How much $ to quit your high paid front office job?
Have you ever thought about winning the lottery and retiring early from your high-paid front office job? As a 28-year-old IBD associate earning over $250k a year, I often wonder how much money I would need to win/save up to retire and live the life I want. I'm curious to hear from others (in similar high paid front office roles) - how much money you would want to retire early? There are a variety of factors determining this but I feel two of the main ones are:
1) stage of your career: if you're early in your career and have many years of salary growth and promotions ahead of you, you'll need to save more to make up for the opportunity cost of being out of work and missing out on those future earnings. E.g. I know I will be a VP earning over $400k in a couple of years so if I retire now it will need to be enough to make up for missing out on those higher future earnings/promotions
2) quality of desired life: if you want to live an expensive rich lifestyle, you'll need to save more to cover those costs or if you want to move to somewhere cheap and have a quiet life you'll need less. Do you want to travel the world? Spend time with family? Pursue a new hobby or passion?
I'm writing this post just for fun as I'm interested in hearing from others who already work in high paid roles. How much $ would you want to retire? Please share your rationale, e.g. include the stage of your career and your desired quality of life as well as any other factors you think are important to consider.
I'll read everyone's comments
This has been talked about before. For me I'd retire on $10M and invest most of it in broad market indices, treasuries, and various dividend paying stocks. Even a 5% yearly yield is a nice $500k which you can reinvest + live nicely off of. I don't require that expensive of a lifestyle. Would probably work on passion projects in the creative spaces and try to find unique ways to make more income rather than do nothing.
Thanks for sharing. I find your views really interesting because:
you state you do NOT want an expensive lifestyle yet you require $10m in savings earning $500k in yearly dividends for you to retire.
Does $10m + $500k yearly not sound expensive to you? Perhaps you come from a wealthy background so to you that would be a non-expensive lifestyle but to others it might.
this is by no means a dig at you, I just love these type of hypothetical questions so want to expand on your views :)
also please don't let me saying this change your mind, if you still feel $10m and $500k is a cheap lifestyle stick to those figure requirements, I just want to hear your rationale and dive in further to your thinking
They're saying the 10m is throwing off 500k per year (i.e. using a 5% SWR)
I'd be willing to walk with $5 million cash upfront. After tax.
Thanks for sharing, out of interest, what type of lifestyle would you want to live that in your view is achievable with that $5m?
4% safe withdrawal rate is the rule of thumb for a thirty year retirement, 3.5% for early retirement , so that implies $175-200,000/year.
Trying to figure out what my walkaway number would be. Not walkaway as in fully retire, but how much of a nest egg is enough to be able to slow down to a more chill job and let compounding take over instead of aggressively investing from IB, PE, etc. type comp. Maybe this is naive but assuming getting to a net worth at 30 of 500k and planning to eventually settle down outside VHCOL cities, I'd imagine I could be comfortable going for a chill 200k job at that point pretty easily.
I thought associates made 500k 250 base 250 bonus. Is that not including bonus?
Oh sweet summer child
Maybe for a 3rd year associate at a handful of EBs in a hot market. Definitely not the case for this year.
The day my cash balance + taxable account + 401k + Roth IRA = $7mm, I'm quitting. I will not count real estate, cause I feel like it's illiquid.
I dream about this at least every other day.
I'm mid thirties and right now I'm only at 1.3mm. And the real problem is my life expenses have crept up to the point that they barely allow me to save more than 150k a year. It's super depressing to think about.
How are you only saving 150k making over a mill a year? ....
You're in PE & you can't read bro?
I've listed out my budget before, but basically in nyc, after trump's stupid tax change attacks on us, my effective tax rate is like 48%. So for ease of numbers, let says I make an even million with a 50% tax rate, I'm only bringing home 500k.
So 500k, living in the most expensive city in the planet, two kids in private school, two mortgages, doesn't really go far.
In fact there is an article on Bloomberg recently that states 100k in nyc is like making 36k. It's hard out here.
