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.
My questions are in bold italics and his 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 67-year-old widower. I was married for a total of 41 years.
Do you have kids/family (if so, how old are they)?
I have one daughter who is 39 years of age.
What area of the country do you live in (and urban or rural)?
I live in a suburban neighborhood in a mid-sized city in Arizona.
What is your current net worth?
My current net worth is $1.5 million.
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?
- Liquid Assets: I currently have just over $1 million in two IRAs and one non-IRA account managed by my financial advisor. The breakdown is approximately 60% stocks (index funds), 30% bonds, and 10% cash. Cash for everyday living expenses as well as emergency backup includes $65,000 in local banks.
- Primary residence: $384,000 (mortgage is paid off).
- Three vehicles: $43,000 total (Kelly Blue Book)
- Time Share: $15,000 (low ball estimate)
- Household: $4,000
I have no debt.
EARN
What is your job?
Three years ago, I retired from my “9-to-5” job, but I continue to do a minimal amount of work with my side hustle.
The majority of my career was spent managing the environmental science and archaeology projects for a large consulting firm.
In addition, beginning 20 years ago, I also began teaching online as an adjunct at various colleges and universities.
What is your annual income?
I currently make just $12,000 per year teaching online after retiring from my career position, as well as scaling back other teaching assignments.
Social Security will be $33,000/yr. beginning next month, and I’m currently withdrawing 2.2% of my IRAs.
Tell us about your income performance over time. What was the starting salary of your first job and how did it grow from there?
Due to my remarkably advanced age, I began early jobs at $1.25 per hour (minimum wage) in the late 60s and early 70s.
My initial professional job earned me a mind blowing $14,000 per year in the mid-70s.
In the latter part of my career, I was averaging $90-$95,000 per year at my regular job, as well as another $30-$50,000 per year from teaching assignments.
What tips do you have for others who want to grow their income?
Loyalty to an employer must be mixed with a regular assessment of your income level – don’t get too complacent, even with a job that you love. Always be aware of where you stand and be ready to negotiate raises based upon your performance.
Consider the appropriateness of a side gig or side hustle.
What’s your work-life balance look like?
Since retiring, the balance has been outstanding – one half to one hour of work per day, followed by freedom and independence.
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?
In addition to my regular career, as mentioned, the other main source of income was the online teaching.
For a number of years, I also received a very small annual royalty from the publication of a book in 2001.
At various times, I also supplement my income with other writing and editing assignments, and I assisted my wife in the preparation and sale of her craftwork.
However, the overwhelming majority of extra income came from the online teaching assignments.
SAVE
What is your annual spending?
Since retiring, it has ranged from $48,000 to approximately $53,000.
What are the main categories (expenses) this spending breaks into?
Expenditures in 2017:
- Travel: $ 6,163.04
- Hobbies: $ 5,425.01
- Utilities: $ 4,947.62
- Groceries: $ 4,428.55
- Restaurants: $ 4,088.39
- Cable: $ 4,053.35
- Automotive: $ 3,783.02
- Insurance: $ 3,470.60
- Gifts: $ 3,250.00
- Taxes: $ 3,091.53
- Home Maintenance: $ 2,571.30
- Other Categories: $ 8,190.45
Total: $ 53,462.86
Remember, this is for a single retired guy – in previous years it was remarkably different.
Do you have a budget? If so, how do you implement it?
I use a good budgeting tool connected to my online banking accounts.
I use it primarily based upon my interest in keeping track of how spending either stays the same, or changes through time.
Fortunately, I don’t need to use it to control my spending, as my expenditures could safely be increased quite a bit.
What percentage of your gross income do you save and how has that changed over time?
In my current situation, I am less concerned about saving, although it has averaged a very basic $1,000 per year since retiring.
When I begin receiving Social Security next month, I will probably start setting aside $6-8,000 per year in additional savings.
What is your favorite thing to spend money on/your secret splurge?
There are definitely several new interests occurring, but at this point the favorite is the acquisition of historic vehicles.
INVEST
What is your investment philosophy/plan?
In collaboration with my financial advisor, I am simply following the retirement formula of diversified investment in the stock market based upon a goal of protection with growth.
What has been your best investment?
Like many folks, I made the mistake of not starting very early with investments. Therefore, I would have to say that the best investment occurred when I got together with a qualified financial advisor to do the rollover of my 401(k) into index funds and bonds. I don’t own individual stocks (I also invested in my future by paying off my mortgage).
What has been your worst investment?
