Retirement Interview 58

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…

GENERAL OVERVIEW

How old are you (and spouse if applicable, plus how long you’ve been married)?

I am 60 and my husband is 65 years old.

We have been married for 38 years. 

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

We have three grown children, ages 29 through 34. Our two daughters are married and we have a new grandchild.

Our oldest daughter lives in California so, unfortunately, we don’t see her as often as we’d like.

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

We live in a suburb of upstate New York. While New York is a beautiful state, it is not very tax-friendly.

We may relocate out of state in a few years, depending on where our adult children and grandchildren reside.

Is there anything else we should know about you?

I grew up in a blue-collar family. My father worked several jobs while we had the benefit of a stay-at-home mother.

We had a lower-middle-class upbringing, but my family was frugal, mostly out of necessity. I had a paper route at age 12 and babysat and did odd jobs to pay for my activities and save for a car.

I worked three jobs to pay for college and graduate school. Fortunately, I was able to continue living with my parents through college. This helped me get a jump start on saving. 

My parents owned and renovated several rental properties. At age 19, while I was still in college, I bought my first duplex in a very nice suburb for $41,000.

I rented out both apartments for the first year and then my husband and I moved into the lower unit one year later when we got married. It was a blessing to have our tenant cover our mortgage and home expenses.

My husband and I were both in graduate school and working on our doctorates when we got married. We lived like poor college students until we began our career jobs.

I have always been a good saver, which has helped us to achieve an early retirement.

RETIREMENT OVERVIEW

How do you define retirement? 

I define retirement as leaving your day-to-day job or career while having the financial independence to live life on your own terms.

I believe that a retired person can continue to work part-time or have a side gig as part of their retirement life.

How long have you been retired?

I retired on September 30, 2022, shortly before my 58th birthday.

I have been retired for nearly three years. 

Is your spouse also retired?

My husband was a Professor and retired at age 60, in May of 2020, in the midst of the pandemic. This was planned and announced 3 years in advance.

It worked out perfectly. I enjoyed having a stay-at-home spouse since he handled all of the grocery shopping and cooking.

He continues to do these things during retirement.

What was your career and income before retirement?

I was a Clinical Psychologist with most of my career spent in private practice. I obtained my Ph.D. in my late 20s and have been working full-time ever since.

While working on my doctorate, I worked full-time as a child and family therapist. My pre-doctoral internship was at the VA hospital.

I did my postdoctoral training as a Pain Psychologist in 1993. From there, I have worked in and consulted for numerous pain clinics, but the majority of my career was spent in private practice.

Unfortunately, my husband’s academic career had forced us to relocate several times. By the time we finally settled down in upstate New York in 2002, I started my third private practice.

Luckily, pain psychology is a rare specialty so my practice was quickly established.

My initial salary as a Ph.D. Psychologist was $35,000 in 1993. My income had increased to approximately $190,000 per year.

For most of my career, I worked approximately 60 hours a week. As I transitioned toward retirement, I reduced my work week to four days (approximately 35 hours per week).

I did this for the final two years of my career. This resulted in a significant improvement in my stress level and the quality of my life.

Why did you retire?

We retired voluntarily, mostly due to the desire to travel. One of the biggest factors for retiring early was the lack of longevity in my family.

My mother passed at age 53, and her mother passed at age 34 (with 4 kids under the age of 8). My father died suddenly three weeks after his 65th birthday.

I believe he did receive his one and only Social Security check. I wanted to enjoy post-work life to the fullest for as long as possible.

PREPARATION FOR RETIREMENT

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

Although we both enjoyed our careers immensely, we were looking forward to retirement in order to travel and experience new destinations. About 10 years prior to our retirement, I began reading a number of financial and retirement blogs and forums, which I found to be very helpful and validating.

Approximately 12 years ago, we purchased a condominium in Costa Rica, with the intent to use for our retirement escape from the cold New York winters. By the time our children graduated from college and we were empty-nesters, we knew that we were financially able to retire.

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

The first steps we took toward retirement were to save at least 45% of our annual income. We also made sure that we were debt-free.

We paid off our house and our retirement property so we had no debt. We have always lived below our means, but have lived a comfortable lifestyle. 

Throughout our careers, we have always maxed out our retirement plans. In retrospect, I wish we had invested less in pre-tax accounts since this may likely result in higher taxes with future Required Minimum Distributions.

What did your pre-retirement financials look like?

Our total net worth on my first day of retirement (October 1, 2022) was $6,934,325. We had no debt.

Assets were broken down as follows:

• After-tax brokerage: $3,212,000
  
• 403b: $1,662,000
  
• SEP: $1,179,000
  
• Roth IRAs: $99,425
  
• CDs/cash/Savings Bonds: $539,000
  
• Cars: $20,000
• House and vacation home: $708,000 (both paid in full)

What was your overall financial plan for retirement? 

While we never followed a budget, I have tracked our annual spending. I tracked the four years prior to retirement to get an estimate of retirement spending.

