Here’s our latest interview with a retiree as we seek to learn from those who have actually taken the retirement plunge.
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 her responses follow in black.
Let’s get started…
GENERAL OVERVIEW
How old are you (and spouse if applicable, plus how long you’ve been married)?
I am 51 years old.
Do you have kids/family?
No kids. No spouse/partner.
What area of the country do you live in?
I live in New York City.
Is there anything else we should know about you?
I am female, and a minority.
I immigrated to the US (NY) with my parents and siblings when I was a kid.
While I had a pretty frugal upbringing, we never lacked for food, clothing and shelter.
RETIREMENT OVERVIEW
How do you define retirement?
I define retirement as not working (or just minimally) and still be able to fund one’s way of life.
If you do earn a bit, it’s not a lot, i.e., you couldn’t fully support yourself/your family where you live on that income.
How long have you been retired?
A little over a year now.
What was your career and income before retirement?
Most recently, I worked at a major broker-dealer, as a finance and planning manager. 12 years total.
Prior to that, I was at a global consulting firm for 8 years, working on business strategy and process reengineering projects.
Over this 20-year period, my compensation has grown from about $90k to $500k.
Prior to attending graduate business school, I worked for a large bank as a business analyst for 6 years.
Before that, I was in college, studying business as well.
Why did you retire?
I’d been thinking about early retirement for many years. At 50, I was finally ready with good healthcare in hand.
While I had planned to quit voluntarily in March 2018, I was able to time it with an employee layoff effort. So technically, my employer retired me!
PREPARATION FOR RETIREMENT
When did you first start thinking seriously about retirement and when did that turn into a decision to do it?
I’ve thought about retirement since my mid-30s but didn’t commit to it until I had fair bit of savings to feel it was achievable.
I had been getting more and more disillusioned with Corporate America. I am not well suited to playing politics and the norms of favoritism / bias (age, race, gender) were wearing on my morale.
Also, I had really enjoyed my prior sabbatical (layoff). I’m a good saver so I felt less pressure to get gainfully employed right away.
What were the major steps you took from deciding to retire to developing a plan to do so?
In my late 30s, I hired an investment manager to help me manage my money. I was good at saving money but was bad at investing it.
I wasn’t too interested in the subject at the time and my job took up much of my time and energy. I was making typical mistakes of a rookie investor: buy high/sell low, poorly diversified, picked high cost funds, etc.
Part of the services included a financial plan (updated annually). It was a good exercise to quantify my annual spend and I’ve continued the discipline to date.
Initially, we set a target for retiring at age 60. Over time, we kept reducing the retirement age: 55 and then 50. With stress testing and reduced return rate assumptions, the plan looked solid.
The other good thing about having a financial advisor was that they got me to think about managing risk as well. 1. asset allocation – we talk about this all the time, especially during market downturns. 2. long term disability insurance 3. estate plan / power of attorney / healthcare proxy, etc.
By my mid-40s, I became more knowledgeable on investing and started managing some of my own money.
What did your pre-retirement financials look like?
Early last year when I retired, my net worth was $4.3m as follows:
- Deferred compensation after tax $200k
- Checking/savings accounts $100k
- Brokerage accounts $2.2m
- IRA/401K/Pensions/HSA $1.0m
- Home equity net of mortgage: $800k
No other debt aside from credit cards that I pay off every month.
What was your overall financial plan for retirement?
My annual expenses are about $73k. Was $93k before paying off my mortgage.
In the 13 years I’ve been tracking, I’ve kept my cost of living in check.
Before I retired, each year, I maxed out my 401K / HSA contributions and saved the rest $100k+ into taxable brokerage accounts managed by me or by my investment manager.
Asset allocation is roughly 65% equity / 35% fixed income. The managed accounts are in a variety of stocks, bonds, REITs and a few funds. The portion I manage are all index mutual funds and ETFs.
Did you make any specific moves to prepare your finances for retirement?
I didn’t intend for my day-to-day life and spending to change much from pre to post retirement so I didn’t need to prepare too much. More like every day is Saturday and Sunday in retirement. For now, I’m happy to enjoy the simple pleasures of life.
In the last five years before retirement, I did become less of consumer (read The Year of Less by Cait Flanders). I became more of minimalist – spending only on what mattered most to me. I’ve also become more environmentally conscious (e.g., so much gets thrown away) so have looked to reuse or buy used items where I could.
I’m also not one for keeping up with the Joneses so lifestyle inflation is not an issue. My home is a one-bedroom apartment so no plans to downsize.
After I was laid off and got my severance check, I paid off my mortgage to reduce my monthly draw down. I also started a donor-advised fund, which also will reduce my annual spend a bit. I didn’t include it in my net worth figures above as the money technically is no longer mine.
