Retirement Interview 59

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 September.

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)?

My spouse and I are both 60 years of age, and we have been married for 38 years.

We met when we were both serving in the military.

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

We have one 35-year-old son who is a high-functioning adult; he is married with no children.

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

We now live in a small town in Middle Tennessee, moving here just prior to retiring, a simpler way of life, sometimes too simple…

Is there anything else we should know about you?

My spouse and I both have blue-collar backgrounds.

I think that this grounds us in both our personal and financial decisions.

RETIREMENT OVERVIEW

How do you define retirement?

I define retirement as no longer having to rely on a paycheck to meet my financial needs. It also means that I can pick and choose what I want to do with my time, yes, my time.

When you are working, you are trading time for money, and that is the way it should be. And it is a necessary trade, but unless you just have a passion for what you are getting paid to do, just remember it’s a job, you give them time and they give you money.

How long have you been retired?

I have been retired for just over 18 months.

January 2024 was the magic date.

Is your spouse also retired?

My wife officially “retired” a few years ago and was fully in charge of running the household after that.

She left the working world when the trade of time for money was no longer worth it to her.

What was your career and income before retirement?

I was a mid-level manager at a Fortune 500 large transportation company located in the South. I was there for 35 years, yes, this is a long time to be at one company, but there are thresholds that you cross, and you continue to tell yourself that you should just stay there and avoid the hassle of switching companies/jobs.

I so know that that is not the way to get ahead in your career these days, but it worked out well enough for me. I now advise the younger generations to move around if possible.

It generally pays off in the end, both making them a more rounded person, and it also helps drive salary increases.

My salary prior to retirement was in the $250K range. No side jobs or other sources of income prior to retirement.

Why did you retire? 

Retiring was voluntary. All my friends and co-workers joked that I had been on a “5-year retirement plan” for the last 15 years of my career.

I actually hung around for 3-4 years longer than I had planned. Some of this was due to Covid, and some of it was just timing and the plans we were making for post-working life.

Lots of travel in those last 3-4 years to some incredible places around the world. My main reason for retiring was you never know how much time, how many days you have left.

I worked full-time for over 40 years. What if my time was going to be “up” when I turned 70?

Work for 40-45 years and have 5 in retirement, no thanks. Financially planning for retirement made the decision easy.

PREPARATION FOR RETIREMENT

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

I would say I started seriously thinking about retiring when I turned 50. I knew that I wanted to retire early and not wait until that magic “65” number to happen.

The decision became real after a few meetings with a financial advisor over the next couple of years, who verified my assumptions and agreed that picking a date was all that was left to do.

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

I started seriously tracking spending for 3 years prior to retiring in order to get a realistic view of our monthly/yearly spending. We have never been big spenders and live frugally.

In the early years, that was out of necessity, and in the later years, it was in order to do the things that we looked forward to, travel, putting our son through college, and early retirement.

I also talked to friends who were already retired on what to expect and if they had any regrets; 99% of them told me that they wished that they had retired earlier than they did. Finding a financial advisor was also a big part of the retirement process, priceless in my opinion, as he thought of a lot of things that I had not considered.

This is something that I wish I had done in my 40s not my 50s.

What did your pre-retirement financials look like? 

Pre-retirement financials:

• Assets
  • 401K–$1.43M (converted to IRA after retirement)
  • Home–$450K
  • Other invested assets–$208K
  • Cash–$165K
  • Property–$75K
  • Vehicles—$50K
  • Total–$2,378,000
• Liabilities—None

There are other miscellaneous assets here and there that I do not include; I do include the vehicles, and I know that not everyone does that, but they are assets, depreciating for sure, but they are free and clear.

Cash was high prior to retirement, but we had plans to use this cash after retirement in order to keep taxable income as low as possible (more on that later).

What was your overall financial plan for retirement?

The plan was to keep our spending level to where we was prior to retirement. Our spending prior to retirement was relatively low, as we did not have any debt/liabilities for many years prior to retirement.

We lived comfortably prior to retirement so we were fairly certain that would continue with the same amount of spending after retirement. I broke it down into two buckets.

The basics, which included everything that it takes to maintain a household, etc. such as utilities, food, insurance, basic shopping, etc. The other bucket included the extras, such as travel, and those things that are what we considered above and beyond the basics.

The thought process here was if the market took a dive, we could stick to the basics and still be ok; a good market, and we are good to do those extra things as we see fit. As I stated previously, we purposely accumulated a large amount of cash prior to retirement that we would tap into as a supplement to my pension to bring us up to the level we needed to maintain our basic spending level.

The plan was to execute this plan until we draw SSI at 62; at that point, we would not need the cash portion of the overall income, and that would then be invested in short-term investments.

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

There were not a lot of financial moves prior to retirement. Most of those moves came after retirement.

Moving and converting the 401k to an IRA, there were also some 401A assets within the retirement account that were converted to a Roth during that same time. We did sell a home and purchased a home prior to retiring, this was to move from a large metropolitan area to a smaller town in preparation for fully retiring.

