Post FI Notes 023: Freshly FIREd at Fifty-Seven

He advanced in an engineering career while she put in more than four decades at the local candy store while raising three sons.

Now, at age 57 and with an empty nest, they declared financial independence and began their early retirement in 2022. While the market has not been too kind to them, they remain in position for a successful retirement while abiding by the 4% rule and expecting a significant contribution from Social Security in the 2030s.

Their main questions revolve around withdrawal strategies, tax planning, and figuring out the optimal way to generate their spending money through the remaining epochs of early and regular retirement.

If you’re interested in participating in one of three interview series, please download the most appropriate form for your life situation: FIRE Starter, FIRE Crossroads, or Post-FI Notes. To see other posts in the series, visit our Q&A archive.

 

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Getting to Know You

 

You’re financially independent. About how much does your household spend in a typical year? How much could you spend while still abiding by the 4% rule?

We happily arrived at our financial independence plateau, our FI number, in late 2019 just as Covid started to crush the world.  As most of you know, “real life” is rather messy no matter how actively you plan.  It is harder to get any messier than concluding a 30+ year journey and doing so during a global pandemic.  😊

We spend between $85,000 and $100,000 a year and have done so the past several years.  This year has been much more expensive given our relocation to our new home.  However, I expect our 2023 spending to return to this range despite recent inflationary pressures.  I am comfortable with this short-term spending spike as long as it does not remain elevated.

Our current investable assets (net worth minus our primary residence) given the recent market decline stands at approximately $2.5M which puts us about spot on for a 4% withdrawal rate. 

However, we expect a modest pension at age 65 ($24,000 annually) as well as more significant Social Security ($57,000 annually, inflation-adjusted) at age 70 that should relieve any pressure on our withdrawal rate over time.  In essence, we believe that our path will involve a multi-tiered withdrawal rate that should start at 4%ish and then drop to 3.25% and then under 2%.

 

Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?

Our immediate family totals five carbon life forms: my dear wife of 31 years and our three sons who are currently ages 28, 26 and 20.  My wife and I are both age 57. 

The two oldest sons are largely independent at this point with my wife and I providing support in only minor ways.  

Our youngest son is a junior at a state university progressing towards a STEM degree.  Naturally Son #3 is still on the payroll but he is very modest in his worldly needs as were his brothers. 

Overall, while certainly not without their flaws, our sons are pretty darn independent and we are super fortunate/proud of their steady growth into adulthood.

While I admire those that do support others in their life, we are not significantly supporting anyone outside of our immediate family.

We lived in a relatively high-cost area in Northern New Jersey for almost our entire lives and raised our kids in the same house that we owned for 31+ years.  In the fall of 2022, we sold our long-time home and made the move to The Sunshine State – Florida. 

Quite a transition but since we had traveled and vacationed in Florida for years, we had a head start on this adjustment.  The move certainly was a financial part of our FIRE plan (geoarbitrage) but it is also based on our desire to move towards a lower stress, slower paced environment.

One full disclaimer since I suspect many in the audience are highly skilled medical professionals.  I am not a doctor nor do I play one on TV. 

I am a simple, good old fashioned engineer so I suspect some of my inherent quirks will come through despite my best efforts to appear normal.

 

Are you still working? In what career? Did your work schedule or attitude towards work change once you knew you were FI?

I retired from my engineering career in April of 2022, April 1st to be exact.  I could have picked any day in the spring but April Fool’s Day seemed like the perfect exclamation point on my W2 career!  

My dear wife retired near the end of May 2022.  In addition to being an incredibly supportive wife and a kick-ass mom, she worked for nearly 41 years at the same candy store.  Yes, 41 years! 

She worked there since high school.  She did have a more formal professional career in the insurance industry but nobly gave that up to stay home with our sons.

I can honestly say that I was in the trenches, eagerly grinding out work all the way up until the end of my career.  Early on in my career, I decided that while I might not be the smartest person in every situation nor the most educated or politically savvy, nobody was going to out-work me.

