Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.
If you’d like to be considered for an interview, drop me a note and we can chat about specifics.
This interview took place in April.
My questions are in bold italics and their responses follow in black.
Let’s get started…
OVERVIEW
How old are you (and spouse if applicable, plus how long you’ve been married)?
I am a 54 year old female and my husband is 68.
We have been married for 24 years, however together for 30 years.
Do you have kids/family (if so, how old are they)?
We do not have any kids, however I have a niece and nephew that I am very close with.
We also have a 6 year old fur baby (our little dog Bailey that we call B).
What area of the country do you live in (and urban or rural)?
We live in the Mid-Atlantic region in a semi-rural environment.
What I mean by that is that the town we live in has all the amenities someone needs however is surrounded by farmland and the next largest city either East or West is approximately 1 hour away.
What is your current net worth?
As of end of Q1, 2023: $3,641,610.
What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?
- 401K/IRA: $1,676,860 (46.1% of net worth) of which 85% is in my 401K’s (3 from former employers) and the rest in my husband’s IRA. I maxed out my 401K as soon as I started working and also took advantage of the catch-up contributions as soon as I turned 50.
- Roth/After tax 401K: $154,000 (4.2% of net worth). I only started a back door Roth IRA in 2023, so the balance is only $7,400, but I also have $88,000 in an after tax 401K that I plan to convert to a Roth. My husband’s Roth is $59,000. I was a high earner for most of my working career and did not learn about Backdoor Roth until a few months ago.
- Brokerage/CD’s/Cash: $1,436,440 (39.4% of net worth). We always saved any additional money after maxing the retirement accounts.
- HSA: $25,120 (0.7% of net worth). I started saving in the HSA as soon as my employer offered a high deductible health insurance and did so over the last few years.
- House: $350,000 (9.6% of net worth). I am only including the house at purchase price even though Zillow currently values it at $468,000.
We do not have any debt.
EARN
What is your job?
Until a couple weeks ago, I worked as a General Manager within a large multinational corporation.
I decided to leave my job and am now taking some time off to spend with my family in Europe.
My husband retired a few years ago.
What is your annual income?
My salary before leaving my job was $245,000/year base plus a 30% bonus and $35,000 of RSU’s.
My husband recently started to draw social security of approximately $23,000/year.
Tell us about your income performance over time. What was the starting salary of your first job, how did it grow from there (and what you did to make it grow), and where are you now?
I grew up in Europe (born in Eastern Europe and later moved to Western Europe) and started working summer jobs when I was 16, making approx $13/hour.
I came to the United States to do an internship that was a requirement for my undergraduate degree in chemistry.
I came back to write my thesis and then started my career as Laboratory Supervisor at a state laboratory within a university making $12,000/year.
I grew my salary to $32,000 before leaving after 3 years to pursue my MBA full time.
After graduation from business school, my starting salary was $65,000. I grew my salary steadily to $175,000 through annual raises and taking on new responsibilities switching from finance roles, to supply chain, to marketing and later on to business manager roles.
I left that company after a 17 year career and moved to the company I recently left in a VP role making $200,000 plus bonus and RSU’s and have kept growing my salary since then through annual raises and getting promoted to the General Manager role.
What tips do you have for others who want to grow their career-related income?
Know what you want to achieve in your career and communicate this to your boss and your network in general.
Find a mentor and a sponsor within your company.
Be willing to take risks and try new things and always deliver more than you promised.
What’s your work-life balance look like?
My work life balance is very good right now since I am currently not working.
Over the last couple years, I worked about 40-42 hours a week with minimal travel and I did not work on the weekends.
I can’t say that this has always been the case as I used to work closer to 50-60 hours a week and also traveled a lot.
Do you have any sources of income besides your career? If so, can you list them, give us a feel for how much you earn with each, and offer some insight into how you developed them?
We did not have any sources of income besides my career and my husband’s income before he retired.
I will be able to draw a small pension of <$10,000/year from my prior employer when I turn 55 next year, however likely won’t take that until I turn 65.
SAVE
What is your annual spending?
