Retire before your kids leave home, not after

I recently received a great comment on my post, Why do all the rich people I know still have life insurance?. It was the last line that stood out. Here’s what Marc had to say.

I had life insurance ($1M) through my employer when I was working full time, but since I cut back to ~10 hours a week, I no longer have it. My wife still has hers through work (also $1 million) for very cheap, but once she leaves it in the next couple of years, we will no longer have life insurance.

I’m not as dogmatic about this as some of the pre-FIRE folks you mention, but we don’t see any reason for life insurance in our case. We carry 3+ years of spending on our emergency fund in cash, so we avoid some of the concerns expressed in the article. That said, we have one umbrella policy. Unlike our financial needs in the case of an untimely death, there is no limit on personal liability judgments, especially in a litigious state like California.

For context, we are in our early 50’s with kids in middle and high school, south of the SF Bay Area. Net worth > $10 million.

Marc and his family are obviously doing well. Hello to them. However, I have yet to meet someone in real life who is rich, has kids, and has no life insurance. Although, I have met many people online who SAY they will drop their coverage once they stop working. But I’m still skeptical.

Saying you’re going to do something once you reach a milestone and actually doing it once you get there are two completely different things. Money is emotional, and we are creatures of habit. That’s why syndrome another year exists.

But this post isn’t about whether you should carry life insurance after you’re in a fire with kids. (Obviously you should.) It’s about something bigger: whether you should pull out while your kids are still at home, or wait until they’re gone.

My take, if you can afford it: don’t wait.

Retire when your kids are home, work after they leave

When I read that comment, a family worth over $10 million, with a middle schooler and a high schooler, and a husband who was planning to leave her after a few years, I was amazed. Personally, there is no way I would continue to work if I had that kind of net worth and both of my kids were five years away from home forever.

We all know that by the time your child turns 18 and heads off to college, you’ve likely already spent the vast majority of the in-person time you’ll spend with them. The widely cited “Tail End” analysis puts this figure at approximately 90% or more. After they leave, you are living the last part.

And I already feel a tremendous urgency about time in my late 40s. I can only imagine how fiercely I’ll want to protect it once I’m in my 50s like Marc and his wife.

More money doesn’t change anything

Choosing to make more money when I they already have 10+ million dollarsinstead of spending more time with the people I love the most, it’s a complete non-starter for me. I just don’t see how spending 40-60 hours a week to make another $500,000 before taxes is going to positively change my life.

But I understand that too money and status are intoxicating and hard to get away from it. Meanwhile, some people have truly amazing jobs that fill them with joy, purpose, and passion. We all deserve to pursue what we love, not just what is best for our children. So I understand. There is no single correct answer here, only what fits your life.

I wasn’t lucky enough to keep my passion for finance after 13 years, so I wanted to leave. But I’ve been lucky enough to keep my passion for writing alive for 17 years, writing before my kids wake up and while they’re at school.

Conventional Path vs. Fire Path

There are two common ways people rank career, money and children.

Conventional route: work, have kids after you have some financial stability, keep working to provide for them until they graduate college, then retire. Children are expensive and time consuming. No one denies this. And there’s no upper limit to what you can spend on them if you let yourself.

Path of Fire: Include your career and save and invest 50%+ of your income for 10 to 25 years, retire early, travel the world and explore passion projects, then have children. In theory, this gives you more time to be present and build a stronger relationship. Then, once your kids leave for college or work, you can go back to wrestling full-time if you want.

Both have real compromises.

The conventional path often means having younger children. As a result, you can share a greater percentage of your life together. This is by far the biggest advantage, and you feel it most in the second half of your life.

One of mine the biggest regret is having children late. Not only will I not be around that long, but I also couldn’t have more children. The downside of the conventional path is more stress from juggling career and family, less energy and sometimes weaker relationships and more tension at home.

The FIRE path usually means having kids later because you’re so focused on saving, investing, and escaping your career that there’s no room for them yet. Then, when you finally pull the trigger, you may find it harder to get pregnant naturally because of biology. And when you have children, you won’t spend as many years with them as you would like.

The flip side is that you’ll likely spend a lot more time with them during their first 18 years than you would while working. You may also have more financial resources such as a FIRE parentwhich can make insuring your family less stressful.

So life is full of compromises. There is no objectively better way. There is only the way things actually unfolded for you, and the way you wish they had.

The hybrid way seems optimal

My wife and I have a joke: there is no need for us both to suffer the same difficult thing. So, a way to balance career and family is for one person to make a big salary while the other stays at home with the kids. This traditional version makes a lot of sense, especially since a stay-at-home parent eliminates childcare costs. Once your child is eligible for full-time preschool, you can decide whether to send them. Just know that full-time parenting is harder than any bank job, so there you go.

Second version: one or both parents quit their full-time jobs after having children and work part-time or on their own projects from home. You may not earn as much, but you will have much more time with your children. The greatest gift of COVID was the normalization of remote work and, in effect, getting paid to be closer to your children. Too bad the more serious firms have dragged everyone back to the office.

Final version, full FIRE version: both parents become stay-at-home parents while their investments generate enough passive income to cover family expenses. It’s a somewhat uncertain life, as market corrections happen all the time. But based on historical returns, it’s a build that could work long-term, especially if you can earn some extra retirement income along the way.

The Fire Path to Career and Parenting

Here’s a FIRE trail worth considering if you’re planning to have kids. Let’s see if my coded vibe guide works.