Retirement Interview 55

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 December. This is from Millionaire Interview 176.

My questions are in bold italics and their responses follow in black.

Let’s get started…

GENERAL OVERVIEW

How old are you?

My wife is 52 and I’m 59.

We have been married for 28 years.

Do you have kids/family (if so, how old are they)?

We have 3 children, ages 21, 20, and 13.

The 2 older children are still living at home for various reasons, the main reason being that their maturity and development was stunted in high school by the Covid-19 pandemic. They are both attending community college and working with plans to go away to college in a year or two.

We love having them around but my wife and I both enjoyed our traditional 4-year college experience so we would like them to have that experience.

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

We live in a suburb of a mid-size city in the SE USA.

RETIREMENT OVERVIEW

How do you define retirement?

Not having to go to a corporate job and deal with complicated and stressful business issues.

I work now but it’s on my terms as a volunteer.

How long have you been retired?

I retired on September 30, 2021.

So as of the time of this writing, I have been retired for three years.

Is your spouse also retired?

After being a stay-at-home mother for 20 years, my wife started teaching school again full-time. She was a teacher during our first 5 years of marriage before we started having children.

My wife going back to teaching was an unplanned thing right before I retired. She offered to be a substitute teacher at my youngest child’s school and they had a short-notice vacancy so they offered her a full-time job.

She’s been teaching for three year now and loves it as she’s a very good teacher.

What was your career and income before retirement?

Right after high school, I started working in a cabinet-making shop for $3.50 per hour. I was not college material at the age of 17 when I graduated high school.

I did cabinet making and a few other jobs for three years after high school and also took a few college classes at night.

Three years after my high school graduation in 1986, I got a great job inspecting houses for large power companies in the metro NYC area. I excelled over the four years I worked there, and my gross pay averaged $25-28K/year.

During that time, one of my managers told me I would only go so far without a college degree, and that feedback motivated me for many years.

I ultimately did go back to college full-time, so I had what I call a 4-year “sabbatical” from full-time career work. While in college full-time, I had 3 internships and worked each summer to pay my way.

After graduation from college, I worked in research for 25 years and my last year’s pay was >$300K

Why did you retire?

There were a few factors leading up to my decision to retire. I fell in love with the concept of “early retirement” and FIRE even though I was early 50s so not young.

We set that as a goal. I was very good at my job, and received regular bonuses and promotions but always had a nagging feeling of “imposter syndrome”

While working in a large global corporation, I survived numerous reorganizations, down-sizings, and site closures so I learned to trust in God for our income security, and He blessed us.

Late in my 25-year second career, I started to realize the value and potential for old-fashioned corporate subsidized health insurance. Few Americans have access to these benefits, but this option became my goal.

I made certain career decisions to increase the likelihood that we could earn this retiree benefit.

Leading up to the COVID-19 pandemic, my job changed a lot, and my job site closed down, so I was already working from home. The pandemic increased my workload and stress level to the point where I was starting to have some health issues.

Finally, the corporation where I worked, was very “Woke”. I was surrounded by very smart people who all seemed to support specific political positions in meetings and corporate presentations.

The mandatory vaccination reporting on an app was the last straw for me.

PREPARATION FOR RETIREMENT

When did you first start thinking seriously about retirement and when did that turn into a decision to do it?

The idea had been something my wife and I discussed for a few years leading up to the decision. We looked at many online calculators and spreadsheets and consulted with our CFA who said it was possible but might be a little tight for a 40-year retirement period (assuming my wife lives until age 90).

During the last 5 years of work, my wife pleaded with me to keep my mouth shut and head down at work until my tenure earned us the corporate subsidized health insurance benefit. My wife had a good friend whose husband worked for a large package delivery company, and he was fired because he spoke up too much.

This lesson was very scary for my wife as she saw how difficult their financial situation became after her friend’s husband was fired.

What were the major steps you took from deciding to retire to developing a plan to do so?

I was using Personal Capital (now Empower) and my employer’s retirement planning website so I thought the numbers would work.

We assumed the 4% safe withdrawal rate rule but never made the time to build our bucket strategy, which is a big regret.

What did your pre-retirement financials look like?

At the time the countdown clock started, we had a net worth of about $4.0M including our home.

We have no debt and assets were mostly in stocks/ETFs, a company 401K plan, and a cash-balance pension plan.

What was your overall financial plan for retirement?

My plan was not as developed as it should’ve been. I wish I had the three buckets in place and some income-flowing options like rental homes or some Real Estate syndications in place.

Not having a fully developed plan wasn’t going to hold me back from early retirement as I believed I could go back to work if the plan didn’t hold up. On the expense side, I managed pre-retirement expenses using the Empower Dashboard.

We tried using a discounted Adviser from Empower for one year but that was disappointing. We now use a local fee-only CFA for things like tax-loss harvesting and a second set of eyes on our portfolio.

