Millionaire Interview Update 70

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. 😉

This update was submitted in June.

As usual, my questions are in bold italics and their responses follow…

OVERVIEW

How old are you?

I am 61. My wife is 55.

We’ve been married 32 years.

Do you have kids?

We do not, but we do have 5 nephews, 2 nieces & 2 great nephews. We are continually active with them both spiritually and financially (birthday, buy them clothes, etc. all part of our budget).

The three adults, 25 & older, are all good people overall. Only 1 of the 3 is really what I would call Fiscally Responsible, and he tuned in early on Dave Ramsey’s program and has maxed out his 401k for the last seven years and will continue to do so where the other two are still figuring it out.

The younger ones to this point are great kids who do well in school, participate, etc. We always encourage them to ask questions about things, especially things they do not want to ask their parents (if it is something that is for the parents, we direct them that way).

What area of the country do you live in (and urban or rural)?

The south, Northern Alabama, Muscle Shoals, referred to as The Shoals.

Both urban and rural and part of the reason we chose to live here.

When was your original Millionaire Interview on ESI Money?

Millionaire 306. Published in May 2022.

Is there anything else we should know about you?

I do not have a college degree, but my wife does in communication, and she has worked mainly in Healthcare and Nursing homes (administrative, fundraising, development). I served in the US Navy as a Logistics Specialist, and that background spring-boarded my career.

After the Navy, I started out as a Quality Control Manager for an Apparel Company (making 25K a year), and by 2010, I was a Director for a Fortune 100 company (proof that hard work and self-education is still an option to meet financial and career goals). From 2010 to the end of 2021, I averaged $157k a year in income, and my wife averaged $40k a year.

I obtained and subsequently maintained my Project Management Professional Certification in 2010, so you can see how that impacted the math above.

NET WORTH

What is your current net worth and how is that different than your original interview?

$2.18 million, which is over where we were for the first interview (1.62 million). This is after spending $300,000 after retiring on improvements to the house we bought (our paid-for house in one location bought us a paid-for house in a new location), furniture & many other items for our home to make it our place.

Included in that number is also money for two new cars, a golf trip to Ireland along other travel (another trip to Ireland is planned), seeding our Healthcare account (we have an HSA but we are leaving that invested and self-fund our healthcare by putting in what we spent each year the previous year), and establishing a larger emergency fund.

Not included in the net worth number is a pension that pays just over $35k a year.

What happened along the way to make these changes?

In 2020 my company stock I had been accumulating for 20 years had doubled and for the position we were in financially, a good one, we determined it was time to cash it out and use that cash to help us live our first three years in retirement and have the money to spend on items as outlined above. Our home value has gone up $80k in 4.5 years, and it looks like it will continue at that rate this year.

We had no real investment challenges or issues. At this point, it is about being strategic with both taxable and non-taxable investment withdrawals (taxes and current market returns will be the determination each year).

I did keep a portion of Company Stock that was part of my deferred compensation that I received the year before and year after I retired (pays a nice dividend).

What are you currently doing to maintain/grow your net worth?

Most people say I am a passive investor because I trade hardly any individual stocks, do so on occasion, and I stick to the indexes (S&P, Mids, Small, International), but I also do have a dividend fund I own.

For the last few years, we have had 58K in cash that we have used for a CD that has achieved an average of 4.7% return (and I have just compounded the interest each time to the new CD). I believe I will always maintain some level of cash (30k to 50k) in cash level investments; the rest will go back to the S&P at some point in the next 2 years.

EARN

What is your job?

I retired as a Project Management Professional (about 20 years of experience as a PM, the other 20 years spent in Operations Management). I was one level below VP, Director Level, for the last 10 years of my career.

My wife is an event coordinator and provides admin support for the sales team at a local newspaper (this is a career change for her since relocating). Her salary is less than before, but the benefits are good, and we can both be on the Healthcare (the cheapest option for us).

I now work part-time at a golf course (10 hours a week), paid an hourly wage plus some cash tips, and I get access to two championship courses for $10 a round.

What is your annual income?

My wife still works, and with all are income sources, we, before tax income, will be about $90k this year.

We have both income and expenses indexed for inflation in future years (moving forward, we are looking at about $100K a year indexed for inflation).

How has this changed since your last interview?

Last year we both worked a full year, we made $240k combined, and then I retired.

Have you added, grown, or lost any additional sources of income besides your career?

I draw a pension and made $3500 at the course last year. My wife makes about $29K a year after HC and taxes are deducted.