We started tracking our spending closely over the last 3 years and spend $47,000 to $57,000/year.
What are the main categories (expenses) this spending breaks into?
For 2022 (the last year we have the breakdown for):
- Home (Insurance, HOA, Taxes): $7,300
- Home Improvements: $14,000 (we needed a new hot water heater and the AC decided to stop working right in the middle of the summer. Bad planning)
- Groceries: $7,000. We like to buy organic whenever possible, but have cut back on eating a lot of meat so that has somewhat offset the higher cost of buying organic produce.
- Restaurants/Dining: $1,000. I like to cook and don’t really like to eat out that much after having done a lot of that when traveling for work. I also switched to a low carb diet last year, so eating at home makes that a lot easier.
- Cars (Gas, Insurance): $2,600 (we both own our cars outright)
- Utilities: $4,000
- Pet (Insurance, Food, Vet): $1,200 (we adopted our dog during the pandemic and he has been a wonderful addition to our family)
- Medical/LTC: $7,200. As I mentioned earlier, I chose a high deductible health insurance plan as soon as it was offered by my employee and this is the deductible. I had a few minor procedures that I had to take care-off last year. We also have a LTC for my husband.
- General Merchandise/Cloth: $4,100. I don’t like shopping, so only buy what I need at any point in time
- Vacation/Hobbies: $6,800. I have family in Europe and we visit at least once a year, but also took a nice biking trip in France last year. We hope to travel more when I stop working/retire.
Do you have a budget? If so, how do you implement it?
We don’t have a budget and never had one.
We are in general very frugal, however spend money on the things that bring value to us such as organic produce and travel.
What percentage of your gross income do you save and how has that changed over time?
I always maximized my 401K and saved additionally between 30 to 40% of the after tax take home pay.
While the $ amounts changed as I earned more money the % has really not changed significantly and has been pretty consistent.
What’s your best tip for saving (accumulating) money?
Make sure that you and your spouse are aligned around what to spend money on and that it brings value and joy to your life.
Also, always spend less than you make and never chase the latest bright shining thing such as a new toy or car. We always keep our cars until they don’t run anymore. I am only on my second car.
Use raises and bonuses to increase your savings.
What’s your best tip for spending less money?
While I have never been a big spender, my best advice is to limit spontaneous purchases.
I find using online shopping makes that easier by being able to add an item to the shopping cart and then wait a few days to see whether you still want/need that item.
I also love to use the library for books and sometime free entertainment via lecturers, etc.
What is your favorite thing to spend money on/your secret splurge?
Good sushi. 😉
I mostly like to spend money on experiences and like to go to see plays, musicals.
Otherwise, I like to give money to my niece and nephew. It brings me more joy to support them instead of spending money on stuff that I won’t use.
INVEST
What is your investment philosophy/plan?
I am a buy and hold investor and mostly invest in index mutual funds (within the 401K’s) or ETF’s (in the brokerage account) although I dabbled a bit in dividend stocks and did very well through 2022 when all my other investments were down. I don’t mind risk, but don’t invest into something that I don’t understand like crypto.
My husband is very conservative and since he invested the after tax money for the longest time most of that money is/was in CD’s.
Also, as I had planned on stepping away from working (either for a while or for good – time will tell), I shifted some of my 401K last year into a stable asset fund which is why we currently sit at a 48% equity/52% Bond/CD allocation.
I am reading a lot about the rising equity glide path in retirement (Michael Kitces and Wade Pfau have an interesting article on the subject and I saw recently some other people in the finance community blogging or doing YouTube videos on the strategy) and my goal is to shift our portfolio more towards an 60/40 equity/fixed income allocation over time.
If ESI Money readers have some experience on this strategy, I am interested to hear their opinions and how they implemented it, meaning how many years into retirement did you decide to shift more towards equity and did you do it by spending down fixed income investments or making a deliberate investment into equity?
What has been your best investment?
Definitely investing in myself and getting my MBA. It was the best money I spent and had a huge return on investment.
Other than that, consistently investing in index funds in my 401K’s and sticking with it during market ups and downs.
