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.
This interview was conducted in June.
My questions are in bold italics and their responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
I am a few months shy of 48 and my husband is 50.
Do you have kids/family (if so, how old are they)?
We do not have any children.
What area of the country do you live in (and urban or rural)?
We live in a suburb of a very large city in the southwest.
We love living here and intend to remain here throughout our retirement.
Is there anything else we should know about you?
I was Millionaire Interview 285.
How do you define retirement?
I define retirement as having complete flexibility to do what you want to, when you want to, and how you want to.
If that means having a small part-time job that keeps you physically active or focuses on an interest you have, go for it!
It is also the absence of the requirement to keep and maintain the higher paying full-time job you once had to have to pay the bills.
How long have you been retired?
I have been retired for 11 months.
Is your spouse also retired?
Yes, he retired in April 2021 after reaching a point of continued high stress in his position and deciding the job wasn’t worth having a heart attack for.
At the time I had a lot of nervousness about being the sole income but it has worked out. I know it wasn’t the most fun time for him as he felt a lot of guilt for quitting two years earlier than we had planned, and he tried to spend as little as possible while I continued to work.
I also projected some stress about the pressure I felt being the sole earner, even though I had agreed to his leaving.
In actuality we were fine; however, the loss of one of our incomes happened fast, and I admittedly needed a few months to adapt and relax about it.
What was your career and income before retirement?
Both my husband and I worked for the same large bank for 20 and 25 years respectively.
He was in a risk management role for home mortgage, and I was in an audit/compliance role in the IT division.
At the end of our careers we were earning $280k base ($132K me / $150K him) and about another $70K in combined annual bonuses. Total $350K.
Why did you retire?
As mentioned in my prior interview, I did not have much passion for the job I was in. I was tired of IT, the fire drills, the copious amounts of paperwork required to make any systematic changes, the constant reorgs / bureaucracy, etc.
Also over the years the company continued to cut or reduce many benefits that had previously been enjoyed in my earlier years working there. I wanted to decompress a while and then focus on new things.
The product our team supported was retired in December 2021. The replacement product did not have a role for the job our team performed prior to the migration.
As the transition drew near and I foresaw the huge reduction in work our team would have, I told my manager, who fortunately was also a good friend of mine, that if he had to make cuts in 2022 I was raising my hand. That conversation took place in October 2021 and at the time the stock market was pretty much at its high and things were looking good financially. I then focused on the migration and waited to hear what, if anything, would happen.
In late Jan/early Feb 2022, I was contacted by my boss and asked if I was sure I wanted to be laid off. He had been advised he would have to cut a certain percentage of the team sometime in 2022. He told me to take the weekend to decide and discuss it with my husband.
I knew if I was to be laid off I would have 14 months of severance pay & healthcare coverage based on my tenure at the company. We agreed together it was time and I told my manager after the weekend that I was willing to be cut. I was advised to say nothing to anyone on my team and told to hang tight because it could take months.
PREPARATION FOR RETIREMENT
When did you first start thinking seriously about retirement and when did that turn into a decision to do it?
In 2015 we heard about a financial plan package that was free to customers of our bank.
We engaged a financial advisor and met with her for two hours. One hour was to discover our future interests, desired annual retirement budget, things we wanted to buy in the coming years, travel wishes, etc. and also for her to take a look at our existing finances. We were asked to compile our net worth in preparation for our first meeting.
While we knew we were saving well by maxing out 401k’s and aggressively paying down our mortgage, we had never done a net worth statement. At the time it was $1.5 million including our home equity.
So when we met with the planner, we said we’d like to retire at 51 (me) and 53 (husband). We were 40 and 42 at the time.
Two weeks later we met with her for the results. We were thrilled to see that the plan estimated we had a 98% success rate to retire at our desired ages.
We targeted 2025 to leave the workplace. It wasn’t because we hated our jobs, but we were starting to see people retiring in their mid to late 60’s who then developed sicknesses or physically were unable to travel as much as they had wanted to. We thought if we were done in our early 50’s we’d have an extra 10 years to do a lot of traveling or other volunteer work while still in relatively good health.
What were the major steps you took from deciding to retire to developing a plan to do so?
1) The first step was to ensure we retired 100% debt free.
We had seen and heard about lots of unfortunate people losing their homes in the Great Recession. We decided we wanted to not owe anyone a dime.
We probably started making extra payments to our mortgage in 2011, but by 2015 we were making double payments every month while also maxing our 401k’s.
It didn’t feel restrictive because we had always upped our 401K contributions at raise time, thus allowing us to live on the same or slightly more than we were already used to.
