Today I have an update for you from a previous millionaire interview.
I’m letting three years pass from the initial interviews to the updates, so if you’ve been interviewed, I’ll be in touch. 馃槈
Today we chat with two millionaires to see how their lives have transpired over the past few years.
We’ll begin with Millionaire 216 who did an interview with me in 2013 for another site which I recently republished here on ESI Money.
As such, her update will serve as the longest time from initial interview to update that I’ve posted.
Her update was submitted in January.
OVERVIEW
I am a 74 year old female, life-time single. I live in a medium sized city in western North Carolina mountains in a TERRIFIC retirement Continuing Care Community (CCC).
I can’t find my original millionaire number from the Wealth Lion site, but my ESI Money # is 216.
I worked as a registered nurse for 34 years in Michigan and northern California, and loved working as a nurse!!
NET WORTH
2013 NW was $1.623 million in Vanguard stock/ bond/ and money market funds.
2020 NW is $2.329 million in Vanguard Index stock/bond/money market funds plus Target Retirement Income Fund.
I still have no debts.
Growth in NW now is about $700,000 (not counting 270,000 I spent for a retirement community entrance fee and a car.)
At 70.5 I began Required Minimum Distributions(RMD) from IRA and annual income grew lots.
Before 70, I left investments alone to grow and lived on $1700/month in a small WNC city where this was doable.
I put $1000/month into savings for 9 years in retirement= $108,000.
Market growth increased stock funds considerably. I allowed stock allocation to stay near 40%.
I have needed to tap investments for a $28,000 new car in 2016, and $240,000 entrance fee into the CCC retirement setting.
My basic MO is — tap investments only as necessary for RMD’s, cars, and large expenses.
INSURANCE
I had an at-fault auto accident in 2018, and was taken to small claims court. Because I had good auto and liability insurance, my out of pocket was less than $800.
I have since bumped up my umbrella insurance policy from $1 to $2 million to cover growth in NW.
I feel better with this increased coverage, because like all human beings I certainly make my share of mistakes.
EARN
I fully retired from paid employment at 55, and am now 74.
34 years working as a RN in Michigan and northern California in major medical centers fueled salaries that allowed me to be seriously persistent about saving and investing. I LOVED nursing as a career — it’s people-rich and scientifically stimulating.
My UNEARNED INCOME in 2013 was about $41,000 from Social Security, a $15,000 annual pension, and investment earnings.
My UNEARNED INCOME in 2019 was about $90,000, because of RMD’s and growth in earnings from taxable investments.
SAVE
From 2010 to 2019 I put $1000/month in automatic deductions into savings. Netted about $108,000.
Since moving to the CCC, I save anything I don’t need but don’t have a pre-set savings target — YET.
Charitable giving has been and is a very important endeavor for me for decades. I’ve tried to grow this amount each year of retirement using a donor advised fund (established from the sale of a house in 2006) and Qualified Charitable Contributions since I began RMD’s.
2013 charitable = $6,400. 2019 charitable = $10,000.
Pre-pandemic I loved volunteering at local libraries, food banks, and as a high school math tutor at a Job Corps site. I keep waiting for a safe opportunity to resume math tutoring.
SPENDING
In 2013 I spent $29,000 (including taxes and charity).
In 2020 I will have spent about $67,000 for CCC, insurance, food, transportation.
The CCC fees are about $37,000/year. Income taxes for 2020 will be about $15,000.
INVEST
In my IRA I’ve changed investments to more conservative ones — Target Retirement Income Fund and Total Bond Market Fund.
My taxable account has stayed in domestic stock index funds and a money market fund for, as Michele Singletary says, a “life happens fund”.
I chuckle now at my UPSET that the move to the Target Retirement Income Fund raised my cap-weighted portfolio expense ratio by 4 basis points (from 6 to 10 basis points). This is an example of sweating the small stuff. Since then the portfolio’s expense ratio has come down a bit. I appreciate that it automatically rebalances and that decisions about where to remove RMD’s are much simpler.
Opportunities Since 2013
I am calmer knowing:
- I’m in a CCC that exceeds my hopes and expectations (even in a pandemic year).