In FIRE terminology, I’m probably considered Fat (and lazy) FIRE. I don’t intend to do geo-arbitrage or work any side hustles or set up for rental income. New York is an expensive place to live but I know of nowhere else I’d rather live. Also, most of my family and close friends are in NY as well.
Who helped you develop this plan?
My investment manager was definitely a big help in running my numbers and getting my investments in order.
Also, in the last few years, I learned about FIRE so did read a lot of FIRE blogs and early retirement articles – definitely drank that Kool-Aid.
What plans did you make in advance to leave your job?
I looked into healthcare quite a bit as I didn’t have the option of relying on a working spouse’s healthcare plan. Thankfully, there was a viable plan via my employer for ex-employees age 50 and over.
Behaviorally, there were some shifts. I became less bothered by work-related nonsense as I knew my time there was limited. Working overtime became less frequent. I generally didn’t go the extra mile anymore as I was no longer invested for the longer term.
What were your pre-retirement concerns (financial or non-financial)?
I wondered if I would have an identity crisis after I retired. My job took up so much of my waking hours and I have invested in my career for decades. Would I feel less self-worth if I was not working, producing, earning an income?
Financially, I felt like I had saved enough, including some extra cushion. Some outlier risks are if my family experience financial hardships beyond what I can afford to help with.
How did you handle deciding on and paying for healthcare?
To me, the ACA marketplace for New York consisted of very few providers who offered either affordable low-quality plans or decent-quality insanely-expensive plans. The plans offered in 2017 were better but have since gotten worse.
Thankfully, my employer offers access to good healthcare (unsubsidized) if you are over 50 and have worked there for 10 or more years. This healthcare had plans from known providers, good quality coverage but less expensive than the NY healthcare marketplace. I still think it’s expensive but I’m relieved I have access to it and can afford it.
I plan on staying with a high deductible plan for as long as I remain relatively healthy. During that time, I can continue to contribute to my HSA account annually which will also reduce my AGI.
After 65, Medicare takes over and the cost of that plus Supplemental (along with 5% annual cost increases) are built into my financial plan.
How did you tell your family and friends of your plans?
I’ve been talking about it for years with my closest family and friends so it was not a surprise to most of them. There are a few who didn’t really believe I was really going to pull the trigger, so they were surprised.
I still keep it a secret from some if I think their reaction won’t lead to good outcomes for them or for me in the long run.
I tell acquaintances if it comes up or they hear about it through others. My general view is that anyone with less than positive reactions are reflecting their own worries about early retirement, e.g., not having enough money, not knowing what to do with their time, judging themselves to be non-contributing members of society.
THE ACT OF RETIRING
How did you ultimately retire?
In mid-2017, my group at work was going through some senior management changes. I was reporting to someone new and over several months as I was getting to know him, I could see that he was the type who was going to replace everyone who reported to him directly.
Everyone who was at risk started looking for a new job. I was an outlier in that I wasn’t showing signs of doing so. Several folks at work offered to put me in touch with potential hiring managers and I had to do a bit of verbal dancing there.
In January 2018, my new manager asked me to train various people on my job duties so I knew the end was near. In February, I was called into HR and laid off.
What went well?
Before the organization changes, I had planned to quit my job in March 2018. Getting laid off a month earlier than I planned and getting a severance check were what went well.
What didn’t go so well?
My ego bruising.
I had given the firm 12 years and, in the end, my meeting with HR, packing up my stuff, etc. was over and done within 3 hours. No farewell drinks, no words of appreciation before I left the office for good.
No one else from the broader team knew about it until the next day or several days later. That’s today’s Corporate America for ya! Though in some ways, it’s easier to leave under radar.
Since then, I heard that three people had to be hired to do my job completely.
How did you ultimately find the courage to do it?
Not much courage needed. As I had been thinking about early retirement for a while, I was getting very comfortable (and eager) with the idea.
I knew I saved enough and had good healthcare. I knew my spending was stable and well monitored. I hadn’t enjoyed working for several years and thankfully no longer had much identity and self-worth tied to my job.
After decades of working, I’ve made some meaningful achievements and knew I no longer need to prove to myself or others what I’m capable of.
RETIREMENT LIFE
How was the adjustment, especially the first few months after retirement?
I love not working. The environment was so toxic to me for several years. My friends asked me if I was going to take a big trip or throw a party but in truth, I was so happy to not work, that that alone was enough reward and celebration for me.
The most surprising adjustment was breaking the habit of looking at my smartphone for work-related emails. Clearly, this was a long-ingrained behavior, reading and replying to emails constantly throughout my waking hours, in and out of the office.
