Retirement Interview 4

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.

There was no way to include every possible question in an interview like this, so if you’re wondering about something that’s not addressed, please leave your question in the comments below so the interviewee can address it.

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

Let’s get started…


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

Me: 57

Wife: 61

Blissfully happily married 30 years.

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

No children.

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

We live in a suburb of a major Midwest city.

We also have a second home, just built, outside a coastal city in the Southwest (more on that later).

Is there anything else we should know about you?

As my story unfolds, you’ll see that I’ve done several things that ‘go against the grain’ or defy conventional wisdom.

That said, we’re both comfortable (or lucky) that these decisions have been positive and we feel good about our situation and the route we’ve taken. I’ll flag these items.

From reading just about every Millionaire Interview, we’re definitely not doing what many have done but we’re in a good place.


How do you define retirement?

I know retirement is a bit like a Rorschach:

  • No longer ‘corporate’ and working part-time, either at a passion or a side gig?
  • Going from full-time to consulting?
  • Doing a complete career change after corporate life?
  • Not working entirely?

For me, I think it’s a somewhat ‘fluid’ definition.

Currently, I don’t work at all so I consider myself retired. That said, if I discovered a ‘passion’ (for example, working with food, writing etc…), I think I’d still consider myself retired. I’d no longer be working in the profession where I’d spent my entire full-time working life.

How long have you been retired?

I’ve not been working since early 2015.

I dabbled briefly with some consulting in the few months following my exit but I abandoned that pursuit and have not been working since.

Is your spouse also retired?

My wife retired about 1 year earlier than me, and her circumstances for her exit were similar to mine.

What was your career and income before retirement?

I spent most of my career in Market Research, first at a large Consumer Products Company, then several large Pharmaceutical companies. I ended my career as a department Director.

Over the last 15 years of my career my total compensation rose steadily from $110k/year to approx. $240k/year, including stock options and stock grants.

My wife spent most of her career in Information Technology for Financial Services companies.

Her salary trajectory, though more bonus-driven was similar — some years she would make close to $300k, other years a bit less.

Having changed positions and companies several times her compensation varied but on average, she brought home ~$175k/year during her last 10 working years, averaging the good and bad years.

Why did you retire?

I was fired, essentially.

I could toss it up to politics, career mis-steps towards the end (a high-visibility project that didn’t go well), ageism and a company changing priorities. I will say I was somewhat surprised as I had always been an out-performer but I did not see this coming.

Though things were not going well and I could sense it, firing was the last thing I expected — I know if one of my employees were in trouble I would’ve worked with them to improve or at the very least given them the heads-up.

In the end though, it was a blessing. The commute was terrible (my company relocated to the suburbs and I went from an easy commute by bus to a 60 mile drive on some of the busiest highways in the Midwest) and the company’s culture and expectations changed.

Upon reflection, I don’t think my skills were current for today’s world, which changes at lightning speed though not to say I couldn’t have learned — and after 15 years, from their perspective they likely needed fresh blood.

There was a bit of a purge, from what I understand and there are many new faces with fresh ideas. I can’t say I blame them.

My wife left her role under similar circumstances. Her last company was a bit chaotic, bosses changed, politics and evolving priorities all contributed.

For both of us though, we left with fair severance packages and we received our bonuses so we did not walk out empty-handed. And we were well-compensated throughout most of our career so for that, we’re grateful.


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

Retirement came to us, not us to it!

But I had a net worth dollar target in mind and I started to target age 55 as an out-date.

From a benefits standpoint, 55 was/is a magic number as I would qualify for subsidized retirement medical benefits etc…and also, psychologically its a milestone that I would have liked to have achieved. I was 53ish but if I throw in severance and bonus that probably added another year in compensation so I fell about 1 year short.

In today’s world, that’s not bad and I consider myself very fortunate. Many folks my are escorted out earlier and/or in much more dire financial straits.

My wife was just ready. She wasn’t happy in her job and she lost the desire to find something else.

That said, when she left her company she did some consulting for 6 months or so for her former boss so that kept her busy but she really had no interest in working full time. She was done, and she just didn’t want to work any more.

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

Several key steps helped me develop a retirement plan, which evolved from my financial plan:

1) Got an Investment Advisor/Financial Planner. More specifically, we got the right advisor that understands our goals:

When I joined my last company, even at age 38 I had one eye towards 55.