We have all our assets with Fidelity now that I rolled my corporate 401K into my own IRA. After going through all the expense categories and adjusting them for post-retirement, I arrived at a post-retirement yearly expense figure of $120K which includes $15K for travel during our go-go years.

We had enough cash reserves and LTIs to cover the first year and I figured we’ll deal with the IRAs gradually through Roth IRA conversions and charitable contributions.

Did you make any specific moves to prepare your finances for retirement?

There were a few things we did to prepare, some of them not necessarily financial, but nice to get out of the way before the steady source of income dried up. I bought a nice truck for pulling a camper or boat someday.

I was reading a lot about real estate syndications, and their monthly distributions but we never could pull the trigger so that’s a big regret. We now rely mainly on CD ladders, all averaging about 4.5-5% annual return.

In the five years leading up to my retirement, we beefed up our DAF to help aggregate donations and help with tax planning.

Other than that, we didn’t really have to change all that much. Since half of our assets were in taxable accounts, we didn’t have to draw on any tax-deferred accounts right away. I left my 401K with my employer for th first two years in case we needed the invoke the “rule of 55” but that risk is now gone.

Who helped you develop this plan?

My wife is fiscally conservative/risk averse but I’m much more of a risk taker.

We had an AUM financial planner for many years prior to retirement and got multiple second opinions on our plans.

What plans did you make in advance to leave your job?

Booked a few trips for the family and my wife and I.

How did you handle deciding on and paying for healthcare?

Before ACA was passed, I was 100% certain we would need subsidized retiree health insurance from my employer. With that understanding, I dragged myself to work the additional years to earn the benefit but then started to read about early retirees paying little-to-no cost for ACA health insurance.

So now, even if you have millions in assets saved, you can still get ACA health insurance if your annual income is pretty high. Regardless, we took the corporate retiree health insurance, and this will work until I turn age 65.

I will then go on U.S. Gov. health insurance/Medicare if it’s not completely broke and we’ll have to buy private health insurance for my wife.

How did you tell your family and friends of your plans?

We confided in a couple of family members and close friends a nine months before I left my job.

THE ACT OF RETIRING

How did you ultimately retire?

Nine months before my planned retirement date, we notified close family members. I turned in my notice at work as I wanted my immediate managers to have plenty of time to recruit and hire my replacement.

I was nervous about giving my notice at work as I had heard that some employees were getting marched out of the building right away. In retrospect, this fear that I had was a little silly, as I was working from home and my SVP and his boss who was President of R&D desperately needed me.

What went well?

In October of 2021, I turned 56 and hosted a combo retirement/birthday party for 4 of my closest friends where ate BBQ and caught up on life. My employer was still in the work-from-home mode due mainly to the pandemic, but things had already changed so much due to downsizing and site closures.

My wife and I took a long weekend trip to Las Vegas and to see the Grand Canyon. The highlight for me was driving a high horsepower Dodge Challenger from Las Vegas to the Hoover Dam and to the Grand Canyon and back.

It was a long day but well worth it.

What didn’t go so well?

I had tons of projects on my honey-do list but the 2022 stock market downturn scared me to death and spending $ was not that fun. During my adult years, I have lived through many market drops and recessions (1987 Black Monday, the Dotcom Bubble, 2008 Financial Crisis and the COVID-19 Market Crash) but hadn’t anticipated the feeling you can get when your portfolio goes down in a 12-month period with no paycheck.

As I mentioned, we didn’t take the time to set up a 3-bucket plan that would include 3-4 years of living expenses. We had about two years of expenses covered and income from my wife’s teaching job.

I didn’t show it outside, but I panicked on the inside. I ended up selling my very special sports car I had for the last 5 years and cashing in my whole life insurance policy to generate additional cash. I now have a basic 10-year term policy even though we can be self-insured.

I like the idea that if I died, my wife would get a quick infusion of cash, and this would give her some extra time to get financial advice regarding our conservative portfolio.

How did you ultimately find the courage to do it?

I had one friend who had retired early around age 50 as he worked in a very lucrative business. He has no kids and was to become my main early retirement pal.

I know, the current Zeitgeist is to fear running out of money as we think we will all live until 90 but I don’t share that fear. I fear dying young.

All our grandparents died by the age of 83 and the average age of death for our four parents is age 70. This gave me most of the motivation, but the miserable feelings I had at my job were the main motivation.

RETIREMENT LIFE

How was the adjustment, especially the first few months after retirement?

I have become a stay-at-home dad by cooking dinner, grocery shopping, and making lunch and breakfast for my wife and our remaining school-age child. I used to eat lunch out with my one retired friend each week, but life has changed unexpectedly.

My main retired pal was diagnosed with a neurological ailment, so his wife left him, and I helped him sell his house and move out of the country. I think the pandemic made some people go kind of crazy.