Practically and immediately, I needed to set up some tools for calendar, contacts and to-do lists. I didn’t realize I relied so much on work applications (Outlook) to manage my personal activities. Now I’m using Google Calendar, Google Contacts and Todoist apps.
For the first few months, I slept a lot (no more alarms!). Ate less and better (no more stress or comfort eating). Walked more, lost some weight. Did a lot of leisure reading. Watched a lot of TV (which I do a lot less now). Reconnected with many friends not seen in a while or lost touch with.
Purging and fixed up my home – in particular, felt great to donate all my work-related attire, business books, etc.! My home is better now for me and for hosting guests.
I also started a journal, writing my thoughts on retirement life and work life in hindsight. It’s nice to look back on your thinking over my first year of retirement.
How is retirement life now? What do you like about it and what do you dislike?
Retirement life is great thus far but I think I’ll know for sure in another year or two. I have a decent routine, but see more tweaking to do. I feel that I’m more pleasant, people and situations don’t bother me as much as they used to.
What I like: I’m never sleep deprived. I have very little stress. I’m taking better care of myself, getting healthier. I’m able to spend time on activities that interest me or give me pleasure – reading, hiking, going to museums, taking art classes, hosting parties.
Now I can be more my authentic self, whereas at work, I had to be a different person to a certain extent.
What I dislike: Costly healthcare (miss subsidized healthcare). Waiting for my friends to retire. The challenge of meeting new people and forming new friendships (avoid social isolation).
I do also wonder about cognitive decline, now that I don’t have complex problems to solve in my leisurely existence.
What do you do with your time? What does an average day look like?
Typical day is not too exciting as I enjoy an unstructured, easygoing pace. The term “comfortable idleness” comes to mind.
- 8-11am: Wake up and gradually ease into my day with a cup of coffee or two, read some emails, check in on social media and catch up on some news.
- 11am- 6pm: Go to art class or see a museum exhibit or go for a walk. Run an errand or make progress on my to-do list / projects.
- 6-9pm: Meet friends for dinner or cook at home.
- 9-midnight: Go see a show/performance. Watch some TV or do some reading.
- Midnight: Go to sleep.
Some things I did before retirement are now taking a lot longer than they used to. I rarely have pressing deadlines so I just let things take as long as it takes, going deeper (e.g., researching for a big purchase, vacation planning).
The extra time spent doesn’t seem to bother me too much if I find the journey of discovery interesting.
Looking back, what would you have done differently?
I wish I had gotten my investments in order back in my 20s. I was a saver right from my first job and if my investments were in the right funds compounding well since then, I probably would have been retired at 40!
I wish I had maintained a habit of exercising regularly. Thankfully I’m relatively healthy but having the habit already ingrained into my day to day would have been better.
Lots of career-related coulda woulda shoulda but what’s the point, now that I’m retired?
Was there any emotional impact from leaving the workforce?
I had a few colleagues / friends that I had hoped to maintain regular contact with. I can see that’s not going to happen. It’s hard to be relevant to them when you no longer work together anymore.
What surprises have you had since retiring and how have you handled them? Did you find it hard going from being a saver to a spender?
December 2018 market decline was not fun but 2019 thus far has been good. These dips force me to reassess my risk tolerance / asset allocation so that was a good thing.
The day fills up faster than I thought it would. I find it hard to schedule more than 1 or 2 things to do a day. If I want to work in other priorities like exercise, I’ll have to be a bit more structured.
Shifting from saving to spending still feels a bit unnatural. My instinct is still to save or economize so that’s something I’ve been working on by reconsidering my frugal choices as I’m making them.
I had no idea how much free or low-cost activities, events and classes are available in New York. Parks/public spaces, universities, libraries, museums, recreational centers, businesses, etc. all provide tons of programs for the local community.
I spend a fair bit of time by myself and I do enjoy my own company (introvert). However, travel is something I want to do more of but I find I enjoy it more traveling with others.
As a single early retiree, it’s hard to find opportunities to travel with friends. Most of my friends are still working and have families. I’m currently looking into active tour groups so I can travel with others and perhaps get more fit in the process as well.
What are your future plans?
I’d like to be more disciplined about improving my health – establish some regular habits around cardio and strength building.
I’d like to go deeper on a hobby, really get good at something, maybe drawing or painting. It was an interest and skill I had a long time ago and would like to revisit it.
I’d like to do more travel. Maybe even go for several weeks or months.
I’m open to hearing your suggestions – my imagination might be limited!
RETIREMENT FINANCES
How has your financial plan performed compared to what you had estimated before retirement?
It’s fine. My net worth is a bit higher vs. a year ago when I retired so that’s comforting. And I paid off my mortgage so being debt-free is also nice.