One benefit from my wife’s company at the time was free access to a financial adviser. We came to the realization that we needed someone to help us develop a rigorous plan.

We had been somewhat haphazard (I had always been a saver) but it was the equivalent of a ‘messy desk’. We had plenty of ‘stuff’ (401k, some individual stocks that seemed interesting, mutual funds) but not organized and not goal-focused.

He helped us tremendously and we still use him today after almost 20 years. I like him because he ‘gets’ us. We’re conservative investors and somewhat risk-averse. He knows where we want to be and he doesn’t push us into things we don’t want.

2) Took full advantage of company benefits – 401(k), Savings/Investment plans and other benefits.

Further, my company had terrific retirement benefits and while I had done so in my previous companies I had not put much thought into it.

As early as I could, I contributed the maximum allowed, both before and after-tax into my 401(k).

I also had a good portion of my paycheck diverted to my financial adviser to invest and I also invested money each paycheck into mutual funds that I like.

I would estimate that >40% of my salary was invested in either my 401(k) and outside investments and that was something I maintained for at least 15 years.

3) Treated ’Savings’ like an ‘Expense’.

For us, monies directed through payroll deduction, automatic investing etc…were considered a bill, something we were obligated to do. The way we pay our utilities etc…we ‘pay’ our Financial Advisor, our mutual funds, our company savings plan.

I like to steadily invest — call it dollar-cost averaging, but I like the discipline of consistent investing on a schedule.

My wife has a different savings style. Where I like to steadily invest throughout the year (payroll deductions, automatic withdrawals each month etc…) she likes to invest in chunks.

Her bonus and excess cash buildup would be invested in addition to 401(k) contributions.

Slightly different means, but we end up in the same place and the good thing is, we both have the savings mindset.

4) Became educated on the finer points of personal finance.

I became a voracious consumer of financial information, through blogs, publications i.e. Money Magazine, Morningstar, Kiplinger, Ric Edelman and retirement-focused newsletters, including ESI!

This helped me to ask much more informed questions, learn from others, shape my savings and investment strategy and to focus on 4 things: cost, return, income and tax implications. Before I invest in anything, these are the questions I ask.

5) Became highly disciplined re spending, budgeting, planning and investment performance and acquired to tools to rigorously monitor.

To that, I rely heavily on Mint to monitor spending, Personal Capital to monitor performance and various of planning tools i.e. TRowe Price FuturePath tool, Fidelity Retirement Planning and NewRetirement.

Though it’s cumbersome since it’s manual, I use Morningstar for research, and Morningstar’s Portfolio Tracker. I find this tool particularly helpful to understand my portfolio’s performance, composition, mix and fund expenses, and to benchmark my performance against broader market indices.

For us, I developed a comprehensive spreadsheet/workbook in Excel where expenses are monitored, a line-item budget is set, with lots of fancy-shmancy graphs and pivot tables so I know exactly where we are and how we’re doing. Finally, once every 2 years I have my Financial advisor do a comprehensive plan for us.

It’s probably a bit OCD but I like to sanity-check against the various tools. There’s so much at stake and the tools all have features that let me model, run what-if’s etc…and that just gives me a measure of confidence that for the most part, the tools all tell me I’m on track, in addition to the modeling my financial advisor does for me.

Regardless, I learn something from each of these tools — what to consider such as impact of market changes or social security claiming strategies or heaven forbid, impact of a catastrophic event.

Overall, the biggest change for us was mindset.

Retirement wasn’t an abstract, far-off concept. It was imminent and the odds are it would happen sooner than we plan so we better be prepared.

It wasn’t an ‘if’ but ‘when’, and we focused our thinking and our investment strategy on the long term through income-generating investments, safety, asset mix so we could benefit from strong, and ride out weak markets.

What did your pre-retirement financials look like?

Here are our financials in 2015 (retirement year) compared to what they are now:

And here’s our asset allocation:

A couple of points regarding above:

1) I took a lump-sum option on one of my pensions. I wanted to have the asset in-hand, and I had done projections from when I took the lump-sum at age 54, and what the lump sum would be at age 65 and I believe I could have done better.

2) I’ve been steadily, but slowly moving to more fixed income (i.e. CDs) now that rates are ~3%. I expect some market volatility and I would like safety, particularly in the retirement accounts.

