When I started blogging, I had been investing for over a decade but just learned what an index fund was, had been paying tens of thousands of dollars per year in excessive fees and unnecessary taxes, and was figuring out how to unwind all of my past mistakes. My goal was to make personal finance accessible to others like me and show that you don’t have to be perfect to get on the path to FIRE.
Today, I’m sharing the story of a long-time Can I Retire Yet? reader, Wade and his wife Cathy. Their story had parallels to my own, and he offered to share it. It is a story that has gone full circle. They both retired early, and he is now looking for ways to pay it forward by helping others.
Wade shares how they retired in their early 50’s while still saving more than they will likely need despite their rocky financial start. We also explore how they got on the same page with their early retirement plans, what he finds surprising (both good and bad) now that he is on the other side of retirement, resources he’s found helpful, and what may lie ahead.
Take it away Wade…..
I’m Wade. My wife, Cathy, and I both retired in our mid 50’s around 2021/2022. My wife was a high school teacher for 35 years. I spent the majority of my 31 year career in technology (software and cloud) in sales, marketing and program management. We do not have children, but have 11 nieces and nephews. We enjoy the outdoors, hiking, and I have a passion for landscape and nature photography.
Deciding When to Retire (X2)
We did not retire at the same time, but pretty close. Cathy retired in May of 2021 and I retired in January of 2022. Originally I was going to continue working for another 5 years or so, but retired at 53.
What changed? My mother was diagnosed with cancer in 2020 and it worsened heading into 2021. She was in her 80’s and living alone and looked to me as her primary caregiver. My mother entered Hospice in March and just passed on June 21. The last 4 months have been quite stressful and intense. Anyone who has cared for a dying parent knows what I’m talking about.
A variety of things including career satisfaction decline added to the desire to retire early. Lastly, we had hit our FI number many years earlier prompting the “what are we waiting for” discussion.
Getting On The Same Page With Your Spouse
We didn’t get to the decision to retire easily. I learned that its very important to bring your spouse along on the FIRE journey. That is one mistake I had to correct. I waited too long to engage her in the thinking around FIRE.
It took some time to educate her on how it worked. It was a process over many months. Once I walked her through everything she agreed the numbers and projections made sense. If I’m honest, I don’t think she was 100% convinced, but she trusts me and that was a big part of the agreement.
Since I had always managed our money and investments, Cathy was feeling a bit blind and surprised at how we arrived here. I have always shared our net worth, but she didn’t fully understand how that converted into cashflow.
Now, I share much more detail of my thinking in investment decisions, specifics on our cash flow, expenses, etc. I built out a one-page statement of our financial status, cashflow, etc. and provide this to her on a regular basis.
Another concern she had is that since I was the “expert” in this area, what would happen if I die? How would she manage all these accounts, allocations, etc?
This lead me to build the “Blue Binder” (Rob Berger recommendation). This binder includes our investment policy statement, location of our accounts, statements, how to rebalance, all of the detail needed to take over our assets, or if she didn’t want to manage it herself, turn it over to an advisor to manage. She told me the “Blue Binder” is her favorite. It gives her peace of mind.
The Role of Frugality
We lived below our means, but not “well” below. We certainly made spending mistakes over the years, luxury cars, larger house, expensive remodels, higher taxes. The cars I regret, the house not as much.
As far as creating a paycheck, right now my wife’s pension more than covers our expenses. We are very fortunate to have a pension and I can’t emphasize how much it removes uncertainty in making the FIRE decision. For anyone pursuing FIRE, any incremental income you can generate helps to alleviate drawdown pressure from the portfolio.
In our pursuit of “enough”, the FI number calculation started about three years before Cathy retired. I tracked expenses in Quicken and did a 3 year average while also factoring in some outliers and potential large one time expenses. After some number crunching we came to find that the pension income was more than enough to cover expenses. My wife was particularly surprised by this, but it’s held up for over a year now.
More Than Enough?
