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. š
This update was submitted in July.
As usual, my questions are in bold italics and their responses follow…
OVERVIEW
How old are you?
I’m 49 and single.
Do you have kids?
No children.
What area of the country do you live in (and urban or rural)?
I live on the West Coast in a large city.
What was your original Millionaire Interview on ESI Money?
NET WORTH
What is your current net worth and how is that different than your original interview?
$4.9 million.
It was $3.5 million four years ago when I did the original interview.
What happened along the way to make these changes?
Not a lot has really changed since my original interview in this regard.
I had a promotion at work, which Iāll detail below.
Still mostly the same formula of working, saving and investing.
Coming out of Covid I do actually want to spend some more.
What are you currently doing to maintain/grow your net worth?
Still working for the man. Lol.
Really, it is plugging away with the same formula. Still investing in my rental properties, real estate syndications, stock market and some other areas.
EARN
What is your job?
I got a promotion soon after my original interview as my boss left and I became the CFO of my Company. This has kept me engaged much more, although my Company has had some struggles and my previous position wasnāt really replaced so I am still doing some of my previous work duties.
However, I realize now that I probably should have focused more on getting to this level earlier in my career.
What is your annual income?
Approximately $330k, although that has a chance to go higher with larger bonuses.
In 2022, I expect to finish at about the $400k level due to those larger bonuses.
I get additional passive income of about $60k from syndications, $7-$8K from dividends on my after tax stock portfolio, and about $40k from the 2 apartment buildings that I own.
How has this changed since your last interview?
My compensation from my job is about $100k more per year with the chance to go higher this year ā maybe $175k more this year than what I was making in 2018 when I did the last interview. It goes to show the income side of the equation is super important, because you canāt really make that much of a difference just by saving and 2022 has reminded us that the investment side of the equation doesnāt always work out so well every year.
I think if you live in a City you really have to explore your options for getting a higher income. I had really plateaued in my compensation and career and things had gotten stale for me. It worked out for me as I was able to stay at my Company, which I like and eventually get a bigger role, but I probably wasted 4-5 precious years. I am glad I didnāt throw in the towel and retire before I got promoted though, especially since COVID hit and I was glad to work through that.
Have you added, grown, or lost any additional sources of income besides your career?
Not really. Between my job, my two rental properties and my other investments that is enough for me.
However, if I do retire that leaves me with plenty of time to do something else that I havenāt developed yet. I do have some ideas for part time work after I retire, but I need to explore those more
SAVE
What is your annual spending and how has it changed since your interview?
It is $85-$90k, although $31k is my mortgage, which I will have paid off in 2022.
My spending was less in 20-21 due to COVID, although it is growing now. My travel, eating out, clothing, entertainment and other items in my budget took a big dip. Now with inflation, I am starting to spend more in 2022.
Also, I am not so big on keeping my budget in check at this point as I think I can spend a little more based on my financial situation. I feel like I missed a little bit of life in 2020 and 2021 so some splurges are in order as you canāt take it with you and I have worked hard to get to this point.
Living in an urban area where I drive little, I never spent much on transportation, but I finally replaced my 18 year-old car. Soon after the first interview it became obvious to me it was more of a liability and wasnāt worth it anymore. Carmax offered me all of $400 for it. It still not only had a CD player, but a tape deck too. Kinda embarrassing getting that offer since that was basically a junk yard price.
I ended up selling it for $650 to another Carmax like place and bought a new Mazda CX-5. I was thinking it I should get a used car since I donāt drive much, but I also wanted the latest technology and it wasnāt that expensive of a car. Since I only seem to get a car every couple of decades I figured I would splurge a little.
Paying off the mortgage is a big accomplishment for me. I could have paid it off earlier, but it is nice to get it out of the way before I hit 50. Also, I thought once I hit $4M in financial assets (basically my net worth not including my home equity), Iād basically be in āfuā money territory. At the end of 2021, I was almost there, but my net worth like everyone else has taken a dip in 2022.
Also, inflation has probably increased my numbers a bit. I knew a year like 2022 was coming where I would be treading water, but that is okay.
I also fear a little bit once I am not working that my spending will increase even though I have planned for some of that.
INVEST
What are your current investments and how have they changed over the years?
- Brokerage Account (Index funds, stock, and cash): $600k
- 401k and IRAs – $800k
- Syndication Investments – $1.2M
- Rental Real Estate Equity – $1.0M
- Primary Home: $1.3M
- Crypto – $50k
I refinanced some of the equity out of rental properties. I used some of that to invest in more real estate syndications and some to renovate and add another unit at one of my rental properties, which I am in the middle of and hope to complete by the end of 2022. The inflation in the construction world had hit me pretty hard here, but it was really the right time for this as the area is really coming into its own. Ideally, I would have done this when I was retired, but the timing didnāt quite work out.