If you have $1.3 put away, you're mid thirties, and saving another $150k/year (and that doesn't increase, even with inflation), a 5% real return will put you at $7m in 2023 dollars by the the time you're 52 or 53 years old.
(But that excludes the major wildcard that is a primary residence in a hcol metro area).
Yea that's about the estimate I've come to.
Im also expected a few million from my dad and a little more than that from my father in law.
Although, I treat that as funny money or unvested stock far into the future or shares in a start-up. Never count someone else's money.
The flip side is if I can convince my wife and kids to live a more spartan and less materialistic lifestyle. I could retire even earlier.
There are a number of discussions about this. I retired in my mid-30s with more than $5.0M, but it is proving to be more than I actually need. Despite the fact that I live/travel around Europe for 6-8 months of the year, my annual expenses come out to around +/- $50k, and would be a lot lower if I cut back on my housing in Italy. I offset the majority of my expenses with my career consulting practice so I end up reinvesting all of my investment returns. The career consulting is for fun and very "part time," so I don't really consider it working. It is also very rare that I avoid doing something due to cost. In many of the places I visit in Europe the annual income in less than €30k per year, so I live well above the means of the average person. A lot of people on this forum have a very skewed perspective on what is an appropriate amount to spend on anything … spend some time in some of the smaller cities and you may find that you can get by on a lot less than you think you can.
Lastly .. Ive met a ton of people who work remote and live like kings and queens on less than an analysts base salary. There are whole communities of digital nomads across Europe and Asia. Beware though, it can be very enticing and may tip you over the edge if youre already on the verge of quitting your office job or retiring early!
CompBanker’s Career Guidance Services: https://www.rossettiadvisors.com/
Did you get large carry checks? Even with that >$5m in mid 30s sounds kinda high.
Pretty much all came from carry, although I had certainly saved a bunch before the carry payments started coming in.
CompBanker’s Career Guidance Services: https://www.rossettiadvisors.com/
That's my dream life lol
What do you do in Europe if you're just traveling and not working? Like what does your day to day even look like? Sorry for the dumb question but I always wonder if its just you sailing in southern greece with a companion/solo?
I have genuinely considered giving the Europe for 6 months nomad life a crack for quite sometime now. Met a dude in Bali back in 2018 who scaled an e-com brand to $300k p/m net and has subsequently exited for decent amount. The kid was smart but by no means out of the ordinary, simply leveraged online attention and social media marketing at a time when ads were cheap. Interested to know more about the nomads you've come across, and if you think one could do freelance consulting with 5+ yrs of M&A experience? Any tips appreciated!
This is a bit of a tangent, but I wanted to share my thoughts on how people on this site seem to believe you need to make far more money than you actually do in order to afford the best access to schools, healthcare, etc.
Coming from a family that lived in one of the most sought after parts of the country, no one believes me when I say we did it on a single salary that ranged between $200-300k a year. Yes that is a lot, but as the owner of a small business, my father's salary fluctuated greatly. I grew up next to the founders of some of the top PE funds with $1+BN net worths. Yes it helped that my Mom also worked for many years and they had a massive nest egg saved up from being DINKs (dual income no kids) for 8+ years.
But the important thing is what we could afford. We vacationed 2-3 times a year (sure we didnt visit say Italy regularly, but we still had great domestic trips), we had premium healthcare (a massive expense), a vacation home, multiple cars (often German premium vehicles), and my parents had a ton saved in cash. All in, my parents probably rarely brought in more than 500-600k combined TC during the years when they were DINKs. I would go so far as to say the average was probably closer to 300k all in, so not that different from the best years when only my father worked.
How was this manageable? No private schools, no nannies, no cleaning ladies, no country club memberships, no expensive services that you get zero equity in, essentially. My parents and my siblings did a ton of the work around the house ourselves.
People on this site (not directed at OP at all) constantly forget how far money goes when you live frugally. Growing up my neighbors included rainmaker IB MDs, PE fund partners / founders, the Heads of the top law firms, etc. My family made a fraction of what they did, but it really never mattered. My family also probably never had a NW of more than $2M at a time. However, my father still works to this day (3+ houses, more cars than he can possibly drive, zero debt, decent savings account).
