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Retirement Interview 23 - ESI Money 2Here’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 completed in mid-May.

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 am 58 and spouse is 57.

Married 33 years.

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

Yes. Son 28 and daughter 30.

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

Midwest large metro area.

Is there anything else we should know about you?

Yes. I apologize to everyone for the current recession. I figured this would happen right after I retired.

I am also MI-21.


How do you define retirement?

I define retirement as no longer having to work full time for money. Beyond that it is whatever you desire it to be.

My personal definition for me is that retirement is life 2.0.

Life 1.0 was getting an education, pursuing my chosen career, striving to reach the top of my profession, building a marriage, raising a family, educating my children, launching them out into the world debt free, and doing my best to enjoy the ride along the way. That is some heavy lifting.

Now that it’s done, I could have kept on the old path or pursue a new one. I felt the pull to “retire” and chase life 2.0.

How long have you been retired?

I am a relatively new retiree. Retired in October 2019.

Is your spouse also retired?

No, she is not. She loves her job and has just hit the sweet spot of her career in the last few years. My wife was a stay at home mom and did not enter the workforce until 2007, so we were a one income family for the first 21 years of our marriage.

My wife fully supported my decision to retire and she has plans to work another 3 or so years. Hopefully, she keeps enjoying it and puts in those 3 years. She is in a low paying profession but if she works until age 60, we get to continue her excellent healthcare benefits until age 65.

She knows that she can quit any time and that we would manage fine, so there is no pressure on her to continue.

Good news is that it is a win-win as she enjoys her role. Plus, she loves that I cook dinner every night and I love cooking…another win-win!

What was your career and income before retirement?

I was a C-level executive at a small to mid-level firm.

My last year compensation was $400K salary/ bonus.

My wife’s income is about $80K.

Why did you retire?

I was starting to get burned out in my career around 2015 at age 54. My field is very demanding and high pressure/stress. Plus, I always had a 2 hour per day commute most of my career.

I had always had the goal of making work optional after age 55. With my last child recently graduating from college, the heavy lifting done, I really started to think more and more about pulling the plug.

However, I had only been at the top of my career making good money for about 3 years. Having a little fire still left in my belly, my plan was to work until age 56 which would give me time to reach my retirement goal of $1.5MM investable assets.

At that time, I was perfectly happy to retire with that amount.

Then the phone rang…I got a great offer to join another firm, make higher compensation, and get a nice bonus in 9 months if I completed a key strategic project for them. The only catch…they were located 2 states away and I would have to hop on a plane and commute 800 miles each week.

At the time this seemed nuts, but after some long discussions with my wife we decided it would be a great adventure and that we were willing to commit to this ridiculous lifestyle for one year.

Well, I ended up really enjoying the company and my role so after one year I saw no reason to leave. But after 3 years I finally had enough of the commuting, had reached all my financial goals, and I decided to resign.

However, I had the typical cold feet in actually pulling the plug and walking away from the big paychecks. When I finally left, I ended up doing the OMY (one more year) thing and ended it in October of 2019. It was a full 4 years of only being home on weekends and holidays.


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

In my mid 30’s I witnessed some very stressed out guys in their 50’s having heart attacks when they got laid off. These guys had kids in college and apparently were living paycheck to paycheck.

I decided then that I would plan to save and invest enough to make work after 55 optional. I was determined to never be that guy. That’s when my retirement spreadsheets were born, and new tabs blossomed at regular intervals.

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

When I took the job out of state in 2015, I planned for this to be my last job before retirement.

Of course, any time you start a new role you never know how it is going to go. Sometimes it can go sideways quick. Thus, before I started, we decided to pay off our mortgage, get my wife a new car, and take care of a few other expensive household repairs.

If I ended up being retired sooner than I anticipated I wanted to be in a good spot with no debt. At this time our portfolio was about $1.3MM and our NW was about $1.6MM.

The other big initiative was to adjust my asset allocation. I had always been 100% equities my entire life (actually ~97% if you include emergency fund).

With the last kid freshly out of college, our plan was to aggressively save every month and to put all future savings into cash and short/intermediate term bonds. My plan was to do this until we hit an asset allocation of 80/20. My 401K would continue to be invested in equities.

This was painful to do as I have never been a fan of bonds especially at such low interest rate levels. However, I was well aware of sequence of returns risk and I wanted to retire with a 4-5 year cushion in cash/liquid investments.

My plan was to employ a simplified 2-bucket approach.

What did your pre-retirement financials look like?

Well fast forward to retirement day last October and I am very thankful that it worked out so well.

In the 4 years travelling out of state we saved an additional $740K. I did get some cold feet in terms of asset allocation. As I really got my head around walking away from the big paychecks, I ran a lot of scenarios around the impact that the pending bear market would have on my portfolio. As a result, I built up to a bit more conservative asset allocation of 75/25 at the time I retired.