Can you give us some insights into your post-retirement spending and income? How much do you spend annually and on what? And where does the income to pay for your spending come from?
My annual expenses are about $73k, roughly 66% essential and 34% discretionary. As you can see below, it’s not all scrimping and saving but reflect what spend categories are worthwhile to me:
- Home $20k: co-op fees, property tax, insurance, handyman services, staff holiday tips
- Utilities $2k: electricity, cable/Internet, cell phone
- Healthcare $11k: premiums and out of pocket
- Family support $12k: helping out parents
- Consumables $1.4k: groceries, household supplies
- Eating out $7k: for myself and treating others
- Fun $8k: vacations, hobbies, classes, shows, movies
- Large purchases $5k: furniture, decor, electronics
- Gifts / charity $5k
- Personal care / apparel $1.5k
- Local transportation $700: subway, taxis
Income-wise, in the year that I’ve been retired, I get some deferred compensation (net of tax withholding) as it vests over the four years but that won’t cover all my expenses. The rest came from cash in my savings account and monthly distributions from the taxable brokerage account with my investment manager.
Going forward, for the next 10 years, my income will come primarily from disbursements from the taxable brokerage accounts. I look forward to being a lower tax bracket!
How are you handling Social Security, required minimum distributions, tax issues and the like?
I’m planning to get some tax guidance soon so I can figure out whether to start drawing down on tax deferred accounts early or later when RMD kicks in. Also, to explore whether Roth IRA conversions make sense for me to do.
Social Security at age 70 should bring in another $36K (today’s dollars) but my financial planner runs the figures with a 20% haircut. That said, much is dependent on how healthy I am when I get into my 60s.
Did you return to paid work? Why or why not?
No plans to return to work at this time, enjoying retirement too much. Will revisit this only if I have to.
Looking back, what do you wish you knew in advance?
Somewhat of a minor issue but I wish I knew that I could have rolled my IRA into my 401K. Now that I am no longer an active employee, that option is closed to me.
I believe this would have been helpful for doing a backdoor Roth IRA. Also, this would have reduced my investment manager fees and resulted in fewer accounts for me to monitor.
What advice do you have for those wanting to retire?
EARN
- Maximize your pay: negotiate aggressively when getting a job offer. Explore the job market every few years.
- Try to climb just one career ladder: I switched job types and industries throughout my career which didn’t maximize my earnings. I have no regrets because I value variety and continuous learning but the sooner you know your true calling, the better. Try to favor the roles that are not considered “office housework”, pick roles that drive revenue or are strategically important to the firm.
- Who you work for is the one of the most important criteria in whether to take/stay with a job: you have to trust that the people who are in power, making decisions about you are doing right by you and have your back.
- Promote yourself internally, network with powerful decision-makers, get sponsors/advocates. Protects you from bad compensation decisions and layoffs. Also ensure decision-makers tap you when job advancement opportunities come along. Most managers don’t gather intel on you, most just rely on what people have told them or their own limited recall.
- Read Who Moved My Cheese? by Dr. Spencer Johnson. An oldie but a goodie.
Side bar: Getting my MBA and choosing to work in high paying industries were financially rewarding moves for me. That said, they may not work for you so I mention these only as having been pivotal to my “success”.
SAVE
- Save as much as you can as soon as you can: If you hate feeling trapped in a job, having lots of savings puts you in control as to when to exit and whether to turn down a bad job offer. Also, you never know when you’ll have the rug pulled out from under you. Especially if you are female, a minority, over 40 or have dependents. Lastly, you never know if your desires/wants will change so having a bit more savings than you anticipate you’ll need will keep more options (especially the unanticipated ones) open to you. Only you’ll know how much savings is “enough”.
- Develop automatic instincts for questioning your spend. Your spending should reflect what’s important to you. Don’t keep up with the Joneses.
- Track your spending. You might be surprised how much is going to certain categories. The less you spend, the less you’ll need to amass for retirement.
INVEST
Hire trustworthy investment expertise or DIY but keep it simple. I don’t regret pay someone to manage my money. Thankfully, my guys are good / honest albeit expensive. I didn’t know enough about investing to consider active vs. passive and know the different kinds of fee structures. But if you go DIY with little knowledge, just stick to index funds (maybe 5) and a moderate risk asset allocation.
PLAY
Cultivate your interests, relationships and social community. Once you retire, these along with your good health will keep you happy. Be open to trying new things and you’ll never be bored. This piece of advice might have the fewest words not because it’s not important but you could wait to start this after retiring whereas all the other advice benefits from years of effort (including your health).
My advice above was well learned over the years but I did not necessarily follow all of it – I’ve made plenty of mistakes and probably still do.