2) The home was paid for in October 2015.
We then had an extra $3600 / month freed up. Since we already were maxing out the 401K we decided we needed more after tax money to live on from 51/53 to age 59.5 when we could access our 401K’s penalty free.
We began saving the extra money in savings/CDs and were also investing $700/mo into a brokerage account buying SWPPX every month. By 2017 we had around $130K in CDs and probably $30K in the brokerage.
It was during these two years from 2015-2017 that I began to regularly read FIRE blogs, and we also began to invest in ETFs that paid dividends. We realized we could potentially build up a decent dividend income by the time we retired which would help offset the need to draw down as much from our portfolio each year.
We decided to redirect future savings almost entirely to our brokerage.
3) From 2017 until April of 2021 when my husband retired, we saved $6K a month in our brokerage.
We bought the same 5-6 ETFs for months on end, year over year at various price points and the dividend income in the brokerage account climbed to $20K/year. We also added some additional money at our bonus times. We still had fun traveling and remodeling our house in 2017 but we always saved first.
They say hindsight is 20/20. Looking back at how we did things and knowing how the stock market performed during 2015-2021, we probably should have invested way more into our brokerage when instead we were saving in cash. We would have definitely had more growth; however, at the time we felt we already had a large sum in equities in our 401k’s and we wanted to be more conservative with money we had to use in early retirement.
Now here in June 2023, we are really glad we saved a decent amount of cash because otherwise we’d potentially be facing a sequence of return risk with the market still being down from 2021 peaks.
What did your pre-retirement financials look like?
In August 2021 when I did MI-285 our net worth was $3,820,000 broken out as follows:
- 401Ks: $2,287,000
- Roth IRAs: $122,000
- After Tax Brokerage: $500,000
- CDs/Cash: $178,600
- Employer Cash Balances: $79,300
- HSAs: $14,100
- House: $605,000 (paid in full)
- Cars: $34,000
Our net worth peaked at $4,014,000 in January 2022. The month I was ultimately laid off we were down $550,000 from that peak. Not at all what I planned or hoped for but since we had been previously over what was needed annually at a 3.5% withdrawal rate, I still slept at night.
I’m not going to lie though, there were many, many days I watched the market and thought, oh sh-t, should I try to cancel my lay off? Because the layoff took months to occur and the market kept falling.
What was your overall financial plan for retirement?
Originally our plan was to leave the workplace together in 2025. Because my husband was promoted 2 or 3 times from 2015 to 2021 and had pay increases that were substantial and allowed us to save more, we moved our date up to April 2023. As mentioned previously he retired in 2021 and I continued to work until July 2022 when my lay off occurred.
We knew we’d need to live on brokerage/savings for about 9 years so we wanted to have $750K in these accounts to carry us to the point where we could withdraw from our 401k’s without penalty. We also estimated having about $90K in our cash balance plans plus HSA accounts to fund medical insurance via ACA (I know you cannot pay premiums to ACA from HSAs; however, we owe ourselves thousands for past medical bills that we paid out of pocket and I’ve tracked this so we “can pay ourselves back”). Total starting point around $840K (cash, brokerage, HSA).
Our budget is $65K a year for living expenses plus fun money monthly, $20-25K for travel and $8-10K for medical insurance on ACA. Total $100K annually. The medical estimate is based on us being at slightly under 400% of poverty level and receiving some subsidies.
We will receive about $30K a year in dividends from our brokerage and employee stock dividends and the rest of our realized income will be from ROTH IRA conversions. We will sell holdings in our brokerage accounts if the market is doing well, otherwise we will fund our living expenses from CDs.
Did you make any specific moves to prepare your finances for retirement?
Other than the aforementioned payoff of the mortgage, I also decreased my 401K contribution to the 6% match level my last two years of work. I put the extra money from my paycheck into savings.
We also began taking our employee stock dividends in cash instead of reinvesting. This helped to bolster our cash position.
Who helped you develop this plan?
We figured this out on our own.
From years of keeping our budget, we knew what we regularly spent and how much we wanted to increase our travel budget. We ran the numbers a gazillion times on endless financial calculators, and I also visited (free) a financial advisor at our credit union who confirmed he thought we were good to go.
I also read lots of blogs (ESI, Retirement Manifesto, Root of Good, A Purple Life, Financial Samurai, Route to Retire, The Dragons on Fire, The Mad Fientist, Get Rich Slowly–to name a few ) and several retirement books during the past few years (Your Money or Your Life really stands out in my memory).
