Retirement Interview 5

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…


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

I’m 59, wife is 51.

We’ve been married 25 years.

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

No kids.

My parents are both gone. Her parents are still together and live overseas.

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

Suburban community in San Francisco Bay Area.

Is there anything else we should know about you?

I’ve had a few “practice retirements”, which I’ll talk more about below.

Suffice it to say these helped me understand some things about what I would do with my time when not working a full-time job.

I was laid off from my last corporate job in May 2018. At that time my wife and I had been planning for both of us to quit working by the end of 2019, or sometime in 2020.

After I was laid off I spent a couple of months reviewing our financial situation and decided that we were in a good enough position for me to begin focusing on my post-work activities, doing pro bono consulting projects and effectively being “reFtired.”

Since my wife is several years younger than me, we decided it would be financially prudent for her to continue to work in her job until at least the end of 2019.


How do you define retirement?

Independence to do what I want, when I want, whether it pays anything or not.

I’ve never liked the word “retirement” because for me it conjures up images of people anxiously awaiting the day they can quit doing whatever it was they spent their work life doing.

That has never been the case for me — I’ve always enjoyed working in general, and particularly the work I have been doing in consulting.

How long have you been retired?

My last job ended in May of 2018, so I’ve been finished working for about nine months.

As I said above, I don’t like thinking of myself retired. For me, it feels more like being freed from having to pursue working for both money and passion.

Now I can be more selective.

Is your spouse also retired?

No, she is still working in her corporate job. This is another reason I’ve been avoiding the R word.

To me, retirement (or whatever we end up calling it) feels more like a “we” thing, than an “I” thing.

Since my new-found independence, I’ve picked up a little more of the house management work: shopping, repairs, cooking. For the most part these are things we’ve enjoyed doing together anyways, but my wife does appreciate me stepping up and taking on a bit more of it while she continues to work hard in her job.

What was your career and income before retirement?

My career was in business consulting, and almost always involved a W2 job for a big company.

Sometimes I worked as an internal consultant, where my employer was my only client. Other times I worked for a large company or firm that billed me out to a client at an hourly rate while paying me a salary with benefits.

My salary ranged all over the place, from $120,000-160,000 per year, depending on my role and whether I was an internal staff consultant, or a billable client-facing consultant. My wife’s income has been more consistent and steadily increasing, in the same range now.

Why did you retire?

I’ve worked for a number of consulting firms, both large and small, as well as a few stints as an independent contractor. Such is the nature of being a consultant in a highly specialized area.

We had set a savings goal for ourselves which we hit — and then raised — a couple of times in the last five years or so because we kept getting there sooner than we expected.

Between that and being laid off from a job I no longer had much passion for, I ran the numbers and decided we could make it work on just my wife’s income provided she continued working for a couple more years.


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

I was laid off from a consulting position back in 2009 shortly after being hired for it as a result of the market meltdown. The guy who hired me said if another month had passed from when I interviewed for the position I never would have been hired because by then the market for our services had evaporated.

It was around then that my brother provided me a spreadsheet he used to manage his investment portfolio and model his decumulation approach, and how long his savings would last.

Since I wasn’t working I decided to start playing around with his base spreadsheet. As I did this the notion of retirement started to become more real to me.

This was my second or third “practice retirement”, whereby I was out of work for almost two years, during which time I had quit looking for a next job, and focused instead on doing whatever I wanted.

The first one of these was around 2004, when I left a corporate gig after an eight year stint. I didn’t want to jump back into another company job right away, so I decided to go back to school, enrolling in a full time photography program at our local community college.

I spent a year and a half as student again, which I thoroughly enjoyed.

Ultimately I decided to return to my consulting work when I realized it was unlikely I would ever make the kind of money we would need to retire being a photographer. So I exited the student life and got myself back into the corporate consulting world.

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

The biggest steps included:

  • Creating the spreadsheet model, and modifying it over time to permit scenario testing.
  • Engaging a robo advisor for portfolio management.
  • Sanity-checking the robo portfolio model with a fee-based fiduciary advisor to validate the robo portfolio choices and my spreadsheet model projections.

What did your pre-retirement financials look like?

Because I’m only nine months into it and my wife is still working, our “pre-retirement” financials look the same as our post-retirement financials do.

We have accumulated about $2.8 million for retirement distributed across taxable investment accounts, uninvested cash in high-yield savings accounts, IRAs and my wife’s 401k, and a couple of small pensions.