What advice would you like from ESI Money readers?
I’m considering leaving my investment manager. If I go DIY, I’d like to keep my investments simple (handful of index funds/ETFs).
However, there would be significant costs associated with changing the holdings. This 10+ year managed account has over 100 different stocks and bond holdings (thanks for diversifying!). The taxes associated from realized capital gains would be significant.
Regarding transaction fees, someone suggested that I ask the custodian to waive the fees if I agree to keep the funds with the same custodian or to use the proceeds to buy their proprietary funds. Would welcome any advice on how to cost effectively manage this change.
Blue Lobster says
Great interview! I love the message to “save as much as you can as soon as you can.” If the powers-that-be decide that you need to be shown the door, then having money gives you a lot more options than you’d have if you were living paycheque-to-paycheque lifestyle. Congrats to you, RI-15! Your tendency to save and your choice to hire an advisor mean that you’ve been able to set yourself up to be comfortable. While your dismissal sounds distasteful after 12 years of service, I’m happy to know that you were already willing & ready to walk away from the bullsh*t that you were observing in your immediate work environment. Your employer pre-empted your move, but was unable to derail your plans to enjoy a comfortable and financially stable retirement. Good on you!
RI#15 says
thanks Blue Lobster! I feel that if you work in corporate America, you have to have give yourself adequate financial flexibility in order to make decisions that are best for you.
Jim P says
Love it. Fit’s my own demographic of early 50’s and living in NYC, although adjusting, even after 3 yrs is still a big challenge for me. (as spouse is still working) Having only $1M net worth makes me a little anxious, but not overly. The interviewee still has VERY full days. My days (while I’ve been down with surgery) ends by around 4pm. but it’s an area I want to improve upon. Thanks for putting this together. Great series.
RI#15 says
Jim P: Hope you’re soon feeling well enough to fill your days with interesting activities and interactions! I kid you not about all the free activities from NYC parks, universities, libraries, rec centers, favorite stores, etc. Sign up for their newsletters, join Meetup and peruse Eventbrite for all kinds of things to do.
Golfnut says
Well done…..honest and sincere interview. You have done well, worked hard and we wish you all the best. You will tackle all your retirement goals for sure.
RI#15 says
Thanks Golfnut! Appreciate your encouragement and support!
Chuck says
Congratulations, your hard work has paid off! I have recently moved the part of my portfolio that I had with an advisor, to DIY. I created a new account at Vanguard to take advantage of the free trades for their index funds. I have kept half at Fidelity just for some diversification. Like you, I ended up with a long list of individual stocks. I am slowly selling them, using some losses to offset gains where I can. Also, most brokerages will give you a limited number of discounted trades per month (18 at Vanguard?). Enjoy your retirement!
RI#15 says
Chuck, thanks for helping me with my DIY plans. Vanguard won’t charge for selling the individual stock if the proceeds are used to buy their index funds? provided within the 18 trade limit per month? Like you, I also plan to do it slowly so I don’t wreak havoc on my taxes. Does the diversification between F and V make it worthwhile for the added complexity of an additional account?
Breezy says
If you own index funds at both vanguard and Fidelity how is that diversified? Isn’t that just owning the same investments but at 2 different brokerage companies? Sounds like more paperwork than diversification?
AEL61 says
Nice interview! How lucky you are to be able to access healthcare insurance through your employer. I hope that remains an option for you until you reach the age of 65. I retired when I was 56, and healthcare insurance is one of my biggest expenses second only to property taxes. Plus, I “worry” that one day I won’t be able to access the private market for whatever reason before I turn 65 and am eligible for Medicare.
I also appreciate your comment about shifting from saving to spending. I too was concerned about the same thing, but after I had been retired for a year and realized I was able to live comfortably on investment income, I felt much more comfortable.
Enjoy your retirement!
RI#15 says
AEL61: Lucky indeed. Before I learned about it, I was feeling annoyed and bummed that I might be “trapped” into working just for healthcare access. I also wonder if my former employer will ever pull that option from me before I turn 65. Doubtful but you never know… Healthcare situation is so perverse in our country.
Regarding spending, I’m glad your investments afford you a comfortable retirement. I wish the same for myself so I’ve gotten more comfortable being generous with myself. Life is short and who knows for sure how short.
gene says
Great interview and congratulations! NYC is an amazing place to be when you have both the time and $$!
A few questions/comments:
1) Call Vanguard or similar. You have sufficient assets to qualify for Flagship services at Vanguard and Wealth Management if you get over 5 million. They can advise you on how they can transfer your funds and minimize the tax liability. I would also directly ask your financial adviser if he/she can reduce their fees. This is the reality of their world today and a smart adviser would work with their clientele as people are increasingly aware that investment fees are out of line.