I commuted for approximately 4 months prior to retiring. No downsizing, the current house is almost the exact same size as the previous one.

Who helped you develop this plan?

We did have the luxury of a good financial planner who helped us and provided advice along the way. I read a lot of articles on finances in retirement, but they are all over the place in their opinion on the right amount that you need to retire.

In the end, it is a personal decision, and if you don’t know if you have enough to retire, you probably don’t. That is just my opinion, but if there are still tough questions to be answered, and the financial piece is the toughest, then pause and seek out professional help

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

I was very open and forthcoming with my employer on my plans. Even two years in advance, they knew that I was not long-term, and really, they were ok with that.

They knew that I would continue to perform at the same level, and it gave them the time to plan for and find my replacement. I did not do a lot of networking outside the company, etc. prior to retiring because I did not anticipate working in retirement.

I was lucky to have a really good friend/ally in HR who help guide me through the process. I know that many say that HR is not your friend, etc., but this was different.

I know she had my best interests in mind as we went through the process. It made the process so much easier.

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

I really did not have many financial concerns other than market volatility, but we had also planned for that. The concerns were more surrounding the non-financials: how will we fill our time, how will we handle healthcare, how to become a spender instead of a saver, etc.

Moving the household from one state to another was also a concern, as there is a lot tied up in that both financially and emotionally.

How did you handle deciding on and paying for healthcare?

We had the opportunity to purchase healthcare through my employer after retirement; however, the cost was prohibitive and cost more than the open market. Once retired, we moved to the affordable healthcare open market.

This is largely based on your projected income. I had a significant amount of my 2023 income (bonus, etc.) paid out in 2024, and this drove our 2024 income to the high side so supplements were low for the first year, making the premiums a bit higher than we thought for that year.

2025 is a different story with our taxable income is much lower, mostly on purpose, for this reason. We will follow this course as long as it is competitive.

Who knows if this option will be viable going forward, we will adjust…

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

I do not have a large family outside of my direct family, so there was not a big announcement; everybody knew that I was going to pull the plug, it was just a question of when.

Some friends were surprised that I finally set the date, but outside of that, it was pretty much a non-event.

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

This is where I was sort of winging it. I do have hobbies, but not many that take up large chunks of time every day.

I knew there would be time required on the new house, and we knew that we wanted to be able to travel more, spend more time outside, and be closer to our son for those day trip visits. More on that later…

THE ACT OF RETIRING

How did you ultimately retire?

It was very anti-climactic. Since my retirement date was Jan.1, the holidays made November and December a slow time at the office, even to the point where my manager let me work remotely for most of November and all of December.

I did go back to the office for the retirement party, on-site and off-site, and to say my goodbyes to friends and co-workers. There was so much prep work with HR in the preceding 30-60 days that it was literally turning in my laptop and badge, and that was the end of it.

35 years wrapped up in a single day.

What went well?

The process went very well. There were not a lot of decisions to be made, not a ton of options that needed to be considered.

Everyone at the company was very helpful, for the size of the company (over 100k employees), they have the process down and also have a very good support program for retirees.

What didn’t go so well?

All the things that you don’t think about. Your accounts and passwords that you have tied to your work email (I was the old school guy who did not really use a personal email), just abruptly end the day that they kill your work email address.

Your phone. I had a company phone for many, many years; things tied to that phone number that just disappear when they shut that phone off.

Small things like that you seem not to even consider can cause you a lot of stress trying to recover the accounts, set up new passwords, etc. Even now, 18 months later, there are still things that I find that were tied to my work accounts that I have to deal with.

How did you ultimately find the courage to do it?

I actually did the “one more year…” for two years. I think I realized if not now, then when…

My father died at a young age and really did not get to enjoy life outside of work. I did not want to repeat that.

I also had the “encouragement” of my wife to just rip the band-aid off.

RETIREMENT LIFE

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

Tough. Moving to a new area did not help things either.

Your social network and work network erode quickly. I found myself in a new area, new places, new people, etc., and it is true that it is tougher to make new friends the older you get, especially if you retire at a fairly “young” age.

I prefer to tell people that I am unemployed rather than retired, less questions that way.

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

It still feels new and strange. When you work for so long and have those routines day after day, they become the norm, setting a new norm takes time.

I like the freedom to do things on my schedule vs working around my work schedule. We can travel during the week, go on day trips just for the sake of the ride, and not rush things.

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

The good thing about moving right before/during retirement is that there is a lot to do in the new place. We completely renovated the house so that kept me busy for the best part of 8 months.

We do things ourselves and rarely hire work out on home improvements. Once that was done, now it is hobbies, kayaking, hiking, gym, mowing an acre of grass, etc.

I still get up before the sun comes up; that is a habit that I am not sure that I will ever get past. 20 years of getting up at 04:30 is still ingrained in us, but you get to see some spectacular sunrises over the mountains.

There is also the occasional consulting work… More on that below.

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

Right now, it is mostly hobbies and travel. We are still trying to travel both internationally and domestically as much as we can. I have picked up a new hobby, restoring/renovating Mid-Century Modern stereo consoles and other furniture.