We’ve also used Personal Capital for several years to track our net worth, and we were receiving a 99% score for our retirement tabulation on this site.
What plans did you make in advance to leave your job?
Because I had the foresight that I was on the list for a layoff, I wrote my goodbye emails in advance. I also mapped out a 14 month severance schedule as far as savings, maxing out my HSA, and letting our dividends build up in our brokerage to be used in the next couple years.
I also thought a lot about what I wanted to do once I had endless free time. Many of the articles I’ve read discussed having a purpose and a schedule that works for you.
I mapped out what a week when not traveling might look like. It included exercise, volunteering, reading/writing, social activities and learning.
I also researched side hustles a lot to determine what if any might interest me. I was not against earning a bit of money, I just didn’t want to HAVE to.
What were your pre-retirement concerns (financial or non-financial)?
As with nearly every early retiree–healthcare.
I also wondered if I’d get bored or would miss the paycheck.
But I also knew I was in danger of getting caught up in one more year syndrome so agreeing to a layoff was my way to ensure I stopped OMY excuses.
As mentioned above, I did have some 2nd guessing myself as the 2022 market got more and more volatile. But we told ourselves we planned for bad years and this market will eventually correct itself.
How did you handle deciding on and paying for healthcare?
I have healthcare until Aug 31st of this year.
At that point we will go on Cobra from September until December and then onto the ACA in 2024. We will use HSA money and our cash balance plans to pay for this.
How did you tell your family and friends of your plans?
We had been telling friends and family for years that we planned to retire around age 50. No one in our close circles was too surprised because I think we were deemed as “being good with money.”
I think some of my close coworkers were surprised as they knew I was younger.
My husband’s boss was shocked in 2021 when he quit. Then she said to him a month later “I didn’t believe or listen to you when you told me once that you and your wife had plans to retire early.”
THE ACT OF RETIRING
How did you ultimately retire?
After the call asking if I was sure about a layoff, months passed and in May I was given the heads up that the probable date was July 14th, 2022. He also shared he had to layoff 35% of our team. Some of us had raised our hands to him and some that were to be let go had not. I felt bad but my boss assured me that my layoff helped save someone else’s job because I would not otherwise have been selected.
July 13th was a very weird day for me. My boss’s boss asked to call me. He said he knew that I knew what was going to happen tomorrow. He called to ask me if I was sure, then to tell me he appreciated all of the contributions I had made to the team and what an honor it was to work with me, and finally to say if I ever wanted another job to call him. He warned tomorrow would go very quickly and I’d lose access by mid-morning. It was a very nice call and I felt good about it.
I barely slept at all that night. It is incredibly weird to work at the same company for 25 years and then all of a sudden the next day would be the last time you ever signed on. I was also nervous because I knew I had to act surprised and not happy because I wanted to be sensitive to the others who did not want or anticipate being laid off. I was also expecting some sad phone calls with very good friends on the team who were going to be surprised.
I signed on at 7:30 a.m. July 14th. At 8:35 I received the formal meeting invite from my manager where he read a script about my position being eliminated, etc. Immediately following this call, emails from the others laid off started to get sent out and people were freaking they were to be called next. Our manager immediately called a meeting to explain the process was over and everyone remaining was safe. I sent my goodbye email to my team and then another to dozens of people I had worked with over the years.
The following two hours were some of the most emotional in my life. I was called, texted and instant messaged by lots of people who expressed shock, sadness and unfortunately, even some anger at my boss. I had to imply that I had raised my hand in late 2021 and that honestly I was ok. I also had two job offers during this time LOL.
At 10:24 a.m. my access was revoked. I went into the shower, sobbed hard for a few minutes, and then I let out the most euphoric scream of happiness that I was free! My husband and I then went to Village Inn and had pie and coffee like we did when we first got married and couldn’t afford a full meal. Then we went home to watch one of my favorite movies, Office Space.
Later that evening we went out to celebrate with friends.
What went well?
Having the knowledge months in advance helped me to emotionally prepare and structure things financially to map out a drawdown strategy.
The calls, texts, emails, and well wishes were beautiful and humbling. I felt I had forged some very good relationships with people at work.
What didn’t go so well?
I didn’t anticipate how emotional that day would be for me. I knew I did not have my identity tied to the job, but I was leaving behind several good friends on my team who I talked to nearly daily and had vacationed with (they live out of state). I was not at all sad to leave the job, but I was sad about leaving the people.
I had one interaction with a woman who is older than me and has been stuck in OMY syndrome for 20 years. She made a comment that it “wasn’t fair I got to leave earlier than her.” I had another former coworker tell me I’d be back because I was too young to retire.
