$6M at 32 - considering exit next year
Posted this in fatfire and got some very interesting comments, some recommended I post here too.
Me (32M) and wife (32F) live in HCOL city and are planning for kids in the next year or two. My current role is demanding, but due to RSU appreciation very high paying. The company is not public, but has given liquidity opportunities the last several years. My wife works for the state part time, but gets full benefits and a pension after 20 years of work. She enjoys the work and sees herself doing it for the foreseeable future. I have questions around kids, concentration risk, early 30’s retirement, and opportunity cost risk.
Job situation
Me - 50hrs/week, $250k base + $1.4M/year in RSUs. (The RSUs will reduce to $600k in July of 2027).
Wife - 20 hrs/week, $50k/year, only two years in but enjoys the work
Current plan - continue working until July 2027 (when compensation decreases) and then leave to take a break and care for the kids in the first few years before primary school starts.
Current Net-worth breakdown
Total - ~$6M
- Investable total - $5.3M
- Cash - $100k
- Taxable total - $3.8M
- $1.6M in semi-liquid pre-IPO company which does yearly tender offers.
- $2.2M in liquid brokerage accounts - Index funds - this is from regular tender sales of the above.
- Traditional retirement - $670k (me + wife)
- Roth retirement - $650k (me + wife)
- HSA - $50k
- Home - $1.1M - this is a pretty modest home in a nice part of town in our city.
- Debt - $340k on 15yr mortgage at 2.125% with 9 years left on note.
Expenses Total - $170k / year
Essential - $100k/year
- Mortgage - $50k
- Home repair - $10k
- Groceries - $15k
- Transportation - $5k
- Utilities - $5k
- Pet care - $5k
- Health - $5k
- Etc - $5k
- Not including health insurance because my wife is planning on continuing to work part time with benefits.
Discretionary - $70k/year
- Vacation - $26k
- Gifts - $10k
- Fun fund - $10k
- Dining out - $10k
- House cleaners - $4k
- Etc - the rest - $10k
Thoughts
If we count the private equity, we are able to RE given our current nest egg ($5.3M) and expenses ($170k) - roughly 3.25% withdrawal rate. If I don’t count the private equity, the math works out closer to a 4.6% withdrawal rate, but we will have my wife’s income until she doesn’t want to work, and some discretionary spending flexibility. I've read "Tax Planning to and through early retirement" and think between a bit of work, wife's work, and roth withdrawl shielding I can keep tax cost fairly low. I think the math mostly works with kids if we assume ~$15k/year in cost per kid (assuming I’m doing child care) - we’d like 2.
If I add the kid cost in - total costs rise to $200k / year for a while - which is still within the 4% rule counting private equity, and less if my wife continues to work.
I would love to stop working my current job in July 2027. I find the job very stressful, and it has impacted my health (high blood pressure, overweight, etc). July 2027 would be after a large equity cliff, if I stayed, comp would drop to ~$850k/year which is still an insane amount of money, which is part of why I'm second-guessing leaving.
I have a few worries:
- Unexpected child costs - I’m worried that I’m underestimating the cost of having kids, or the risks associated with leaving work just before having kids. Am I thinking about the total costs correctly?
- Concentration risk - The company I work for is not public, and historically only gives liquidity opportunities once per year. It has been very successful and I take every opportunity in tender offers to diversify, but my current plan is still to leave with a significant portion of my net worth invested in the company. How would others value this equity?
- Opportunity cost - my current compensation is insane. I don’t think I will ever strike it this lucky again, would I be nuts to leave this job?
- Wife work dependency - my wife working and providing benefits feels like an important part of the plan (is this true)? It feels safe because she is working part time already and enjoys it, but I’m also thinking about how much to depend on this.
- Very early retirement - I am perhaps overindexing on money in this situation, I’m curious how many folks actually never earn another dime after they have left work, especially in early 30s.
- Anything else I’m missing?
Some options I’m considering:
- Work my last year and leave July 2027 (current plan)
- Work until kid 2 arrives.
- Leave now
- Work until the Lord takes me.
For all of these, I'm considering some work after "RE" - so am curious how folks who have stepped back from high stress tech have done it.
Thank you in advance!