We're in our 50s and have $2.6 million in our 401k – this is our plan for finally pulling the rip cord on retirement

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The problem for many prospective retirees who take to the r/ChubbyFIRE subreddit isn’t that they’re feeling just a bit of anxiety as they approach the big day they finally exit the labor force. Indeed, there are also folks with nerves for those who aim to retire at more traditional ages (in their mid-to-late 60s). However, when it comes to early retirement, there are always added jitters that go well beyond one’s financial situation. Such jitters may cause one to be overly conservative regarding their asset allocation.

In this piece, we’ll look at a rather interesting case of cash-heavy early prospective retirees who took to Reddit for feedback. I thought they were in great financial shape to make the jump. But as someone in the comments section remarked, they were rather conservative, perhaps too conservative. Arguably, this case represents one of the most conservative retirement plans and asset allocations I’ve seen on Reddit.

While posting on Reddit isn’t a substitute for getting advice from an adviser, I do think there were a lot of interesting points that would help the poster better recognize their blind spots and react accordingly.

Key Points About This Article

Their financial situation looks terrific.

The couple in their mid-50s is in great financial shape, with significant assets (total net worth reportedly at $4.55 million, $1.25 million of which is in cash and cash equivalents). There’s a whopping $2.6 million sum in the 401(k) and Social Security benefits to be expected in less than a decade.

With a paid-off home and vehicles, the couple seems well-positioned to enjoy a so-called chubby early retirement. Also noteworthy is their adult child lives with a moderate disability that prevents him from working. In any case, with $90,000 in expected expenses, it seems like the family is in decent shape to retire anytime they’d like. Their annual expenses would represent less than 2% of their net worth.

Though the family could upgrade their lifestyle to spend a greater amount every year, I do think it’d be smarter to invest the rest so that they can continue growing their wealth in retirement. Indeed, being conservative is only smart when retiring early. However, being too conservative can also have significant drawbacks. And in the case of this family, I do think they’re overly conservative, even for an early, chubby retiree.

There’s just too much cash sitting on the sidelines.

Of note, the more than $1 million in cash could be a sitting duck should inflation pick back up in the coming years. With potential Trump tariffs that could be on the table in the coming years, I’d encourage the family to meet with a pro to take care of their excessive cash situation.

Although I have no idea if the family is open to investing a greater chunk of their cash hoard in risky, higher-return assets, I do think that a financial planner could help them better understand their options. Holding too much cash in the face of a potential inflation resurgence, I believe, carries its own slate of risks.

Additionally, the family expects to inherit another fortune (in the $2 million ballpark) at some unknown point in the future, which could put the family’s net worth at north of $8 million in 2035. With such a cash windfall on the horizon, I’d argue there’s room for the family to be a tad less conservative. That is, if they’re willing.

The bottom line

In short, the Redditor is in great shape to retire earlier, with their annual expenses accounting for less than 2% of their net worth. With all significant assets (home and vehicles) paid off, the couple seems prepared for some smooth sailing.

That said, I believe they’re too heavy on cash and should weigh other investments (precious metals, stocks, bond funds, REITs, royalty funds, alternative assets) so they can continue growing their nest egg in their decades as retirees.

Regarding early retirement, it’s good to err on being more conservative. However, with more than $1 million in cash, I’d argue they’re too conservatively positioned, so much so that they’re leaving a lot of future growth on the table. Sure, making the jump into early retirement can be a tricky call. But if I were in this couple’s shoes, I’d chat with an expert about the trade-offs of being too conservatively positioned.

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