Proud to say that I kept that up throughout my career well into becoming FI and all the way to our eventual RE.  My dear wife has the same warrior spirit.  In fact, she worked the extra seven weeks after I retired because she refused to retire before the insanely frantic Easter and Mother’s Day gift giving seasons. 

You sell a lot of candy between, Christmas, Valentine’s Day, Easter and Mother’s Day.  She would likely still be grinding away there if she had not married a FIRE zealot like me!

 

Was financial independence a long-term goal of yours? Did you think you might retire early or be able to do so when you first got started in your career?

Long-term goal?  It was an all-consuming passion at least for me!  My dear wife was on board with our FIRE efforts but certainly she was not as bloodthirsty about it as me. 

There is nothing more rewarding that attaining something that you worked towards for so very long.

If I am being completely honest with myself, 25-year-old me never would have dreamed that being financially independent and retiring at age 56 was possible. 

I also probably did not think I would accomplish as much professionally as I did over my work career.  However, as I became passionate about FIRE I fully believed it was possible to be FI and retire before age 60.  That mental pivot came into play about 10 years before we actually FIREd.

 

Investing

 

How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?

Current Nest Egg:

Equities: 65% (US equities – mix of low-cost index funds and individual equities)

Bonds: 15% (high yield bonds, I bonds, treasury bills)

Real Estate: 12% (primary residence only)

Cash: 8% (high yield savings account, money market)

Alternatives: 0%

Boring, I know.  Our goal was/is to be boring.  It is a continuous struggle to remain focused on being boring vs chasing the latest investment novelty but the long-term reward is undeniable.

Hot individual stock?  Options trading?  Commodities trading?  Art?  Gold?  Crypto?  NFTs?  Beanie Babies?  – Thanks, but no thanks.  I am sure you can make some money speculating in these items but it is just not for us.

 

Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?

This question hits squarely on one of our current challenges.  As of December 2022 (after the market correction), we have investable assets (excluding our primary residence) of approximately $2.5M broken down into the following tax statuses:

Tax-deferred: 70%
Roth: 4%
Taxable: 26%

Ideally, we would have a much larger Roth component and a much smaller tax-deferred balance.  This is a fine, 1st world problem to have but it was likely an oversight on our part.  Whoops!

 

Do you have investments in an HSA? How about 529 Plans?

We do not have an HSA.  We simply never felt comfortable moving to a high deductible health plan while raising three boys!  Super jealous for those that did make this path work.  HSAs are the bomb!

We had/have 529 plans for all three of our sons that allowed us to save a significant portion of the amounts needed for their bachelor’s degrees.  We balanced that with non-529 savings earmarked for this purpose in an effort to maintain some financial flexibility and not overfund the 529 plans.

 

 

What has been your best investment?

Easily and without being mushy at all – marrying my wife of 31 years.  Seriously!  Getting to FIRE is tough but doing so while living in an unstable home environment or worse yet divorcing one or more times is often insurmountable.

Thinking along purely financial lines, our best investment has likely been our nearly 100% US equity asset for nearly 30 years.  We did not broaden our asset allocation to include more conservative bonds and significant cash positions until we were within 3 to 4 years of FIREing.

Equity volatility can be intense but if you can keep a long-term focus and remain calm, the payback is significant.  In fact, I just ran an intriguing calculator that indicated that we likely received an approximate annual real return of 7.3% per year (nominal annual return = 10.2%) from 1989 through the 2022 market correction.  Patience and calmness are rewarded over the long-term.

 

Your worst investment?

Like most people, early on in my investing career I diddled in things that I did not understand and had no business entertaining.  Penny stocks – yep.  Stock options – oh, yeah.  

In hindsight, I had no freakin’ idea what I was doing.  Luckily, I did this when I had very little money (lost it all) and learned from my mistakes.

 

Post-FI Life

 

What do you like to do with your free time? How much free time do you have these days?

