Millionaire Interview Update 73

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 August.

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

OVERVIEW

How old are you?

I will turn 57 this year, my husband is 61; we just celebrated our 32nd wedding anniversary.

The other day, I said we had been married 31 years, and my husband corrected me. Time flies.

Do you have kids?

We have two adult children, one with his master’s degree, fully launched financially, the other graduated from college and has full-time employment. The youngest is 95% off the payroll, so we are close to having both of our adult kids fully launched.

Both of them recently received healthy quarterly bonuses for going above and beyond expectations at work. Maybe this is my sign that both of our sons can support themselves.

With this major milestone, I am actively setting a date for retirement.

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

We live in the Midwest in a suburb very close to an international airport, many major sports venues (NFL, NBA, NHL, and MLB), museums, and a world-class university campus.

What was your original Millionaire Interview on ESI Money?

I am Millionaire 228. I still cannot believe how quickly time goes by.

I stay engaged with all ESI posts and continue to enjoy hearing about everyone’s unique journey.

Is there anything else we should know about you?

I plan to retire in less than a year. I could retire today and reserve the right to do so if the mood should hit me.

The company is going through reductions in force, so who knows, maybe I will be let go. We have a new CEO, so I feel obligated to help with his transition, but I am sure he’ll do just fine without me!

NET WORTH

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

Let’s see – our net worth in the original interview was $2 million. Our net worth today is $5.25 million.

Roughly half of our net worth is in a brokerage account, and half is in a variety of tax-deferred accounts. My husband was always self-employed and gratefully had the discipline of always using a SEP, solo 401 (K), and tax-efficient vehicles to save.

My 401 (K) at work is now north of $1,000,000. Amazingly, I now have an 11% match to my 401(K), and that is just really tough to walk away from.

Our home is worth around $1.6 million in the current market environment, and we owe just under 350K on the mortgage. Our loan rate is below 3% so I am not going to rush to pay this off before retirement.

We have no plans to move, but will do so when both of us are no longer physically able to clean and maintain the property and the home itself. Consistent with the last interview, I am pegging the current value of our home (minus outstanding mortgage debt) to be $1 million and including that amount in our net worth number.

We have one rental that is a nice, albeit modest, source of cash flow, as that property is fully paid off.

What happened along the way to make these changes?

I changed roles within the same parent company, took a bigger role in another city, two years in was given a base pay increase, tend to earn large bonuses, sometimes nearly equal to my base salary.

I also have a longer-term incentive that pays out every 3 years. The 401(K) match is far, far better than the market and really keeps me motivated to save.

We received an inheritance following the deaths of my husband’s parents. We would ideally like to preserve a good portion of that to pass on to our sons one day.

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

I continue to save and invest as I have been for so many years. I have a financial advisor who buys me peace of mind.

I know many ESI readers will bristle at the idea of paying an advisor. The value proposition for this is a no-brainer for me.

If I predecease my husband, he will be all set with a robust plan in place to cover him for life. My husband has zero interest in talking about our financial plan and has gratefully entrusted me to handle all of it.

I guess that is role reversal? It works for us!

I also track everything using Boldin software (highly recommend – about $140/year), so I am using a belt and suspenders, but again, peace of mind.

Importantly, I am also trying to cut spending. I do not need any more “things” and my past times are cheap: yoga, walking, gym workouts with a personal trainer.

EARN

What is your job?

I have a very unique role at this point; I am an internal executive coach to senior executives. Yes, sort of like the psychologist on Billions.

I am a doctoral-level psychologist by education.

What is your annual income?

Base is $240,000, bonus can vary from 0 to north of $200,000, depending upon many factors, but predominantly based on company profitability.

Longer-term comp program has been as high as $230,000 and as low as $50,000, but only pays out every 3 years.

How has this changed since your last interview?

The biggest change is that I work in another city during the week and travel back and forth to my home state on the weekends. All of this is on my own dime. I pay for an apartment in the city in which I work.

My attitude toward this is that money is a tool. My benefits are superb.

We have a very healthy nest egg, which continues to grow. Both of our sons have graduated, and we no longer have big tuition bills, and soon also will not be paying for any expenses for our youngest son.

My husband is nearly fully retired and continues to have health challenges. I feel a major responsibility to continue to provide financial stability and access to health care for him.

His passion is golf. He belongs to a private club, and we hope to be able to continue to fund that for him even once I retire.

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

Husband has retired. We received an inheritance.

Rental property is fully paid off, so that is just cash flowing now.

SAVE

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

Our annual spending continues to be higher than most of the other millionaires I read about on this blog. We spend north of $200,000 per year.

That level of spending is fairly stable since the last interview, except for supporting dependent children, which we no longer have to do. Our home maintenance and property taxes are very high.

When friends from other states ask us what we pay in property tax, their jaws drop. However, we love the area, and our home is like our little slice of heaven.

We have no plans to buy a second home, so that is part of our justification for this expense. Our dog loves our big yard, and he loves our doggy neighbors, so we simply must maintain the standard to which he has become accustomed. 😊 Dog lovers will understand.

What happened along the way to make these changes?

