I’m in my 40s with a net worth of almost $3 million – retirement calculators suggest I’m safe to retire but I’m not so sure

Quitting the rat race and pursuing the dream of living comfortably in early retirement is an idea often associated with Americans, but its appeal is universal. Likely just as many Europeans would like to get off the treadmill and focus on things that matter personally.

This was brought to mind by a Redditor’s post on the r/ChubbyFIRE subreddit who lives in Europe, but was wondering if he had achieved enough wealth to retire early and live a comfortable retirement.

Both he and his wife are in the 40s with two young kids. His net worth is approximately 2.7 million euros, split between investments, real estate, and pensions. His annual expenses are around 75,000 euros, and though he lives in a high-cost of living area, online calculators for those seeking financial independence  retire early solutions say he can do it. His problem is he doesn’t trust them.

When is enough enough

That is a problem many people face when considering this lifestyle. Particularly for those seeking a Chubby FIRE existence, or a lifestyle that is comfortable, but not extravagant, fear that you still need more is common.

Whether it comes from a fear of being poor or having to return to the workforce again when older (and not necessarily as employable), the desire to keep going is strong. Put away just a little bit more and then you’ll have enough. Except that day never seems to arrive.

For those serious about actually achieving this lifestyle, it is necessary to take a realistic assessment of your financial situation: your income now and when retired; you current expenses and those you will have when no longer working, especially if you have children; and what sort of curveballs life might throw at you in the future.

It’s important to remember you don’t have to consider this all on your own. In fact, you probably shouldn’t. Consulting with a qualified financial advisor who can give you personalized advice is the best first step you could make. 

Now I’m not a financial professional nor a tax expert, so these are only my opinions, but my take is the Redditor is ready to take the plunge.

He has sufficient liquid assets that, when using a 4% safe withdrawal he will still have a comfortable buffer of about 28,000 euros a year. The Redditor is meeting his living expenses with a little left over.

While the Redditor has the chubby FIRE component nailed down, can he actually afford to retire? Yes, with some caveats.

Going by the numbers

While the Redditor’s portfolio should allow him to retire without having to work, his portfolio needs to earn around 6% annual. With the historical stock market average of 7% (including inflation), he should be okay, but that’s the S&P 500’s return. Presumably the Redditor is investing in European stocks, which may not offer the same kind of stability as U.S. markets.

His child’s education costs are also likely to continue rising over time so he might need to choose a lower SWR to make the numbers work for him. He has a good sum coming from stock in his company, which could be volatile.

Overall, though, the Redditor seems like he is ready to take the plunge. He says if he works for one more year he can save an additional 100,000 euro, which is probably a good plan as it could fund extra goals. 

To be on the safe side, the Redditor should probably lower his SWR to a very conservative 2.7%. It doesn’t offer as much walking around cash, but it ensures he will be able to meet all of his goals for financial independence and early retirement.

Key takeaways

The desire for individual freedom, whether from oppression or work, is universal. Whether in the U.S., Europe, or elsewhere, being able to live comfortably is the goal and through hard work, planning, and investment it is possible.

Just make sure that as you close in on your goal, and ponder taking that big step, you meet with a professional to ensure that you haven’t missed any key points in your plan, and then take the plunge.

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