Prior to retiring, I must admit I was pretty tight with a buck; however, my worst investment would probably be the purchase of new cars instead of used cars.
What’s been your overall return?
During the years that I contributed to the 401(k), overall return was approximately 8%. Since rolling it over three years ago into an IRA, the return has been 19%, obviously as a result of what has occurred in the market.
How often do you monitor/review your portfolio?
I know that as a retiree, I’m not supposed to fret about it on a regular basis. However, based upon my continued interest, I check it more than once a week.
NET WORTH
How did you accumulate your net worth?
I have always tried to turn hobbies into money.
This included an early interest in archaeology, which produced a lot of writing, which led to publication of a book.
The same interest led to the second income of teaching online. After completing two master’s degrees, I was feeling overeducated, and decided I wasn’t going to waste the results of any education I had received. So, I was managing environmental science and archaeology contracts during the day, and teaching pretty much the same subjects online.
My original plan was to save everything that I was making from teaching and apply it toward retirement. Life became very expensive, however, and the direct separation of the two incomes did not occur cleanly. It did, however, allow my wife and me the eventual opportunity to more effectively focus on maximizing 401(k) deductions for each of our primary jobs.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
I would love to say that I executed a brilliant plan, but frankly, I simply muddled through whenever we hit a roadblock.
For the first half of our marriage, it was a constant struggle to stay ahead of the game. We made the major mistake of relying on credit cards when we had an unexpected payment to make. This was really the trigger for me to start the second job in order for us to get back on track.
What are you currently doing to maintain/grow your net worth?
I am in regular contact with my financial advisor and we have had numerous discussions about minor changes in the portfolio (I’ve learned a great deal in the last three years!)
Do you have a target net worth you are trying to attain?
Throughout my career, my wife and I had a target of $1 million. What’s interesting about it is the fact that we had no specific reason for naming that amount as the magic number.
When we were in our 30s and 40s, I wish that I had been aware of specific methods for attempting to determine how much we were actually going to need after retirement.
Going forward, I’m currently shooting for $2 million in net worth.
How old were you when you made your first million and have you had any significant behavior shifts since then?
I was probably 62 or 63. Since retiring at the age of 65, my life has been one giant significant behavior shift.
If you could rewind to when you first started out, what would you do differently?
If I had had the time or interest, I would have pursued the acquisition of real estate.
I would only recommend that to those of you with the time and interest to learn everything that you can about it, due to the obvious risks involved. I do recognize it, however, as an excellent method for wealth accumulation.
What money mistakes have you made along the way that others can learn from?
I would have avoided debt like the plague, and I would’ve purchased used cars instead of new ones.
If you had to give advice to ESI Money readers about how to become wealthy, what would it be?
I would recommend starting very early to save money and to invest it. I would focus on financial goals and not be swayed by marketers whose job it is to convince you to spend your money. You and your family members are the only ones that should decide what you need and what you really want.
If you have the opportunity to contribute to a 401(k) at your place of employment, jump on it! The best way to become wealthy is to save by never even seeing the money, getting free money from your employer, and having it compound through time. If you automate your saving and allow it to compound through time, you will accumulate wealth.
Plan to increase your sources of income. In my case, I found teaching online to be extremely convenient, as it can be done not only from home, but from pretty much anywhere. It also produced not only the direct income through the years, but it substantially increased my future Social Security income, which I will be receiving very shortly.
FUTURE
What are your plans for the future regarding lifestyle?
My future plans regarding lifestyle include continuing a much more relaxed existence than what was occurring during my working years.
The feeling of contentment and independence now is indescribable after having to answer to employers for all of my working life.
What are your retirement plans?
When I retired my goals included visiting the grandkids, teaching, hiking, biking, traveling, writing, working out, socializing, and volunteering and/or giving. During the last three years, I’ve started doing all of these activities.
I may even throw in a cruise or two in the next few years.
Financially, I’m going to continue teaching for at least a few more years, and I’m going to continue to learn more about management of my portfolio.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
Frankly, I feel that I have been very lucky financially. However, a concern on everyone’s mind is the cost of healthcare as we age. I have a reasonably good idea of the potential costs involved for an average individual, but as we know, no one is average! I do feel good that I have a long-term care policy that I’ve held since I was in my 40s, so it is affordable even now.
MISCELLANEOUS
How did you learn about finances and at what age did it ‘click’? Was it from family, books, forced to learn as wealth grew, etc.?
My parents lived through the Great Depression and were quite frugal.
I grew up being relatively frugal myself, and then life happened.