Excluding the pension and our home, our investments calculated out to about 45x our annual spending. I did not include Social Security in this number. My wife doesn’t qualify for Social Security (SS) due to her pension (WEP) and while my SS will increase our cashflow, I discounted it by about 50% due to uncertainty with the SS trust fund. After that discount, its impact was minimal.
I know it’s a privilege to be in this position. This is a somewhat atypical FI number.
Cathy and I discussed and agreed to build a larger than normal buffer in investments because I had a strong feeling we were going to hit a bear market soon given the long bull. The bear did come and our NW decreased by 14% so far from the peak in 2021, but it’s had minimal impact on our quality of life.
So far our drawdown rate is less than 1%, predominantly due to the pension. While we do at times use dividends to replenish cash accounts, we are now maxed out at what we need in cash. I currently hold about 5% of our portfolio in cash which is conservative given our pension cashflow and manageable expenses, but I wanted some buffer in these early years. I’m reinvesting any income from our taxable account from this point forward.
While both my wife and I were good savers and had relatively controlled spending, being high earners helped us achieve FI much earlier than we had expected. Not everyone is going to have a large salary, but to the extent you can increase earnings and control expenses, it will certainly help.
All that said our journey is not over. We still have areas to dive into such as Roth Conversions, tax management, charitable giving accounts, updating our estate plan, and recently an inheritance. Constant education is the approach we’ve taken for our next phase of FIRE.
Navigating Health Insurance as an Early Retiree
Cathy has 100% premiums covered via her pension through age 65 (Aetna PPO). I just recently switched from COBRA to a dependent on my wife’s plan. This will start on July 1 so we’ll see how this goes.
My premium will be 50% covered by her pension as a dependent. I calculate that the premium will be similar to my COBRA single premium, but we’ll have slightly higher out of pocket costs for things like prescriptions. I have accounted for the higher premiums in our budget.
Her PPO coverage ends when she starts Medicare, so I will need to look into ACA plan coverage for a few years since I’m 2 years younger than her (She loves when I tell people that. 😁)
I’m staying close to developments in ACA. I have factored this into our overall annual spend projections.
One thing that surprised me is the assumption that COBRA is prohibitively expensive, but for me it turned out to be a good deal. I think it’s very dependent on your employer, what kind of premiums they have, how good the plan is, single vs family coverage, etc.
I wouldn’t write off COBRA as a short-term option leading into early retirement. Its been helpful to have the same coverage and plan benefits I had with my employer for 18 months as we plan for a transition into a more permanent plan.
Another benefit to COBRA is that I was able to continue contributing to my HSA because the employer plan is a HDHP even though I’m accessing via COBRA.
Insights From the Other Side (Unanticipated Rewards and Challenges)
I’d say we are hitting a rhythm and routine in retirement: we’ve become closer as a couple, we talk more, we do more together than when we were working. It’s been really nice.
I don’t have any regrets so far. People ask me all the time, don’t you miss work? I honestly don’t.
What I do miss is the satisfaction of helping others. I was a mentor to many younger employees over my career and it’s the thing I derived the most personal satisfaction. I’m still searching for the “thing” that will replace that.
One of the biggest adjustments/challenges has been my relationships with friends and coworkers. Even my friends outside of work are so busy with their lives that it’s hard to find time to get together.
I’ve found I had the attitude of “I should call them but I don’t want to bother them. I know how busy they are with work etc”. I needed to break that mindset and take initiative to staying in touch with friends.
An Encore Career?
(In our email interactions, Wade shared that he started classes in preparation for the Series 65 exam and is considering getting a CFP designation. I asked him to share his motivations, goals, and challenges he’s encountered, and where he is in the process.)
My original interest came from wanting to pursue more formal education in finance/investing. I’m self taught, but I wanted to take my knowledge to the next level. I am interested in doing some pro-bono advice, so I thought it made sense to get officially certified.
