Financially Independent at 38 but not sure what to do with it.

[ERhoosier]

Congrats on building an excellent financial base at your age, and LBYM. That said, I wholeheartedly agree with other posters concerned about that nest egg being enough to FIRE before age 40 with 2 young kids. Fifty-plus years of life expectancy creates a HUGE cone of uncertainty. Just a few years of high inflation (as we had in late 70's-early '80's, and just a taste of in '22) or a major bear market (sequence of returns risk) can make today's nice sum look pretty small in short order. Health care costs over time (insurance premiums/copays/deductibles/uncovered expenses) can be HUGE, especially you or a dependent develops a chronic illness. Kids college expenses (unless you intend to just cut them off at age 18) will likely total multiple 6-figures (unless they are star athletes). And there is the risk of future tax increases (Fed and state/local) with the Gov't running such large deficits that eventually need to be paid for. Then there is the mental aspect of ER. I REALLY thought I was ready to FIRE with plenty of $$$ (WR 1%, literally) in my 50's, but I failed badly. First 3mo were almost euphoric high, but by 6mo I got back into consulting before taking another FT j#b. Got out (2nd try) 3+yrs ago- hopefully for good this time. Still miss some aspects of my old jobs, but coming to grips with new station in life.
Good luck whatever path you choose!

 

[winyaz]

Any chance of taking a sabbatical, or even an extended vacation? You could quit and take a year or more off but then if you want to go back to work it may be hard to get as good a job as it sounds like you have now. I think healthcare is the biggest issue for someone retiring so early, but then maybe you can get that through your wife's job. I retired at 60 and get healthcare through the ACA, but I'm not sure how long that will be available.

 

[DrRoy]

Would you mind sharing around how much you spend a year?

Between $130K and $170K depending on the BTD of our travel.

 

[aaronc879]

Congratulations, you've built solid foundation, and you're way ahead of most of your peers.

I agree with the responses above - buckle down and keep working for a while. There's a lot that *could* happen in the coming years, and not all of it good. The bigger your stash, the easier it is to navigate the challenges should they occur.

You didn't mention what type of accounts that lovely $1.7 million are in. Anything in a 401(k) or IRA is only available with stiff taxes. If you're serious about downshifting and need to supplement, you will benefit from a large taxable (brokerage) account.

Actually, anything that was put in a 401K or IRA avoided stiff taxes with his high income. In retirement, with his low spending, the amount he needs to withdraw would not be subject to ANY federal tax due to be married with 2 dependents. That means it only costs a 10% penalty which is not much.

 

[aaronc879]

Similar to what posters said above, I would like to have more cushion.
But you probably have enough to retire.
Inflation adjusted, you probably have similar numbers to Justin, who used to post here and retired @33 with two young kids.
Check out his blog Root of Good

"Retiring" to do other part time work is a lot different than retiring and not working at all. Justin makes more off his blog than I have averaged in my working life.

 

[aaronc879]

With current leadership, the next few years could be volatile. With 2 littles at home I would suggest working a few more years at the current cushy job. Then you can re-evaluate and likely quit full time work. Then find something you enjoy that gives you flexibility so you can spend as much time with family as you want. Maybe help your parents out if they are struggling but without making them think you are rich.

 

[Pineapple13]

A very important consideration is will your spending stay so low and do you want it to? As your life changes post retirement you might want a bigger budget for travel, hobbies, charitable causes, helping your kids, etc. It's nice to know you have the means to spend more if life takes you there. We're only as free as the choices that are available. Some (dare I say many?) people in this group have phases where they are spending more in retirement than during their work life. It's a nice option to have.

 

[Koolau]

A very important consideration is will your spending stay so low and do you want it to? As your life changes post retirement you might want a bigger budget for travel, hobbies, charitable causes, helping your kids, etc. It's nice to know you have the means to spend more if life takes you there. We're only as free as the choices that are available. Some (dare I say many?) people in this group have phases where they are spending more in retirement than during their work life. It's a nice option to have.

In addition to inflation, when retired, there is more time to do things which cost more money. So planning to spend more in retirement than during w*rking years would be wise. For another thing, when w*rking, we were saving. Now, we don't feel the need to save, so we spend more of our income. It all adds up. After 20 years, I estimate we spend 3 times what we spent when w*rking. Of course, YMMV.

 

[pjigar]

A very important consideration is will your spending stay so low and do you want it to? As your life changes post retirement you might want a bigger budget for travel, hobbies, charitable causes, helping your kids, etc. It's nice to know you have the means to spend more if life takes you there. We're only as free as the choices that are available. Some (dare I say many?) people in this group have phases where they are spending more in retirement than during their work life. It's a nice option to have.

I had an itch to RE in my 40s when I "thought" I was FI. But after I projected all the things I wanted to do (travel, expensive hobbies, charity, etc.) when I retire, I realized that those cost a lot of money so I wasn't really FI relative to my future spending. And since then I decided that I would rather FatFIRE than OverweightFIRE. YMMV.

 

[RetiredHappy]

I remember that I was in my late 30s and had my million dollar home paid off and had about half a million dollars saved. I thought I would take a minimalist job from that point to pay bills and I was set for life. Fortunately I came to realize that minimalist jobs were not pleasant and so I stayed on in my high tech well paid job. I also later realized that I needed several million dollars to be retired comfortably.

 

[KiwiFI]

That's great for your age, and a paid off house! Little kids become bigger kids, then don't move out! ha

That 60K /year is admirable, but that could be a much larger figure very soon.

Even another 3-5 years could just put the icing on the cake. Take a mini breaks if you want. I did this many, many times in Tech and while I could be substantially further ahead financially, I'm happy with where I've landed. I don't regret those breaks one iota!