High income ER - long-term follow-up from post 5 yrs ago

[Ruminator]

Hi all, I've benefited so much from this forum in the past, and wanted to contribute an update as I personally have enjoyed the more longitudinal stories on this site.

When I first came here, basically in crisis, in 2014, there weren't a ton of people in situations like mine, so hopefully I can help someone out. And of course, I'm still learning, so as always welcome any advice or camaraderie!

A few years have passed since my initial contemplation of ER in 2014 (see link below), but we have made some major life changes. The big ones have been: cashing out of an extreme high COL area and moving to a more moderate COL area; a little bit of budgeting; and announcing my retirement this year. I'm mid-40's and had a high profile professional services job for 18 yrs. Here's the old thread for context:

http://www.early-retirement.org/foru...-up-75023.html

Our income grew as expected and we will retire with ~$15m in liquid assets, invested 80% in 70%/30% VTI/VXUS and 20% in a hedge fund that has done well for us thru cycle for the last 15+ yrs. Own our home, and no debt. We live on about $250k (300-400 if I add in health expenses, we luxuriate more, etc), so am not concerned about whether it is sustainable. [We'd be pretty happy living in a shack by the beach, which makes me wonder why it took this look to see the light.] $500k of the liquid is going into a donor advised fund this year, to start, and we are heavy in equities so that we can donate the upside over time.

The biggest questions now are about:
(1) How to raise our kids with the right values (we are trying to be present but not too much so, and are largely hiding our wealth and teaching them to work for it). But teenagers are hard, especially if you pay attention!

(2) What will be fulfilling for me long term. I am massively enjoying sipping a morning cup of coffee, seeing the kids off to school, working on projects I dream up, exercising, pursuing hobbies with vigor, actually getting to know people around me, sleeping adequately, etc. But am starting to think about what will come next. I am naturally a hard-charging person, so may need a more serious outlet for that at some point. Frankly it's hard to imagine any kind of intense "job" work will ever be a part of it, there's too much other fun stuff to do, but never say never... I am delighted that my frequent flier status is falling by the day, and my ties are waiting in a pile for an eventual bonfire.

(3) I'm hoping my wife will want to slow down at her career at some point soon so we can explore the world, be spontaneous, etc. This is probably the biggest area I'm thinking about, as she has put her professional life on hold for 20 yrs while I did my career, so now it truly is her turn... but at the same time, I'm ready to have fun and we have the resources to do it! I'm trying to be patient.

My wife asked me the other day how I'm feeling in the midst of my retirement announcement and transition process, and I said I feel like I'm 12 years old. The world is so filled with possibilities and I am not gunning... I did college and grad school and career and now I can get back to what truly stimulates me. This post resonated completely with how I've been feeling:

https://ournextlife.com/2018/01/17/high-school-rule/

Anyhow, I recognize I'm incredibly fortunate to be in this position, and am so thankful to this group for advice that set me on the right course. Thank you all, and as always, advice welcome.

[Texas Proud]

Just one comment on what you wrote...


You cannot hide that you have money from your children... they will eventually figure it out when all their friends and their parents keep asking them how all the stuff you do is paid for as you do not have a job...


Then there are the comments your kids will make.... one time my DD was waiting for me to pick her up... the adult asked what kind of car I will pick her up in... she said "I don't know, we have 4 of them"... (At that time most cheap)...

[Ruminator]

Texas Proud, thanks and I agree. It is already clear we are viewed as the wealthy family in our kids' circles living like we do. We are not living like we have big savings, e.g. we fly coach, drive 5 yr old low-key cars, dress rather shabbily (I wear what's on top of the pile), etc, but we have a nice house and I am so happy to be (soon) without a job that I am not hiding it much... So hoping our kids turn out well-adjusted. We are trying to build in them a sense of self sufficiency and ambition. Lots of great threads I've read on here about finding this balance in parenting, but welcome advice.

[Sunset]

OP - I have no advice, nice to hear your story. How wonderful.

As for the money.

Tell your kids, if you perform well at school, get a good paying job and do well at it, you can be rich like your parents

[leftbucket]

OP,

I highly recommend a legitimate part time job in retirement, especially while you have kids at home. I work 3 days a month, but...the kids see Me take it seriously when I do work, and it helps dramatically with the questions others may ask them (and ask me as well). Even if its only a 1 day a month job that pays, I would consider it....maybe an NFL referee?...

Congratulations,
LB

[jabbahop]

I am not sure the age of your kids but we retired when our kids were in high school. I agree with Texas Proud - your kids probably already have an idea our your relative wealth even if they have no idea of actual level. My kids would ask if we were millionaires and we would response “We?” And nothing more. They knew kids whose families who seemingly spent less and more.