I knew that once the kids graduated college and launched, we would spend less in that area. We added to our estimates for discretionary travel and increased health insurance.

Our overall plan was to have enough cash available to provide 3 to 5 years of living expenses in the event of a downturn in the market. We plan to continue to do Roth conversions.

Currently, our passive income through dividends and capital gains have exceeded our annual spending. We have not needed to take any money out of our taxable account with the exception of annual gifting to our children.

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

Other than closing my private practice and referring my patients to other psychologists, we didn’t make any other changes.

Who helped you develop this plan?

Our financial plan was mostly self-directed with minor input and validation from our financial advisors through Fidelity and TIAA. We review our plans annually and make any necessary adjustments.

Ten years ago we enlisted the one-time assistance of a fee-only planner for additional confirmation and tax-advantaged planning. 

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

Approximately two years prior to retirement, I stopped accepting new patients. I reduced my workload to four days a week.

I enjoyed having every Wednesday off as it gave me the opportunity to run errands and enjoy a break in the middle of the week. Approximately nine months prior to my retirement, I informed my patients that I would be retiring.

We developed transition plans for each individual. After retirement, a few of my clients continued working with me through my part-time coaching practice.

My husband submitted his retirement transition plan to the university three years prior to his retirement date. He transitioned to a part-time schedule for the final three years while continuing to receive health insurance and other benefits.

We had also made plans in advance to spend our retirement winters in Costa Rica. We had purchased our vacation home down there a decade prior to retiring.

We rented it out while we were not there, so it has been financially self-sustaining.

What were your pre-retirement concerns (financial or non-financial)?

While I was very confident about our financial ability to maintain our current lifestyle in retirement, my biggest concern was what to do with my free time. I have always been a very busy Type A personality who has had great difficulty with downtime.

I was concerned about boredom with too much unstructured time. I spent a great deal of time creating personal goals in regard to hobbies and thoughts of exploring new interests.

Much to my surprise, I have been able to slow down and enjoy the unstructured time with very little boredom.

How did you handle deciding on and paying for healthcare?

My husband’s university provided group health and dental insurance with a small subsidy. He is currently on Medicare.

Fortunately, I am able to stay on the university insurance plan until I reach Medicare age.

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

For years, I told my friends, family, and colleagues that we would be retiring after the kids graduated from college. At first, I think they were surprised that we could afford to retire early.

Afterward, they rolled their eyes knowing that I was a workaholic who enjoyed my career, thinking I would never retire. I think they were actually surprised when I pulled the plug.

Did you have/make any plans for how you’d spend your time in retirement?

We planned to travel more extensively, find new hobbies, and spend more time with our future grandchildren.

We also planned to continue with the restoration of our antique house.

THE ACT OF RETIRING

How did you ultimately retire?

I was a member of the OMY (“One More Year”) Club for several years. Since I enjoyed my work so much, it was difficult for me to end my career.

We were both initially planning to retire in 2020, but then Covid struck. My husband already gave his notice and was therefore obligated to retire at the end of the 2020 academic year.

Due to the ability to engage in telehealth, it was an easy decision to continue, as people were struggling with the emotional impacts of Covid. The ability to work from home was a huge benefit.

I was able to sublet my office which saved a significant amount of money.

My clinical license was due to be renewed on September 30, 2022. New York State added a new requirement of 36 hours of continuing education in order to renew my license.

Furthermore, although I was unable to treat my patients virtually, the state required that both the patient and I be physically present in NY state. This would be impossible for me to snowbird, as I couldn’t leave my patients for 2-3 months.

While I am disappointed and frustrated with the state requirements, it was the push I needed to retire. Fortunately, I can offer similar services in my part-time pain management and life coaching from Costa Rica.

What went well? 

I enjoy the freedom and the lack of time pressure. I have always been a type A, extremely busy, and efficient person.

I find myself to be less rushed, and less agitated while driving or forced to wait in line. Being able to shop or engage in community activities during the workweek has helped this tremendously.

Our son forbids us “old retired people” from shopping on the weekends, as we apparently add to the crowd size and get in working people’s way. 

In addition to being more active with Pickleball, I’ve also made a new set of friends through our local pickleball league.

What didn’t go so well?

I was hoping to lose weight and improve my physical well-being. I exercise regularly but find myself snacking more than I should.

I was also surprised that some of my anticipated hobbies were no longer of interest.

RETIREMENT LIFE

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

The adjustment was easier than I had anticipated. We had a lot of home renovation projects and other tasks that have been waiting to be accomplished.

I had made a list of retirement goals, some of which came to fruition, and others that were no longer of interest. I took an introductory class for pickleball, and like many people, because instantly hooked.

I play 4-5 times per week. This has also led to a new circle of friends, with whom I interact outside of pickleball.

The several hours per week that I engage in coaching has also helped the transition. It allows me to enjoy a few hours of work and extra spending money while still being very helpful.

I will continue to engage in the coaching for as long as it remains fulfilling.

