensive home and paid cash for a home in a lower COL area. We cut our living expenses (with basically zero pain) by 40% by just paying better attention. And the income kept going up as expected.

Netting all that out, we now have around 4.5m in after tax investments, 1.0m in retirement, and no debt. Our living expenses are currently <4% of savings, but I want to add some padding and make room to weather any downturn without stress (i.e., closer to 2% WR).

On the "life" side of the ledger, I'm working hard to reduce stress by prioritizing work just a bit less. I still reflect and laugh about someone's suggestion earlier in this thread of taking Fridays off, or hiring 4 assistants. It is easy to get wrapped up in your world and not realize the degrees of freedom you have. The progress is incremental, but in any given month I can point to 3 or 4 choices I've made that prioritize family+life over work, and that has made a big difference.

Knowing I am close to FI also helps immeasurably, as at this point I could coast (or even quit) and probably be fine. But the habits that got me to where I am professionally are pretty deeply set! So work remains intense - often stressful, but at times enjoyable when things are going well.

I'm now looking to an ~2018 timeline for "retirement", whatever that ends up meaning for me... Am putting that out there to keep myself honest!

Thank you all for your insight and encouragement.

[daylatedollarshort]

Quote:

Originally Posted by Ruminator That point in my life marked the beginning of some big changes, in part inspired by this board (which I continue to stalk daily . We sold our expensive home and paid cash for a home in a lower COL area. We cut our living expenses (with basically zero pain) by 40% by just paying better attention. And the income kept going up as expected.

Good job. Thanks for the update. I'm not in your income bracket, but we also found many ways to painlessly cut our expenses in order to ER. I wish we'd done that years earlier. It would have meant a lot more days of retirement.

[audreyh1]

Quote:

Originally Posted by Ruminator Netting all that out, we now have around 4.5m in after tax investments, 1.0m in retirement, and no debt. Our living expenses are currently <4% of savings, but I want to add some padding and make room to weather any downturn without stress (i.e., closer to 2% WR). On the "life" side of the ledger, I'm working hard to reduce stress by prioritizing work just a bit less. I still reflect and laugh about someone's suggestion earlier in this thread of taking Fridays off, or hiring 4 assistants. It is easy to get wrapped up in your world and not realize the degrees of freedom you have. The progress is incremental, but in any given month I can point to 3 or 4 choices I've made that prioritize family+life over work, and that has made a big difference. Knowing I am close to FI also helps immeasurably, as at this point I could coast (or even quit) and probably be fine. But the habits that got me to where I am professionally are pretty deeply set! So work remains intense - often stressful, but at times enjoyable when things are going well.

Sounds like you are well on track!

[Ruminator]

Quote:

Originally Posted by daylatedollarshort Good job. Thanks for the update. I'm not in your income bracket, but we also found many ways to painlessly cut our expenses in order to ER. I wish we'd done that years earlier. It would have meant a lot more days of retirement.

Thank you daylatedollarshort. Yes, it was remarkable as we looked through our expenses and found some easy areas to cut - slowing down "home improvements", making the next car more modest, etc. The bigger change though has probably been the day to day awareness of a savings goal, and all the small decisions (e.g., fewer spurious purchases on Amazon).

I now keep a running quarterly file of expenses and invested assets, calculating the "SWR as of today," and it has been exciting to see how small changes in run rate expenses dramatically change the overall picture. It's just math, but powerful math.

[rodi]

Great update.