I’m over 1/2 through the study materials for my Series 65 (Investment Advisor Representative licensing) exam. I haven’t decided to pursue a Certified Financial Planner certification. This pursuit was put on hold in order to focus my attention on caring for my mother in Hospice.
I may pick this up again, but due to putting my life on hold for the last 4 months, I may take some time for travel the rest of the year and pick up the study again in 2024. I’m not putting pressure on myself in this particular area.
Overcoming a Bad Retirement Plan….
We had 2 bad experiences with advisors. The most destructive advice was to purchase a variable annuity in my wife’s 403(b) plan. This predated our marriage.
Shortly after we married I noticed Cathy had been saving for 8 years and had hardly any money in her account. I dove into the annuity and found she was paying 8% annual fees on top of the 2-3% expense ratio of the funds in the plan. It was a mess.
We decided to take the surrender charge hit and move to regular mutual funds. Unfortunately, at the time I wasn’t as educated on how mutual fund expense ratios worked, load vs no load, etc. (this was around 1999 for reference).
Cathy ended up agreeing to move her money into American Funds which was recommended by the advisor. While not as bad as the annuity, these were still very costly funds.
Learning and Moving Forward
Finally her school district added Vanguard as a 403(b) plan option so we used this as an opportunity to completely extricate her from the bad advisor and high fee funds. I calculated that over a 12 year period she lost nearly $250,000 in gains due to the expenses and lost growth opportunity.
The financial industry is particularly predatory in pursuing teachers with annuities. At a minimum I try to share our story with other teachers as an example of what not to do with their 403(b) and to pay close attention to expenses.
Both of the above experiences in the late 1990’s and early 2000’s led us down the path to take more control of our investments. There were certainly additional mistakes along the way, but once we started investing with Vanguard, I learned more about expenses, reading about John Bogle, etc.
It was a real eye opener. I started paying more attention to our investment options and expenses and most importantly simplified our investments (US, International, and bond).
The role of FIRE Blogs and investing blogs came a bit later in our financial journey, I’d say post 2017. As our portfolio grew larger I started to research how much we needed to retire.
This led me down a path to the 4% rule. I started subscribing to financial blogs, FIRE blogs, podcasts, YouTube, etc. I believe Can I Retire Yet? is the 1st FIRE blog that I subscribed to and actually read on a regular basis, including Darrow’s book.
Over the years I’ve expanded my reading and viewing. I’ve read through many books and have a long list of subscriptions to blogs sites. While not complete, my list includes:
- JL Collins
- Financial Samurai
- The Retirement Manifesto
- Early Retirement Now
- Retirement Researcher with Wade Pfau
- Michael Kitces
- Rob Berger
- Ben Felix
- And a newer GenX FIRE blog, Two Sides of FI.
I enjoy reading and learning from different perspectives coming from all the wonderful educators. Some of the blogs focus on very technical investing advice/strategy, some are more around the emotional FIRE journey and post FIRE experience, all continue to contribute to my education.
Thank you Wade for generously sharing your story. I appreciate readers putting themselves out there for others to learn from. If you have gotten value from these reader stories and would like to share your own, email me at email@example.com.
Here are my big take home messages:
Savers vs. Spenders
The two reader case studies I’ve published this year were about as opposite as you can get. They drive home an observation I’ve seen over and over regarding approaches to personal finance. Some people seem hard wired to be spenders, while others are natural savers.
This is not to say behaviors and mindsets can not change. But change is hard.
Note how Wade’s financial conservatism flows through nearly all aspects of his story. He reports his household’s investment assets are 45 times their annual spending. In addition, Cathy has a pension that covers 100% of their normal expenses. Yet he was planning to work another five years prior to family circumstances forcing his hand.
In his original responses to my writing prompts, he did not mention factoring Social Security benefits into his plan at all. After I asked him about this, he came back with what you read above…. assuming a 50% cut to his stated benefits.
Contrast this with our previous case study from Margo and Nick. Their propensity to be spontaneous and spend freely flowed through almost all aspects of their story.