At the end of this year will be the first year we will take money out of any of our retirement accounts (trying to keep it around the 4% rule or less, there are years it will be more, but most it will be less).

SAVE

What is your annual spending and how has it changed since your interview?

This is our annual spending (non-discretionary) for the last four years. 2025 looks to be similar (slight increases each year based on inflation history).

We also know that in the next 10 years we will need two new cars, the house will need a new roof, likely to replace the AC/Heat Pump, Water Heater, buy a new bedroom suite, new living room furniture, washer, and dryer, all planned expenses. We are also going to put new windows and redo several rooms floors in our house.

We track total expenses in two categories: what it takes to live (that is one yearly number), then discretionary (Hobbies, Vacations/Travel, Money spent on nieces & nephews, blow, or fun money for both of us). Discretionary will go up and down over time, especially the travel category/expenses.

What happened along the way to make these changes?

Retirement happened. Honestly, our financial experiences have been all good since the 2008 crash.

We just continue to evaluate the numbers monthly and adjust our 5, 10, 20, 25, 30-year plans as needed.

INVEST

What are your current investments and how have they changed over the years?

Now:

Then:

• S&P 500 Large Cap Index Fund – 35%
• Mid/Small Index Funds – 15%
• International – 15%
• Bonds/Cash – 8%
• Dividend Stock/Fund – 7%
• Real Estate (paid for) – 20%

From 1994 to 2000, I was heavy S&P, 2000 to 2004 heavy international, 2005 to 2008 more evenly balanced. From 2009 to 2020 stuck to that mix.

2022 to now is where I stay with the sum of the cash portion making it back into the market at some point.

What happened along the way to make these changes?

No bad experiences from then to now.

Market goes up and market goes down; at this point I am trying for a real average of 4.25% a year (real average to me is what is the average return you have achieved tracking from the first year you put into retirement as the baseline + what you added each year = today’s balance and ours is 9.1%).

MISCELLANEOUS

What other financial challenges or opportunities have you faced since your last interview?

We inherited around 100K, and we have taken half that money and set it aside in a mutual fund for our nieces and nephews.

We donated some, and we spent some also.

Overall, what’s better and what’s worse since your last interview?

We have certainly gained more knowledge, which continues to be the goal, from both a spiritual and financial perspective, and continue to do so. We are both more relaxed.

The worst part is losing friends and family to death, just part of getting older.

What are your plans for the future?

Working towards having my wife retire in three years vs. four is our next thing to tackle. We are in a position where we can, but we do not have to make that decision for two more years.

We know the numbers we need to achieve.

We are going to travel, do volunteer work, spend time with family and friends, play golf, exercise, etc. All the things we planned for retirement.

Read and take history courses online to keep my brain working (Hillsdale College offers many for free).

Given that you have a bit more wisdom and experience, what advice do you have these days for ESI Money readers?

• Never stop learning!
• Stay away from consumer debt (car payments, CC payments, etc.).
• Have a 1-to-30-year plan you modify each year (sounds hard to do, but once you have it, you will be amazed).
• The key for retirement is have a spending plan, ours goes from this point in time to the age of 105 so we ensure we do not run out of money, which means you have to be documenting expenses (I see many people who have said, whatever I draw is what I will live off of and that plan usually ends up with consequences that impact entire families).
• Never too early for estate planning; it should be in place and modified as needed.
• Look at trusts for your house and your other dollars; it makes it much easier to pass money along.
• Ensure that you have beneficiaries designated on your investment accounts. My mom passed recently, and she did not have us, her children, listed. She did have us listed in the will, but you need to have both, or there are going to be hoops to jump through to obtain that money (we got it done, but it took some time).
• I agree with Warren Buffet, the average investor out there should play the indexes and/or mutual funds vs. trading individual stocks (I have an account I do some trades but currently have that money in CDs, as outlined above and likely will just put it back in the indexes the next two years); main thing is stick to a plan!
• You must think about things like assisted living or nursing homes. For us we are not trying to hide any money, we know we will need money to live in assisted living and possibly a nursing home at some point so we track those cost each year (You hear the term don’t go broke in the Nursing home and it is important to understand the five year look back if you do start giving money away to family).
• You need to understand Medicare and Medicare Supplements, and how you will use those once you turn 65, and the inflation rates for both.
• You need to learn when it will be best for you to draw Social Security.
• Do not rely on SS to be there as it is today (currently going to only be able to pay 76% of promised benefits by 2034).
• You cannot run your finances out of separate bank accounts if you are married (no such thing as I, it is we in a marriage)
• Make sure your plans include having a lot of fun!