I think I got a little FOMO with Crypto and I knew I was speculating. I thought I was at a level that I could put a little money in more speculative investments. Unfortunately, I am currently underwater on it after being up pretty nicely for most of 21. That is how it goes and I donāt plan to add much here as it really isnāt my thing. Iāll hold on to it for a while though so no plans to sell it.
I think I have enough syndications as I want now. I think Iāll keep this around the $1M to $1.3M in the future. Right now, I am dollar cost averaging into the stock market with any excess investment dollars I have. The real estate syndications are not liquid and make for a bit of a mess at tax time, although they do provide quite a bit of cash flow and my returns have been quite nice. It has been tougher to find decent investments as of late however.
MISCELLANEOUS
What other financial challenges or opportunities have you faced since your last interview?
My medical costs have gone up quite a bit. I think some younger potential retirees just assume theyāll be in good health forever, but age does catch up to you at some point even if you take care of yourself quite well.
The financial markets have boomed despite Covid for both stocks and real estate. 2022 has been more challenging and if there is a recession there may be good opportunities for investments going forward that we havenāt seen in a while.
I did set up a Donor Advised Fund after my interview and I think I have this blog to thank for that. It was great to avoid some capital gains taxes and get a nice charitable deduction and be able to give to some of my favorite charities into the future.
Overall, what’s better and what’s worse since your last interview?
Well, financially I am much better off. Definitely, career wise I am in a better spot. If I had not reached the CFO level, I feel like I would have retired too early and not reached my potential.
On the downside, I am older and I feel personally I didnāt grow too much the last few years. I think some of that is the sign of the times, but also I have a little reduced energy. I have arthritis in my foot and my knees so I canāt do half-marathons or even jog much anymore. Seems like once I hit 45, medical issues cropped up. I had some skin cancer removed from my face and have some high blood pressure that runs in my family that caught up with me despite me being in pretty good shape.
What are your plans for the future?
That is really the question. I am strongly considering retiring in 2023. However, I really havenāt started getting into the nitty gritty of what I would do exactly once retired. You need to have some purpose, so I need to figure that out. I plan to take the summer to sit down and really evaluate things. I do think I will stay busy, but Iād like to find a passion project or two to really keep my interest and have a solid reason to get excited to get up in the morning.
I noticed I said in my last interview that once I hit $3M in financial assets/investments that everything after that would be gravy. Now I have moved the goals posts to $4M. Some of this is inflation, some is my lifestyle creep and I guess some is just my appreciation for a bigger safety buffer. I guess you could say that I am guilty of one more year syndrome too, which I hope I can avoid.
I mostly just need to figure out my post retirement life and I think Iāll be more comfortable with the numbers. I am sure Iāll work doing something so that should help whatever anxiety I have about cutting the rope.
Given that you have a bit more wisdom and experience, what advice do you have these days for ESI Money readers?
I really think it is to focus and then think big. I say this because I didnāt always do this.
It is good to take some time and set some big goals and really think about why these are your goals and how you are going to achieve them. It is very easy to get distracted in life and get away from this. I think a lot of people donāt think big enough and when I see the successful people around they tend to think big. Not all have big egos, although quite a few do. Keeping the big picture and big goals in mind is key in my mind.
Some feedback from someone who has retired (I was 47 when I did) and had some of the same thoughts and questions that you mention, such as would I spend more when I retire given that I’d have all those extra hours to fill when previously I’d have been at work? I’ve found the answer has been no, my costs didn’t go up.
Like you, I also used to change my goalpost of the amount of money that I was targeting, to have a bit more buffer/be on the safe side. There’s nothing wrong with that, and it is nice that the finances are comfortable. On the flip side, when you decide that you want to retire, don’t let the desire to be safer stop you – as you mentioned with regards to health, we aren’t young forever, and maybe in 10 years time we won’t be able to do the same things that we can now. I’m not saying rush into retirement, more like, when you’re ready, don’t put it off trying to get to an even safer financial position.
By the way, my summary of early retirement – it’s awesome!
I share the same sentiments as David. I retired at 50 in January 2021 and found that my living expenses have actually decreased. https://esimoney.com/millionaire-interview-234/
My health actually improved significantly as Iām more mobile and free to do more outdoors pursuits during pleasant times and weather. My gym membership is getting full use. In terms of concerns for optimizing your time in retirement, I recommending exploring hobbies or interests before retirement. I had no problem envisioning what I do with my time with 12 different hobbies ranging from gardening, cooking, reading, skiing, hiking, biking, and volunteering for causes I care about. I didnāt have any health issues before retirement and my mental & physical health has improved 10X post retirement. I hope if you do have some health issues now, please know that you will have so much more options and time to address them post retirement.
