Retirement Interview 6

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.

My questions are in bold italics and his 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 59 and my wife is 57.

We’ve been married for 33 wonderful years.

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

We have 2 kids.

Our son is 28 and our daughter is 24.

Both have good jobs and are living independently (without college debt!).

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

We currently live in SW Florida where we moved right after we retired.

We moved from New England to get away from high taxes and the cold, snowy climate.

Is there anything else we should know about you?

We participated in the ESI millionaire series about a year ago. We were interview #55.

We were retired about 9 months at that point.

RETIREMENT OVERVIEW

How do you define retirement?

I believe that retirement in its purest sense is the complete absence of work for pay. Although I understand and accept that the definition is a little blurry these days.

I see and hear about folks becoming financially Independent and leaving their main career to do things more meaningful or rewarding. I suppose retirement could be defined as not needing to work or not working for someone else.

How long have you been retired?

We’ve been retired for almost 2 years.

And to sum up the theme of this interview in advance…we have ZERO regrets!

Is your spouse also retired?

Yes, my wife retired 3 months after me.

What was your career and income before retirement?

I worked for a consumer products company in a number of roles over 27 years.

I went from being an hourly paid individual contributor, to Manager of that department, to Project Management, to Director of Data Reporting and Analysis in a completely different area. I created a vision and a team in the absence of a group to do it and showed how we could add value.

I was given authority to hire a team of specialists that changed the way the company made decisions…all the way to the top.

My wife was a teacher for 30 years. Regardless what I did, or how successful I may have been, she was the one who made a real and positive difference in the lives of children.

My impact was fleeting, hers will be felt for a generation or more.

Our salaries at retirement were about $220k/year. Mine $160k, wife $60k.

Why did you retire?

Our retirements were completely voluntary and eagerly anticipated.

That doesn’t mean it was easy to walk away from almost a quarter million dollars’ worth of salary!

On the contrary, it was one of the most emotionally difficult things we’ve ever done.

We didn’t hate our jobs, but we didn’t live for them either. We both took them very seriously but agreed that they were merely a means to an end.

Our days, even after our kids went out on their own, were filled with brutally long commutes, long days, and a good amount of stress.

We agreed that getting away from that routine would help us lead healthier, happier and more fulfilling lives.

Once we felt we were financially independent and could support ourselves through 30+ years of retirement, we made the difficult choice to end our careers and start a new chapter in our lives.

PREPARATION FOR RETIREMENT

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

I remember reading Work Less, Live More by Bob Clyatt back around 2006.

That was my first glimpse into what early retirement might look like and instantly I was hooked.

At that point we started getting more intentional about getting out of the workforce even though we were already saving and investing significantly.

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

Our plan was simple:

• Plow as much money into my 401K as allowed, and keep it aggressively invested while we still had time to ride out any downdrafts.
• Started to track our expenses more closely to get a handle on what we might need in retirement.
• Refinanced our home from 30 years to 15 years when rates bottomed.
• Started looking for and researching places where we might move and downsize.

What did your pre-retirement financials look like?

When we retired in spring 2017 our financials looked like this:

Net worth $1.650M

• $150K in home equity (FL)
• $1.21M Retirement Accounts (401K, Roth)
• $250K Cash, Emergency Fund, etc. (primarily from home sale in MA)
• $40K Cars (debt-free)

What was your overall financial plan for retirement?

We bought our Florida home 3 years before we retired and were able to rent it during high season and the shoulder months. That allowed us to pay for roughly 60% of the carrying costs. We used the home for about 6-7 weeks during the year while still working which accomplished three goals:

It was like going on vacation for free…but not really. 😉

It allowed us to experience the city, culture, neighbors, climate etc. before actually making the move. This is a hugely important factor in our opinion. Just because you vacationed somewhere does not mean it’s a great place to retire. We did almost 10 years of research and “test vacations” before we found the place we now call home.

We got a very good handle on the cost of living here. We knew in advance how much the insurance, utilities, taxes, mortgage, etc. would cost well before we retired.

Knowing all of that allowed us to create a tight budget to determine what it would cost to live.