Our portfolio was $2.8MM with 46% taxable and 54% pre-tax IRA’s, so we were in a good tax diversification position. Our NW was $3.9MM.

The big gap between investable assets and NW is company stock. Part of my compensation package with my last company was an equity package. This is not liquid as the company is private and VC owned. The equity is paid out upon an eventual sale of the company which could take place in 2, 5,10 years or whenever. It is anyone’s guess but it will be flipped at some point. Obviously with the Covid-19 crisis it likely will be longer rather than shorter as their operations have been shut down during the pandemic.

The company is in a niche tech sector, was extremely healthy and growing very fast. When I retired, I decided to value my equity on my balance sheet at $750K, which was a conservative 40% of FMV at that point in time. Now it’s probably not so conservative.

I do expect the company to rebound eventually as their industry is in a good spot. My equity could very realistically be worth well north of $2MM, it’s just going to take a while.

The VC owners have a great track record of creating value. We shall see. Nonetheless, I’m not counting on any of this to fund my retirement. So my asset allocation at retirement was as follows:

  • $400K Cash
  • $321K ST/Intermediate bond funds
  • $2,100K Equity Index Funds ($985 large cap/ $508 Mid cap/ $462 Small cap/ $145 International)
  • $750K company equity
  • $345K home (90% of FMV/no mortgage)

$3,916K Total NW

Of course, the market continued to increase after I retired so I was feeling fantastic for a little while.

At the peak in February my portfolio had grown to $3.1MM and the NW was at $4.2MM.

After the Covid crisis hit my portfolio was down about $850K at the bottom. Not a great feeling but I never missed a wink of sleep thanks to having all of that cash.

Now with the rebound our portfolio is only down a little over $100K from my retirement balances shown above.

What was your overall financial plan for retirement?

In the 3 years before retiring I began to track our expenses.

With all of my travel, we spared no expense while I was at home. We ate out a ton, outsourced several home chores, and took some nice vacations.

My retirement spending goal was to maintain our pre-retirement spending levels which we considered to be a fat fire lifestyle.

My promise to my wife was that our lifestyle would not change with me leaving my career. We would spend the same and continue our giving the same.

Thus, I downloaded our bank statement activity and easily calculated our monthly and annual spend. Then I reconciled this with our tax returns. Having 100% visibility to our savings activity this was easily done.

The result is that we spend about $84K a year. We live great on $7K a month having zero debt.

Funny to consider that a few years earlier we were living comfortably on $60K per year and that was my retirement goal. Talk about lifestyle creep!

So here was my retirement financial plan:

ESI and many others recommend having multiple streams of income in retirement. We have no pensions and no real estate or appetite for real estate. So, my plan was to replace multiple streams of income with multiple cushions to my plan to enable a minimum $84K per year.

I have identified 5 layers of cushion to my plan as follows:

  • Initial withdrawal rate of $84K is only 3% not 4%. $84K/4% = $2.1MM. My balance was $2.8M so I had $700K cushion. Please note that at 58 years old, I’m very comfortable with a 4% WDR assumption.
  • SS will add >$4K per month which will reduce our withdrawal rate to 1.3% upon receiving benefits. This assumes filing at 65. No firm decisions on this yet as I have plenty of time to figure out what strategy fits us best.
  • Wife continues to work for my first 3 years of retirement which reduces our actual initial withdrawal rate to 1.3%. Her take home is about $4K per month so no need to pull the full 3% for another 3 years or so. I should also mention that her industry and position is extremely secure even in this pandemic environment.
  • My company equity was worth ~ $1.9M upon my exit. This is an asset that has a very high probability of having material future value.
  • Likelihood of an inheritance from both sets of parents is very high. A conservative estimate of the combined total could be in the $1.0M to $2.0M range.

Please note that I was very comfortable in pulling the plug with only cushion #1 and #2 as I saw these as a given upon my retirement.

Then the pandemic hit and basically wiped out all of cushion #1 (insert Mike Tyson quote here). However, I must say that I am proud of myself as I never second guessed myself and never lost any sleep. Having lived and invested through several recessions I have long standing faith in the resilience of our economy.

Who helped you develop this plan?

I have always managed our finances myself.

I have an MBA with a concentration in Finance.

I have also been blessed with a little common sense.

I was raised by a single mother and we were not well off. I think this made me extra careful with money and I always had a fear of being homeless. Thus I started doing Dave Ramsey before Dave Ramsey.

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

Besides the financial moves referenced above, I did a lot of reading (retirement books and blogs) to make sure that I knew what I was getting into and to insure that I had all of the bases covered.

I must say that ESI and Fritz’s “The Retirement Manifesto” are among my favorite blogs.