At first I was concerned that retiring would send the wrong message about work ethic. In fact I think it ended up sending a good message - work hard and you have freedom to choose what you do - based on their summer work and spending/saving patterns.

Spending more time with the kids during high school (sports, college searches, etc.) was really enjoyable for me and they seemed to appreciate it.

What you choose to do in retirement is a big question and I think this forum has a such a variety of different answers from throwing oneself into hobbies, exercise, traveling, etc. to just taking it easy. I will say traveling for us didn’t really change until the kids were off @ college due to their school and job commitments. It might also be complicated by your wife’s career. We have started to become comfortable doing some trips single though that isn’t of preferred travel. For example I have gone biking in Mexico a couple of January’s when my wife preferred staying home with friends.

Good luck and enjoy your hard gotten independence.

[HI Bill]

I had a neighbor who ran a small business generating a really good income, and had four young kids (0-9 years old). He lived in a two-bedroom condo with his wife and kids because he wanted to teach them humility. He could have easily afforded a house, and as they grew older, would certainly want to move into one.

While it's nearly a certainty that your kids know your family is well-off, they don't have to know how well-off. Kudos for keeping your lifestyle low-key, and not buying into the 'Southern California" lifestyle. From what I've read, letting the kids know early on that they won't be inheriting anything until they are xx years (if at all), and encouraging them to work for their money and become productive members of society will go a long way towards fostering indpendent, well-rounded kids who will transition into solid adults. That said, I would also teach them that by doing so, they can build their own life, with their own values, and if they desire, can also make FIRE a reality, by themselves, without a large inhertiance.

Living in Hawaii, I've seen many well-to-do families on vacation, staying at high-end resorts, buying all sorts of clothes, snorkel gear, and eating out at fine dining restaurants. I wonder if those super-spoiled 'silver spoon' kids will every amount to anything. Hopefully, so!

Good luck!

[audreyh1]

I hope you are putting your most highly appreciated stocks/assets (lowest cost basis) in that donor-advised fund! For maximum tax benefit.

[MarieIG]

First of all congrats with you ER plans.

With regard to the kiddos, the goal (in my opinion) is responsible, intelligent, gainfully employed adults, able to fully support themselves and their families (should they choose to have them) without looking to continued financing from you. (That's not to say not to gift within reason or not to leave them an inheritance, :it's a fine balance.)

I would NOT tell them that you are "rich." That is a bit of a subjective statement, and what you mean by it, and what they imagine it to be are two different things.

At this stage, I would NOT give them details about net worth. If they ask, you can respond something like: your mother and I have worked very hard, and that in combination with some good fortune/ blessings in our lives, have allowed us to become "comfortable" and to allow me to retire/significantly cut down my work hours to spend more time with you. However, it IS necessary for us to budget/ watch expenses.

You should not give them the feeling of "entitlement." You may intend to pay for very expensive educations: however, they should not feel entitled to a 70k per year tuition payment without blinking an eye. (They need to be educated as to the different schools which are out there, from community college to state schools, to the different private schools before the choice is made so as to not take anything for granted.) Oh, and you should show them how student loans accumulate and make them read an article or two about how loans linger for decades and their effects upon life style. - I do not anticipate that your kiddos will have student loans - but they should be appreciative/grateful.

You can drop $ on SAT prep courses and tutors without them even much noticing. Paying for a class trip to Italy, I would (that's a lifetime memory), but that they need to appreciate something like that.

Cars - if you are gifting should be tied in with a demonstrated need: and should be USED and SAFE, not new and fast. If you want them to pay for something associated with the car, limit it to gas. You need the insurance to be sufficient and up to date; you need to repairs/inspections to be current.

Part time jobs are good: money doesn't grow on trees. But, if you have a kiddo who is literally putting in tremendous hour studying and involved in school activities, you don't want the job to effect their grades - again the balance.

The kiddos should have weekly chores, a responsibility to contribute to the family. It's not all about "MEEEEEEE" others are important as well. You may not let them know the amount that you contribute to charity, but you can let them know that you do - and why.

A small allowance is fine. (I was rather unusual here, I did not link an allowance to chores. I expected chores whether or not they received allowance money as I did not want the kiddos to get it into their head that they somehow deserved to be paid for anything they did for the family.)

You actually need to teach your kiddos about money. Start off simple. How to save, how not to accumulate (in particular CC debt), living within your means, later regarding investing. You can mention that you paid off your house when working, allowing you to require less money to live each month. Remember Stupid can blow through any amount of money.

Show them how to enjoy the simple things, in particular their time with their Dad and family.

Good luck!

[Texas Proud]

Just wanted to throw in another comment...