As many people experience, my wife and I would save diligently to buy something that we either needed or wanted, and immediately after buying it, the washing machine would break down, the car would break down, etc. We were both eventually fortunate enough to have 401(k) accounts available at our places of employment.
Who inspired you to excel in life? Who are your heroes?
I definitely looked up to my father for the kind of person he was as well as his outlook on the management of finances. He came from a relatively poor background. He did not attend college, and admitted to me at one point that he had trouble making it through high school. However, he retired as the base commander at one of the largest Air Force bases in the world.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
I do give to charity, and it has been a combination of both time and money.
The money that has been given has been approximately 10% of my income through the years.
I feel as though I now can afford to give more in both time and money.
I really like the idea of what I refer to as clandestine philanthropy – the act of giving without getting credit for it. I’m looking into the best way of accomplishing this.
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?
I do plan to leave everything to one family member. She deserves it.
I love these sort of millionaire interviews because of their honesty.
Could it have been done better? Sure. Could it have been done more honestly? Probably not.
Thanks for being vulnerable and sharing the details with us. I appreciate your perspective and the advice you can give all of us being further along the path than many of us are. It serves to hammer home some really good points and to encourage good behaviors.
I would be curious to know what specific advantages the writer feels his financial advisor offers him? Is the FA providing a better “draw-down plan” than he could do himself? Investing in something different than what the writer would invest?
He doesn’t say how much is in the fund that his FA runs, but if 1/3 of his 1.5 million is with the advisor, that’s probably going to cost him $5,000 per year (1% Assets Under Management Fee) which is 10% of what he plans for his annual spending (~$50,000).
Thank you for the kind words! In regard to the use of a financial advisor, it all goes back to my earlier feeling that there were simply too many things I did not know about financial matters.
My wife and I felt that we were doing fine during our careers and never used an advisor, but as I approached retirement, I felt the real need for more professional help. My plan was then to choose the best advisor that I could find in order to have the time to pursue other interests. What I did not count on was developing my own strong interest in financial planning (hence my interest in this blog and yours, as well).
Moving forward, the need for professional assistance has certainly dwindled…
I hear ya. Glad you are making intentional decisions about it!
And I certainly appreciate you following along at my blog!
Always a unique take. I love the very very end and the concept of “deserve” rather than “she’s family.” Nicely said.
I swear every single one of these interviews mentions fixing our health care system and the pricing of health care, didn’t the last interviewer wanted to jump to France for the health benefits? We really need to figure this out.
Its a complicated problem.
Let this sink in, I (as a physician) have no idea what my care costs patients. This is because I cannot memorize every health care insurer and what they will pay when we bill them.
That said, I sure wouldn’t go buy a car if I didn’t know how much it cost. I also wouldn’t use a middle man to tell me how much I owed versus how much they would pay the car dealer.
What gets billed and what gets paid are different numbers. It’s also different for each insurer. And each hospital. It’s simply ridiculous. All the while, the insurance companies and hospital CEO’s are who make bank from the system.
Here’s an interesting issue I just had regarding pricing…
I have a prescription that needed to be filled.
My wife called around to various pharmacies for prices.
The cost differences FOR THE SAME THING ranged from $325 to $38.
We went with the $38. 😉
And this is by far not the craziest health care pricing issue we’ve had in the past year.
I appreciate that attitude of the proactive consumer! Yes, our system is broken, but I view that issue as being way upstream from fighting over the “management” of chronic illness symptoms, when lifestyle changes can prevent and/or reverse many of those issues. Medicating But there’s not a lot of money to be made in helping patients exercise, eat well, and become socially connected, as compared to being medicated, is there?
There’s a relatively simple solution to this (I’ll try to make this point without getting political). Literally every other developed nation uses a single payer system. They pay less per person (including all the US citizens that currently don’t have healthcare) and have better outcomes. There’s many reasons why the US hasn’t done this, most of which go back to the insurance companies making lots of money off of the inefficiencies in the system.
I’m with you Lin. ‘Health care’ should not be synonymous with ‘medical services’.
Thank you, Lily!
“I have always tried to turn hobbies into money.” I love this quote. I’ve been preaching it a bit as well. Finding a way to get paid for what you love is a fantastic shortcut for financial independence.
I also appreciated the buying used car guidance. I’ve gotten some flack offline for my last post giving the same advice. Some people are very passionate about buying new.