Since we are recent retirees, we have all the time in the world to focus on what we think is important that day!  Perhaps this is a bit of an oversimplification, but the joy of time freedom is fantastic.

As we transitioned into our early retirement there were a lot of “Huh?” questions from family, friends, coworkers and complete strangers asking all kinds of questions both deeply wise and absolutely silly.  One of the silliest questions has been “What are you going to do all day?” 😊

Primarily here is what we have been able to focus on so far by being FI and eventually retiring:

Sleep: Still not great on getting healthy amounts of sleep but waking naturally without a damn alarm clock helps a great deal and feels heavenly.

Exercise/Fitness: Able to spend significant time daily to get in better shape – so rewarding.

Stress Reduction: Newsflash – being FI and eventually retiring will not remove all stress from your life.  Sorry, not gonna happen.  However, it does allow you to stress about topics that really are important to you (versus silly work bullcrap).

Relocation / Home Improvement Projects: Moving is tough but being FI allows you to do so with a different pace.  Same for home improvement projects, which I really do enjoy.

Family / Friends: It is very rewarding to have the opportunity to spend superior quality time with those that you want to spend time with.

Entertainment: We really love taking advantage of what Central FL has to offer especially all the Disney properties which are 5 miles from our new home.  Love heading to a park after taking care of morning projects!  Go Team Mickey!

Travel: We haven’t really embraced this fully yet, but this is soon our radar.

 

 

Do you enjoy travel? Tell us about a favorite trip you’ve taken.

We do enjoy travel very much although since this has been such a significant transition period, we have not done much traveling yet.  However, we actually just booked three 2023 cruises in the past two weeks!  Very exciting.

While we do look forward to taking some epic travel trips, we also look forward to doing some slow travel and enjoying modest pleasures.

 

Do you incorporate giving (money or time) into your post-FI life?

Interesting question.  I suspect if giving time or money was a focus to an individual during their working life, that is unlikely to change post-FI.  We have always been very active in donating our time to worthwhile organizations.  This has slowed as we transition to our new home location however, I suspect we will be volunteering again in significant ways in the future.

Additionally, we increasingly realize that we have financial resources that we will likely not spend on ourselves.  This is not an absolute certainty but logic and probability say this is likely.

As such, we have started to craft plans to gift some of our assets to our three sons in the near term so they can utilize the money at a time when it will be most impactful in their lives.  It is said that it is better to give with a warm hand instead of a cold one.  We believe there is some truth to this sentiment.

 

If retired, do you miss work? Do you get bored?

Neither of us misses our previous careers other than some of the amazing people that we worked with and of course the paychecks themselves.  I thought I might miss the problem-solving aspects of engineering, but I have been able to scratch that itch by being super-active in refurbishing our new home.  I recently asked my dear wife the same question and she confirmed as well that she does not miss working.

We enjoyed our lengthy careers fully.  We have no major regrets at all.  However, pivoting to other non-work opportunities has been exciting.

Bored?  Nope, not one bit.  We remain very active and engaged in life.  Our activities have changed but our drive has not.

One thing I would suggest considering when you consider leaving the workforce is the concept of Addition by Subtraction.  The concept is based on the idea that you can add value to your life simply by subtracting unpleasant demands.  

I cannot emphasize how much joy I have gotten from removing the completely asinine portions of a traditional work life.  Waking to an alarm at 4:30am – no more.  Writing, giving, and getting annual performance reviews – no more.  Taking completely foolish HR training modules (what? I can’t accept expensive gifts from vendors??) – no more.  Driving in terrible, unsafe weather to get to work because you are in demand – no more.  You get the idea.

 

What advice do you have for others hoping to achieve the financial success you’ve found?

Wow, I could probably add 5,000 words here in a semi-coherent ramble.  😊

In brief I would offer:

Figure out your career niche and focus on steadily growing your work career.  Constantly add value and be agreeable.  FI is possible on a modest salary but likely easier if you have more resources to leverage.

