Long-time MMM blog reader, recent lurker, first-time poster

Age: 43 and 41

Children: 3, ages 13, 10 and 8

Location: somewhere very expensive in USA

All figures annual

Pre-Tax Income: $1.2mm

Taxes: $360k

Expenses: $450k

Net Worth: $4.2mm

Without getting into too much detail, we have an expensive home which is valued at a little more than our net worth, and a lot of the expenses go towards servicing the debt and paying off the mortgage. We estimate that by 2020, when our first child goes off to college, our annual expenses would drop to $250k if between now and then we purposed all annual discretionary income to pay down principal and sold existing investments to completely pay off the mortgage balance. For simplicity assume straight-line decrease in annual expenses, or $40k a year lower: $450k in 2015, $410k in 2016, $370k in 2017, $330k in 2018, $290k in 2019, $250k in 2020 when the house is owned outright.

I would conservatively estimate that our income will remain constant at $1.2mm pre-tax, $840k post-tax over the next 10 years.

We estimate that in 2020 our net worth would conservatively be $6.5mm in today's dollars, assuming market returns that are in line with inflation (0% real). By 2025, with all kids out of the house, we would look to downsize to a residence worth roughly 1/3 of our current home, giving us liquid investments (both taxable and tax-deferred) of a combined $5mm. We also estimate that annual expenses starting in 2024 would decline to $200k, then $150k in 2028, as the kids each graduate from college.

Assuming the above scenario, at what point would it be safe to assume we could completely rely on investment income alone and not have to earn a wage?