Self-Made Millionaire Faces Retirement Dilemma: Should I Retire Early or Find a New Job?

I grew up in extreme poverty, so I started saving and investing when I was 17. I’ve had a lot of tough lessons along the way, but I’m proud to be a self-made millionaire with no help from anyone, especially my family. . I have $3 million in assets and I just turned 43. However, I have just been informed that I will be laid off in three months after almost 25 years. I will have a pension of about $66,000 before taxes. I’m married – unfortunately, but that’s another matter – and I have two young children aged 3 and 1.

So before the end of the year, I won’t have a job and I will probably have to find a new place to live and move, because I was only in this neighborhood for work. My wife wants to live in New York, but $3 million won’t be enough in the Big Apple! I worked hard to make life easier for my kids, but originally planned to retire in five years. Once I reach 59 1/2, I will be able to withdraw from my retirement funds, which will be an additional $20,000 a year, but that will still be over a decade away.

At first, I was stressed and nervous about getting a new job and starting over, but after thinking about it, I thought, “Why not really retire, FIRE? Do I have to live on dividends and 4% interest, or do I have to continue the stressful job and find another job for a few more years?

Scrooge solitaire

Dear lonely Scrooge,

Earth — population 4 people. Let me explain.

You are making a decision for four people, not just one: you, your wife and your two young children. The average cost of raising a child in the United States is $20,000 per year, according to some estimates, and this figure does not include the cost of a college education. Assuming you contribute to a tax-advantaged 529 college savings plan, keep doing it. If not, consider creating one. The longer you can keep your wallet, the better. Stocks, like housing, are long-term investments.

You could retire early if it were just you, but many variables will affect your ability to live a long and happy retirement. First, you say your marriage isn’t really happy. If you and your wife live together for the rest of your life – unfortunately forever – it would probably make your retirement easier, at least financially. If you divorce, you will probably have to give up a large part of your estate. In fact, some studies suggest that divorcing partners end up giving up far more than half of their estate.

But there’s a lot of good news here. You have two rentals, a share in a family home – which your siblings might decide to buy out from you – $2 million in stocks, mutual funds and ETFs, $500,000 in retirement funds and $250,000 in cash . Certainly, many Americans would be happy to have that much money when they retire. You’ve accomplished a lot at the age of 43, but I urge you not to let the loss of your job get you down. You haven’t even entered your highest earning years.

The reason you embraced FIRE — “financial independence, early retirement,” for those unfamiliar with that optimistic acronym — is to spend quality time with your family. This may or may not have a positive effect on your marriage and your children will soon start school. A person who has reached 43 with that much money, I suppose, can get bored easily and start worrying with 30, 40 or more years of life ahead of them. After all, golf courses only have 18 holes.

I asked Paul Karger, co-founder and managing partner of TwinFocus, a wealth advisory firm in Boston, about your predicament. “You have to weigh that against the very real risk that inflation will erode your purchasing power over time and the wallet won’t be able to support your personal spending,” he says. Otherwise, you will have to increase the risk profile of your portfolio beyond your comfort level. “It’s by no means a prudent or advisable course of action,” he says.

He too says you should let your portfolio grow. You can currently earn more than 4% in long-term US Treasury bonds, he adds. “For a variety of macro reasons, we encourage our clients to consider extending the duration of their bond portfolios as yields at the longer end of the yield curve have risen. A healthy allocation to equities through mutual funds and ETFs should partially offset inflation, as should your real estate investments over time.

Here’s a trade-off: why not take a break from your work for a while and use that time to figure out how you’d like to use your personal time and think about ways – maybe marriage counseling, although it’s not a panacea in itself. – could you improve your marriage? Has your wife changed? have you changed? Have you both changed? Did you both get stuck in a rut? Were you compatible at first? Your current goal is probably to raise your young children. Have you made enough time for each other?

Taking, say, a year off — while applying for a job and researching other business opportunities — will also give you perspective on your work-life balance, something millions of people can relate to for a while. the pandemic. You might want to go back to college, or you might decide your work life wasn’t so bad after all and say, “Hey, I had a great life and I took it for granted. I want this life back.

You probably never thought you’d see the day when a $3 million man would be asked not to quit his job, but here we are.

Readers write to me with all sorts of dilemmas.

By emailing your questions, you agree to them being posted anonymously on CNET. By submitting your story to Dow Jones & Co., CNET’s publisher, you understand and agree that we may use your story, or versions of it, across all media and platforms, including via third parties..

The Moneyist regrets not being able to answer the questions individually.

More from Quentin Fottrell:

Do kids get 529 counts in divorce? My in-laws opened two projects for our children, but their marriage is in ruins.

My husband and I have $6 million in retirement and no debt. What do you recommend for the couple who has everything?

Our oldest son, 37, is an artist and puts $1,000 a month on our credit card. Our other son, 35, is independent. Is it unfair?