Most of the invested assets are managed by a roboadvisor using a pretty conservative risk profile for the model portfolio, aimed at 50-50 stock/bond ratio.

Automatic rebalances and tax loss harvesting are done automatically, which takes a huge burden off of us as we have two IRAs, two ROTH IRAs, a 401k, and an after tax account – all of which the robo manages for tax effectiveness and fee minimization.

Since we shifted to this approach in 2014 we have hit an average 5.5% return. This return rate isn’t going to set the world on fire, but it keeps me from worrying too much about market meltdowns and shifts while still outpacing inflation with a reasonable rate of return.

Our situation with the robo advisor is a bit unusual in that they are managing the bulk of our investable portfolio for effectively free.

Whereas most online robo advisors charge from 30 to 70 or even 100 basis points to manage client portfolios, ours charges us a tiny monthly flat fee amounting to a couple hundred dollars per year because we signed up early, before they started charging a percentage. This has saved us tens of thousands of dollars over the years, and we still benefit from the full range of services they offer all of their clients.

We have a small mortgage on our house with about one million dollars equity, for $3.8 million total net worth.

What was your overall financial plan for retirement?

We’re still working on this. Overall our plan is based on a decumulation strategy that assumes spending our retirement savings down to zero. Of course we’re trying to build into that some leeway to account for market fluctuations and longevity.

We had already worked up a spending budget based on actuals, plus our best guess as to how much some items would change once we both stopped working.

For us the big ones here include our mortgage, real estate taxes, health insurance, and discretionary funds for travel and recreation.

Assuming we stayed in our current house, kept our mortgage, and adjusted the above items based on neither one of us working, we would need about $130,000 per year (not taking account of taxes – which would need to be added).

This would go down significantly if we were to pay off our mortgage, move to a state with lower real estate and income taxes, and moved out of the country to one which provides low-cost healthcare. We are looking at all of these.

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

Our decumulation strategy is divided into stages.

The first stage will last 11 years and is aimed at getting me to age 70.

At that point I will have maxed out my social security benefit in the same year my wife will become eligible to start withdrawing hers. We’ll look at where our remaining balances are then and determine whether it would be better for her to wait, or start taking social security then.

To get us through the next 10 years we will start by drawing from our cash positions, which hopefully will last 3-4 years.

We’re also setting up a separate bucket of funds in a more conservative portfolio, aimed at reducing exposure to a big downturn, but still getting some upside growth over the same period, which we will then tap into once our cash positions have been depleted. The rest of our portfolio will be moved into a more aggressive risk profile.

We are seriously considering moving overseas when my wife stops working so she can be near her parents. At that point we’ll have to decide whether to sell our house, or hang onto it and rent it out. Renting it would result in about a break-even proposition once management fees and taxes are accounted for.

The main reason for doing that would be to give us a way to return to California if we decided to do that in the future; and also to give us some significant exposure to the real estate market.

Who helped you develop this plan?

We did most of it ourselves with the help of lots of discussions with family and friends who have some insight into financial planning because of their work or their own experience.

I’ve also benefitted from reading blogs and web discussion forums like ESI Money and others (Bogleheads has been a go-to for me for a long time).

We did hire a fee-based financial planner a couple years ago to sanity check the portfolio that our robo advisor created for us.

The planner helped us refine our budget model and modeled various decumulation scenarios based on factors like when each of us stopped working, when we start collecting social security, and the order in which we draw down various portfolio components.

And most recently we have been working closely with an advisor from the firm that manages our portfolio on creating our 10 year decumulation strategy using the tools that are available with the robo.

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

Our biggest ones were, and continue to be, what do we do about healthcare, how do hedge against longevity, and, in general, have we saved enough?

After that our concerns have all to do with what assumptions to use in modeling how our portfolio will last during decumulation.

Obviously rate of return has a big effect on how things play out, and past performance doesn’t mean the future will be similar.

Less obvious to us was the effect inflation has on how long our savings will last. The portfolio model is much more sensitive to this assumption than it is to rate of return. And if rate of return is tricky to conservatively guesstimate, inflation rate is nearly impossible.

Also, rates of return tend to bounce around in a way that allows one to average the ups and the downs so that they offset each other. Inflation rate doesn’t work like that.

A rate of 2% or 2.5% may be considered normal and “safe”, but there’s no way of knowing whether there will be two years of 7% or 8%.

What’s fairly clear in the historical data, is that even when this happens, the thing that doesn’t happen is a corresponding offset after a spike. It just works its way back down to “normal.” Not being an economist or expert financial strategist, I haven’t figured out the right way to model that variable in our portfolio.

