We’re in our early 30s with $2 million saved – should we scale back or wait until we hit $5 million?

A Reddit user with a $2 million net worth is considering taking a sabbatical. His $2 million net worth includes a $1 million rental property with a 3.5% net rate cap, $0.55 million in a taxable brokerage account, and $0.5 million in a retirement plan. 

He’s trying to decide if cutting back on work now is the best course of action, or if he will end up regretting giving up his good job and not earning more money while he can. 

Consider your priorities when making financial decisions

In order to decide what to do, the Reddit user is going to need to decide on what his priorities are. 

He explained that he and his wife currently earn $700,000 and spend $130K per year, so they’re saving around $400,000 per year after accounting for taxes. They live in a medium-cost-of-living area and have a 3-month-old son and can’t wait to have more children. 

His wife’s parents live abroad in a low-cost-of-living country and would like them to move there and would likely provide a house and land. The couple is considering dropping down to work very part-time so they can simply support themselves without touching their nest egg, but without saving any more money. He’s thinking they could potentially build their own business while working a little bit and enjoying more free time with friends and family. 

Now, he most likely could make that plan work if he’s able to arrange part-time work, although the couple’s investments really aren’t going to provide a ton of money to live on now.

However, if he takes this approach, he’s likely to end up with far less money over time than if he kept working for longer to grow his nest egg first. His future Social Security benefits will be affected as well due to his reduced income. The result is that he likely won’t be able to retire rich at a young age with a lot of financial security  — but he will get to have more freedom and flexibility during his working life.

He’s going to need to consider whether he would rather prioritize spending more time with family and pursuing his personal projects now, or whether he would rather prioritize building a lot of wealth now while he has a high income to have more financial independence later.

There is no wrong answer to this question — it’s just a matter of what he values most. 

A financial advisor can help you chart your course

If you are trying to make important money decisions, like whether you can afford to quit your job or how cutting back on your income will affect your financial future, one of the best things you can do is to talk with a financial advisor. 

An advisor can help you run the numbers so you can see where different paths will lead you, including how much money you could end up with if you worked for another few years to save more, or what your life would look like if you took a few months or a few years off work in your 30s. 

By getting this professional advice, you can make the most informed choices so you are not left with regrets that you didn’t take a different course once you see where your financial life ends up. 

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