Long-time supportive reader (and baby boomer) Ron emailed me this week to say that he had recently retired, at age 57. Because of his success, I asked him to share his story with us so that we could learn from it. He graciously agreed so please read on and discover that careful retirement planning does pay off.
Our story is relatively straightforward. My wife is 55 and I am 57. Last week was my final week of employment. In 23 working days, my wonderful wife of almost 37 years will be joining me in retirement.
Like so many baby boomers, we both have a mailbox full of degrees. My initial background was in accounting/finance for 10 years before gravitating to education. Marsha has always been in education and will be finishing her career as Assistant Superintendent of Instruction and Curriculum for a school district.
We adhere to the philosophy of always saving something toward retirement. It started when we were in our 20’s by opening IRA’s. We followed the IRA’s by opening 403b deferred comp. vehicles. We always have contributed (forced saving).
As of the past couple of years, we have also utilized the opportunity of opening 457c savings plans. After getting hammered in 2001 with the demise of the equity markets, we shifted everything to fixed income. [Ed. Note: Your conservative switch helped you dodge a big bullet in 2008.] We’ve always made money since. We have taken full advantage of tax free rollovers to take advantage of higher interest rates. The one thing that we believe folks should be fully aware of is the effects of federal income tax on taxable investments. Thus, milk deferred comp. to the max.
Three facets of entering retirement that were mandatory are:
1. Manage expenses
2. Utilize a budget (both before and after retirement) make budgeting a mindset
3. Enter retirement debt free or with relatively no debt (it’s all about cash flow)
One also should become a student of reputable information sharing. My two must haves are: Go to Retirement (your blog/numero uno) [Ed. Note: Thanks for the plug Ron!] and Kiplingers Retirement Report. Folks have to be aware of who is out there and not fall victim to entrepreneurial exploitation.
Take advantage of organizational discounts. i.e. AARP and AAA.
As you have pointed out, people should have long term care coverage with an inflation rider. We both have a policy. It is imperative that you have health care coverage. I could write a book on that.
Sometime, it would be a pleasure to reflect on that topic. We are in the process of leaving our group and purchasing HSA compatible Blue Cross Blue Shield policies. We’ll be saving almost 50% and have another saving vehicle through the HSA. [Ed. Note: We would like to hear more about the coverage and costs of these policies.]
With all of the above being said, we are starting our retirement with multiple income streams. Our net income after taxes will actually be about 25% to 30% more than when we worked. [Ed. Note: Truly an awesome outcome. Pensions are so helpful for this.] If folks will read your blog and follow your sage advice, they will well be on their way to a healthy retirement. There is sooooo much more, that I could add regarding the experience of getting here and would enjoy doing so in the future, if it will help folks out.
Ron and Marsha
Thank you Ron and Marsha for sharing your story. Personally, I would love to read more, particularly as you adapt to retired life while still in your 50’s. So please contribute whenever you have the time. Meanwhile, congratulations on what you have achieved.
I invite any other readers to share their stories as well. Use the contact page to let me know you have something to contribute.