I agree completely. I used to get a lot of flak from my wife for pursuing moneymaking hobbies. She used to tell me to relax and read a novel. As you well know, there are simply too many ways to make money doing things that you love (but NOW I have time to read a novel 😉
I distinctly remember the early “poor years” when my wife and I would dream of getting away from automotive “clunkers” and actually buy a new car. For most people, when that day finally comes, they sign some papers and suddenly realize that they’re poor again.
Your response to the question about work & life balance says it all and you’re the envy of all of us. What a wonderful life. I also noticed that travel and hobbies make up your largest expenditures. Good for you! These expenses are what I aspire to one day spend the most money on. Great interview!
Thanks very much! I definitely admire all of you who are interested in FIRE – in my case, I am interested in it only in retrospect. Although I really loved my career, it certainly would’ve been good to have reached FI earlier and avoided lots of stress!
Congrats on your success. I am sorry to hear that you lost your spouse. Your interview was motivating.
Thank you, Dave – I really appreciate it!
I too teach at the university level part time in retirement. But mostly in a traditional class room setting. I never taught while I was working full time and admire you for doing it. However, I’m surprised your online classes only require 30-60 minutes per day? Tom
Hi Tom – I have been teaching online continuously since 1998 (the methods were much more primitive at that time). Through the years, I taught at five colleges/universities and each one of them had a specifically developed curriculum that instructors needed to follow. That by itself removed a great deal of the required time commitment.
Initially, however, the time commitment was much greater and it has only been in the last few years that it was reduced to 30 to 60 minutes per day. The reasons that the required time has been further reduced include:
1. I am currently teaching just two sections of a single class that I have taught more than 50 times.
2. Many of the postings that I have used previously can be used in all subsequent classes.
3. I use voice recognition software for pretty much everything that I write (including this sentence).
Thanks!
I appreciate the candor and experience of this retiree.
As someone who is older than most FI/FIRE folk – and who considers themselves late to the FI/FIRE idea – it’s nice to hear from someone who has a bit of history under their belt (ie; you’re older!)
This is a refreshing profile!
Thank you, Todd (I probably have socks older than most of the readers of this excellent blog).
Thank you for sharing, very interesting. As I’m approaching retirement and trying to figure out what to do with all of my free time, I’d be interested to know more about online teaching. Can you please share what would be good resource to start exploring that?
I appreciate your help.
Hi Traveler – there are now thousands of helpful resources online, but a great place to start would be: https://www.thebabbgroup.com (I have no connection, financial or otherwise with the Babb Group).
MI 45, thank you for sharing your story. I think you should be proud of your financial results and your accomplishments. It sounds like you have had a full life and now you get to enjoy the fruits of your labor and your good work with saving and investing.
I also like your activity plans in retirement and commend you for your side hustle of online teaching. That is a great way to give back and provide income at the same time. Maybe you can even make a buck or two by finding some of those historic cars you like at the right price and flipping them down the road for a profit. Perhaps you could even find a partner who will restore some of the cars at a reasonable price and turn the profit a little sooner. There might even be another retiree out there who is looking to expand a restoration hobby in retirement that could be a good fit for you.
Anyway, thanks again for your story and continued prosperity and good health in retirement!
Thanks very much, MI 27. I really enjoyed your remarkable interview. Your recommendation is a very good one – I just need to keep learning about collectible car flipping! I hope things are going well, and good luck with your new entrepreneurial endeavors!
You should come to Scottsdale during the Barrett-Jackson auction. I bet you could meet all kinds of restoration guys in the area that could work with you.
I appreciate your good wishes as well. We’re expecting 2018 to be a launching point for our reconstituted healthcare venture as we enter into a couple of new JVs that should really help us expand our offerings and allow us to raise more capital to scale our business.
Good suggestion! I missed it this year but was there in 2016. It is definitely a fascinating show and auction and it is excellent for extending a network depending upon one’s specific interests.
Anything that you can do to assist the world of healthcare will be greatly appreciated by millions. The subject is definitely outside of my wheelhouse but I have taught several courses in medical anthropology. Once again, good luck!
First, let me thank you for sharing the details of your ‘success’ story (so sorry for the loss of your wife) —- although I’m younger than you (by only 4 years), it’s refreshing to read stories like you shared………I’m a bit late in my career to reach FI, but I’ve done it ———and it feels good; but not that different, honestly. Being taught to live a frugal life – – — good advice for all. I plan to retire in 2 years, 9 months and 11 days ——– and I enter retirement at the age of 65. The countdown is ON —–
Lastly, I love what you said about leaving your inheritance to your daughter ——-very nice!!!