- I can afford to be here now and in the future.
- Vanguard’s Monte Carlo simulator allows me annual estimates of the income I can safely spend from the portfolio.
Challenges
The pandemic has been tragically dreadful for most of the world’s health and economy. A number of my family members have gotten mild cases of COVID, though avoided hospital stays, so far. It takes dedicated persistence to keep up the COVID avoidance behaviors necessary.
In March 2020, as I entered the CCC, I had to dig deep for trust in my chosen asset allocation. The 2008 economy and market crash helped me with leaving it alone.
Plans for the Future
I hope to enjoy the delightful people in my new community. I look forward to seeing them mask-less! I hope to explore even more of western NC.
- Keep up lots of exercise
- Read, Read, Read
- Return to donating blood
- Return to volunteer math tutor at Job Corps
My Advice to Any Others Who Wish It
- Be clear about your goals that require finances
- Live below your means persistently
- Save enough for “life happens”
- Invest in assets that can earn for you
—————————————
Next we have Millionaire 3.
Yep, one of the OGs himself!
This update was submitted in December.
As usual, my questions are in bold italics and his responses follow…
OVERVIEW
How old are you?
I am 43 and my wife is 40.
We鈥檝e been married for 15 years
Do you have kids?
We have four children ages 11, 9, 6, and 4.
What area of the country do you live in (and urban or rural)?
We live in an urban area in the NE part of the country.
What was your original Millionaire Interview on ESI Money?
I am part of Millionaire Interview 3 from December 14th, 2016.
Is there anything else we should know about you?
Nothing that won鈥檛 come out in the questions below.
NET WORTH
What is your current net worth and how is that different than your original interview?
Our current net worth is at $5.25 million which is $3 million more than my original interview when our net worth was $2.3 million.
What happened along the way to make these changes?
Our income didn鈥檛 change drastically, but we continued to invest at least 50% of our income.
I think the consistency of investing, compounded with the amazing returns from the market have contributed to the change in our net worth.
Since our original interview, we have also been able to defer more of our income from taxes in a defined benefit pension plan.
We have also sold our last rental property as it was too much to manage.
What are you currently doing to maintain/grow your net worth?
We continue to maintain our salaries at good high paying healthcare jobs. We haven鈥檛 seen much of an increase, but we haven鈥檛 increased our spending either.
We continue to invest in the market and minimize taxes. About 99% of our investments are in index funds.
EARN
What is your job?
I am at a director-level position at a different pharmaceutical company and my wife is a part-time physician contracted to work 80 hours/month.
What is your annual income?
My base salary is about $240k with a bonus of 23% every year and equity granted every year equivalent to about 20%. Total compensation is around $350k not including any 401k match or health benefits. This is about $70,000 more than the original interview.
My wife earns about $200k working part-time. She earns no benefits whatsoever (no health insurance, 401k match, etc). She also lost her work-from-home job that she had during the last interview. She is earning about $50,000 less than the last interview
How has this changed since your last interview?
All together, we are earning approximately $20,000 more than our last interview in 2016.
I have increased my salary by $70k, but my wife has lost about $50k in income primarily due to COVID.
Have you added, grown, or lost any additional sources of income besides your career?
We used to earn rental income, but we were not meant to be landlords, so we sold the property.
We put it up for sale in August 2019, and it finally sold in March 2020.
Coincidently, the market was crashing, so I took the proceeds and invested a lump sum in an index fund. It has returned handsomely.
We have no other income besides our career.
SAVE
What is your annual spending and how has it changed since your interview?
Our main expense continues to be our home. We only have about 6.5 years left on the mortgage. We have the funds to pay it off, but rather keep it in the market.
We still have a small student loan balance, but the rate is low.
We own the same cars as the original interview and own them outright.
We don鈥檛 keep a budget, but we don鈥檛 spend frivolously.
Our biggest expense are vacations as we鈥檝e started to travel internationally. We set aside $12-15k per year on vacations for our family of 6.
We also give to our Fidelity Donor Advised Fund every year in the amount of $30-50k. Our current balance in our fund sits at $460k (not included in net worth).