I can’t overstate this enough. I read a lot about retirement and I keep seeing people ask what percentage of their current income it will take to retire.

That is a completely backward and useless way to plan!

Anyone seriously considering retirement MUST create a retirement budget of anticipated spending and then compare that to realistic and conservative income streams in retirement.

We’re lucky to have pensions. Those pensions take care of roughly 45% of our normal budget (not counting capital expenses like cars, home renovations etc.)

In addition, we have a health care plan courtesy of my wife’s previous employer that will cover us for a minimal cost until we reach 65 and go on Medicare.

Simply put, those two things (pensions and very low-cost health care) are what enabled us to retire when we did.

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

As I mentioned above, we downsized which gave us around $250k to use until we get to 59.5.

We also moved to a place where taxes are lower and the climate is better and healthier.

We also switched the allocations in our 401k to more conservative investments.

Who helped you develop this plan?

We created and executed this plan on our own with the help of a lot of online research, books, and blogs and a retirement calculator that I highly recommend.

Among the books and blogs I read and continue to be my favorites are:

• The Simple Path to Wealth (Book)
• Can I Retire Yet? (Book)
• ESI Money (of course!) (Blog)
• Budgets Are Sexy (Blog)
• Can I Retire Yet? (Blog)

The retirement calculator we use/used is called Pralana Gold.

I’ve looked at and tried numerous online calculators, and in my opinion, no others even come close…especially if you’re detail-oriented and want the best estimate of where you’ll be and what you need to get there.

At the very least, gathering the information to do this properly really makes you more aware of where you stand.

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

I spoke with a benefits representative about 9 months prior to my planned retirement without revealing my exact intentions. I told her I was reviewing my situation with a financial advisor. However, I’m pretty sure she knew what I was contemplating and it was going to be soon.

I made sure that the benefits I was assuming would be there actually were, and confirmed the amounts and logistics for when I decided to leave.

I learned some valuable tidbits. For instance, if I stayed until April, I would not only be eligible for my bonus, but would also get paid for all my unused vacation time for that year. With 5 weeks of vacation time, that added up to a nice sum.

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

Without question this was and still is, one of the scariest decisions I’ve ever made.

No matter how prepared you think you are, or how much calculating you’ve done, to say goodbye to a good-paying job, that comprised the lion’s share of your adult life is not for the faint of heart!

You can button up the financial side fairly well, especially if you have a cushion built in beyond your planned spending, and don’t need rely too much on the markets.

Our financial concerns, however, came in second to concerns about leaving our jobs, moving from New England to Florida, leaving our friends, dealing with being together 24/7, and whether we would find fulfillment, happiness, and contentment on our new path.

I can happily and truthfully say that those concerns are no longer in play.

We’ve made many new friends. It turns out that the area where we moved is filled with folks in a similar situation; those looking for new friends and acquaintances and have time on their hands to do a multitude of fun activities.

We love our newly adopted home and although we spend a good deal of time together, we find ways to do our own thing enough to create some separation.

How did you handle deciding on and paying for healthcare?

We are extremely lucky to have health coverage through my wife’s previous employer.

As part of a clause in her original teaching contract, they will continue to contribute to our health care in the same amount as when she was working, until she can claim Medicare.

Our health insurance currently costs about $300 per month.

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

We started mentioning it to our kids and parents approximately 2-3 years in advance.

We told our friends later…maybe a year out.

All were surprised…and the common question from all of them was “how are you going to swing that?”

But as you know, ESI, few if any wanted to engage in the details of how they could do it too.

Announcing to coworkers was truly surreal. I suppose because I was seen as a top-performer and successful, most thought I was a “lifer”.

They initially and mistakenly asked why…“was there some personal reason? (inferred illness)”, “did someone ask me to leave? (just plain insulting)”, and “are you taking another job?”

When I told them “no” to all of those questions and that I was retiring early, they were floored.

The shock and surprise was kind of amusing.

Then came the same question “how are you able to do that financially?”

Even though I offered to sit with anyone interested and go over some of the things we did to get there only two people sat with me.