My DW will make some snide comments about me being on the couch and watching TV... so my DD started up doing the same... one day I just had it and when she said something I blew up... I said I had worked hard 50 years and saved so I could sit my butt on this couch and enjoy my life... she has never mentioned it again...


BTW, DD enjoys a lifestyle that we never had the ability to have.. we grew up poor and had to work at my dad's businesses... she gets almost everything she wants as DW will just throw money at 'things'... I kinda hate it but unless I get a divorce cannot change it...

[Ruminator]

Thanks audrey1, yes for sure! I put our most highly appreciated VTSAX shares into the DAF.

[rd2020]

Ruminator!- thanks for these posts. Would love to hear an update on what has been going on and how you decided on what would fill your time.

I have been reading these forums but have never posted. As I contemplate retirement, your 2014 and 2019 posts are ones I return to again and again. I am in a similar financial position and in my early 40’s. Over the last decade I have seen my net worth go from $1M to low double digits MM. During the last ten years, I always thought it would be relatively easy to pull the trigger and stop working. All the financial math says I can.

However, now I am faced with high income (depending on company performance cash and stock of $1-$3 MM per year) and find it harder to walk away. I enjoy the business problem solving but the stress is high and I would like more freedom. The kids are still young (10 and 13) and we (including DW) spend lots of family and youth sports time together.

I guess I am just nervous on what I would retire to, especially as kids will want to spend more and more time with friends. Would love to hear how the adjustment has gone….or any other thoughts.

[Retired Expat]

Quote:

Originally Posted by jabbahop I am not sure the age of your kids but we retired when our kids were in high school. I agree with Texas Proud - your kids probably already have an idea our your relative wealth even if they have no idea of actual level. My kids would ask if we were millionaires and we would response “We?” And nothing more. They knew kids whose families who seemingly spent less and more. At first I was concerned that retiring would send the wrong message about work ethic. In fact I think it ended up sending a good message - work hard and you have freedom to choose what you do - based on their summer work and spending/saving patterns. Spending more time with the kids during high school (sports, college searches, etc.) was really enjoyable for me and they seemed to appreciate it. What you choose to do in retirement is a big question and I think this forum has a such a variety of different answers from throwing oneself into hobbies, exercise, traveling, etc. to just taking it easy. I will say traveling for us didn’t really change until the kids were off @ college due to their school and job commitments. It might also be complicated by your wife’s career. We have started to become comfortable doing some trips single though that isn’t of preferred travel. For example I have gone biking in Mexico a couple of January’s when my wife preferred staying home with friends. Good luck and enjoy your hard gotten independence.

Lots of folks; kids, family, friends ask what my job was once retired. Non answers like living off investments doesn’t satisfy most people. Saying I still consult, manage properties and am an active investor somehow does. All true even if I am doing it all for my account. While we don’t owe anyone an explanation people look at you differently if you are effectively saying you are independently wealthy and have no need to work. So I don’t lie and am busy taking care of things that make me money or perhaps save us money. Isn’t saving money equal to earning it?

[RobbieB]

I don't care if I don't satisfy "most people", just concerned about my family. Those other people can satisfy themselves however they want.

I don't ask about their jobs, don't ask about mine.

[oiseux]

Congratulations!

I'd think I'd spend some time on the "what to do next" and alignment with the spouse. Have you considered really getting involved with a charity (like Boards, heavy volunteerism)? Given your already admirable steps, it could be a way to really get some enriching experiences, new friends and involve the family.

I'm curious, if you want to share, I saw in one post you had a 2018 target. What caused it to slip (if anything beyond the high earnings/extra cushion)?

[steady saver]

Okay well nobody is addressing this but I think it's a BIG DEAL:

"(3) I'm hoping my wife will want to slow down at her career at some point soon so we can explore the world, be spontaneous, etc. This is probably the biggest area I'm thinking about, as she has put her professional life on hold for 20 yrs while I did my career, so now it truly is her turn... but at the same time, I'm ready to have fun and we have the resources to do it! I'm trying to be patient."

I am that wife that put her professional life on "slow" status...I chose to leave my PhD program when I had our second child but it was hard. I maintained a small practice all those years and had geared up with a new practice when DH decided to retire. Because of concerns about potential serious health issues he may genetically inherit, I closed my practice. I didn't want to regret losing our time together. But I am having regrets nonetheless. "My turn" never really materialized. I take full responsibility for making those decisions, but some robust encouragement from DH would've gone a long way in helping me figure out how to make it work and to have the luxury of help from him in the same way I had helped him throughout his career. I urge you to support your wife in her career and have open and candid talks about that support.

