Retirement Interview 57

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.

Today’s interview is going to be a bit different from my standard question and answer interview. This one is a post from the Millionaire Money Mentors forums where one of our mentors shared his one year retirement update this past January.

He was in the “FIRE Class of 2024” (we have a class for almost every year as forum members work towards financial independence and retiring early) and shared this update with us all. I think it’s a great story of a successful retirement and thus I wanted to share it with you (and he gave me permission to).

Hope you enjoy it…

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Retirement Update: Year One

Well, it’s been an entire year of retirement, so it’s time for the Year One Update from your Class President!

Overall Grade: A-

On the whole, I am really happy with how my first year of retirement went. I’m a big planner and almost everything went according to plan. So, I’m giving myself an A- for the year.

Did I get the retirement decision timing right? Grade: A

The single biggest retirement decision that we all face is when to retire: too early and you may run out of money; too late and you’ll run out of time. Finding the sweet spot between these opposing forces is a challenge, but I think I got it just right.

According to my “Early Retirement.xls” (Don’t laugh, I know that we all have one… ), I started scheming ways to retire early starting back in 2018 at age 47. Making it happen that early would have required some crazy compromises like (gasp!) working part-time. I might have been able to make it happen that early, but the risks would have been high.

When I got to April of 2023, my assets had grown to the point where my withdrawal rate was just 4.2% (not including Social Security or the eventual elimination of my mortgage). As 25% of my budget was travel, I was confident that I could adjust my budget to account for any issue that arose.

I confirmed this using New Retirement (Boldin), which had me at a 95% success rate under normal market conditions. With this confirmation, I made the decision to retire at the end of that year to capture one final round of bonuses and stock payouts (40% of my annual comp is granted on 12/31 each year).

If I had succumbed to the dreaded One More Year Syndrome and worked all of this year instead of drinking fancy drinks on a beach in Bali, adding another year’s worth of earnings and bonuses would have had zero impact on my financial ability to retire (even if the market had been flat and not gained 28%). At the cost of not being able to do what I did this year, working another year would have definitely been a mistake.

On the other hand, if I had retired one year earlier at the end of 2022: From a financial point of view, I likely still would have been fine as my chance of success would have been over 90%.

However, from a family perspective, it wouldn’t have made much sense. My son was a senior in high school, so I couldn’t just leave for weeks or months at a time, and if I’m going to be sitting around the house anyway, I might as well have gotten paid!

I think I got the timing right from a mental perspective, as well. Prior to April of 2023, I really enjoyed my job.

I had full autonomy over what I did, had been working mostly from home since my divorce six years prior, and was paid well. I don’t think I could have crafted a better scenario.

However, in 2023, the return-to-office mandate came down (even for those of us who had worked remotely prior to the pandemic). As it turns out, commuting 4 hours a day is a sure-fire way to encourage an early retirement! 

To ensure that I was making the right decision, one strategy I used to ease into retirement was the use of a 3-month personal leave of absence. This gave me a chance to try out retirement with the option to go back to work if I wanted. Needless to say, after three months in New Zealand, I had zero desire to go back into the office!

In the end, my decision to retire wasn’t really a decision at all. It was a painfully obvious observation that there was really only one correct thing to do and I took the leap.

Also, one small hack for those looking to retire at the end of a year: work just a little bit in January. I received enough earned income in January to make a Roth IRA contribution and get rid of the last $0 on my 35-year earnings calculation for Social Security. Neither of these really moved the needle, but my internal optimizer rejoiced at this little win.

Health (AKA “The Year Without Ice Cream”): Grade B+

One of my primary motivations to retire at 52 was to get back on top of my health. With the return-to-office mandate from my company, my step count quickly dwindled to the hundreds/day during the week, I put on a fair bit of weight, and my physician stated that I was close to needing blood pressure medicine. 

To combat these, I took the classic 2-pronged approach of increased exercise and decreased caloric intake to start the journey towards better health.

On the exercise front, my goal for this year was to average 15,000 steps/day. Just before leaving for New Zealand, I pulled a muscle in my back and couldn’t walk without pain.

This kept my step count down while I was there, but it quickly rebounded once I got back and I ended the year an average of 12.5k steps/day. This is so much better than the 7k steps I had in 2023. While I didn’t make my overall goal, I am now routinely getting in 7 miles / day and plan to continue that this year.