One of them seemed like she just might give it a try, the other simply said “there’s no way I could do that” “I’m afraid I’ll be working until I’m very old”…all I can say is UGH.

THE ACT OF RETIRING

How did you ultimately retire?

I must admit, once I achieved financial independence (and could see the retirement light at the end of the tunnel), it became more difficult and yet easier to do my job. I know that sounds paradoxical so I’ll explain.

My job became harder to endure because I was suddenly less interested in striving for more…the next promo, the next project, the next raise, etc.

As a result, getting up in the morning, commuting through horrible conditions and aggravating traffic seemed pointless. I kept telling myself… “why am I doing this and making myself miserable when I don’t have to?”

What made it somewhat easier was less stress related to “checking all the boxes”. No more worrying about whether a downsizing was coming, and honestly the freedom to say what I felt to anyone and everyone (within reason!).

The fear of speaking my mind faded away and in its place was “here’s what I think and why” without the fear of repercussions in terms of promotion, reputation, etc.

From a logistical perspective, I made sure my boss knew about my plans at least a year in advance. Luckily, we have been friends and peers for over 20 years, so I trusted him and didn’t want to see him blindsided.

To his credit, he appreciated the gesture and made no changes in my level of responsibility or any other negative actions that some might take.

In terms of my team, I really struggled.

They were a younger group made up of creative and intelligent professionals. For better or worse, they looked at me as not only their boss but also a mentor and someone who’s example they could emulate.

I didn’t want to tell them too late but also didn’t want to take the wind out of their sails too soon.

Ultimately, I made the decision to tell them (confidentially) two months in advance.

It would be an understatement to say they were surprised.

They took it hard and to some degree I think they felt let down. That gathering was one of the most difficult in my professional life.

We all cried together…it wouldn’t be the last time for me. The term bittersweet would apply for much of the rest of my time there.

Luckily their professionalism prevailed and they performed well right to the day I left the office for the last time.

What went well?

Fortunately, everything went as planned.

The key to that sentence is “planned”.

One of my favorite quotes, which I live every day, is: “A goal without a plan is just a wish.”

What didn’t go so well?

Leaving my career and all the people I had worked with (some for over 2 decades) was difficult emotionally.

I was “all-in” at work and worked to build strong and trusting relationships. I put all my passion and effort into every single day.

Walking away from that, even though I had been preparing for years, was tough.

I have no regrets however. The life I live and enjoy now is, without question, the best it’s ever been.

How did you ultimately find the courage to do it?

Our finances looked good by every measure, prediction and calculation I could come up with.

But more importantly my wife and I spoke constantly throughout the planning stages making sure that we were both committed and ready to execute our plan.

I was worried that she would get cold feet as the day drew closer. She was very committed to her job and had been at the same school for 30 years.

We both craved a life beyond work, however, and we both accomplished all we set out to do professionally.

Escaping extremely long commutes (mine 140 miles; hers 100 mile round trip) and the everyday stress of work was more than enough motivation to take this step.

When you talk about and plan something for years, and the plan holds together, it becomes more a matter of when than why.

I also believe that we drew strength from each other as we have over the course of our 33 years of marriage. We’ve always been strengthened by the “we’re in this together” mantra.

RETIREMENT LIFE

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

We believe one of the keys to a successful transition from work to retirement is staying busy. To that end, we had our hands more than full!

While waiting for my wife to finish school, I had already begun overseeing a “full gut” renovation of our Florida home in May.

I traveled back and forth as necessary to spend time together and to manage the sale of our home in New England.

We chose to leave for Florida the day after my wife’s last day of school.

We moved ourselves (which I would not do again!).

We finally finished the major portion of the renovation around September of 2017. It took another 9 months to do all the finish and trim work myself.

I believe that anyone who just quits work cold turkey, and then just sits around wondering what’s next, is destined to fail or at least regret the decision to leave their career. I was so focused on our move and renovation that kept me engaged and removed the opportunity to consider “oh my, what have I done?!”

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

As they say…Life is Good. And I mean that in total sincerity.