This is not to endorse one approach over the other. I think key lessons can, and should, be taken from both.
I personally relate a lot more to Wade’s story, and I’ve observed this consistently with readers of this early retirement blog that I’ve had the privilege of interacting with. We tend to skew heavily to being natural savers, at times to a fault.
That’s why I tend to focus more on writing about how much is “enough,” learning to make the shift from saver to spender, and learning how to enjoy the wealth you’ve build and use it to make the world a better place when you have “more than enough.”
Hidden benefits of FI
There is one definite advantage of being a saver and achieving at least a degree of financial independence quickly. Despite the best laid plans, we don’t necessarily control when we will retire. Reasons people retire earlier than planned include, but are not limited to:
- Health issues,
- Wanting/needing to be a caretaker,
- Job loss,
- Changes in company management, values, and/or locations,
- Age discrimination,
- Unforseeable events forcing change (See: pandemic).
Having at least a degree of financial independence makes these events that can be catastrophic for those in a vulnerable position, at least manageable for those with some financial security.
I appreciate Wade sharing his experience of being a caretaker for his mother in hospice. I recently went through a similar experience. Financial independence did not make this experience easy or stress free.
However, it did make it possible to be there for my loved ones in the way I wanted. I was able to focus my attention of being a caregiver, without worrying about a paycheck.
Getting on the Same Page
It is common in couples for one partner to have a greater interest in personal finance. Wade shared some excellent recommendations and resources to help bring the less interested partner on board and make them feel secure.
Even if you have two partners who are both engaged, it is common to divide and conquer to be more efficient. I shared earlier this year that this is the approach my wife and I tend to take with our finances, and how our different perspectives lead us to drastically different conclusions about our spending patterns.
If either of those scenarios describe you, let this serve as a reminder to start better conversations with your partner, and to develop systems that are simple and well documented so the less interested and/or involved partner can confidently step in and take over if necessary.
An Important Message for Teachers (and the Rest of Us)
I also appreciated Wade pointing out the poor retirement plan options Cathy had as a school teacher. I’ve witnessed this with multiple school teachers in my family who I helped decipher retirement saving options.
I’ve touched on this topic in the past when writing about often expensive and complex annuities, which are unfortunately a common feature in teacher’s 403(b) plans. If you are an educator, or have one in your family, this is important to understand.
I’m not sure why this is such a prevalent issue in teacher’s plans. I think some of it is the loyalty of teachers to their union, who they assume is looking out for them.
Even if you are not a teacher, there is a valuable lesson here. It is one Wade and Cathy learned again when blindly trusting a financial advisor, a story that was all too familiar to me.
You simply can not blindly assume anyone has your best financial interests at heart. There are too many conflicts of interest. You must educate yourself on at least the basics of personal finance. Blindly trusting your financial future to anyone else is a risk you can not afford to take.
* * *
* * *
[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. After achieving financial independence, Chris began writing about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. Chris also does financial planning with individuals and couples at Abundo Wealth, a low-cost, advice-only financial planning firm with the mission of making quality financial advice available to populations for whom it was previously inaccessible. Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He has spoken at events including the Bogleheads and the American Institute of Certified Public Accountants annual conferences. Blog inquiries can be sent to firstname.lastname@example.org. Financial planning inquiries can be sent to email@example.com]
* * *
Disclosure: Can I Retire Yet? has partnered with CardRatings for our coverage of credit card products. Can I Retire Yet? and CardRatings may receive a commission from card issuers. Other links on this site, like the Amazon, NewRetirement, Pralana, and Personal Capital links are also affiliate links. As an affiliate we earn from qualifying purchases. If you click on one of these links and buy from the affiliated company, then we receive some compensation. The income helps to keep this blog going. Affiliate links do not increase your cost, and we only use them for products or services that we're familiar with and that we feel may deliver value to you. By contrast, we have limited control over most of the display ads on this site. Though we do attempt to block objectionable content. Buyer beware.