INVEST
What are your current investments and how have they changed over the years?
Assets:
- Primary home: $740k
- Retirement Accounts (SEP, 401k, Roth, Traditional IRA, HSA, Pension Lump Sum): $3.4 million
- Taxable Investment Accounts: $600k
- Real Estate Crowdfunding: $75k
- 529 Accounts: $548k
- Cars: $36k
- Cash: $100k
- Donor advised fund: $460k (not included in net worth calculation)
Liabilities:
- Mortgage: $250k
- School Loan: $33k
What happened along the way to make these changes?
Consistency and automation.
Every week and month, we have a portion of our income going into our investment accounts.
Time in market is better than timing the market.
MISCELLANEOUS
What other financial challenges or opportunities have you faced since your last interview?
No major challenges financially.
My wife has lost some income due to COVID, but thankfully, it hasn鈥檛 impacted our goals much
Overall, what’s better and what’s worse since your last interview?
We are more financially secure and closer to a goal of retiring early.
I鈥檇 like to retire at age 50. If all goes well, according to my projections, we would have a net worth of about $9 million at that point.
Anything can happen between now and then, and I have a lot of exposure to the markets. If the markets crash, this would delay our early retirement plans, but I don鈥檛 mind the work, so I may work until I鈥檓 55 in order to receive health care benefits.
We feel that our kids undergraduate education is about fully funded. Since my wife and I went to graduate school, we would like to help them with that as well.
Personally, I鈥檓 not looking to climb the proverbial corporate ladder. Over the past 5-6 years, I have been able to manage a healthy work-life balance. Since my kids are young, that continues to be our primary goal.
When my youngest becomes a teenager and no longer enjoys our company, I may pursue higher positions, but my wife and I are comfortable with where we are in our careers.
What are your plans for the future?
My wife and I will continue work for the next 5-6 years, but will also maintain our work-life balance.
We鈥檒l continue to invest regularly.
We鈥檒l continue to enjoy this time with our kids both at home and by taking vacations.
Our goal is to live in the moment now and create memories that will last a lifetime.
Given that you have a bit more wisdom and experience, what advice do you have these days for ESI Money readers?
One thing I struggle with is seeing my peers buy nice homes and cars. I know I shouldn鈥檛 feel that way, but I鈥檓 human.
I鈥檓 glad we didn鈥檛 buy a million dollar home. We can certainly afford it. I say this because while most readers may not earn a household income over $500k, the point is that we don鈥檛 live a $500k lifestyle. We drive cars from 2012 and 2013. Our home was purchased for $630k.
That said, the goal for everyone should be to live way below their means and invest the difference. If you can earn more, go for it, but balance it with family duties and responsibilities. We live a very fulfilling life and I hope that we can continue this in the days to come.
The Millennial Money Woman says
I really enjoyed reading both interviews and seeing the progress for both millionaires – hopefully I’ll be at that level soon, as well. For ESI Money #216, I thought it was great to read about continuing care communities. I work with a lot of individuals who are also actively considering moving into CCC’s – and of course the buy-in cost as well as the continuing annual costs are a major factor as it relates to the affordability. However, I often hear – just like you – how thankful they are to have made the switch into CCC’s, especially knowing they have nurses, doctors, etc. around them if needed. I also thought it was great how you mentioned you monitored your progress using the Monte Carlo simulation. I use the Monte Carlo simulation myself and see how it certainly helps – visually speaking – better understand where your financial situation is presently versus where it should be.
For ESI Money # 3- I loved reading an OG post. Congratulations on continuing investing and saving and ultimately growing your net worth. What stood out to me was that you both still own outright the same cars from your first interview. I think that just shows your winning mentality and why you are successful – and I’m not just talking about owning cars for an extended period of time. Clearly, your mindset to save, invest and live below your means has helped you be where you are currently. Congratulations – and continued luck on your journey!
Cheers,
Fiona
M says
Glad to see M3 with such a strong history of giving to the DAF. My only suggestion would be to group years together (perhaps every other) to perhaps get a little more tax efficiency out of the donation.
Nice to see folks doing well and following the same basic formula that they were previously. Slow and steady does seem to work.