All in all it wasn’t a bad exit at all.
How did you ultimately find the courage to do it?
I knew if I didn’t go then that I could get stuck in OMY.
I can say with complete honesty that if I hadn’t been laid off I’d probably still be there because the stock market was doing poorly. But I had hundreds of talks with myself and my husband…this is what we prepared for, this is why we saved up several years in cash. Markets go up and down.
And ultimately I said to myself the worst case scenario is I get a part time job.
How was the adjustment, especially the first few months after retirement?
FANTASTIC!!!! First off there is something AWESOME about it being Sunday night and you don’t care that tomorrow is Monday! I let myself sleep in later on Mondays just because I could.
It is also so much more pleasant going to the gym at less crowded times, like 10 a.m. on a Tuesday. We also love grocery shopping and seeing movies midweek during the day to avoid crowds.
We had a lot of travel planned for right after I was done working. We took a cruise to Alaska in September, went to Los Angeles and Maui in January, Florida in February, Vegas in March, and then we did a Danube river cruise in April.
I would say until about a month ago I have been living in a euphoric state. I have intense gratitude about our position and I’m so glad to not be chained to my desk any longer. I have less back pain and headaches. Back in April my blood pressure was the lowest it’s been since I went on BP meds 12 yrs ago. I’ve lost 5 pounds, not a ton, but considering all the travel eating I’ve done, I’ll take it!
Finally, as I’ll detail below, I am so thankful we’ve had this time not working because we’ve been able to help and support our dear sick friend.
How is retirement life now? What do you like about it and what do you dislike?
I’ll start with the dislikes because they are so much fewer than the likes! And really there’s only one dislike.
As many, many people who retired early have already said, a lot of people just cannot understand how/why you are retired in your 40’s. I’ve heard it all–“what do you do all day? You’ll go back to paid work once you’re bored. Wow, I wish I could retire early but we had children” and so forth. I actually stopped telling strangers I’m retired because I don’t want to hear it.
The likes are endless:
- No meetings.
- No work politics, drama or fire drills.
- The freedom to travel as much as we want.
- I don’t need to check the clock when I’m out to lunch on a weekday.
- Less crowds everywhere during the week.
- The time to try different things.
- Having my best friend (hubs) with me all the time without work interrupting us.
- The ability to help friends with doctor appointments, rides, etc.
What do you do with your time? What does an average day look like?
- I usually get up around 7:30 a.m.
- I have coffee and read email/check accounts for a couple hours.
- We hit the gym and then have lunch.
- In the afternoons we run errands or do our own thing — he is learning Spanish on Duolingo and I work on puzzles, read, or catch up with my old coworkers on the phone a couple times a week.
- Our evenings are pretty busy–we are very social and see friends quite often for meals, movies, a Top Golf league, and a regular show night, as well as a ladies night weekly. He also golfs at least once a week with friends.
Lately we have been spending more time helping our friend with stage 4 cancer. In the past few weeks we have assumed POA and helped facilitate the start of hospice. So a couple times a week we help him with housework, groceries, medications, etc. and spend time with him. I reiterate how very grateful I am that by us not working we have had immense quality time together in this last stage of his life.
What are the major activities that fill up your time in retirement? Are there any new ones you’re planning to try?
Major activities include frequent travel, a Top Golf league, going to the gym, reading, playing bingo, social events with friends probably 4 evenings a week, and helping our friend.
We also were about to apply to be volunteers at the food bank; however, our friend’s changing needs has pushed that plan back a bit. I anticipate executing his estate plan in the coming months and then we will move our focus to other volunteer opportunities.
Regarding new things to try, so far we’ve taken a couple Pickleball classes and liked it! The Top Golf league is something new since we’ve retired. I’ve also started doing puzzles which are incredibly relaxing.
In March I signed up for Prolific which I learned about from Dragons on Fire. I take surveys throughout the week when I feel like it. The money isn’t vast but it’s a bit here and there.
Husband is learning Spanish, and he also taught me to play chess a couple weeks ago. Not sure I’m into that game yet but that’s the beauty of it! I can try something else. 🙂
What is your social life like?
Active for sure. We probably have 1, maybe 2 nights a week max where we don’t have some sort of plans with friends or activity planned. Those nights we catch up on our shows together.
I am incredibly social so I like having things planned with other people. We have another retired friend who is a bit older and we go on hikes or out to eat with him during the day. We also see my mother-in-law for lunch every week to 10 days. I still am in contact with many of my old coworkers whom I consider friends. I have lunch with those locally and still have travel plans with those who are not.