Start your financial independence journey early no matter how small a first step you take.  Every long journey starts with an initial and often unimpressive first step.

Focus on your annual savings rate and growing that number as aggressively as you can.  This is where you should focus most of your energies.

When is doubt leverage the KISS Method of decision making.  KISS = Keep It Simple, Stupid.

Minimize your focus on annual investment returns.  If you have a simple asset allocation that is logical and works for you mentally, just relax and stick with it.

Enjoy the damn ride a bit.  Do not let your FIRE journey consume today to the point that you are not enjoying a wonderful life.  FYI, I was not always very good at this!

 

What is on your “Get a Life Tree?”

The Get a Life Tree is a concept that I picked up from a wonderful book by Ernie Zelinski called How to Retire Happy, Wild and Free?  I highly recommend it for those nearing retirement.

His book does not dive into any of the traditional retirement financial numbers but rather your post-retirement life itself.  This is really an underdiscussed portion of FIRE.  In his book, he discusses how to construct a post-retirement tree with main limbs focused on 4 key areas:

Activities that turn me on now

Activities that have turned me on in the past

New activities that I have thought about doing

Activities that will get me physically fit

The goal is to add meaningful branches to these limbs so that as you retire, you have a full tree to retire to (and not just away from your work life).  Super powerful.

 

Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.

Since FIRE is an endless journey even post-FI and into retirement, we naturally always have a few topics that we are focused on maximizing.  Yep, even after FIRE if you are driven to maximize opportunities; that recessive gene does not suddenly go away.  Maybe over time this drive diminishes but for me, not yet.

Current focal points:

Balancing Roth conversions, capital gains harvesting, income taxes and ACA subsidies annually: wow, talk about a complex, interactive equation full of unknowns.  We are certainly focused on trying to balance these competing demands in a logical way.  I think I have reached a point where my brain agrees that there is no ideal or perfect answer, only better ones.

Asset decumulation: Since we retired in early 2022, we are spending down assets.  So far, given the 2022 market decline, it has been rather straightforward that the best path has been to utilize money from our cash reserve.  However, over time and as the market recovers, the question of where best to draw from each month/quarter will increase in complexity.

Happy to hear any thoughts from your readers.  Additionally, I hope your readers feel free to challenge anything I have written.  I am happy to discuss.  I am never in doubt but occasionally wrong in my beliefs.

CHEERS!

 

PoF: Catch all the future interviews from those just getting started, at a crossroads, or at the end of their FI journey with a free subscription to Physician on FIRE.

 

 

I've got my 2 acres of non-leveraged, crop-producing, cashflowing farmland via AcreTrader. Get yours.


 

I thank today’s interviewee for sharing their story, and I’ve shared my feedback privately with them. I wouldn’t want my opinions to influence yours. Please give your take and answer any questions they have had in the space below!

Again, if you’d like to partake in a future Q&A, please download a FIRE Starter, FIRE Crossroads, or Post-FI Notes interview form.

 

6 thoughts on “Post FI Notes 023: Freshly FIREd at Fifty-Seven”

  1. Great article! Congratulations. It is definitely a journey. As I read your article, I assumed that the sale of your NJ home with $500K tax free gain and move to a less expensive home in a lower tax state was part of your strategy, but you did not explicitly state this. This is an excellent strategy!

    Our situation is so similar to yours (married 33 years and retired in 2021 at age 57). It is gratifying and reassuring to read about your experience. I know a few engineers, and they are very fastidious and particular (I am being nice). Your mention of the recessive gene had me laughing!

    I just want to mention Frugalwoods as an excellent resource for anyone who wants to tighten their expenses. Also for stretching your travel dollars, we are doing home exchange and offering pet-sitting services in exchange for free lodging. It has been an adventure!

    Reply
    • Hello Sally:

      Sorry for the delay in responding. Thank you for the kind words!

      Congrats to you and your husband as well!!