What has been your worst investment?
One: not paying attention to some stock options (about $24,000) from my former employer and letting them expire. While this goes quite some time back, it still upsets me.
And two and maybe even more important: not being interested in investing outside of my 401K and having that money not work very hard for us sitting in CD’s. I only got interested in investing when I stumbled across the ESI blog in 2019 and I learned a lot ever since and keep learning.
What’s been your overall return?
About 8%/year in my retirement accounts and anywhere between 1-6%/year on the after tax savings (CD rates were quite high in the early 2000’s LOL.)
How often do you monitor/review your portfolio?
I check what the market does on a daily basis, however only do a net worth statement at the end of every quarter.
I don’t let market movements’ influence my behavior.
NET WORTH
How did you accumulate your net worth?
My net worth was all accumulated through earning and saving.
Getting my MBA was definitely the basis for increasing my earning potential and was the best money I ever invested/spent.
Setting up automatic savings into mine and my husband’s retirement account and living below our means and saving what we did not spend got us the rest of the way there.
While I never had any education about investing, I made the right decision to invest my retirement accounts into low cost stock index funds and cost averaging through monthly contributions and compounding took care of the rest.
What would you say is your greatest strength in the ESI wealth-building model (Earn, Save or Invest) and why would you say it’s tops?
Definitely earn and save.
I kept growing my salary by first going to business school and after my first job in corporate by taking on roles with increased responsibility.
Also, I learned at an early age from my mother to save and kept at it as I made more money and started getting a bonus and equity compensation at work.
I am still a student at investing and keep learning as much as possible every day.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
We made the decision to physically move quite a bit (we moved 6 times) for my career, which made it very challenging for my husband as he was not able to stay with his employer and needed to find new jobs frequently. That meant that he was not able to earn a high salary.
I was very lucky though that I had stable employment through most of my life and the frequent moves including one international one allowed us to experience different parts of the country and world.
What are you currently doing to maintain/grow your net worth?
Since I stopped working, the goal is now to optimize the asset allocation and location to minimize sequence of return risk as well as taxes.
I am also looking into investing more into myself and learning new skills in areas that interest me such as personal finance or how to use food to stay healthy.
Do you have a target net worth you are trying to attain?
$3.3 million in liquid assets (outside of our house).
I arrived at that number by looking at our expenses today and what they likely will be in retirement and used a 3.25% withdrawal target.
I also build an extensive withdrawal spreadsheet to make sure I felt comfortable with the number before deciding to leave my corporate job.
How old were you when you made your first million and have you had any significant behavior shifts since then?
Looking back at some net worth statement I recently learned that we crossed the $1M mark in 2011, so about 11 years ago at the age of 42.
No change in behavior. We continued to live below our means and kept saving and investing.
Over the last three years though as I learned more about investing as well as the FIRE community, I realized that we are FI and that allowed me to distance my identity from work and I started working from 8-5 and not taking work home. This has prepared me for being ready to step away from work and feel ok with it.
What money mistakes have you made along the way that others can learn from?
I was always so involved with my work that I never paid a lot of attention to money, which led to the expiration of the stock options I mentioned earlier and to minimal growth of the after tax savings.
In hindsight, I wish I would have taken some time earlier to learn about investing and not just put the money into CD’s.
What advice do you have for ESI Money readers on how to become wealthy?
Follow the ESI principles.
Invest in yourself and take some calculated risks at work putting your name in the hat for new opportunities as they came up to be able to grow your earnings.
Live below your means, but enjoy life along the way and don’t just save to be able to retire early.
Educate yourself about investing in the stock market as early as possible. With the internet and social media (used the right way) this is so much easier today than it was even a few years ago.
FUTURE
What are your plans for the future regarding lifestyle?
Since we achieved the $3.3M target, I decided to stop working at the end of Q1.
I am not sure whether that means I will never work again, so for now I look at it as an extended 1-2 year sabbatical. We will see from there. 🙂
What are your retirement plans?
Financially, we have achieved our plans. Now, I spend a lot of time learning about de-accumulation and tax optimization strategies.