3) I was fortunate to have benefited from a tax law change in 2014 that allows for after-tax 401(k) contributions to be rolled to a Roth IRA. I had contributed to not only to the pre-tax limit, but after-tax limit in my 401(k). This was convenient forced savings for me and I was happy with the investment choices across a variety of fund types and at low cost. [Note: Roth was $325k of retirement funds in 2015 and is now worth $424k.]

What was your overall financial plan for retirement?

I’ve been obsessively, and in excruciating detail, tracking my expenses over the past 5 years so I’ve been able to establish a baseline — that is, average expenses across the major categories, allowing for the unexpected and fun i.e. travel, dining out etc…

For the past few years our spending has been consistent so I’ve been able to plan and budget accordingly.

Since 2018 was the year we built our house, one-time expenses were significant but I’ve been able to establish a baseline for average expenses — utilities, etc…on a second home.

We know what our mortgage payments (plus escrow for taxes and insurance) will be for the next 10 years and our plan is, within the next 5 years to sell our Midwest home and with the proceeds recast our mortgage so the payments will be much lower.

Our overall yield (dividends, interest etc…) is ~2.5% and our portfolio has grown approx. 7.5%/year since retirement.

We do not expect that growth rate to hold in the future, especially as we move to safer investments but we are confident that the interest and dividends will be consistent given the composition of our portfolio.

Currently, the non-retirement and my wife’s retirement portfolio throws off approx. 60% of our expense requirements:

  • When I turn 59 1/2 in 2021 the combined income generated by these accounts will represent approx. 80% of our requirements.
  • When bonds, preferred issues and some structured products come due throughout the year we are able to utilize these proceeds as needed to pay expenses etc…Our CDs are ‘laddered’ – that is, with maturity dates from 1 year to 3 years that we’ll continue to roll over
  • My wife and I have 2 small pensions that we will take when we’re 65. My pension will be 100% joint/survivor so if I pre-decease my wife she’ll still receive income.
  • We have an annuity, ~$500,000. We like the idea of a consistent income – we’ve given ourselves a paycheck every month since retirement – and this particular annuity was attractive in that it provides 6%/year. We will likely turn this on within 4 years.
    we’ve modeled every combination of Social Security – both at full retirement, both early, one early and one at full retirement etc…and we’ve settled on me claiming at 62 and my wife at 66 though this may change. While many recommendations are to wait as long as possible to maximize the monthly payments
  • We’ve identified these claiming ages as a ’sweet spot’ – that is, our assets would not be markedly different at milestone ages – 70, 75, 80 and in some cases lower had we chosen different timing. We’re able to take the proceeds and use or invest depending on need. Waiting longer may mean a higher payout but fewer years to enjoy it.

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

Against the grain #1: We UPSIZED our home(!)

  • We’ve lived in the same townhouse we bought, which we’ve owned free/clear since 2003, having paid off our 30 year mortgage in 15 years.
  • We fell in love with the area of the Southwest and purchased property in 2004 with the plan to eventually build a house where we can entertain, have visitors etc…We’ve never owned a stand-alone home and we did not want to move to another townhouse or a condo. We wanted a house to call our own, built the way we like it with the features that we don’t have in our townhouse.
  • For now we’re keeping both locations, maintaining ‘dual citizenship’. We have the financial means, maintaining our home and lifestyle in the Midwest is in the plan and honestly, we’re just not ready to move – we have our friends, our routine and we enjoy many of the things the Midwest has to offer. So, for the time being we have the best of both worlds but I’ve planned for us to sell our Midwest home and live full-time in the Southwest within 5 years.

Against the grain #1a: We took a mortgage(!)

I know that many retiree’s goals is to be debt free and there’s plenty written, blogged about etc…about the perils of having debt in retirement but we felt this was the right move.

We certainly could have paid cash but we’d rather have our money working for us in the market, especially since the mortgage interest rate is low — 3.75% and the interest is tax-deductible.

Against the grain #2: A portion of our equity portfolio is in individual stocks.