Since you can’t outrun a bad diet, I also constrained my caloric intake by no longer eating lunch and, except for one small gelato (which isn’t real ice cream anyway… ) shared with a fellow MMMer in August, I went the year without eating any ice cream.

Now, this might not sound like a big change, but to say that I was an ice cream fanatic is a complete understatement. I was known by my kids’ friends for having the best home selection in town and they could always try something new when they came over.

My goal for the year was to drop a pound a week for 52 weeks. I was mostly on track through the first half of the year, but then I hit a wall when I spent the fall in Italy. Not only did I not lose a pound a week, I put on several pounds while I was there. But, oh, the food was soooo good! 

After returning home, I was able to take off those newly added pounds, but I’m only back to where I was before going.

When I saw my doctor in December, I was down 30 pounds, and my blood pressure had mostly returned to normal. My goal for next year is to lose the remaining 22 pounds – though I am going to Oktoberfest in Munich in the fall…

Finances: Grade A

When I made the decision to retire in April of 2023, my net worth was $1.85m. With an annual spend of $78k, my withdrawal rate was 4.2%. I was fine with this as this included $20k of discretionary travel, my $22k/year mortgage will eventually be paid off, and Social Security will add another $36k.

Since that time, my net worth has grown to $2.4m (despite pulling out a year’s worth of expenses) and my personal inflation rate was 2.5% to grow my annual spend to $80k.

This puts my current withdrawal rate down to 3.3%. In theory, I could increase my spend up to $96k to get it back to 4%, but I don’t know what else I would spend the money on. I’m already traveling 5-6 months / year and I don’t really want anything else. The only possible additional spending I might do is to help my kids with down payments, but that is probably a couple of years off.

Personal Growth: Grade B+

Beyond sipping cocktails for a few weeks on a beach in Bali, I wanted to dedicate some of my newfound free time this year towards personal growth activities.

I’ve always been an opera fan but was never able to see more than a couple a year. With hundreds of operas in the repertoire, I thought that I would never see them all. As I mentioned earlier this year I decided to build my own opera class and endeavored to see 176 operas this year.

Well, as it turns out, you can see too much opera… 

I made it about 50% through my list, and then my enthusiasm burned out. My plan is to pick it back up next summer and then finish the list – plus I’m going to see some opera in Australia this winter and in Berlin next fall.

On a more positive note, I did finish the 14-book Wheel of Time series. This massive fantasy series took most of the year, but I made it to the end. I’m not sure if I would recommend it (the middle set of books are rather slow-paced and are lovingly referred to as “The Slog”), but I’ve been wanting to read it for a long time and I’m happy to be able to cross it off my list.

Travel: Grade A+

I’ve always enjoyed travel, and now that my calendar is wide open, I’m taking advantage of this freedom.

This year, I spent nearly 6 months away from home. With trips to New Zealand, Iceland, Florida, Finger Lakes of NY, Seattle, Bali, Hong Kong, Italy, and Slovenia, it was everything I was hoping it would be.

Though this pace was somewhat aggressive, I’d rather err on the side of doing a little too much now than drag it out over a number of years. As my ability to travel could be cut short through any number of issues (e.g. health, family, pandemics), I am glad that I am front-loading all of my far-flung travel at the beginning of my retirement.

Outlook: Year Two

Even with the bar set so high from year one, my second year of retirement is shaping up to be as good or even better!

Like last year, I’m planning on being on the road for nearly 6 months this year. I’m going to Australia (avoiding the cold), Japan (cherry blossoms), Florida (MMM25), Vietnam (retirement traveler meetup), Ireland (to see some friends), Germany (Oktoberfest and opera), and the UK (fall photography).

As for my reading list, a few sci-fi series are in my queue: Dune, Foundation, and The 3-Body Problem.

I’m also going to continue to work on my photography. I recently broke down and upgraded my iPhone X to a 16 Pro. While I don’t think it can completely replace my full-frame DSLR, it’s pretty close and I’m curious to see how far I can push it.

That’s it for 2024. I’m currently sitting in the Delta Lounge sipping champagne, awaiting my flight to LAX on my way to Brisbane.

I hope that everyone else in the Class of 2024 had a great year (I look forward to reading your year one reports) and wish you all a great second year of retirement!