retiredunder50
Recycles dryer sheets
Although I think the scenario provided seems too risky at first glance, it could possibly work out for them. From the income side, the income generated from $800K will likely result in a zero income tax burden. Refundable credits for the children will generate $4200 a year for the first 8 years or so (assuming tax law gets extended). Actually, the child credits could generate up to $6K off the tax bill if they do owe a few thousand. The income for 5 likely meets the federal poverty level and will qualify the family for free health insurance, school lunch, and other government assistance. Low income internet plans are about $10/month. When the kids are ready for college, the income reported on FAFSA would result in a very low EFC. If the no debt claim translates into owning their own house, they would have prop taxes, insurance, maintenance... which could be low depending on where they live and the condition/age of the home. If they were able to accumulate $800K at this early age with 3 kids (assuming it wasn't a result of inheritance, gifts, insurance payout,...), I would bet they have a pretty good handle on LBYM. Could they live on an approximate NET $35K/year with a few thousand dollars worth of additional government programs? It's possible, but I would recommend several more years of working to build up some safety margin. Also, that $800K was probably all in on the market this past decade. I doubt they could really handle a major correction/recession or 2 or 3 without having to return to work.