  • I’ll give more of a breakdown of our assets later but in short, I like having these stocks and I chose those that are rock-steady and consistently pay dividends. While these holdings don’t represent the most significant portion of our portfolio, they’ve provide a steady source of income each month. And, by and large these holdings tend to generate dividends in good times and bad and for us it’s about income as much as it is about assets.
  • I know that everyone – from Bogle to the ESI millionaires say to hold a few ETFs, broad-market low-cost index funds and to stay away from individual stocks, and for the most part I agree. I would tell people, “do as I say, not as I do”. But I bought many of these stocks – just about all are blue-chip, known names across sectors that pay dividends consistently and at a good yield. Many I bought low, bought more when the market dipped and they’ve appreciated significantly, which is a blessing and a curse since selling means generating a taxable event. For now, I’m happy with the income. And, I’ve got a balanced portfolio with a good mix across the major categories: Individual stocks, ETFs, broad-market and some specialty mutual funds, Munis, Bonds and cash.

Who helped you develop this plan?

My financial planner played a significant role, but by educating myself through magazines, newsletters etc…: Kiplinger’s, Money, Morningstar, Consumer Reports Retirement newsletter (now defunct), NY Times, NewRetirement, Ric Edelman. They all had things to say and while their advice wasn’t always for me, I’m able to ask informed questions of him.

Some things our planner helped with:

1) He recommended taking a Line of Credit against our assets to build the house. The interest rate was low and deductible against investment earnings/interest. Next he recommended we convert to a mortgage vs. paying off. Our money is working, the mortgage interest is deductible and we got a great interest rate.

2) About 10 years ago I started to ‘hammer’ him on fund expenses (much to his chagrin) but given how much we have with him, we’ve brought this down significantly. Way back when, I didn’t know expenses were a ’thing’ since these tended to be buried in the prospectus but now it’s a decision-point for me when it comes to investing. When I have excess cash that I’d like to invest I as often bring ideas to him as he does to me.

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

Well, since the decision to leave wasn’t ours, we didn’t do any specific planning.

That said, even had I had more time I was/am comfortable with our plan.

The expense projections are realistic with enough of a cushion, we have some assets that are liquid (i.e. cash) that we can access if needed and, most importantly our investments provide enough of an income stream and when we start tapping our Social Security and Pensions we can think about reinvesting.

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

After all I had read about the newly retired needing a purpose, having their identities so tied to their jobs and feeling lost or bored, I was very concerned that I would experience these same feelings and would start to ‘climb the walls’ after a month or so.

I also anticipated trying to find a new job and experience one disappointment after another: the unspoken age discrimination, not having the skills companies are looking for, a rigorous interview process or having my resume fall into a black hole.

Financially, though my models tell me otherwise, I was, of course worried about running out of money, an unexpected major expense that would significantly deplete my savings or expenses much higher that planned.

How did you handle deciding on and paying for healthcare?

Fortunately, I qualified for retiree healthcare benefits for my wife and I, and I made it just ‘under the wire’.

While not subsidized, which I would have qualified for had I been there until age 55, I had enough years with the company that entitled me to pay the group rate with the same coverage that I had as an employee, which includes dental and vision.

The health coverage, fortunately is terrific including free prescription coverage.

When I or my wife turn 65 we enroll in the company-sponsored Medicare Advantage plan.

We consider ourselves blessed that we’re in this plan as this gives us tremendous peace of mind. While the coverage is not inexpensive, I know on the open market we’d likely be paying more for less.

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

I told everyone I retired.

I’ve never been ‘let go’ and while many go through it in their careers, it was tremendously embarrassing and humiliating.

I feel as though my career has ended in failure and that is something that I just would prefer to keep to myself — except my wife, of course!

It’s great, in a weird way that I have someone that also went through this.

My boss, by and large was supportive and understanding, and he and I crafted the ‘retirement’ story and that was how it was announced internally.

I told my team as well though, in all honesty they likely know the truth. Of course, after I left, the truth came out. Unfortunate but understandable. People just talk.


How did you ultimately retire?

For me, I was given a choice: leave that day, leave end of year, leave end of February.

I chose end of February as I would accumulate time with the company, earn, still invest in my 401(k) and qualify for my bonus.

Since it was positioned as ‘Retirement’ it was a long goodbye, getting work things in order for my successor, managing my team and projects etc… So, business as usual up until the end.

I didn’t want a lunch or a party as these tend to be uncomfortable so my departure was quiet.

My wife and I went out to a nice dinner that evening.

But, I am above all a professional and I took a lot of pride in what I built there and wanted to leave with my head held high.

My wife’s ‘retirement’ was a bit more sudden, along the lines of a classic firing: mystery meeting set up, HR and her boss in a meeting room, her boss read a script, she was handed a packet and was escorted out after collecting her things. It was an unceremonious, humiliating end to a long and successful career.