2) Sorry that you had a less than ideal exit from your company. Had that not been the case, do you think that it would have been more difficult to retire early and leave a 500k annual salary on the table?
3) As a fellow immigrant, I think I would have family pressures not to retire early. Did you experience this with your parents/immediate family? How did you deal with it?
Congrats again!
RI#15 says
Gene, thanks for your kind words and taking the time to share your thoughts.
1. I will definitely contact Vanguard to see what they advise. I’m sure my adviser will try to keep me as a client so will certainly listen to their counter.
2. No doubt that my job dissatisfaction helped to increase my desire to retire. I was planning to go even without getting laid off so yes, I would have willingly left my high comp.
3. I do get family pressure but being female, I tend to get less pressure as expectations are lower than for my male siblings.
Gene says
I believe you can hold individual equities in a Vanguard brokerage. I don’t think transferring the stocks would trigger any capital gains.
Look into a donor advised fund. Vanguard and many of the other brokerages do them. You can transfer some of your most appreciated equities (low cost basis) and capture the tax deduction. This can help negate some capital gains taxes.
Donations to charities are easy via a DAF. In addition to helping a good cause, donations can open the door to member only activities and social gatherings at the museums, etc. New friends!
RI#15 says
Thanks Gene – already have a DAF (plan to transfer another chunk soon) and have enjoyed several members only events and programs via non-profit organizations.
Yesterdaysprincess says
Absolutely you can hold individual securities in vanguard brokerage. I transferred stocks and mutual funds to vanguard 17 years ago from a stockbroker I worked with and have never regretted that decision. As a flagship customer with vanguard (over 1 million between all accounts held at vanguard), you have access to a free portfolio analysis and ongoing reviews of your portfolio for free. I still hold 5 individual stocks in my taxable account which would trigger large capital gains if I sold at this point in my life, but I’ve slowly sold everything else my first broker had me in and invested in vanguard funds. Simply call vanguard, and they help you fill out the forms to initiate a transfer from their end.
You also get 25 commission-free trades per account per year as a flagship customer which helps you sell all those stocks as your tax impact allows. For example, 25 free trades in an IRA account, 25 in a taxable account, and 25 in a Roth account. Even though you will still own individual stocks your advisor put you in, you will no longer be paying an asset management fee to hold them. Additionally, if you feel you need someone to manage your portfolio, vanguard offers personal advisor services for .30% fee for portfolios under 5 million.
Here’s a link to flagship benefits:
https://investor.vanguard.com/investing/benefits/flagship
Here’s a brochure on their personal advisor services:
https://personal.vanguard.com/pdf/vpabroc.pdf
RI#15 says
Thanks Yesterdaysprincess! You’ve given me more confidence to pursue this change. There sure are a lot of Vanguard fans!
Jeff says
This is one of the best interviews I’ve found here. I’m speaking less of the means and amount of wealth accumulation ( which is impressive) but more about the attitude toward work. I believe the comment had to do with realizing that self-worth wasn’t tied to her job. She had nothing to prove. She had been successful and decided to quit chasing the carrot.
This is very impressive on so many levels. Strong focused wealth accumulation and planning. Retiring young. – a minority woman kicking ass on Wall Street.
Just great. Thanks for this great share.
RI#15 says
reply below
RI#15 says
Thank you Jeff – your words mean a lot. Regarding my attitude toward work, I read this story below many years ago. Ever since then, I’ve never let anyone make me feel that my self-worth was tied to their treatment of me. Of course, age/experience helps too…
A well known speaker started off his seminar by holding up a $20 bill. In the room of 200, he asked. “Who would like this $20 bill?” Hands started going up.
He said, “I am going to give this $20 to one of you – but first, let me do this.” He proceeded to crumple the 20 dollar note up. He then asked. “Who still wants it?” Still the hands were up in the air.
“Well,” he replied, “what if I do this?” He dropped it on the ground and started to grind it into the floor with his shoe. He picked it up, now crumpled and dirty. “Now, who still wants it?” Still the hands went into the air.
“You have all learned a very valuable lesson. No matter what I did to the money, you still wanted it because it did not decrease in value. It was still worth $20.”
Many times in our lives, we are dropped, crumpled, and ground into the dirt by the decisions we make and the circumstances that come our way. We feel as though we are worthless; but no matter what happened or what will happen, you will never lose your value.
steveark says
To the interviewee, this isn’t a paid promotional but if you think you’d like active travel, which my wife and I do, I recommend Backroads Travel. We went on a hiking vacation in Tuscany and Cinque Terre with them and it was a lot of fun. You are put into a small group of maybe ten people and stay in small towns mostly avoiding big crowds. You can walk as much or as little as you like at your own pace and you really experience the places you pass through on a different level. We had a mix of metro people like you and rural rednecks like us and it was fun being part of such a diverse and interesting group. We still hear from some of the group from time to time.