We have discovered so many more things to like than dislike, so I’ll also put some “adjustments” in there.

And the word “discovered” is important. You simply can’t anticipate exactly what retirement will be like until you experience it.

If you’re prepared to be courageous, adventurous, spontaneous, and flexible, it will work. Nothing ever goes exactly as planned.

Likes:

• Few, if any, pressing commitments.
• Very little stress
• We pretty much do whatever we want, when we want.
• We enjoy taking more time to do things that were rushed when we were working.
• Leisurely breakfast (in fact, all meals are more of an occasion than a rushed necessity)
• Exercise and working to stay fit
• Time to be social (more on this very important aspect later)
• Traffic? Who cares? We’ll get there eventually!
• Few if any money concerns.

Dislikes/Adjustments:

• It is still a bit of a struggle to create a routine. On one hand, it’s great not to have a forced routine driven by work, on the other it is a bit disorienting to be responsible for what you do and when to do it when most of the time of each day is completely your own. This is an area that I’m somewhat conflicted. I crave some sort of routine, but I also shun the idea of being scheduled with any regularity. This one remains a work in progress ?
• Being together with your spouse 24/7 is a double-edged sword. While we enjoy each other’s company, and have very similar interests, we also found the need to create some “me time” apart. So we go out with friends or even just go to another part of the house (for me the garage, for her the living room reading).
• I’m somewhat introverted and although I like to spend some time with the numerous friends we’ve made here, believe it or not, that is probably my prime source of stress now. Finding a balance with an overflowing social calendar is also a work in progress.

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

Even though we’re coming up on 2 years, I can’t say we have a typical or average day just yet.

We typically get up around 7:00 and to bed around 11:00.

I do some sort of exercise each day (run/walk, bike, or pickleball) but I plan to formalize that a bit more and begin to include some strength training.

My wife works out at the YMCA about 4 times a week because she likes a more social workout experience.

We eat dinner out about twice a week.

The rest of our home time is spent working around the house or running errands or taking part in some of our volunteer activities.

I still have a long list of things we want to do to our home. None of the things we have left must be done, they are more just improvements, so I’m taking them on a leisurely pace.

Currently, we intersperse house projects and regular chores (lawn, pool, cleaning, etc.) with fun activities.

Sometimes those involve visitors (because, well, everyone wants to come to FL in the winter!).

Others include biking, walking, pickleball, boating, kayaking and just sightseeing around our newly adopted state.

We’ve also become more active in our local Civic Association. I got “volunteered” to be on the board of a club within the association and my wife is active on a club that does charity work. These things take up maybe 10-15 hours a month.

Our social life has gone from zero to almost overwhelming since we moved here. There are so many people that have the time and want to do things with others like us, we actually have to scale back sometimes because it can get to be too much.

Looking back, what would you have done differently?

We would not have been in such a rush to move. Our daughter had just graduated college and she was a little freaked out about us just picking up and leaving. It’s important to note that we made sure she was all set and she was welcome to come with us, but in retrospect we should have let that stretch out a bit longer.

Among my flaws is impatience. I work on it, but sometimes it wins. I want things done now and if they aren’t, I can get frustrated. Retirement has been a good way to practice that and I think I’ve become more patient because I don’t have work and raising kids types of deadlines anymore.

It was hard to say for sure at the time how our budget would hold up, but I would have bought a slightly bigger and newer house here in FL. I would love to have a 3-car garage to have room for a better workshop. But we’re fine here, and unlikely to take that expensive step.

Was there any emotional impact from leaving the workforce?

Initially, when I left work for the last time, I was emotional.

When you do something that long and invest a good portion of your life in working hard and nurturing a career, it’s hard not to reminisce and consider the things you’ve accomplished, and the people you’ve met.

However, that was temporary. I have no desire whatsoever to go back there nor do I have second thoughts.

My wife feels the same way. She does miss some of the folks she taught with, but 30 years was more than enough in that career.

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

As mentioned a few times above…we have a more active social life than we would ever have anticipated (we had almost none when we were working). It takes energy and commitment to “get out there” and meet people, but it has been very rewarding and fun to spend time with our new circle of friends.