What went well?

Once we decided that working full-time was no longer in the cards, settling into the retirement mindset was easier than I thought and the boredom etc…that I expected to experience didn’t really happen.

Our finances and our plan (knock wood!) has held up so we’ve not had to struggle nor significantly curtailed our lifestyle.

We were never extravagant spenders anyway so there really was no change.

What didn’t go so well?

For me, since leaving my company was unplanned my first thought was to find another job so I started the process of job-hunting:

  • I updated my resume, and I took advantage of the outplacement services offered to me as part of my separation. I found this to be particularly disappointing but I accept responsibility for that as well since I had higher expectations. I found this to be very formulaic i.e. “today we’re going to work on your elevator pitch” or the best way to answer why I left my last job. That said, these are critical skills for job-hunters and for most these exercises are invaluable but for me, my heart wasn’t in in it.
  • I networked, reached out to former colleagues etc…and got some bites but many roles like the one I left were either highly technical — if I were recruiting for my job I’d want more technical too — or just not for me.
  • I thought about doing something completely different and there were some positive aspects to this but we were in the midst of building our house so we’d be away for several weeks at a time.

I look back on my career and have my share of regrets: I should’ve done this, I shouldn’t have said that, I should’ve taken on this job or project etc…

I don’t think there is a person who ever worked that didn’t share these regrets with varying degrees.

While I don’t necessarily block these out, over time I put these in perspective.

But, I still see, out of the corner of my eye colleagues that have done well, landed a great job or got a great promotion and wondered if that could’ve been me if only…I know these thoughts will diminish over time but I imagine the newly retired go through this process.

How did you ultimately find the courage to do it?

I guess this question could be re-worded as, “how did you decide to retire vs. finding another job”?

For me, this was a rude awakening. That is, to find a comparable job in the same or similar industry would have been very difficult.

Companies want younger and more technical: while I would consider myself tech-savvy, many companies want player-coaches. Sure, soft-skills are great but getting through the first hurdle — demonstrating the hard skills — is very difficult.

I tested the waters early but realized that I would have had to invest considerable time upgrading my skills in order to more effectively compete. Interviewing is now a different ball game now — by video vs. in-person which I found to be somewhat jarring.

I know that it’s something that with practice one becomes more comfortable with but for me I found it to be frustrating to talk into a monitor vs. interacting live.

I did a lot of soul-searching about what I wanted my next job to be:

  • Another large company? Sure, but I know what that brings. While compensation and benefits, and the trappings that may come with the job may be attractive, I also know that there is a drudgery aspect — meetings, politics, good co-workers and bad, competitiveness and honestly, the work itself.
  • A smaller company or startup? Maybe, but those are harder to find, and they tend to be frenetic, chaotic work environments. Challenging and exhilarating too, but for me a younger person’s game.
  • Consulting? I did a bit of that for a consulting firm after I left my job and while the engagement was unsuccessful (client mismanagement), it wasn’t for me. I realized that if I were to go it alone I would need to completely immerse and re-educate myself in this fast-changing world so my technical skills are top-notch and more importantly, have a great network of folks that would want to hire you!
  • Changing industries or doing something I enjoy: I’m still contemplating that and keep one eye open.

I don’t need to tell you that job-hunting is difficult! Networking, developing a ‘pitch’, a tight resume, sending out countless letters, applying on-line, dealing with recruiters is exhausting and frustrating.

For me, I kept asking myself: do I really want to go through all this, for maybe another couple of years? I know many colleagues are fortunate, and smart enough to have a broad network where they walk out one door, and through another in a matter of days into a job that is as good or better as the one I left. I realized I should have worked much harder at building a strong network.

I got to the point where I weighed the ’three F’s – Freedom, Flexibility and Fun’ with work. I enjoyed the Freedom of not having to answer to anyone, the Flexibility to go where I want and when, and the Fun of being able to go to the beach in the middle of the day, take a trip or go to a museum.

I also think that in the end, I just gave up trying to find a full-time job. I didn’t have the fortitude to go through the process.

I know I am fortunate and for many folks who lose their jobs, there is a much more positive spin on above, especially in a profession that one truly loves. I understand and appreciate that many folks find better jobs, whether through good fortune and a good network or a lot of hard work.