      Yes, the sale of our long time NJ home and relocation to Florida was a part of our FIRE plan. Geoarbitrage can be very helpful financially. However, I do not think we would have moved just to realize the financial gain if we also did not want to live in Florida (warmer weather, slower pace, more time with Mickey).

      Thanks for the Frugalwoods lead. I will check them out!

      All the best

      Reply
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  3. congrats man! you and wifie should be very proud that you will have a future to enjoy to the max after careful saving and preparation. You give me a lot of hope! I live in Upper Saddle River, NJ and at the age of 41 and a neurologist I plan to retire at 65, but my wife wants to FIRE in 9 years, and seems daunting given expenses and taxes here in NJ. We also are not the most frugal of couples either, but we try to save 20% of gross income for retirement. also, we do plan to get the hell out of NJ when i retire and move to Florida and enjoy sun and no state income tax!

    I should be getting advice from you, but regarding when to draw down equities I would wait until your equities at least draw back to even from when the bear market started in feb of last year and try to deplete your cash reserve first, then iBonds (if past the 1 year lock up period), then short term treasuries. Hopefully the equities will recover the losses by then. My reasoning is this is the reason you have these “safer” assets, to draw down cash and bonds to wait until your stocks recover. Also, I recommend selling your individual stocks while they are down in this bear market to minimize cap gains and convert to low cost stock index fund.

    But likely you already thought about this! God bless you man and thanks for sharing 🙂

    Reply
    • Wow, Upper Saddle River NJ! We lived in Ringwood, NJ for 31+ years so very close to you.

      Thank you for the kind words regarding our journey and also your advice regarding drawdown. We luckily (but planned) have a significant cash buffer due to our NJ home sale so the near-term is covered which should allow equities to recover in 2023(ish). And yep, hope to sell the individual stocks in 2023 (vs 2022) to avoid the NJ taxman.

      You did hit the nail on the head regarding understanding and getting after your expenses. I was slower to realize this than other aspects of FIRE but once I got on board, we really did a fair job of eliminating non-value add expenses from our lives. I would suggest that you make the time to get gritty on your monthly expenses. I have now measure our expenses every month since March 2018 so 5 years of data. I use Personal Capital and then download into Excel each month to manipulate any wrinkles. It takes me about 30 minutes a month. Hardly a burden. As the saying goes “what gets measured, gets managed”.

      Given what I am sure is your significant W2 income, I have no doubt you have the building blocks to FIRE as your wife wishes. At least you can be “FI” even if you do not want to “RE”.

      Leif has my contact email. Feel free to get it and reach out to me. Happy to help!

      Reply
  4. Freshly FIREd at Fifty-Seven: Congratulations to you and yours!!!
    Your story is so similar to mine. I’m still stunned by seeing my whole life recapped in your story – thanks for sharing it! (My wife just read your story as well, we’re both grinning at the similarities.)
    Just started post-retirement on 1/1/2023. My wife of 31-years will join me on 5/1/2023; just wants to get her clients through one more financial cycle. We are both Fifty-Seven.
    Feedback: get some help on the tax-loss harvesting component of your non-qualified plans; this is a real gift-horse for your 2023 and future tax liabilities (today’s tax-loss harvesting software is amazing). The fiduciary advisor you select will also help you answer the question of which buckets to draw-down first, as this stategy will impact your future taxes, Roth roll-overs, the future cost of your medicare, etc.
    Bottom line: Congratulations on reaching this milestone, and for embracing the fact that your new, full-time job is setting a course for living life and enjoying adventure for the next 40-years! (Three cruises booked; nice start!) To quote one of my life-long friends, “This next phase of our lives is going to be a lot of fun.” Thanks again for sharing your FIRE Journey!

    Reply
    • Thanks Jeff! I appreciate the kind words and advice.

      Congrats to you as well! If I have one word of advice it is this:

      Your transition into retirement will likely be choppier than you planned. That is completely understandable. However as a planner, it caught me off guard a bit. Embrace the madness and enjoy the ride. 🙂

      Reply

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