Financially, we have raised our spending budget from around $80k per year to about $90k. That hasn’t caused any issues, but it was a bit of a surprise that it happened fairly quickly. We’ve done it intentionally more because we can, than by accident.

What are your future plans?

Damn! these questions are hard! 🙂

To be honest, we’re not really sure! We’ve certainly talked a lot about possibilities:

My wife may decide to find a part-time job in retail or something like that, but she/we are in no rush with that. Frankly, I’ll be surprised if this happens.

Once my house projects are pretty much done, I may offer my services as a handyman or build things in my small workshop (currently building an Adirondack settee with a wood-working friend).

We want to travel more, but in so many ways we already feel like we’re on a permanent vacation. As a result, we don’t feel the necessity to “get away” or to find time to recharge like we did when working. We are in the process of budgeting some trips to Europe as well as in the US to areas we’ve never been, but we’re taking it slowly.

RETIREMENT FINANCES

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

So far, so good!

Although under the topic of mistakes, I should have rolled my 401k to an IRA by now. I’m paying a little more than I should on fees in my 401k and we would have more options in an IRA.

It hasn’t been a big deal, for the most part, because I haven’t reached 59.5 yet and can’t take disbursements without penalty.

We have a simple investing philosophy. 50/50 equities/bonds. Using index funds to match the total stock market and bond funds.

Our net worth has increased by about $110k since we retired.

Our pensions cover about 45% of our expenses (~$90k/yr) so we need to make up about $50k per year from our investments. We should be able to cover that fairly easily with dividends and interest as well as harvesting some gains each year.

In down market years we plan to reduce or curtail drawdowns from our portfolio (other than dividends and interest) and use our emergency backup funds.

Here’s our current financial picture:

Net worth $1.76M

• $225K in home equity
• $1.290M Retirement Accounts (401K, Roth)
• $100K Cash, Emergency Fund, etc.
• $145K Cars and Boat (debt-free)

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

Since we’re still about 3 & 5 years out respectively from early SS availability and we haven’t made a firm decision.

Our advisor is suggesting we take it as soon as possible because that, along with our pensions, interest and dividends would cover almost our entire budget.

I’m not certain that is the best path but we’ll analyze/consider as we get closer.

I am considering taking yearly disbursements from my tax deferred funds to reduce RMDs (and their tax bite) over the next 10 years. I need to do some more math to determine whether that’s prudent or not.

Federal taxes (estimated) are included in our budgeting. And one of the benefits of living in FL is there are no state or local taxes on income.

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

No, and I can’t imagine ever returning to work as an employee working for someone else.

The freedom we’ve found and enjoyed since retirement is far too precious to give up except under the most extreme of circumstances.

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

YES!

This is one of those things that is easy to think about and plan for, but until you start spending from those savings it’s hard to imagine how difficult that can be.

It’s all psychological, however, and our advisor encourages us to relax and spend carefully but old habits are hard to break!

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

I wish I knew:

• That Roth IRA’s might have been better than putting everything in my 401k earlier in my career.
• That with a little more discipline, knowledge and courage we could have retired even sooner (sound familiar ESI?)
• More in-depth knowledge of investing. I’m working on that now!

What advice do you have for those wanting to retire?

• If you have the financial ability and you’ve done all your due diligence, go for it!
• Expect retirement to be somewhat different than you think, and to that point, think about and consider all the questions asked and answered in this and other retirement interviews.
• Try to rehearse it, if you can, on some future vacation, sabbatical or extended leave.
• It is not all about the money! It is about planning out a fulfilling retirement.
• Work is just that…work. Your time is not your own. Life is too short to have someone telling you what to do every day. Trading your limited time on this earth for money is not the end game.
• We never took our eye off the goal and always understood that work (at least for us), while worthy and fulfilling, was only ever a means to the wonderful end that we’re living now.

Thank you once again, ESI, for the opportunity to tell our story. We can only hope that it helps or possibly inspires others to follow a similar path. I can’t wait to read the others in this series. We still have a lot to learn, and look forward to that each and every day.