[finnski1]

Quote:

Originally Posted by steady saver Okay well nobody is addressing this but I think it's a BIG DEAL: "(3) I'm hoping my wife will want to slow down at her career at some point soon so we can explore the world, be spontaneous, etc. This is probably the biggest area I'm thinking about, as she has put her professional life on hold for 20 yrs while I did my career, so now it truly is her turn... but at the same time, I'm ready to have fun and we have the resources to do it! I'm trying to be patient." I am that wife that put her professional life on "slow" status...I chose to leave my PhD program when I had our second child but it was hard. I maintained a small practice all those years and had geared up with a new practice when DH decided to retire. Because of concerns about potential serious health issues he may genetically inherit, I closed my practice. I didn't want to regret losing our time together. But I am having regrets nonetheless. "My turn" never really materialized. I take full responsibility for making those decisions, but some robust encouragement from DH would've gone a long way in helping me figure out how to make it work and to have the luxury of help from him in the same way I had helped him throughout his career. I urge you to support your wife in her career and have open and candid talks about that support.

I agree completely!

[pacergal]

OP--
Congratulations, you have saved and done well.

Your wife was "patient" for 20 years. It is now her turn to shine!
Do not push her. She obviously enjoys her work and doesn't do it for the money for your budget. Can you sit down and review both of your ideas about retirement? Are you both OK with you doing some traveling or whatever on your own? (keeping in mind the needs of raising teenagers on a day to day basis :-) )
When does she see herself retiring? A year or two, 10-20 years?

[Ruminator]

Hi, it's the OP, back again after another 2 1/2 years!

I am loving retirement.

A few random observations:
1. I don't think about retirement nearly as much as I did when I was working. I just happily live my life. [I guess that extends to checking this forum, which I used to do daily and now I see I've let some replies sit - sorry! ]

2. My wife's career is ramping up! And I'm happy about it. I appreciate the encouragement from several of you to support my wife's career-building. She does "gig" style work, and has ramped up to several commitments that she's found quite rewarding. Sadly, her efforts started to really get a head of steam right around when COVID started, so that put a damper on progress... but she's starting to pick up momentum again and is enjoying it immensely. I think over time we'll find a happy medium where she has some stretches in the week and over the course of a year that she is free to play, and others where she is more busy. We'll take full advantage of her time "off", and I'll have plenty to entertain myself (and take care of her) when she's "on".

3. Kids - Our kids will be off to college within the next couple years. It has been incredibly rewarding - and challenging - to be much more closely involved in their lives than when I was working. All the "mundane" stuff - driving to activities, watching shows/lessons, helping with schoolwork and college applications, sitting down for family meals - priceless (even if sometimes tiring on a day to day basis). They've told me they feel like they know me better than they did before, which is poignant, but reinforces that I've made the right decision for me. They're happy to have their dad at home.

4. Travel - I have been struck by how little drive I have to travel for fun. I've done a few trips, but ~2 yrs into retirement I'm still just relishing waking up in my own bed, sipping a cup of coffee, doing the 1-3 things I've set up for the day (or choosing my own adventure), regrouping with the family for dinner, and winding down the day gently. It makes me realize how far from ideal was my previous routine of cross-country flights, a packed schedule, and high stress.

5. Financial - The stock market rise and our not-too-exorbitant spending has pushed our NW up over $21M. Our base spending has probably crept up to $300k (incl taxes), and we've been doing some capital improvements to the house on top of that. I don't think about money nearly as much as I did when I was working. We plan to add $1M to our DAF when NW hits $25M, and increase the proportion of any further increases in NW after that point.

6. Watching old colleagues / friends continue to achieve great career success, and rake it in financially - I have had many peers go on to achieve continued success in my old line of work, and several become CEOs of multibillion dollar corporations. I have been glad that, on self-reflection, I feel genuinely happy for them, but am FAR happier in my own shoes. I had been a little worried I'd feel some sense of jealousy or "missed opportunities", but nope. Sure it would be fun to have $50 or 100M in the bank, but what would I do differently if I had twice as much money? Nothing, really...

7. Working again - So far, no freaking way! I have turned down a number of opportunities, and can't imagine ever giving up my freedom (in any significant way) again. I may eventually join some boards, but for now I am having too much fun and staying as busy as I want to be with an empty calendar. I have 4-5 main hobbies + all the commitments above, and that is enough!

I hope this is helpful to someone, and good luck all!

[Bee4]

Like your Item 1. My kids inherited money and didn't know it was coming until early 20s. They are early 30s now. I stay completely out of their money management. Not to sound too "zen" but if you decide to let them know about potential windfalls, a) wait till college is over (assuming that is in their future) and b) here is the zen part, kiss it goodbye in your mind and trust in their ability to land on their feet with not a penny to their name. One of mine has allowed his money to be managed. The other decided to do it himself.