RI#15 says
Thanks steveark! Will definitely check out Backroads Travel. I just signed up for a holiday in Asia with Intrepid Travel that’s fairly active (hiking, biking, kayaking, etc.) and with a small international group. Glad to hear it was lots of fun!
Steveark says
We are thinking about a trip to Iceland to see the northern lights and a lot of snow and ice next! Sounds like you’ve got a great trip scheduled!
Mr Fireby2023 says
I love your daily activities. We’re all envious of You! Waking up between 8-11 AM? You’re living the DREAM!
I’ll be fully retiring myself at age 55 (in 2022) and a portion of my daily routine will be binge-watching episodes of various shows offered on Amazon Prime and Netflix. I’m certain you binge-watch yourself. I bet wine is part of your routine as well, LOL!
Kudos to you for retiring early, living the dream, enjoying your youth and health and doing whatever it is you want to do. The one word that no longer exists in your world is the word, “Mandatory.” What a dreadful word! As an ex-employee you no longer hear that one!
RI#15 says
Thanks Mr. Fireby2023 – sounds like you’ll be there before you know it, enjoying life without constraints!
Dave says
Nice interview. As others have commented, I recommend you transfer assets, in kind, to Vanguard or Fidelity so that you don’t pay any commissions to your full service brokerage. Sometimes Fidelity has promotions of free trades if you bring a specified set of assets to them. You would easily qualify for these free trades. For Flagship customers at Vanguard, after the free trades allocated, you will only pay $2/trade to thin out your individual equities. I was surprised that you mentioned individual trading commissions by your broker as this is somewhat unheard of in today’s environment. I have also noticed, through helping family members consolidate assets to Vanguard from a full service brokerage, that many of the full service brokers structure portfolios with many, many individual equities or funds such that they are perceived to be “better” than a simple set of index funds. If it looks more complex than it really is, it helps to justify their higher fees. For example, you don’t need 100 individual equities to be diversified – based on my research, the experts say 30-50 max is all you need to be well diversified. Good luck!
RI#15 says
Dave, thanks for the advice! I will certainly compare what both Vanguard and Fidelity can offer someone in my situation. I don’t know that my investment manager was trying to fool me into thinking 100+ securities is “better” but rather that’s just their approach, active fundamental investing. I’m not convinced therefore looking to go DIY. In reality, the capital gains are probably the bigger area of concern (taxes) than the transaction fees.
George says
I have been retired for almost 2 years, and have been a follower of ESI for about 4 years. Although I have enjoyed reading most of the interviews, this one falls into my favorites’ category.
Why? I felt that you described well some issues that I have been struggling with too.
I retired as soon as I turned 55 and have never regretted my new phase in life. Actually, if I could have, I would have retired even earlier. Since I worked for a local government entity in the DC metro area, my pension was based on my age (55 was the minimum eligible age), years of service and final compensation.
“Shifting from saving to spending still feels a bit unnatural.” I too need to learn to spend all the income from my monthly pension. Since I retired, my expenses are still less than my monthly pension income, and my savings and investments are still untouched.
As a single person with two grown independent children, my philosophy is to pass a small percentage to them and spend more during my healthy, active years.
“What I dislike: Costly healthcare (miss subsidized healthcare). Waiting for my friends to retire. The challenge of meeting new people and forming new friendships (avoid social isolation).” I couldn’t agree more. All my friends are working, and it seems that it will be years before they retire. Forming new meaningful friendships has been a challenge!
“I do also wonder about cognitive decline, now that I don’t have complex problems to solve in my leisurely existence.” I guess I need to start playing chess!
“Travel is something I want to do more of but I find I enjoy it more traveling with others.” I’d like to do more travel. Maybe even go for several weeks or months.” I love to travel and have been many places since I retired. I have even spent 2 months in Japan. Though my experience has been that good company in a journey, any journey, makes the way seem shorter.
I wish there is a way we can connect and travel together.
I admire your thoughtful and heartfelt insights.
RI#15 says
George, thank you for the compliments and am glad my situation resonated with what you are going through in retirement. I wish you the best in your navigating through these issues successfully. The more activities I engage in and the more time I invest in new friendships, the less concern I have with social isolation. Some of this cost money so go ahead and spend that excess pension and investment income to enrich your life with new experiences!
Jamie says
Congratulations RI#15 on your accomplishments, including wealth accumulation that enabled you to step into early retirement when your work situation changed! I have been working on my FU fund, knowing it is “when,” not “if” I get laid off.