In some ways I envy these folks — to have a passion for what they do, to have done all the right things re building and maintaining relationships, being active and pro-active in being visible in their profession and being able to seamless move from one role to another.

I also understand that many folks need to keep working — financial obligations or because they enjoy what they do. For me, I count my blessings that I planned and saved enough that I don’t need to go back to work. That said, if I had, or found that passion it wouldn’t be work, right?


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

The adjustment was surprisingly easy.

My fears of boredom, inadequacy, the need to go back to work etc…never really kicked in.

At first, I admit it was a bit strange doing things during the day that I would normally save for the weekend or on a day off but that quickly wore off.

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

Retirement life is good!

We enjoy spending time together, and while I wouldn’t call our days busy, they fly by.

What I don’t like is the nagging feeling that I should be working and in all honesty there are days I’m just bored.

My wife is the opposite — she loves not working and has no interest in going back.

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

I think to the outsider, our typical day may seem boring, and they would say “you need to find something meaningful to do with your time!”.

Most days are a combination of going to the gym, running errands etc…

Once or twice a week we plan something: go to the movies, go to a museum or shopping, and go to a restaurant we like or want to try.

In nicer weather we may go for a walk on the beach or do some other outdoor activity i.e. play golf.

We’ll get together with friends for dinner or drinks once or twice a week and on weekends we’ll do activities as a group.

Every 4-6 weeks we’ll visit our Southwest home. We’ll shop for the house, explore the area, and get together with our Southwest friends.

Looking back, what would you have done differently?

I would have stayed ahead of the curve with my technical skills and made myself more of a thought leader in my industry.

I would have developed and maintained a much, much stronger network so I had options, whether moving to a similar role or a comparable one in a different industry.

I think if I had these options, It would have been easier to find my next endeavor.

I also would’ve cultivated a passion and developed a way to build upon that so I would’ve had the option to move in that direction.

I know there’s time for that and it is something I may still do.

Was there any emotional impact from leaving the workforce?

Yes. For me, I had never been fired so it was humiliating. I was ashamed, and I thought I need another job to demonstrate to myself that I still had ‘game’ and could find a job as good as, or better than the one I left.

I wasn’t afraid of the financial impact but more the emotional one: sadness, missing the social aspects and honestly some of the fun, boredom etc…and the inevitable frustration that job-hunting brings.

For my wife, she reveled. She couldn’t wait to retire and though she did some consulting for about 8 months or so, she didn’t truly enjoy it and was happy when the engagement ended.

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

I’m surprised at how easily we both were able to ‘let go’ and enjoy the freedom. There aren’t many days where I say to myself “I wish I were working”.

I know my wife never says this!

Fortunately, we’ve not had any financial surprises that we’ve not been able to handle. Thank goodness I planned for the unexpected.

What are your future plans?

We will eventually move to our Southwest home, though the timing is TBD. My plan has 5 years but that may change.

I’m keeping one eye open for a passion pursuit — it may be food-related (I have a culinary degree), or involve writing.

My wife loves retirement so as long as we’re healthy (we are!), we’ll continue to enjoy the Three F’s — Freedom, Flexibility and Fun.


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

Our plan has held up well. The income our portfolio produces, coupled with the cash reserves and other portfolio moves have enabled us to both cover expenses without having to curtail our lifestyle.

I set a line-item budget at the beginning of each year and for the most part we’ve stayed on track. While I admit that I had no idea how much it would cost to maintain the Southwest home before it was built, we’ve been able to establish enough of a baseline so we can better plan.

When we were working we didn’t pay much attention to how much income our portfolio generated — dividends were reinvested, any cash buildups were also invested. Now, it is our primary source of income so naturally we monitor obsessively and I can better plan our cash flow. We’ve also done some other things to make the most of this:

Since my wife is 61, we’ve directed any dividends/cap gains etc… generated in her IRA to our checking accounts. Prior to 59 1/2 these were reinvested. Fortunately we’ve not had to sell any of these assets (yet) though we might start to draw down at some point, since RMDs will be an issue in 9 years.

In our taxable accounts, we’ve also taken the dividends/cap gains and interest, vs. reinvesting.

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

Since we’re both a couple of years away from claiming Social Security, we’re still formulating a strategy.

I’ve run every combination (one or both claiming at 62, full retirement age etc…) and determined what my portfolio and cash flow would be at various future ages i.e. age 70, 75, 80 and beyond.

