FI and VHCOL

I will start out by saying I am in a privileged position here.

Our non housing expenses are $10k per month or so. Investment portfolio has $3.75M. We are 10 years away from being able to collect social security and a pension that will bring in $100k per year.

Given that, we could pull 5% from the portfolio for next 10 years to meet expenses and then reduce portfolio withdrawals once social security kicks in.

Sounds like FI, right?

But …. There is a catch

We live in a popular VHCOL area with good weather and near all the top companies. Not wanting to commute, we bought a house years ago, which has now appreciated.

It’s worth $3M. Our equity in it is almost $2M.

Still have $1.1M mortgage, locked at low 2.6% rate (refi during pandemic).

Together with prop taxes, the monthly housing outlay is $7k ($5k mortgage + $2k tax).

So, with $17k monthly expenses in total, we are not FI for next several years if we stay in VHCOL. W2 incomes (2 jobs) can easily meet these expenses.

What would y’all do here? Choices are:

1. Just stay the course and keep working day jobs as long as possible. Maybe we can ride it out all the way – 8-10 more years.

2. If one of us loses job to RIF, then coast along on the remaining income and let the portfolio compound, while looking for a job without any panic.

3. If both lose job, sell the house (maybe it will go down in value in a recession, but still should be able to unlock $1-1.5M upon sale). Use that to move to cheaper MCOL and buy home in cash. Where???

4. Proactively sell and move to MCOL. Buy home in cash for $750k-1M, and keep $4.5M in portfolio to fund day to day life.