The age difference between my wife and I adds a layer of complexity to both healthcare and longevity.

I have six years to go before I can claim Medicare. She has 14 years before she can! That’s a big gap to bridge given that it will require significant annual drawing down of our assets.

And since we both have pretty good family health histories, we’re using 100 as the financially conservative estimate for how long our assets need to last. That means 40 years for me, and 46 or 47 years for her!

How did you handle deciding on and paying for healthcare?

Right now I’m on a subsidized COBRA plan from my last job, and my wife is on her company’s healthcare plan.

At the end of this year my COBRA will end and I’ll go onto her plan.

When her job ends, if we remain in the US then we’ll have to go to the healthcare markets to buy healthcare coverage, which we’re budgeting $25,000 per year for to cover the premiums, plus whatever out-of-pocket costs end up being.

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

When asked about whether I’m working, I just say I’m no longer with a company — I’m independent and doing pro-bono consulting work that interests me.


How did you ultimately retire?

My company went through a reorganization and I was laid off. This included a severance payment and company-subsidized COBRA healthcare coverage.

With the modeling and planning we had already done, I decided that I was close enough to my target retirement date (12/31/2019, at age 60) to call it quits.

What went well?

Still a work in progress, particularly since my wife is still working.

One of the things that has worked well for me is that I was able to get involved in pro bono work almost immediately.

I enjoy the mental challenge of the work I do, and I never imagined myself simply quitting doing it. I found a variety of outlets for my skills that allow me to engage in challenging work that is greatly appreciated by my clients.

What didn’t go so well?

I’m still concerned about longevity, mainly; and have not yet figured out a passive income or side hustle that would be sustainable.

We’re exploring options for both.

How did you ultimately find the courage to do it?

I was really well and truly done with corporate life; and since I was in college I had always thought in terms of having enough money saved up to be able to just walk away. (My college buddies and I had a more colorful term for this “fund”, but it’s not printable).

As the end of my last job drew near, I realized that my fund was at a level that I could actually now use it for what I had imagined all those years ago: simply walk away. A decision I was more comfortable with having experienced 2-3 short periods of unemployment over the prior 10 years through which I proved the ability o live on one income.


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


As a consultant I was able to work from home for most of my career. So being at home was not in and of itself anything new to me.

I also had some experience of looking for independent contract work when I was between consulting jobs.

The really freeing thing about deciding to call it quits was really knowing for the first time in my life that I was actually done, and no longer had to think in terms of finding the next job. I used my energy to find my way to some small projects that interested me, without worrying about whether they would pay me anything.

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

I like having the freedom to work on only things that interest me, and not worry about whether I can get paid for doing them.

I also enjoy having the time to revisit creative pursuits that I have been interested in before, but put aside due to the demands of my career.

I feel like I’m in limbo right now since my wife is still working, so I’m holding off on planning the trips and adventures that she and I will end up doing together once she’s finished working.

There are times when I feel like I’d like to just take off on my own, but a part of me feels guilty about doing that because it will represent a net outgoing of funds, and my wife won’t be able to come along to enjoy it with me.

We realize that being in this “limbo” state is creating some stress so we are taking steps to make the financial and lifestyle decisions (i.e. set a firm date for when my wife can quit her full time job, decide whether/how we move to Europe and put the plan in motion to make it happen, etc.)

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

I read a lot, do pro bono work, and am starting to explore getting involved in activist groups aimed at local government activities.

If I don’t have any client visits or meetings scheduled, my morning starts with coffee and reading the news from various online newsfeeds.

I also like writing, so if there is something I want to write about, that happens during the morning hours.

Email, letters to the editor, forum posts and an occasional blog post feature here.

Afternoons include client work, grocery shopping, any maintenance items on cars or the house, outdoor recreation activities, and figuring out a plan for dinner.

Looking back, what would you have done differently?