So, with that said, give me a $1-2M (post-tax) lump sum one time and I believe I would be perfectly capable of working some 40-50 hour a week chill job making 100-200k a year at its ceiling to support a family of 2-3 kids and provide them with the best opportunities.
If I knew for a fact I wasnt going to have children and would remain a DINK, I would probably stop working a high stress job today with a ZERO $ LUMP SUM. I think I could find a comfy job bringing in 250k+ a year by 30-35 while my GF does the same and we could live a more comfortable life than 99.99% of people.
My $0.02 - If you want a comfortable life find a significant other who also wants this and is willing to work for it. If you have a SO that generates a similar amount of income to you AND lives frugally, suddenly getting rich becomes 2x as easy. My GF and I have historically switched off between who makes more per year and we both save like fiends.
You make a lot of great points. I think the caveat is that a lot of people on this site don't really want to live frugally (including myself) so they require a bigger pool of liquid, investable capital to finance that lifestyle.
Really boils down to how you envision your life on a normalized basis.
I hear you, and of course nothing is wrong with wanting to avoid living frugally. You probably work very hard (what IB VP doesnt) and make a killing, and I think that is extremely commendable.
Your response has me thinking that I should have prefaced my initial post by saying that despite what most see on this site, if you live frugally and are smart with your income earned, you can provide your family with the best possible opportunities without earning nearly as much as you might think you need. While I had a modest childhood relative to my counterparts, I still benefited from the same (or better) quality of education, healthcare, access to extracurriculars, etc.
I guess this is getting deep now, but for me my primary driver for working hard and generating a good income is solely to do what my parents did for me, to provide my children with every opportunity possible and to give them a better life than I had. If I have to drive an old Camry and live in a smaller house, I think I can live with that, so long as I can spend the amount of time I deem necessary focused on my family, friends, and hobbies.
Great comment, +1 SB, you really made me think about the context necessary for my initial post.
What type of city would you plan on living in longer term, whether with kids or DINK? Making $200k in your 30s with no nest egg now seems like it would take a while to build up investments.
If with kids, T2 city that I know quite well and while it is a T2 city, youll find the COL is closer to a T3/T4 if you have a deep familiarity with the area.
If no kids, I would likely opt for a T4 / T5 city where the COL is about the same but the quality of life is much higher. I like the outdoors and if I didnt have kids would prioritize living somewhere that would allow me to maintain an active lifestyle outside year round.
I agree with the sentiment but you sort of admit that your math doesn't hang together. Your parents were making $500-600k a year for 8 years before settling into $300k eventually. Not to mention that regardless of how frugal you are, to afford a nice house in a desirable area (which I assume you were in since your neighbors had considerably more wealth), a vacation house, and 2 luxury cars that $300k 15-20 years ago probably needs to be more like $500-600k today. There aren't very many people with a nice primary home, a vacation home, and multiple german cars on $200-300k combined income to feed/clothe/save for a family.
Assuming a paid off house, probably $3M
$2M + house in Europe @ estimated value of 0.8-1M.
Currently make in the 175-200k range, late 20s, married with kids, don't live on the coasts. Wife stays home with the kids. Current budget for expenses for the year is around 75k. If I plus up my spending to 100k, at a 4% drawdown I'd need 2.5M. Thats If I wanted to just walk away.. which I don't.
I have great WLB and feel like hitting VP is more or less inevitable over the next 10 years. Wife and I live very frugally. I imagine we'll spend more on home renovations, on the kids, on vacations, etc but I've set a hard goal of saving 35% of our after-tax income. I enjoy my job, feel challenged, and am still on a path that could end in the C-Suite.. so I don't have desire to walk away. Maybe that will change.
I came from a financially stressed background and almost had to drop out of college because I ran out of money. I've developed a view of wanting to sow the early seeds that lead to being an old money family. Money and name are what it takes to have an influence, and while my career may or may not get me to that point- I can hopefully start something that leads there. It's a weird ideal- I know. I've always been around people who shake their heads at where society and culture is going, but none of them try to do anything about it or accumulate resources to do anything about it.