I’ve been reading the millionaire and retirement articles on ESI for the past several months and I love it when it’s a single female in her 50s. I wish there were more content like that. I’m not yet able to retire yet, as covering healthcare for the 12 years until I hit 65 is a concern stepping into a mini retirement or moving to part time work.
Thank you for sharing your successes and, especially, your challenges. I learn something from everyone’s interview.
RI#15 says
reply below
RI#15 says
Thanks Jamie – with your focus, you’ll hopefully have enough FU money very soon. Healthcare absolutely was the #1 issue I had to solve for (after saving enough of course). Sometimes, I wonder, if I had left my last employer years ago in hopes of a happier job situation but ultimately still wanted to retire early, whether I could have made it work with other healthcare options (ACA or via part time job). I wish you the very best in your journey to early retirement.
coco says
Thanks for sharing your story.
On the FI path it’s rare to encounter someone like u with a success story willing to share numbers and sentiments.
I’m also on a single path and with similar backgrounds.
But earning way less haha.
Hope you will start a blog or join twitter!!
RI#15 says
Coco, I’m glad my story was of interest to you. I’m not much of a writer but wanted to share my story as I felt it was different from most of the early retirement profiles I’ve read about. I’m always curious how many others similar to me are out there FIRE-ing and also wanted to encourage others who are like me to also share their stories. And of course, it’s great getting valuable advice from such a knowledgeable reader base! Best wishes for achieving your success story soon!
coco says
haha. I can’t write but twitter and instagram are both fun for me. No pressure though! Enjoy the nice summer weather!
Rich says
Dear RI15,
First off, congrats! I am your age, too, but I haven’t been quite as diligent as you in saving and keeping living expenses low, so I’m a few years behind you in “retirement readiness.” But your story inspires!
Definitely, definitely consider a DIY approach to managing your portfolio. I’m a long-time Vanguard client in their Flagship program and I don’t pay for anything: no annual brokerage fees, no trading fees, no advising fees. Most of my Vanguard funds charge 0.1% or even less, and they have many, many choices. I am certain one of their advisors could help you through the process and make gradual, tax-savvy changes that will diversify your holdings as well as reduce your expenses greatly.
Over your expected lifetime, lowering your annual fees from 2% to 0.1% will save you hundreds of thousands of dollars! And NO ONE will take better care of your money than you will.
RI#15 says
Rich, thank you for your encouragement and advice. Something tells me you are a lot better at investing than I am. That said, I’m willing to give it a go and I know I can always go back to hiring an adviser if I see that I’m not able to take good care of my money. Best of luck on your path to retirement readiness!
Rich says
Worst case, Vanguard offers an Advisory Service to manage your money for you, and at 0.3% a year, I’m still pretty sure this is way less than what you’re paying your advisor today.
RI#15 says
yes, many several low cost options than status quo… thanks Rich!
MI81 says
Great interview and congratulations on your successful early retirement!
If you haven’t found the Bogleheads forum already, I would suggest you post your question on how to detangle yourself form an advisor there – you will get a lot of great advice and that group is all about simple investments https://www.bogleheads.org/index.php.
Wishing you continued success!
MI81
RI#15 says
Thanks MI81 – never been visited the Bogleheads site, will definitely take a look!
1oldjock says
Congratulations on your early retirement. You are one of the earliest retiree that I have read about on this site. Your education and hard work have definitely paid off and well deserved. Since you are an early retiree, have you thought about how long your finances will carry you and does the longevity gene run in your family? I retired at 55 (currently 60) but my father is 97 and in good health. I worry that I may not have enough if I live that long.
RI#15 says
Thanks, 1oldjock. My parents are healthy in their 80s so I’m assuming they’ll reach 90s. I believe I’ve saved enough but that said, nothing is for sure, so yes, as an early retiree, I too worry about longevity risk and sequence of returns risk.
There are few actions I take to manage my fear of running out of money:
1. Keep a low withdrawal rate / keep year over year increase as small as possible
2. Maintain a moderate asset allocation while still stay in markets to preserve / grow my investments
3. Don’t count on Social Security but plan to delay collecting until age 70.
Beyond my actions, I know:
1. About 1/3 of my current spending is discretionary and can dial it down if my assets decline materially.
2. I’ll probably spend less in my Slow-Go and No-Go years (even with rising healthcare expenses) vs. in my Go-Go years. This trend has been confirmed in studies.
3. I can always dip into home equity if I have to. If everything goes to hell, I can move out of NYC.
Being optimistic, I hope that when I’m decades into my retirement, I’m letting loose more because my investments will have grown better than expected.
I hope this gives you some comfort or ideas of what all you can to do to preserve your capital.