M3 says
Great suggestion! We鈥檝e been bunching deductions every other year since the SALT deduction limits were in effect.
Kathy says
Great interviews. I have a question regarding CCC. When you pass or if you decided to leave, would you (or your estate) be entitled to any portion of buy in money refund?
Ann says
When I entered this CCC, I opted for the entrance fee that, after six months of living there, I had to choose—was I leaving and getting entrance fee back, or was I staying and leaving the money with the CCC. I had no problem deciding to stay and leave the money with CCC.
Ann says
Kathy,
Another Option for the entrance fee was to pay a good bit more, but get 50% back if I left after some specified time after the above 6 month option. I had research this CCC for 15+ years and visited it when economy was booming and in the Great Recession. It maintained its services/buildings/grounds/staffing/Medicare ratings through thick and thin. The place is also a non-profit, so it is not needing to jack up resident fees to keep outside investors happy.
I also investigated several other CCC’s during good and bad economies, and found they all had substantial falls in services/facilities/waiting lists to get in. So this place’s holding up so well was important to me in a time that the entire economy was suffering.
I
Kathy says
Sounds like you really did your due diligence 馃憤
Great that you鈥檝e found a home you鈥檙e truly happy in鈽猴笍
Nguyen says
Hi Ann,
Thank you so much for the information on CCC. May I ask on how did you research the CCC for that many years? Are there any websites or databases that we can look up and/or compare?
Thanks.
Ann says
Nguyen,
I first learned of this CCC through my church, then later did web searches for more examples of CCC’s, some of which I investigated. Many I eliminated due to weather, prices, too far from good medical, etc. I also explored a few near universities.
Eventually, I narrowed search to ones in NC mountains because I like the weather(usually!) and prices are closer to reasonable.
I worked for years in a large medical enter in California, and prices there were OUTRAGEOUS!! Probably because the weather along the California coast is wonderful…
There is probably a website that lists CCC’s that go though I big certification process every few years, as this ones does. Also Medicare lists skilled nursing facilities in each state (CCC’s have skilled nursing, assisted living, and independent living). You would want one that has top ratings for staffing for skilled nursing.
Joe says
Question for M3. I鈥檓 curious as to why you鈥檝e built up such an enormous amount in the DAF rather than distributing it, especially considering the impacts from the pandemic in 2020. Do you have a specific goal in mind for how you will use it?
M3 says
We do distribute $30k a year from the DAF but we allow the rest to build up in the hopes of creating a legacy of giving that will outlast our lifetime. Our mutual interest is children鈥檚 education so we鈥檒l likely leave a lot to organizations that support that cause.
M139 says
Both updates were awesome. I try to read original interview and guess change in net worth between original and update and significantly guessed wrong on both. One I missed to the upside one to the downside. Both misses are the result of guessing wrong on investment returns. Incredibly impressive saving and investment gains from M3 and great lifestyle choices and safety from M216. Congrats to both on accomplishments.
Ann says
Thank you, M 139!!
Success Triangles says
Great interview. This remark really hit home:
“That said, the goal for everyone should be to live way below their means and invest the difference. If you can earn more, go for it, but balance it with family duties and responsibilities. We live a very fulfilling life and I hope that we can continue this in the days to come.”
It does ring true that a higher salary comes with the expectation of longer work weeks, resulting in less time spent with family and friends – and often increased health issues from the added stress. At some point you have to ask yourself if the additional income is worth the tradeoff. I’d rather be comfortable financially and be a great husband/dad rather than filthy rich and a stranger to my family. Finding the right mix with your finances, health, and relationships is the key to a good life.
Charlie @ doginvestor.com says
I’m impressed by the level of income on part time work for healthcare. That sounds like an ideal situation to continue working at lower hours, but still earn well for it. That way you could get the mental stimulation from it rather than retiring outright? As well as affording the larger home if that’s what you really want without any real impact to your net worth – as opposed to retiring completely? I’ve just noticed that my ideal is not 80 hours of paid work per week, nor is it 0. After a few years I’ll probably push it back from 0 up to a more manageable 20-30 or so…