Amanda and I seem to be starting a mutual agreement society! That said, one difference between us is that I struggled to imagine how I’d fill my time in early retirement – while I was stuck in my “working life” life, I couldn’t foresee what a normal day of retirement life might look like. Anyway, long story short, it hasn’t been a problem, I haven’t had any difficulty filling my days with activities that I enjoy. I have less hobbies than Amanda’s 12 – but I think as few as 3 core interests/hobbies and maybe a couple of other lesser activities can create a framework to build an enjoyable retirement around.
Thanks to both of you, David and Amanda for your comments and insight. I can appreciate how time flies by. Can’t believe it has been 4 years since I did my original millionaire interview. I don’t think I’ll be bored at all in retirement even though I don’t necessarily have everything completely planned out yet. I do have a lot of ideas and plan to explore different paths to spending my time to see what works best.
I am curious do either of you do any part time work? It is something I might think about in 24, but only if I really enjoy it.
Iām sure youāll find your path in retirement. I donāt do any paid part-time work at all because it would just be an inconvenience to my freedom. Who in the world wants to do a commute in rain or snow in the winter or hot summer days of 90+ degrees? š I do a lot of non-paid volunteer work which I can do from home at convenient times for me.
No part time work for me either, for exactly the same reason as Amanda, I value my freedom and flexibility too much to compromise it by committing to a part time role. If I were to be interested in something part time at some future point (although I genuinely can’t imagine this), I think it would be in something different to my past career. I don’t volunteer currently, but think this is a good option.
Nice update, things have really progressed well. I hope you can find nice projects, but would be good to retire to something. If you enjoy your work then perhaps just see if you can build in more flexibility?
I’m curious about the home, seems like a lot of equity, but do you use your home a lot? Or is that just the price of median homes in your area of the country?
I have a nice townhouse, but live in an expensive part of what is already an expensive city. I bought the property for $335k when I was 25 and had friends stay as roommates over the first years as I was a little in over my head. I renovated it in 2015 and paid off the mortgage earlier in 2022. It is now worth $1.5M, but I subtract out selling costs.
The good news is that I was able to live very close to work for the past 22 years (2 different jobs) as well as kind of being in the middle of things. It can be a bit hectic and crowded but I plan to travel around more once I am done working and even now I can work remote a little bit, which I have taken advantage of. My family is all up and down the West Coast so I have a lot of bases to go to.
Yeah, it is a lot of equity to have in a house, but it is what it is for now. No plans to move, but I would like a house with a yard eventually, but that is probably 6-7 years down the line.
Good interview. Thanks for sharing. Why do you think you want to eventually move to a single-family home?
I’m deciding on my future retirement living. I recently sold my FL waterfront rental unit (was going to be my retirement destination, but got tired of paying the ever-increasing property taxes, HOA fees, and special assessments).
I’ve been living in a well-located, older golf course community single-family home for the past ten years. Upkeep and maintenance is a chore, but as I get older I guess I can hire that out. I do like the space and privacy as compared to a condo or townhouse.
I’d like a yard with some fruit trees and a garden. I guess some of this desire is just because I have lived in a townhome but grew up mostly in a SFH. I guess it depends if I get married as it doesn’t make much sense for a single person.
Thank you for sharing this update.
Thanks for the update. I’ve read the thoughts from other commenters and wanted to add mine. I’ve been retired since 42, that was 15 years ago right before the Great Recession. I owned my house outright when I retired. Within two years of retirement my net worth declined 35% from a high base due to the financial crisis. I moved and travelled overseas for 5 years, got married, had a kid, bought rental properties, incurred various health expenses (overall quite healthy for now), and am now financially responsible for a number of people (none of whom I supported before retirement). My net worth has been as low as 65% and as high as 325% of the value when I retired. I haven’t earned any active income since retiring while my spending has tripled or quadrupled.
Life has changed tremendously from 15 years ago. A lot depends on if you will eventually marry or have children, as well as how you are invested, but there are so many things we can’t predict. A retirement for someone married with grown up kids and living in their forever home could look very different from yours. Having recently helped an elder settle into an assisted living home, I also have some idea of costs further down the road – anywhere from $6k to $25k a month for an average home in my area depending on level of assistance needed. These costs include food and lodging but not medical care.