That’s a pretty big question. Three things come to mind:

  • Career – The whole concept of a pension never really occurred to me until well after companies had started doing away with them. When I was younger I never gave much thought to where retired people got the money they needed to live on — I just assumed it came from somewhere, and I’d have access to the same. Had I been more aware of the importance of pension plans (which I could have been), and the shifting tide against them (which I couldn’t have been), I might have chosen to stay with one or two of the companies that I left voluntarily, in order to benefit more from the generous benefit plans these two in particular offered.
  • Investing – I grew up with awareness of the stock market. My dad gave my brother and me a couple thousand dollars as a small investment stake, which we were free to invest at a full-service brokerage. He encouraged us to read financial journals and track the stock market. Unfortunately, this planted the seed of stock picking in my mind, and it took me decades to figure out that stock picking is a fool’s game. Had I simply invested in a three- or four-fund market-tracker portfolio of stocks, bonds, and international I would have probably been able to quit working five years earlier than I did.
  • Real Estate plays – I’ve never had the stomach for real estate investing via direct property investment. I didn’t buy a first home until I was almost forty. As a result, we missed out on some pretty significant appreciation that others have benefited greatly from. We had the funds and the opportunity to buy into some particularly lucrative markets over the years, but I never felt good about taking the risk. Woulda coulda shoulda.

Was there any emotional impact from leaving the workforce?

Not much for me.

As I said, I was already in a place where I was feeling burned out, and my walkaway fund was where I thought it should be.

Also, I had a few periods over the years when I wasn’t working, so I was left to my own devices to figure out how to use my time. And since I was accustomed to working from home, the idea of leaving the workforce as an employee didn’t have the same type of impact on me that it might have on someone who worked in an office and was used to being out of the house all day and around other people.

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

No real surprises thus far, but it’s still early days. Touch wood!

What are your future plans?

As soon as my wife retires we’d like to spend more time with her parents, and traveling overseas.

We’re both into outdoor activities, so our plans include building a series of trips to various countries and exploring them.

We are also seriously looking at relocating ourselves to somewhere overseas for a period of several years, if not permanently.


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

It’s too early to tell, but I’m optimistic that our conservative portfolio profile will continue to shield us from any major setbacks due to market fluctuation.

As we approach my wife’s exit from the workforce and are faced with decumulation to fund our retirement, sequence risk looms large as a concern.

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

We’re going to hold off on claiming Social Security as long as we can.

Depending on what our glide slope looks like in five or six years, I may decide to start claiming it when I turn 66 or wait until I turn 70.

By then my wife will still only just become eligible to claim it, so we’ll have to keep re-evaluating when it would make sense for her to claim.

Going in we would like to both max it out by waiting until we’re 70 to claim it.

As for RMDs, they’re just another piece of our decumulation strategy. The work we did with the financial planner helped us better understand the sequencing of withdrawals from the various types of invested assets we have.

Start with cash and funds invested in our after-tax brokerage account, top off annual budget needs with minimum RMD amounts only from the IRAs when RMDs start. Leave the ROTHS to the end.

We still need to evaluate whether or not to convert IRA funds to ROTH IRAs, and if so, how much.

Again, given our age differences it’s more complex than it would be for some couples.

Also, I don’t believe the current model portfolio that our robo advisor is using adequately accounts for the timing differences that the various funds have in terms of when we will need them. As a result, I think we need to create a bucketing approach, but I’m not sure if our robo advisor will allow us to do this and still keep the funds under their management. I could definitely use some help with this, as it’s not clear to me how to set that up.

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

No, and I don’t expect to, at least not for a salary job.

I may end up getting some paid consulting work, which I’m open to, but not actively seeking.

If I do, it will be because I would have been willing to do the work for free, and the client offered to pay me for it.

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

With my wife still working I haven’t yet experienced this fully, but I am concerned that it is going to be quite challenging for both of us.

We’ve spent our entire careers focused on accumulating the funds that we would need to be able to quit working. Along the way this has meant being mindful about extravagant spending and wasting money.

That isn’t to say that we haven’t treated ourselves to some fantastic trips and experiences — we have. And we buy ourselves nice things from time to time. But it’s always been mindful spending for us.

Once we start drawing down our portfolio I think it’s going to require enormous discipline on both our parts to relax and enjoy the money we worked so hard to accumulate. As we all know: “can’t take it with you!”

What advice do you have for those wanting to retire?

You mean besides Earn, Save and Invest? 🙂

Advice I’d give to my many nieces and nephews, and anyone else who wants to retire (who doesn’t??):

  • Max out your retirement plans at work.
  • Never lease a car — always buy a good used one.
  • Focus on your work and your career and look for something to do that you care about and enjoy doing.
  • Don’t forget to smell the roses and enjoy the fruits of your efforts along the way — you never know when life will change and you might miss the opportunity to do so.
  • Think about where your money is going to come from when you retire. Side hustle? Rental property? Pension? Annuity? The best money in the world is mailbox money — it just shows up each month. How can you set yourself up so you have mailbox money?


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