Hi all, I have just recently discovered this forum, and it is quite interesting and exciting. I am learning a lot by reading a number of the most recent and past threads. I feel that part of learning is to put yourself in different positions and determine "what would you do?" if you were in this particular position.
So here goes: Let's say you were hypothetically a 40 year old married man, with two young kids (ages 5 and 2), and you were fortunate enough to have a job that pays you an average of $2 million per year for the last four years. Your job is not too bad, let's say working about a 35-40 hour work week and take about 8 weeks vacation per year. You have a house worth $1.2 million that is paid off, you have about $1 million in pretax retirement funds, about $3 million in post tax investments, and about $700k to 1 million in cash. With your current spending habits, you are technically LBYM, saving a lot, but you are also not shy about spending. You go out to eat anytime you want, take nice vacations (especially with 8 weeks off a year), pay for private school, decent cars, watches, etc. Let's say you annual spending habits are to the tune of $400-500k per year.
So given the above hypothetical premise (somewhat far-fetched but just humor me), what would you do? I suppose you could technically cut down your spending to $100-150k per year, and then retire now, and live off current savings. But with that, you feel somewhat restricted where you can't eat out whenever and wherever you want, can't take super nice trips, etc. Or you can continue to work (it is not too unpleasant, you are paid nicely, with good hours and ample vacation time) and continue to save relatively a lot of money per year, while living a lifestyle where you feel you can do whatever you want, buy whatever you want, to the tastes of spending $400-500k per year? If you work for another 5 to 10 years at this pace, with your savings rate, you could easily bump up that nest egg to the $12-15m range or more, and then really be in a position where you continue this lifestyle in retirement. I know there are many more options that encompass the whole scale of extremes, but what would you do if you were in this hypothetical situation? Would you feel obligated to you kids that with just a few more years of work, you can technically set them up for life (hopefully they can continue to abide by the relative LBYM mentality)?
Thanks in advance for humoring me about the above hypothetical premise. And please just don't blow it off as being far-fetched and silly. For me, changing the parameters of things and seeing what you gurus would do in different situations would be very educational.