I have found new ways to be busy and have fun but seeing my main pal and one other good friend deal with divorce late in life has been sobering.

How is retirement life now? What do you like about it and what do you dislike?

I love my freedom. I have freedom to help friends, elderly neighbors, widows, and be what I see as a “ninja-helper” I get to go in quickly, make a substantial improvement for those in need but then return home with my freedom and little drama.

Volunteering is better than working for pay, as it takes away some of the expectations.

I have a lot more time to volunteer but we used to be very generous with our charitable giving and early retirement has limited our financial giving. We still tithe at our local church, but I don’t feel free to write generous checks to all the charities we used to support.

What do you do with your time? What does an average day look like?

I ride my bicycle three times per week (30-40 miles) and do a whole-body workout 2 times per week. When I was younger, I used to run a lot, and this helped me deal with stress and I believe kept me from falling into depression.

Now I use working out and being outside in the sunshine as my mental and physical therapy.

What are the major activities that fill up your time in retirement? Are there any new ones you’re planning to try?

I continue to coach cross country running at my daughter’s school and here’s a brief list of some of what my bigger activities during the first three years in retirement:

2022: I built a basement workout room, took up road biking, and I cared for my elderly Aunt who started living with us during the pandemic. She recovered from serious cancer surgery and now lives in a nearby apartment.

I built a screened porch for my sister in Virginia and started serving on the board of directors for a non-profit. My wife and I visited the island of St John, USVI.

2023: I started serving as the chairman on the school building committee at my youngest daughters’ school. We bought land and we want to build a new school campus soon.

My wife and I went to Athens Greece for a week and ventured out to Corinth and Delphi and then went on a family Caribbean cruise. I serve as HOA President.

2024: In January, I spent 3 weeks in Israel volunteering with the IDF (in response to the Oct 2023 attack.) The low spot on that trip was wasting a whole day in London waiting for my connecting flight to Tel Aviv. The high point was seeing all the people be so happy that I and others came to show our support and love for the people of Israel.

My wife and I spent a glorious week in the NC mountains in July and we joined a new church near our home.

In March, we went on another family cruise to the Southern Caribbean (Belize and Honduras) and in October, my wife and I did a 2-week cruise around Italy.

It was the longest trip we’ve ever taken and the longest time away from the three kids.

What is your social life like?

We have a weekly life group through our church that we meet with, I try to do things with all three of my children who will leave the nest sooner than later.

I try to eat lunch out with a different friend 1-2 times per month.

Looking back, what would you have done differently?

I get this nagging feeling that I should’ve set up a few real estate syndications to create about 5 years of passive income.

Worked one more year with a plan to save all the cash earned for a bigger bucket one for post-retirement.

What are your future plans?

I’m planning a bike trip from Washington DC to Pittsburgh, PA for April 2025 and we go on a cruise to Aruba, Bonaire and Curacao in March 2025.

A long-term dream is to spend 2 winter months on an island in the Caribbean so we might try that to celebrate my 60th birthday. Dare to dream!!

RETIREMENT FINANCES

How has your financial plan performed compared to what you had estimated before retirement?

I originally assumed we would spend about $100k per year in expenses (excluding taxes and investment activities). We spent less in 2022, more in 2023 and way more in 2024 (see table in next question).

We’ve seen wild swings in our net worth (from early 2021 to late 2024). As of November 2024, our net worth is back up to about $4.2M. It had crashed down to about $3.6M in late 2022 which felt terrible as we have always worried about the dreaded “SORR” I will admit that it was very nerve-wracking to see the stock market drop so much in 2022, just months after my retirement.

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?

The below table summarizes our spending for 4 adults and one teen over the last two years. We get rent payments from our two young adults of $500/mo. each.

Ideally, they would be done with university and out of the house soon, but both are moving slow for various reasons.

How are you handling Social Security, required minimum distributions, tax issues and the like?

Might claim at age 63 as we have a daughter who will be age 16 and she will earn a small benefit for two years.

Still doing the math but it looks like it might be a wash to claim early versus delaying until age 67 for the larger check.

Did you return to paid work? Why or why not?

I feel like I’m too busy to take on a job with time commitments.

But given our high spending rate, I do worry we could run out of money later in life.

Did you find it hard going from being a saver to a spender?

No, we are spending like crazy which is not very good.

Our subsidized health insurance premiums started at $675 per month, then went up to $750 (going to $850 in 2025) plus all the co-pays etc.

Looking back, what do you wish you knew in advance?

I tell others I know who are getting ready to retire that they need to know what they will fill their days with, be it hobbies, charity work or PT employment/consulting.

What advice do you have for those wanting to retire?

Save more cash for the first few years and create income streams from rentals, RE syndications, or CDs and bond ladders.