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

I think that the mental aspect is huge and that was one of my biggest concerns.

I am very Type A, so I knew that boredom would kill me. Going 100 mph to a dead stop was a concern.

However, I have many interests so I was not too worried about this, but I did know that I needed a plan that would provide some balance. I am smart enough to know that if I went fishing every day, I would soon get sick of fishing. I never want to get sick of fishing.

I totally agree with Wes Moss’s book that ESI recently featured on the importance of having at an average of 3.5 core pursuits. I had a plan. Firstly, the hobbies that I am passionate about include:

  • Fishing
  • Cycling
  • Golf
  • Backpacking
  • Riding and working on my motorcycle

Secondly, I planned to pursue some other passions:

  • Adjunct teaching at a local university
  • Secure meaningful volunteer work
  • Coach High School
  • Consulting

I’m happy to report that in addition to engaging in all five of my core fun pursuits, I have been hired by our local High School to coach, I secured a position as a mentor with a local organization geared toward challenged youth, and I’m in the process of applying for a couple of adjunct teaching positions.

I have also provided some consulting services with several organizations.

How did you handle deciding on and paying for healthcare?

My wife is still working and if she puts in three more years to age 60, we will qualify to keep her health benefits until age 65.

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

I gradually told them every time I was asked how long I was going to keep up my crazy lifestyle.


How did you ultimately retire?

Besides all the planning mentioned above, the actual act of turning in my resignation was gut wrenching.

I waffled for a good 4 months. Every weekend convincing myself that this was the week. Then I would chicken out.

The thought of walking away from the nice paychecks would often paralyze me. Some days I would be so confident in my financial plan, then other days I’d think of all that could go wrong and how much more I could have if I kept at it a few more years.

The goal posts would start moving.

What went well?

Once I announced my plans the company was absolutely shocked, but they understood and treated me extremely well. It ended up being a great experience.

It was also eye opening to hear from my C-Suite colleagues. Many told me how jealous they were and how they wish they could retire. Some looked at me like I was from outer space…how could this be possible? How would I live? These folks are all around my age, making great money, and apparently living paycheck to paycheck. Amazing! The envy from many was palpable.

What did not go so well?

I am fortunate that it all went as planned.

How did you ultimately find the courage to do it?

Well as I mentioned I did get trapped in OMY.

Here is the realization that finally pushed me out. I found myself staring out of my beautiful corner office window more and more frequently.

I had met all of my financial goals, I had met and exceeded all of the goals that I had set for myself to accomplish when I took the role, and I had met my professional goal of reaching the top of my profession and sitting in the C-Suite.

I was amazed at how this reality totally usurped my motivation to keep going. I was burnt out after 36 years of working and spending the last 7 in a C-level role. While it is great to be on top, I still had to answer to a CEO, a Board of Directors, Owners, and Investors. Not to mention managing multiple teams. I’m a simple man and I was just plain sick of it.

Plus, I felt the clock ticking…how much time did I have left? One day I realized that I hit the point where my time was worth more to me than money.

What about my fear of boredom? Well, if I do not need the money, would I show up and do this job for free to give me something to do and alleviate my fear of boredom? No, I would find something meaningful to do with my time.

The realization of these factors gave me the courage to finally walk.


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

I must say the first 3 months (Q4 2019) were seamless.

I immersed myself in some projects around the house and in my hobbies. I bought a new motorcycle (I had set these funds aside pre-retirement) and continue to have a blast with it.

My newfound freedom was and is wonderful!

Once January hit, I began to pursue the coaching, volunteer and teaching opportunities. I am happy to say that everything is coming together with these and I am very excited about the future.

I was surprised at how many consulting opportunities came my way and also how many job offers I have had to turn down.

The consulting activity really picked up in January to the point where I was getting ready to turn down a couple of engagements. I was amazed that once I got a taste of freedom…not having to be anywhere at any particular time and on any particular day, was infectious. The thought of having to get up and get dressed and get in traffic for a meeting was now revolting to me. After only 3 months of freedom I was hooked on it.

Then the Covid crisis hit and most of the consulting got suspended.

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

As mentioned above I am loving my new lifestyle.

One strange thing to mention…I had always heard people say that they love retirement because “every day is like a Saturday”. This always concerned me. Again, I am a big believer in balance. If every day is Saturday, then Saturday is no longer special. I loved Saturdays and I feared losing them.

Well I have found this to be bogus for me. I have scheduled my week so that all chores get done Mon-Fri, so weekends are still special and only scheduled with fun activities. Plus, I am a huge sports fan so weekend NASCAR, motorcycle racing, not to mention college football/NFL/PGA will always make weekends special for me.

