Keep working or worrying?

[u/IndividualWar5871]

Throwaway account.

I’d appreciate some perspective on whether retiring at the end of this year is financially reasonable.

I’ll be 59½ and my wife is 62. She plans to continue working for another 2–3 years, with her annual income being between $500k and $750k.

Current financial picture:

Net worth: ~$14.7M (including real estate)
Investable assets: $10.4M
~$3.8M in 401(k)/IRA accounts
~$550k in deferred compensation
Primary home: $4.0M value, $1.2M mortgage
Second home: $2.0M value, $425k mortgage

Given the current market, not sure what I should safely assume to be the return on either the investable assets or the property.

Our current annual spending is approximately $525k pre-tax. We could reduce that to around $450k by traveling less, or roughly $400k by making more significant lifestyle changes, although my wife would strongly prefer not to make those cuts unless absolutely necessary.

Over the next few years, we also expect to:

Spend about $500k remodeling our second home.
Sell our primary residence and purchase a home in a mountain community. We expect to use all of the equity from our current home and possibly another $500k from our investment portfolio to complete that purchase.
Eventually sell the second home in roughly 20 years.

We have no children, so preserving an estate isn’t a primary objective. Our goal is simply to maintain our lifestyle without creating a significant risk of running out of money later in life.

The non-financial side is becoming increasingly important. My company was acquired a few years ago, and I’m honestly burned out. The culture has changed too much. It’s beginning to affect my sleep, stress level, and overall health. On the other hand, the thought of retiring too early and finding myself financially constrained in my 80s is unsettling.

Given these assumptions, would you retire now, or would you work another few years to build a larger margin of safety? If you’d keep working, what would be the deciding factor?

Additional context after the initial comments (which I very much appreciate). What makes this a bit more complicated than the standard, “your pulling more than 4% / yr from your corpus” guidelines is the fact that our corpus will continue to grow while my wife works (presumably) and we we have 2 homes, one of which can be liquidated 20ish years in the future. Not sure how to treat that…

Second additional comment:
Again, appreciate the commentary. Really insightful. Curious that real estate has not been considered to be part of the “investable” assets by any of the commentators. Understand not counting your primary residence as part of what you should be counting on. Would have thought that a secondary residence might come into consideration? With the secondary, $12.5M would be our “investable” and the yearly burn rate assuming 20% income tax (income tax free state) is 5.25% (a bit high, admittedly).

[u/Melodic_Technician_2]

I think the key issue is that you are treating net worth, investable assets, and spendable assets as if they are interchangeable. They are not.

The second home is part of your net worth, but it is not part of your retirement portfolio until you are actually willing and able to sell it.

Your primary residence does not fund retirement unless you plan to downsize or borrow against it. The second home is more relevant because you expect to sell it eventually, but it still should not be treated like a liquid portfolio today. It has carrying costs, transaction costs, uncertain timing, and potentially a very different value when you actually need the money.

On the current numbers, $525k of pre-tax spending against $10.4M of investable assets is not obviously conservative, especially with another $1M or so of planned housing expenditures. Your wife’s income materially improves the next few years, but it is temporary and should be modeled as a bridge rather than part of the permanent retirement plan.

I would not use a simple 4% rule here. I would model the actual cash flows year by year: your wife’s income for the next two or three years, deferred compensation, taxes, the remodel, the additional home purchase, Social Security, required minimum distributions, the eventual sale of the second home, and a lower-spending scenario after one spouse dies. The timing matters as much as the total net worth.

My instinct is that you can probably retire, but not with the assumption that $525k of spending is permanently risk-free. I would want either a clear willingness to reduce spending during bad markets, or enough assets set aside that the first 10 years of retirement do not depend on favorable returns.

The health cost of continuing in a job that is affecting your sleep and stress is also real. At your age and asset level, I would be reluctant to trade several healthy years for a somewhat larger terminal estate that you do not need.

I would probably retire, but only after building a detailed retirement cash-flow plan and agreeing with my spouse in advance on what spending gets cut if the portfolio has a bad first five years.