We’re expecting our first child and still live in an expensive city – will cashing in another $10 million trust let us downshift?
If you are fortunate enough to have a high salary and a trust fund, congratulations, you have made it in life. Many of us dream of affording a comfortable lifestyle that doesn’t require sitting in a corporate cubicle for decades, at least I know I do! Well, if you are this Redditor posting in r/fatFIRE, […] The post We’re expecting our first child and still live in an expensive city – will cashing in another $10 million trust let us downshift? appeared first on 24/7 Wall St..
If you are fortunate enough to have a high salary and a trust fund, congratulations, you have made it in life. Many of us dream of affording a comfortable lifestyle that doesn’t require sitting in a corporate cubicle for decades, at least I know I do!
This Redditor is thinking about how soon they can walk away from their corporate job, especially with a trust fund available.
This Redditor has hit a winning lottery ticket with three separate trust funds available.
The good news is that they have a good head on their shoulders and are still looking to be financially responsible.
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Key Points
Well, if you are this Redditor posting in r/fatFIRE, you can already say goodbye to the corporate world forever, but good for you for sticking it out for a few more years. With a high salary and multiple trust funds forthcoming, this Redditor wonders exactly when they should call it quits.
Trust Funds Galore
This 38-year-old Redditor currently earns a $500,000 annual income, while his 35-year-old wife earns around $35,000 annually. However, where things get interesting is that the Redditor receives a $200,000 tax-free income from a trust fund, though the figure can vary from year to year.
The scenario gets even more unique as the current trust is valued at $6 million, allowing the Redditor to receive a 5% draw annually. This money is immediately invested in the stock market and grows based on market conditions. However, in four years, this Redditor is set to earn a second $10 million trust, which is also set to be invested in the stock received and granted a 5% yearly draw, tax-free.
If this situation didn’t already sound like a winning lottery ticket, another $20 million trust is set to arrive once the source of this trust passes away. While this final amount depends on the size of the estate at the time of death, the Redditor doesn’t believe, given the individual’s lifestyle and additional funds available, that there should be a significant drop in value.
Between the trust fund and salaries, the family has around $2.3 million invested in restricted stock units and large-cap stocks. Another $100,000 is in cash, while $450,000 is in a 401(k). Regarding real estate, they have a home with $800,000 in equity, so there is no question that the original poster is sitting pretty financially.
All of this leads directly to a question of what he should do with his time, as far as knowing when to retire and what to do to occupy himself upon retirement.
Living Well While Coasting
As it stands right now, the original poster’s current plan is that he wants to slow down as he and his wife both work too much, and they are rightfully concerned that life is passing them by. The current thinking is to work another four years until the second trust kicks in while continuing to let the current investment portfolio grow.
The original poster thinks that once the second trust is awarded and invested, they should sell their home and relocate to a more moderate-cost-of-living area. They anticipate having a net worth between $5 and $6 million at this time. Understandably, the Redditor is a little concerned about lifestyle creep with a second trust, but doesn’t see this as a serious issue.
The good news is that he already has a plan to potentially consult on the side, where he can pick and choose what projects to take on. As mentioned in the post, he should also consider working with charitable organizations, while his wife may or may not continue to work.
To be honest, this Redditor and his wife already seem to have a great plan as they are not looking to live solely off the trust but can coast a little with it in their back pocket.
Thinking About Downshifting
In many cases and for many reasons, it’s fair to say that plenty of people would let these trusts go to their heads and blow the money before they realize it’s gone. Thankfully, this Redditor is in a good mindspace, and even if they are worried about lifestyle creep, they are already being fiscally responsible by thinking about relocating.
There isn’t much more that needs to be added here, as the current line of thinking with downshifting seems strong. There is no question that lifestyle creep might be a thing, which could mean an expensive car or two or maybe a slightly larger home than planned, but with the current level of income and trust, this plan looks pretty reasonable.
The post We’re expecting our first child and still live in an expensive city – will cashing in another $10 million trust let us downshift? appeared first on 24/7 Wall St..
