Are We Nuts to Retire at 42 With $1.5 Million?

My wife and I are both 39 and have worked hard since graduating college. For the past 17 years, neither of us have been out of a job or for that matter ever really taken a vacation for more than a couple days.

We’ve always planned to retire early, but in the past couple of years with COVID and our sons’ (11 and 8) activities, we’ve been counting down the days. We both have set a target date of three years from now when we are 42. This would allow us to enjoy some years with our boys, who will then be 14 and 11, before they go off to college.

We currently own our house and cars completely debt-free. Between 401k(s), investments and cash, we will have around $1.5 million combined, about $350,000 of which is in 401(k)s, or $2.3 million when adding in home and cars. We live in a suburban/rural area of ​​Missouri, so the cost of living is below the national average.

Further, my wife owns one third of the business I’m currently running, which is a family business. The business currently is successful, and her shares will be completely paid off at 42 under the current model. The company currently produces around $2 million a year of distributed income after tax that she will receive one third of once the sale is complete.

After purchase, the dividends will go into a trust fund and should be around $750,000 a year. We plan to accumulate that money and live off the interest from her trust and our aforementioned assets. Our kids have fully funded 529 plans and starter accounts that will have restrictions on age for them.

Are we nuts for wanting to just drop out of the workforce and live our lives with our kids? Are we missing something here? We both would like to travel and spend time with them until they go off to college, as we feel we will never be able to get those years back. Then, perhaps, we can reassess whether we’d like to work part time or do consulting when they leave our home.

To further complicate things,…