So that all said, I'm not looking to walk away. I'm also not overworked, so that makes things easier.
Currently in IB but thinking of pursuing a corporate (either corp dev or other finance function at a corporate) path. I know its a fairly sizable paycut but don't think I can grind out IB, PE, etc. for the long term. For corp fin, is there any benefit being in NYC other than maybe slight premium on pay (obv offset by COL)? And do you have any advice on generally the best time to make the switch? I imagine making 200k/yr in a chill job especially outside of VHCOL is a pretty good setup but don't know people that made the switch unless they were late VPs / director level.
No- I'd say no meaningful benefit to being in NYC. In fact, it seems like the higher pay doesn't fully offset the higher COL, so you're better off being in a cheaper city like ATL, Dallas, Chicago, Phoenix, etc that have plenty of corporate presence where you can jump around as necessary.
As far as timing I would say to jump for manager level or higher. If you jump to CorpDev this should only take a few years, and you can likely come in at 150k+ as a manager, ~250k as a director.
My low expenses above are in large part due to buying a sweat equity home, driving 7-10 year old toyota/honda/Kias, private label groceries, etc. It takes discipline, but coming from very little growing up and also increasing my income from the 60s only a few years ago makes it a lot easier.
After I've reached 1 billion $+ NW
Uh, I think most people think of it the opposite way in terms of opportunity cost. If you're a lowly analyst making 150k, the path to high finance and millions is long, unsure, requires a lot of hard work and luck. Your number is certainly lower than someone who's already made it, even though they have additional savings. For example an MD 2-3 years in, maybe they have 5m in the bank, their number will be much higher because (i) they've put in the hours to "make it" and (ii) the opportunity cost on their annual earnings.
I've said before, my numbers are about 12.5 - 15m assuming no kids, 20-25m with kids (and I'm in the latter camp)
No amount. You could give me a billion and I wouldn't quit. I would take the money, but not retire. I like to keep myself busy, I enjoy my job, I find it interesting. Why would I retire then? It's not always about the money.
"Teller in IB" hmm
10MM cash/taxable accounts + house paid off. Don't count retirement accounts since I'm hoping to hit the number before I turn 65 and not planning to touch retirement accounts until then. I would not really call it a "walk away" number its more of a not look for a comparable gig (think I will always work in a markets related role as long as I can but would find something slower paced and more laid back) if I got laid off number, would not give them the satisfaction of quitting and letting them keep my deferred comp and not pay a severance. My firm has been good about letting people raise their hand and paying them out especially if they have been there a while, a lot of guys in their mid 50s with 15+ years at the firm have ridden off into the sunset recently. I also don't hate the job and make a pretty nice living not working that many hours, so I don't really dream of quitting and feel like I'm not that far off from making MD and having a team of junior people to do all the stuff I don't want to do. I'm 35 and if I can get to MD by 38 or 40 I should be able to hit the number by 45 or 50.
That sounds sweet. Congrats!
Completely unrelated, but I am interested in asking whilst I'm here:
Would you enter S&T TODAY if you had the option? I hear conflicting views on this, interested in hearing an opinion from a senior bro.
Would do it again in a second, its not as easy/lucrative/fun as it was pre-2008 but it still pays better than any other white collar job on a per-hour basis. If you like to keep score, are interested in the markets, and can stomach some vol in your career and life you will enjoy S&T. The job is not dying its just changing and if you are not willing to adapt you will be weeded out.
"Highly" paid is grammatically correct
To actually retire and do nothing lucrative? $50MM.
I'd quit if I had $500k liquid that I could use for real estate investments. About to, actually
Interesting, care to elaborate more?
Thanks for sharing. $500k seems extremely low - could you expand on your thinking please? I don't see $500k lasting you 60+ years of life.. what about a future family how can you support kids on such a low figure, a 1 bedroom flat in NYC costs like $1m? So would you want to relocate somewhere abroad with a cheap cost of living like India?
Thanks looking forward to hearing your rationale!
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