The one common sentiment that I have found very true is that the Sunday afternoon/evening blahs are gone for good. Sunday late afternoons and evenings are now among my favorite time of the week. Not having that pre-occupation of a million things to do and having to get up super early on Monday is priceless!
I must say that I love not having to sleep in a strange bed Mon-Thurs every week.

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

Most mornings I am up by 7:30, then coffee and reading the WSJ as well as several blogs on various topics plus email. I must say I have very leisurely mornings and I love it.

I usually will go for a run around 11-12, then weight training.

Then it is whatever I have planned, be it yard work or other house projects and errands.

Obviously, I must flex my time if I have some consulting work to knock out.

When high school coaching starts, I will have more routine to my day.

I do try and plan to accomplish something each day. It does not have to be a big thing as I find even knocking out some little tasks gives me that feeling that I have been productive.

Looking back, what would you have done differently?

I cannot say anything different at this point.

Was there any emotional impact from leaving the workforce?

I am very fortunate as it has been a really smooth transition so far. As I have stated above I did try to do a lot of preparation for this huge change so hopefully that is what has helped.

The strange thing is that I almost never thought about my job in the first 3 months after walking away. It was like a magical cold turkey success.

Then when January hit I found myself occasionally thinking about the job and missing the leadership team a bit. I worked with some great folks and I do keep in touch occasionally.

But I have never had any second thoughts. I can immediately hear the stress in their voices when we chat.

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

Biggest surprise is that Covid-19, the big Black Swan decided to come 5 months after I retired.

Good news is that we have handled it so far and this should be good news for future returns since valuations have been adjusted down.

What are your future plans?

Continue to discover what I will find meaningful and fulfilling in life 2.0.

I love the idea of being able to give back to the community and I love the idea of freedom.


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

Despite the pandemic, having a few layers of cushion to our plan has enabled our plans and lifestyle to stay on course.

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?

Our post retirement spending has been exactly as planned at roughly $7K per month. $4K of this is funded by my wife’s job and once a month I transfer $3K from our money market mutual fund to our checking account.

I also fund a sinking fund account once per month. I thought up this idea myself and had been tossing the structure around for a year or so pre-retirement. Then I read Fritz’s post on this in his blog “The Retirement Manifesto”. This helped clarify my thoughts, so I adopted his approach to basically accrue for longer term capital expenses like a new car, roof, etc.

I know that this is just mental accounting, but it helps to smooth out those lumpy expenses when they do occur. When the big paychecks stop coming, the accrual approach not only smooths out the spending, it also smooths out the anxiety. Since the pandemic hit in mid-March, our spending has dropped quite a bit to about $4K per month since there is nothing to spend money on.

Our current cash/bond hoard is huge and could provide anywhere from 8-12 years of living expenses. IMHO this is excessive, but it is by design to protect us against a bad SORR early in retirement (can you say Covid?).

My longer-term plan is to maintain 3-5 years by occasional harvesting. We also have discussed moving to our dream home which may take a ~$300K whack out of the portfolio which helped me rationalize the excess liquidity.

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

I have not decided on a SS strategy yet and I plan to explore this in the near future.

I do plan on doing Roth conversions in the future to minimize our tax hit from RMD’s. I am in the process of developing the specifics on this so I’m not ready to share anything on this yet.

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

I think that I can say with certainty that I will never return to a full-time role. I have turned down many opportunities to pursue some very attractive gigs since retiring. The thought of working full time in an office is already quite revolting to me.

I cannot say that I wish I retired sooner because the extra year or so really paid off in terms of financial cushion. For me I think that I timed it right.

But boy…I could never go back. I will continue to consult on a limited basis so long as I enjoy it. We will see.

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

I was very concerned about this because I loved saving money. I really got a thrill socking $10k+ a month away.

However, after you do the math 1000 times and realize that you have enough, and you have a systematic plan to insulate you from short term market moves and pay yourself each month, it actually was easier than I thought.

I also fully expect to ramp up our spending to more than $84K per year in the not too distant future. Once we get a couple of years of retirement under our belt, and assuming that the market returns regress to the mean, our portfolio will easily support withdrawals of ~$125K + per year.

The impact of our very low initial withdrawal rate plus future SS makes this feasible. It is nice to be able to tread lightly in these first few years and not sacrifice anything. But I foresee much more frequent travel in our future once my wife retires.

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

At this point I do not see any big gaps. I am glad that I read as much as I did to prepare for the non-financial aspects.

What advice do you have for those wanting to retire?

Not to be a suck up but ESI says it all.

Invest in yourself and Earn.

Save as much as you can while making sure you strike a balance and enjoy the journey.

And invest. Believe what you hear about index funds. They are inexpensive, they are efficient, and they will outperform your brother-in-law’s stock tips every time. Make a plan and stick to it.

If anyone spots any gaps or concerns with my plan please let me know in the comments. Being a DIY guy I always welcome another POV. Thanks for reading!


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