Now, you’ve got me thinking more about adding more to my ‘side hustle’ plate……….
I appreciate the kind words, Razorback, and congratulations on your upcoming retirement!
Yes, there’s nothing like the effects of a good side hustle. Especially if you can figure out how to do it without disrupting your family life.
Side hustle: I love owning real estate and plan to continue during retirement, until maybe age 75. Hopefully, this will keep me in the game and will help me fight inflation as the future unfolds.
Does owning ‘Real Estate’ equate to a having a qualified “side hustle?”
That is a very good question – any comments from all of the successful real estate barons? 🙂
Great interview M45. I just turned 68 so can relate to the retirement lifestyle change, better work-life mix and the reduced stress, especially when you have financial security in retirement. Job well done!
Have you thought about delaying SS to get increase payments at 70? Can you collect SS from your spouse account in the meantime?
Thank you, M22, I enjoyed your interview as well. Yes, the change in lifestyle is dramatic and I still wake up sometimes thinking that I need to jump out of bed and get to work.
Up until my recent birthday I was receiving survivor benefits from Social Security. However, the increased amount available from my own recent filing at 68 (I had a birthday right after the interview) is putting me in the 98th percentile of Social Security recipients. I certainly could wait until the age of 70, but only 2% of retirees wait until that age. Receiving more money earlier will allow me to frontload two 529 plans for my granddaughters in a more timely manner.
I’m just a few years behind you and about to retire; my wife is a dozen years younger and doesn’t want to quit work since she still enjoys it. I have a large set of IRAs and I’ve had to consider the impact of Required Minimum Distributions in a few short years. We can live quite well off her income and our taxable investments, but I’ve chosen to convert money OUT of IRAs in a way that keeps our taxable income at a fixed level–perhaps $200k per year, reducing our IRAs while increasing our taxable investments. This may also be an opportunity to use IRA funds for charitable contributions, avoiding taxes altogether. Sorry, but this is a fairly long intro to the question of whether you’ve projected the impact of RMD on your substantial IRAs? Certainly, your tiny draw from the IRA will increase dramatically when you hit the RMD age. Are you/how are you planning RMD into your future?
Thank you, Rick. These are all excellent points that I have been investigating recently with my financial advisor and tax professional. My current 2.2% distribution is all coming out of an unqualified IRA so there is no tax impact. However, as you say, when I hit 70 1/2 the entire RMD will be coming from one or both of my qualified IRAs.
It currently appears as though it may not be worth it to attempt conversion to a Roth, but I do intend to utilize those future distributions for both philanthropy and contributions to 529 plans.
Great points!
Is it possible to take a IRA distribution and put it into a 529 for the grandkids and not have to pay taxes on the w/d. Would make it much easier to front load the grandkids college fund.
This is the exact question I intend to pose to my tax person when I meet with him next week. Maybe another reader has the answer?
Thanks, Charlotte!
That would just be too logical. I doubt it can be done tax free.
We plan on taking money out of our IRAs in our early 60’s while our tax rates are lower. Once you turn 70, you can have IRA money donated directly to a charity. My wife’s RMDs might be in the $120K a year range.
First my condolences to you and your daughter. I enjoyed your candid and interesting story. Most of us have some things we would do differently, and life can be a winding road, with challenges along the way. You seemed to the best of things. Some of these interviews are hard to relate too, but your story hit home to the average middle manager worker. I am about to retire and I liked your comment about making your hobby a revenue stream. I wish you all the best and live your dreams. Thanks for sharing your story.
I truly appreciate your comments, Michael. As we all know, some of our best-laid plans simply don’t work out for a variety of reasons, but we have to stay the course and continue to live our lives. The best of luck to you in your retirement!
What has been your best investment?
Like many folks, I made the mistake of not starting very early with investments. Therefore, I would have to say that the best investment occurred when I got together with a qualified financial advisor to do the rollover of my 401(k) into index funds and bonds. I don’t own individual stocks (I also invested in my future by paying off my mortgage).
… I think this is the first positive shout out to FInancial advisors?
Always like to,hear about how other people did it. I also made the mistake of not starting early. Can’t get it through my daughter’s head to start now. Great post
Thanks very much, Mark!
Holy cow this was so in depth and enlightening. I felt like I was reading an article written by my future self, although I’m desperately compartmentalizing the whole widower part — I cannot imagine that.
Thanks for being so open about your journey!!
I appreciate the kind words, Jack (it definitely has been a long journey!) Good luck and keep up the great work with your blog.