In terms of activities, we plan to spend at least 3 months/year in Europe with my family and use my parents place as a base for some travel in Europe. There are a lot of places that my husband and I would like to see that because of the limited vacation time every year we were not able to visit yet. I would also like to travel in South America.
I also want to get more involved with volunteering, especially around literacy and in the outdoors.
And I want to do more for my physical health and exercise more. Adopting a dog already made a huge difference as we now walk at least one hour in the morning with him.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
As so many others have said, health care is definitely a concern. My husband has Medicare, but I will have at a minimum 10 years to bridge until Medicare. I likely will use my former employer’s COBRA plan for 18 month and then look into the Affordable Care Act. Given the uncertainty around health care cost, I planned a conservative number that should cover the potential expenses.
Outside of the financial aspect, finding a purpose is something I am a little concerned about. I definitely am a driven person and know I will need to find something to do that is meaningful to me after the initial vacation phase.
MISCELLANEOUS
How did you learn about finances and at what age did it “click”?
I never had any formal education about personal finances and for me it didn’t really click until I was 50. While I knew that we were doing well financially, I never really paid attention to the money aspect. My whole focus was on my career.
I then came across an ESI post and my thirst for learning more was born. So, in our case you can definitely say that we are “accidentally FI”.
Who inspired you to excel in life? Who are your heroes?
My heroes are my grandmother and my mother.
My grandmother lost her parents and had to live on her own at a very young age. She was very entrepreneurial and always found ways to make money.
And my mom didn’t have the opportunity to get an education beyond elementary school, but always has been able to handle all her affairs and supported my sister and me to go to high school and college to afford us a better life than what she had. It’s from her that I learned to save.
Do you have any favorite money books you like/recommend? If so, can you share with us your top three and why you like them?
My favorite money books are:
- Quit like a Millionaire – Kristy Shen and Bryce Leung. I learned from this book that you don’t need as much as you think and it gave me to courage to start thinking about stepping away from my corporate career.
- How to Make Your Money Last – Jane Bryant Quinn. I liked this book because it covers all the key aspects that need to be considered in retirement, but it still an easy read.
- The Retirement Guidebook – Wade Pfau. A great book for the DYI community and it really helps your think through your retirement income style. This one is a lot more technical and will be one that I plan to revisit often over the next few years.
Aside from books, the ESI Money and the Retirement Manifesto blog as well as the Retirement Planning Education Facebook group were key resources in my learning journey.
I plan to read more non financial retirement books in the near future and would love to get some recommendations from your readers on which books, resources were valuable to them.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
We gave to charity through my work. We also give money to a local animal rescue where we rescued our dog from.
At this time it’s a small percentage of our net worth and my plan is to increase that in a few years when I have a better sense how my retirement plan is working.
I used to volunteer some of my time until a few years ago and want to get involved a lot more with volunteering and giving time during my retirement.
Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?
Since we don’t have children, we don’t have any direct heirs.
The plan is to leave what is left over to my niece and nephew. Since they live in Europe we still have to figure out how to structure that in the most efficient way.
So legacy and estate planning is a big To DO item for the near future.
Chris says
Great job! Congratulations on all your achievements.
You mentioned concern with regard to purpose in retirement. I am 3 years into mine and would highly recommend you give yourself 12-18mo for that to happen. Likewise, I caution you that you may find your purpose is no longer goal oriented, in the traditional sense, but more about being “available” for others, due to your ability to own your time. Owning your time provides an amazing sense of flexibility, allowing you to pivot towards an immediate need, often involving helping others.
Paper Tiger (aka MI-27 & MIU-8) says
Great insight, I found the same thing in my retirement.
Millionaire368 says
Thanks for the insights.
Jennifer says
Don’t forget to look into International Health Insurance. I read another post on this site that talked about how you just need to be overseas for at least 3 months a year and you can have access to much more affordable health insurance. I haven’t researched this option, as of yet… because I’m not there yet…
Millionaire368 says
Thanks Jennifer: would you have a link to that information. My understanding is that with most international insurances you can only be in the US for 3 months of the year, however there could be something I am not aware off.