I am enjoying that for now. I still homebrew beer, just not as much as I used to. I try and get to the gym 3-4 times a week.

What is your social life like?

My social life took a hit after retiring and moving to a new state.

There is plenty of time to work on that; maybe I will get involved in local government if I can stand the political side of it all.

Looking back, what would you have done differently?

I would have been more active in the early years on the financial side. I waited until my late 40s and early 50s to really start paying attention to it.

Post-tax accounts vs pre-tax accounts, I would have engaged a financial planner much earlier to help me navigate those decisions.

I would not have stayed at the same company for 35 years; I would have taken some of the other outside opportunities and worked more on increasing my salary, vs taking the easy route and staying on the easy path.

Maybe all of that would have made me more secure to pull the plug at 55 as I had always planned.

Was there any emotional impact from leaving the workforce?

I think it was the loss of the work social network more than anything. You have work “friends” who you see all the time at work, and eventually you start to congregate socially as well.

You lose 75% of those people once you leave the company. You have that core group that stays in touch, but for the most part, that evaporates very quickly.

I don’t miss the job, I miss the people.

What surprises (financial or non-financial, good or bad) have you had since retiring and how have you handled them?

Not really a surprise, but that transition from saver to spender is a real issue. When you have struggled and saved for 30-40 years, it is hard to flip that switch.

We tend to talk ourselves out of big-ticket items, RVs, boats, etc. I am not sure when or how we will overcome this, but we also do not want to just pass everything along in our will; we need to find that solution.

What are your future plans?

We have talked about moving again in about 5 years (when we hit 65), our current place is nice, all on one level, near the mountains and really close to the lake but there is about 1 acre of grass to mow and just not a lot of things to do (restaurants, bars, breweries, etc.) to keep us busy and social.

That is about as far into the future as we have discussed. We want to continue to travel as much as we can while we are still active, find new hobbies, and explore new places.

RETIREMENT FINANCES

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

I always set the bar pretty conservatively and use the 4% rule when I look out into the future. There are too many factors that can influence the market one way or the other, so you have to find that happy medium, so I stick to the tried and true.

Last year, our first year of retirement, our realized gain was around 9%, so far this year we are running just a little under 6% return, in that aspect, so far so good. Spending is pretty much on track to our estimates if you remove the home renovation expenses and just look at what I would consider “normal” expenses.

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?

Annual spending average (I projected for the rest of 2025):

• 2024 spending–~$65K
• Food/Dining–$13k
• Utilities/phone/etc.–$6.5k
• Shopping–$6.5k
• Insurance–$6.1k
• Health ins.–$6k
• Travel $10k

2025 spending is on track to be very close to 2024 at around $60-65K and a bit easier to track with no major renovations this year.

Income:

• Pension–$34K year
• Consulting work $20-25k per year ( I try and control/limit this to keep reportable income to a target level)
  As of this writing our net worth is up about 15% since retirement. Not bad so far.

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

We have decided to start Social Security at 62. I know that there are a lot of opinions and formulas associated with this, but I assure you that EVERY situation is different and unique, and you have to make this decision on your own.

In my case, there are pension offsets that helped me make this decision, along with other factors and consultations with my financial advisor. We are not at RMD age yet and are going to start this year with ROTH conversions to minimize tax impacts before we hit RMD, otherwise we may be in for a shock.

Our taxes are pretty simple, and we live in a state that has no state income tax for a reason.

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

I did return to paid work on a part-time/project-based basis. For me, it was just a good transition from 50-60 hours a week to 0 hours a week.

I have a good friend that put this out to me right after retirement, and 90 days later, I found myself in Europe consulting. I enjoy the work and the control I have over how much or how little I decide to work.

Picking and choosing the projects you work on is also a benefit and is much different from the full-time grind. When I hit 62 years old, I may re-evaluate this and either do less or end it all together.

Consulting is a beautiful thing.

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

Extremely. Even when we were still working, big purchases were not our thing, and when others were upgrading cars and houses, buying toys like boats, RVs, etc., we kept our nose to the grindstone and kept our eyes on the target of being debt-free and retiring early.

Now we have the funds to buy those things, but we are still not there yet. We did the renovation to the house ourselves (saving a boatload of money on labor!), the only things that we hired out were those that we just could not do, roof, chimney, countertops, etc.

I think we will get there, but we will also still be thrifty and take a long time to pull the trigger on bigger purchases.

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

How much of a mental piece is associated with retiring, one day you are 40 hours a week and the next nothing, the loss of social networks, reinventing what you do all day, every day.

You eventually start to get into a groove, but it sure takes some time and effort.

What advice do you have for those wanting to retire?

Talk to friends about their experiences, find that good friend that you can have those financial discussions with. Also, not all your friends want to discuss their finances in detail; one or two will share those things with you, though.

When you hit your targets with money, life, family, etc., pull the trigger. This is what you have been working hard and preparing for, and most of all, try and ease into it.

If you have the opportunity to reduce work hours over a period of time, take it until you ultimately wind down to zero, then enjoy.