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

Retirement life is amazing! The sense of freedom is enjoyable and far less stressful.

I like the opportunity to explore new interests and accomplish tasks without feeling pressured for time. We have a new grandson, so we are looking forward to spending more time with him and helping my daughter and son-in-law. 

We also enjoy the ability to travel more. The flexibility to travel off-season and spontaneously has been wonderful.

We try to take four vacations a year, with one of them being an 8-10 week winter vacation in Costa Rica. We are making a concerted effort to travel more while we have the strength and endurance to explore and be active.

As our healthspan declines over the next few decades, we will likely do more cruises or spend more leisurely time visiting my daughter in California.

There is not much to dislike about retirement. My main dislike is the decreased motivation that I experience at times without a structured schedule.

While the lack of structure enables more freedom and less stress, it also reduces the urgency of many tasks. As someone who has never struggled with motivation, I now find it difficult at times to self-motivate.

Having the structure of coaching sessions and pickleball has helped. I schedule my responsibilities early in the day prior to those commitments.

Although I have slowed down, I often feel unproductive and have to reassure myself that downtime is acceptable.

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

I wake up around 4:15, read retirement and financial blogs, take care of emails and other administrative tasks. I complete household tasks, run errands, and exercise or play pickleball.

I spend some time reading or watching YouTube. Due to personal privacy, I have never engaged in Facebook or any social media.

I try to avoid the news, reading only enough to stay informed. I do check my finances several times a week, mostly because investing and personal finances are one of my hobbies.

Since I wake up so early, I run out of energy and tend to go to bed early.

What are your future plans?

We plan to continue traveling and hope to spend more time with our new grandson. I will continue to play pickleball 4-5 times/week for as long as I am physically able.

We may downsize and relocate in the future, depending on where our kids relocate.

RETIREMENT FINANCES

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

Much to my surprise, our current net worth is higher today than when we retired. This is with increased spending, gifting, and inflation.

Granted, last year’s stock market was very favorable, but overall we should continue to see continued growth in our net worth.

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, our income is derived from passive income such as dividends and capital gains. This income has exceeded our annual spending.

To date, we have not needed to take any money out of our taxable account except for annual gifting to our children, which began two years ago.

In 2024 our total annual spending was $132,700, including income tax and discretionary spending. We spent $67,000 on living expenses, $37,000 on income taxes, and $28,700 on travel and other discretionary spending.

This does not include the annual gifting that we have been giving to our children. Last year we each gave the maximum per child, which we hope to continue.

We will also contribute to our grandson’s 529 plan.

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

My husband will reach full Social Security retirement age next year, and I plan to take mine at the full retirement age of 67. Since our projected Social Security benefits are nearly identical, it doesn’t make sense to delay my husband‘s filing in order to increase the spousal benefit.

Once we are both receiving SS benefits, 90% of our annual non-discretionary spending will be covered.

We are currently making Roth conversions. We will continue to do so until the required minimum distributions begin.

This may end earlier depending on Social Security income and tax considerations.

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

I currently provide virtual coaching services 5-6 hours per week. I do mostly pain management coaching, but also general life coaching.

I am also including financial and retirement coaching to the mix. As we know, much of the struggle and uncertainty is emotional.

This fulfills my need to help others, and unlike with my psychology license, I can do this from Costa Rica.

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

Honestly, this has been the biggest struggle in retirement. I have to actively work at shifting to an abundance mindset.

Knowing that we will likely never run out of money helps. Gifting to our children while we are alive, and so they can benefit from the money now, helps a lot.

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

Had we known that we would retire with more money than we can comfortably spend, I wish I slowed down and enjoyed better balance in my life. 

There are three things I would have done differently:

First, I would have selected a different investment model in our earlier years. Not knowing any better, we invested in mostly C-share mutual funds, through a financial advisor.

We are still working on shedding the remaining funds, but they have created massive capital gains, so we need to plan accordingly.

Secondly, I wish we had invested less in our retirement accounts since this will likely push us into a higher tax bracket with future Required Minimum Distributions.

Third, and most importantly, I wish I hadn’t worked as much and hard as I did. Although I retired early, I worked too many hours and missed out on some enjoyment and opportunities.

Being self-employed, it was hard not to see every hour as potential income. I also felt the pressure to accommodate as many referred patients as possible, knowing that I was in a highly specialized field, with only two other providers in my area.

What advice do you have for those wanting to retire?

My advice is to eliminate all debt, including mortgages, if possible. Track your expenditures for a few years prior to retirement.

If you can, reduce to part-time for the final year of employment, as it makes the transition to retirement easier.

Once you have saved enough, consider your priorities. Projections may show that you may have more than you will ever need.

If you are financially independent, retire if you wish. If you love your career, then find a way to continue working, but on your terms (Full-time, part-time, consult, etc.)

Keep in mind that your nest egg may continue to grow after retirement.

ENJOY THE JOURNEY! Don’t focus only on the end goal.

Find balance, take vacations, and make memories along the way.