Personal Capital’s Retirement Planner is a great tool for this exercise once you determine your individual Social Security payments from their site as it enables one to create multiple plans based on different claiming ages or other events.

For us, we’re not concerned about how much we’ll have at age 90; age 70 we’re relatively young, hopefully healthy and can fully enjoy things.

My advice — it’s not about how much you’ll have at the end — you probably won’t be able to enjoy it. With Social Security, ‘you can’t take it with you’.

As for RMDs, we’re a ways off from having to take these and I’m weighing the tax implications of converting some of our traditional and rollover IRAs to Roth.

While we each have a Roth, I’m mindful that someday there may be a change to the tax laws that lead to taxing these as well.

We’re already taking the income my wife’s IRA generates, and I will do the same when I turn 59 1/2.

Since our investments are our primary income source, our tax rate is fairly low, and that’s just how we like it!

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

After a brief consulting stint I did not return to paid work.

I started to enjoy the freedom, we were/are financially in a good place and the longer I wasn’t working, the harder it would have been to get back into the work mindset. And to even get to that point I would need to actually get a job!

That said, I still keep one eye open for something that may interest me outside of my profession and I may pursue one day but for now I’m not actively looking.

My wife is officially retired and she does not see herself going back. But like me, she keeps one eye open for something that she may find fulfilling i.e. volunteering.

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

For us, this was not as difficult as I thought.

We’ve set up our portfolio in such a way that we’re able to pay ourselves each month without having to sell assets for living expenses.

We can anticipate dividend and interest from our investments so we know what our monthly ‘paycheck’ is.

This provides something akin to the predictability of ‘payday’ when we worked.

While I look at our portfolio daily, despite market variations, dividends and Interest, our primary sources of income are fairly stable.

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

Well, I most certainly would have liked to have known it was coming!

I would’ve liked to get another year in, and there are things I would’ve done differently at work in order to leave on my terms, not theirs.

I think my wife would say the same thing.

What advice do you have for those wanting to retire?

For those seriously considering retirement, keeping in mind everyone’s mindset is a bit different:

1) Educate yourself.

Read books, newsletters, magazines and blogs that are retirement-focused.

This helped me know what I didn’t know and learn from others like me or faced with similar challenges i.e. Social Security, pensions (monthly payout vs. lump-sum, for example), paying for healthcare, taxes.

Had I not become an educated financial consumer I’d have been caught flat-footed.

2) Assume retirement will come earlier than you think, and not necessarily in the way you envision especially if you’re 50+.

The days of the gold watch, nice send-off with balloons and a cake are long gone.

More than likely, your boss, who’s probably younger than you, with Human Resources will be the one to tell you and you may not see it coming.

Or worse, you’ll start to see the signs and it’ll be ‘death by a thousand cuts’. If you’re prepared for the worst you’ll be ahead of the game.

It’ll still be jarring but at least you’ll have some measure of comfort that you’re ok.

3) Know your financial situation.

In particular, spending and future income.

Assume you’ll spend more than you plan for and have a line-item in your plan for the unexpected.

Leverage the various online tools — use more than one. I find Mint and Personal Capital to be invaluable to help with planning.

4) It’s easy to romanticize your job and towards the end, or even when you walk out the door you think about the good times, and how the bad times weren’t so bad after all.

That’s natural, but over time you’ll put these things in perspective.

If the good times were truly good (and for all of you I hope they were), you’ll have fond memories to share and reflect upon.

It’s easy to focus just on the good times and if you have the luxury of staying ‘one more year’ (absent financial circumstances), to do so.

I know it’s a time-worn saying but no one ever said, on their deathbed “If only I had spent more time at the office”.

5) Once you’ve developed and are comfortable with your plan, try not to compare yourselves to others.

Many folks like yourself have more, have less or have a different mindset than you.

The ESI Millionaire interviews are insightful — use these to learn, not necessarily to see if you measure up (or down) to people that may, on the surface be like you.

When you’re comfortable, ask yourself whether having x more money would significantly change your situation.

For me, sure I’d love to have more money — who wouldn’t — but I’m not sure I would do anything different. I wouldn’t live in a different house, drive a nicer car nor buy more expensive jewelry.

Plan to have enough to live the life you want and have enough of a cushion to take you through the rough patches.


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