We won’t be writing big tuition checks anymore (previously paying for out-of-state, private college plus living expenses in a destination city) so that is a big change. I always thought I would retire when we had saved $4,000,000.

That came and went, and then I said, “I will retire when we get to $5,000,000.” Now I find myself thinking….”I wonder how long it would take to get to $6,000,000.” Stop the madness!

INVEST

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

We have a highly diversified portfolio – mostly ETFs but still many individual stocks. Way too many individual stocks for my comfort zone.

Our inheritance came in all individual stocks. We are taking our time to transition all of this over to our preferred approach of ETFs, widely diversified across many asset classes.

We have an advisor to help us with tax loss harvesting. However, I may move our money away from this advisor and begin managing the money myself.

I am actively exploring those options. At this point, the 0.9% annual assets under management fees really cause me concern.

I went to our advisor and asked for a better rate and he was able to get me to 0.8%. Needless to say, 0% vs. 0.8% is attractive, so I will likely pull everything out and move the money to a major brokerage where I already have some other funds.

What happened along the way to make these changes?

Aside from the inheritance, not much has changed in our approach since the first interview…except our health. It is amazing how much shifts between the 40s and the 50s.

I can only imagine that I will experience the same declines between 50s and 60s, and so on. I have less energy, need far more time to recuperate, and just generally cannot accomplish as much in a day as I used to.

This is sobering. I would like to retire while I still have some ‘get up and go’ left.

MISCELLANEOUS

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

We continue to financially support my husband’s cousin, who is mentally and emotionally impaired. She was diagnosed with breast cancer since the previous interview, requiring surgery and aftercare.

We had to hire a nurse to help her as I work full-time. Fortunately, upon the passing of my husband’s parents, each of his siblings agreed to contribute a small amount (less than 1%) from each of their inheritances and put it towards a fund to support further needs for the cousin.

This was the right thing to do. I am the legal guardian and legal conservator, and I do all of the visits and “heavy” lifting in terms of annual accountings, seeing that she has a safe and clean place to live, etc., etc.

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

My health is obviously not as good as it was 3 years ago. This gives me pause.

At this point, I feel that I make a clear trade-off between my health and my finances as long as I continue to work. From the outside looking in, I would counsel myself to retire and focus on my health. I think a bit of fear of the unknown is keeping me stuck.

Both of my parents are still alive, but making very poor financial decisions. Not only will there be no meaningful inheritance from them, they will both likely need some financial support from me and my siblings as they are burning through money and not allowing others to assist them in making better decisions.

Sad example: at the age of 89, my dad bought a boat….likely trying to recreate his glory days of yachting and partying. Tragic. (My parents have been divorced for around 50 years, neither is remarried.)

I anticipate this next stage with them to be full of controversy, as I have a couple of siblings who are not well off and a couple who are quite financially successful. One sibling is estranged from the other siblings but stays in touch with the parents (likely hoping to get some meager inheritance.)

What are your plans for the future?

Retire, care for my husband and parents, volunteer, travel, and find out what it feels like to not have someone else control my calendar. I will likely work in private practice as an executive coach as people continue to contact me for that type of support.

I enjoy art, museums, yoga, walking, and reading. I hope to continue all of that in retirement.

I will play golf with my husband more in retirement. Today I join him only once or twice per year – when I retire, I will consider doubling that rate 😊

Confession time: we bought an over-the-top luxury automobile. Many folks say they have regretted these kinds of purchases – but for me, this is not an investment vehicle, I do not plan to keep this car precious, I plan to use the heck out of it.

Depreciation be damned, I am going to enjoy every minute of it. I am a car person, and I appreciate a good car like some appreciate good wine or a good cigar.

With my dad being an engineer, during a visit to Germany when I was in 6th grade, he took me to the manufacturing facility for this car maker, and we watched German engineers conduct testing in their wind tunnel.

These things leave an impression. I blame my dad. 😊

One popular retirement guru I follow on YouTube talks about how he drives a minivan with over 200,000 miles on it, only buys second-hand clothes, has stopped buying snacks, and never eats out for dinner. I really respect this person and have learned a lot from him.

However, I am not him. I like to have a nice car, nice clothes, and enjoy a meal out now and then.

I get my nails done, and I maintain a nice haircut and color. I don’t want to scrimp in retirement.

I am willing to cut back for sure, but I have no intention of living like an ascetic.

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

Well, unlike so many of your other contributors, I have made a lot of mistakes. I am more of a spender than my husband.

My husband is more conservative. I will need to change some habits once I retire and really watch where each dollar goes.

I would say that my husband and I are generous with gifts, entertainment of family around holidays, and we enjoy quite nice vacations. There are plenty of places where we can spend less on the margins but still enjoy life to the fullest.

Big picture, we are proud of our children. They are responsible, respectful adults who are full of gratitude to have advanced degrees and no debt.

They take nothing for granted. My husband and I are grateful for our long marriage and for one another. We are blessed.

In the past year, I have had a far younger colleague pass away, suddenly leaving behind a young daughter, I have a colleague whose child has cancer, I have another colleague who had a traumatic car accident and narrowly escaped death. These incidents surely give me pause.

Time to stop and smell the roses.