Tuesday says
Congrats! Looks like you made some really good decisions for your future from the beginning. I admire that. It is so hard for me to get through to my grown kids to do this, but I’m trying. They tend to think they have plenty of time to ‘get started’. The most important thing on the savings journey is to ‘just start’, and then ‘be consistent’. Looks like you did just that and it’s paid off royally.
Millionaire368 says
Thanks Tuesday. Starting early is the key.
ScubaJay MI-293 says
For the sake of equality, my eyes and ears always perk up when I see women post that they are the breadwinner. Kudos to you and your hubby for being on the same page and executing on that vision.
We are also DINK’s and animal lovers. Have fun identifying what you will be retiring to and what activities that you will explore. Enjoy the time off as there is no rush to take on added responsibility just yet, you guys have earned it!
Millionaire368 says
Thanks ScubaJay. Enjoying my time off a lot so far.
Mary says
I’m curious about the pension from your previous employer. Will it grow over time or is there another reason you’re waiting to start it?
Really enjoyed reading your interview!
Millionaire368 says
Hi Mary: reason for not taking the pension early is that I want to manage my income for Roth conversions and for ACA health insurance purposes. It also does continue to grow. Thanks for your question
117 says
Good for you guys. Backdoor Roths seem to be a pain imo. But now is a great time for you to start moving 401k/IRAs into Roths via conversion. You have a lot in pretax so maybe during retirement conversions make sense. But pay attention to taxes so you stay in lower brackets if you can.
I love ETFs. VOO and VONG specifically. I’ve dabbled in stocks but I’m not good at it. Lol.
I really don’t like bond funds at all. Never get good returns in my experience. That being said this is a good time to hold Tbills as they are well over 5% currently. I’m heavy in the market. Don’t care for the 60/40 rules. If you have cash make sure it’s in good MM. SPAXX at Fidelity is close to 5%.
Good luck
Paper Tiger (aka MI-27 & MIU-8) says
Hi 117, are you retired? If not, what % in equities do you think you will hold once you are? I too believe in holding a higher % than most in equities in retirement but I was curious what you are thinking.
117 says
Hi- Not yet but I’d say I’m FI and could RE.. lol. My NW is close to $4M and I have a modest lifestyle and no bills.. other than real estate tax, insurances, etc.
I’m 60 and still enjoy work for now… my wife will probably retire soon and she’s a tad younger.
The market over a short window can be highly volatile… but over a longer window (say 5-10 yrs) it’s not as volatile and yields bigger returns than cash-like assets. When I retire (maybe 65ish) I won’t really need much more than our SS while drawing some cash from my brokerage/saving account. So I can afford to keep ~$500-750K in cash and let the rest ‘ride’ in the market so to speak. I’m mostly in index ETFs- heavy with VOO. Currently I’m about 30% cash-like, the rest is in the market. But most of my cash is making over 5% today. If my accounts keeps growing more than inflation over the next 5-10+ years I can see a ratio of 20/80 or so. That’s my thought. We’ll see what I feel like in the tough markets with no work incomes… lol
Paper Tiger (aka MI-27 & MIU-8) says
Thank you for your response. I believe we are very like-minded. I am 65 and retired and my wife is 62 and still works. She says she would probably like to go to 65 if she can continue to deal with the stress.
Our passive income should cover our living expenses in retirement which is why I’m OK with a higher % in equities. I too have been thinking along the same lines as you re: keeping ~80% in equities.
Good luck and good health in the years to come!
SB says
You targeted 3.25% withdrawal but your spending is closer to 1.6%. Why are you spending so little?
MI 343 says
Thanks for sharing your story with us!
We also rely on the simplicity of no-load low-expense stock index mutual funds at a roughly 70/30 mix with fixed income investments. We’ve had a very similar mix for the 31 years we’ve been investing. There’s been no reason for us to change over the years, even for retirement. Emotions based on Market news almost got me a few times, but I’m glad I hung with this mix as it’s paid off handsomely.