Looking back, what would you have done differently?
Not a whole lot honestly.
I am glad we made the sacrifices early in our marriage (using coupons, having roommates, saving half of all raises, maxing 401K, etc.) to get us to the point we are at now.
Was there any emotional impact from leaving the workforce?
Aside from the sadness of leaving my coworkers, the emotional impact has only been positive for me.
I am so grateful to be in the position to meet new people, try new things, and do whatever I want whenever I want.
And while I’m still young-ish enough to enjoy seeing a lot of the world.
What surprises (financial or non-financial, good or bad) have you had since retiring and how have you handled them?
One financial surprise was that an aunt passed away a couple months ago and I inherited $50,000. I didn’t expect that and I’m grateful she thought of me.
Another thing that has been really nice to see is our friends who are our age have suddenly realized they want to be done sooner too and have taken steps to meet with their financial planners to expedite the process. This makes us happy because then we’ll have more time with them.
What are your future plans?
We plan to continue to travel extensively. For 2024 we have already planned a Hawaii trip for 2 weeks and a Portugal/Spain trip. We will probably also take a cruise and go to Vegas as well.
We also will continue to focus on our health by remaining active: physically, mentally and socially.
I also would like to become a financial mentor in ESI’s Millionaire Mentor forum.
How has your financial plan performed compared to what you had estimated before retirement?
When my husband retired in 2021, we projected that when I retired two years later our portfolio would be approximately $3.45 million.
Instead when I did the comparison two months ago in April 2023, we were off by $500K due to the recent bear market. We are grateful we still were in a fine position for me to retire.
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?
Currently I have 6 severance checks left and then we will implement our new budget. I’m planning to give us more to spend each month than I currently have allotted when I’m still getting paid. We are still actively saving about $1200/mo from my checks.
Our budget for monthly expenses / social activities will be $5400 or $65,000 a year. Of the $5400 our base expenses are about $3500 so plenty of flexibility here. Our travel budget will be $25,000 a year.
Each December we will assess how the market has performed and either sell from our brokerage account to produce the annual need, or we will use cash if the market has not performed well.
We have about 3.5 yrs of living expenses in cash right now. The cash should last longer than this as we receive $30,000 a year from dividend income.
Prior to retiring we also knew we had large house expenses coming up. The house is 22 and we need two new AC units, a new roof in the next couple years, and new windows. This is about $50K which we set aside and don’t count in our net worth total.
How are you handling Social Security, required minimum distributions, tax issues and the like?
We currently have 69% of our assets in pre-tax accounts (401ks). Our plan is to do as many Roth conversions as we can to minimize taxes later.
We are currently planning to take SS at our full retirement ages of 67.
We also can sell equities in our brokerage and not pay any capital gains tax as long as we keep our income under the $83,000 threshold.
Did you return to paid work? Why or why not?
I have not returned to paid work.
As mentioned above, I am doing Prolific surveys in my spare time and have earned about $375 in the past 3 months.
My husband worked a 3 month seasonal job at a big box retailer over the holidays in 2021 and then worked at another retailer for a few months in early 2022. This was mostly to stay physically active while he was waiting for me to be done with full time work.
Did you find it hard going from being a saver to a spender?
We are not officially there yet with me still receiving severance; however, we are comfortable with our current budget and I plan to increase it a bit in a few months to allow for more activities.
I definitely think it will be weird to draw down after 25+ years of a high savings rate. I have confidence in the plan though, and we can always make adjustments if need be.
Looking back, what do you wish you knew in advance?
Not a whole lot other than had we known the stock market was going to perform as it did in the 2010’s, we could have invested our freed up cash more aggressively into our brokerage account.
Also, when we married we made $35K combined. We had no idea of the trajectory our careers would take so I think had we known this, we would have started to even consider the idea of early retirement earlier than age 40.
What advice do you have for those wanting to retire?
Have faith in yourself if you have a solid plan and try not to get stuck in OMY syndrome. Life is very, very short and things can change on a dime. I have encouraged several people to retire who I believe have enough money but are scared to pull the plug.
One thing I’ve focused very hard on is not considering how much money in lost income we gave up by retiring early. We are content with enough.
One last thing I’ll share is that in listening to a speaker at a leadership conference years ago, something she said still resonates with me today. We are very focused on all the bad “what ifs” that could happen. She said instead ask yourself “what is the best thing that could happen if I do x”? I’ve tried to change my thinking to that sort of opportunistic attitude.
I wish all future retirees and current ones the best of health and happiness, and I thank ESI for allowing me to share our story.