For many individuals approaching retirement, financial security and lifestyle adjustments are major concerns. Stacy and Michael’s story exemplifies the journey from a demanding career to a fulfilling and financially stable retirement. Their thoughtful preparation and dedication offer valuable insights for those preparing to navigate this transformative stage of life.
The Burnout Moment: Knowing When It’s Time
After decades in retail, Stacy hit a point of burnout—a feeling many professionals in their 50s and 60s can relate to. Having worked tirelessly for over 30 years, including the challenging retail landscape during COVID-19, Stacy realized she was ready for change. Her primary goal became transitioning to a retirement where she could focus on life’s simple pleasures and enjoy time with her family.
Key Insight: Retirement readiness isn’t just about finances—it’s also about knowing when you’ve reached the emotional and physical limits of your career. For Stacy, it was clear she needed to prioritize her well-being and begin the next chapter of her life.
Building Wealth with Late-Stage Savings
One of the most remarkable aspects of Stacy and Michael’s story is their ability to amass significant savings despite starting later in life. Stacy began aggressively saving at age 47, funneling bonuses and raises into their 401(k) and other investment accounts. By living frugally—packing lunches, avoiding lifestyle inflation, and making sacrifices—they built a portfolio worth over $2 million.
Key Insight: It’s never too late to start saving. Even if you feel behind, disciplined saving and avoiding unnecessary expenses can create substantial wealth over time. Stacy and Michael’s approach demonstrates the power of consistency and prioritizing financial goals.
Calculating Retirement Expenses
Stacy and Michael wanted to live a simple yet comfortable retirement without the fear of running out of money. Their monthly retirement budget of $2,500 (excluding housing and healthcare costs) was a reflection of their frugal habits. However, as they discussed their aspirations—such as attending live music events and traveling—they realized they could comfortably spend more without jeopardizing their financial future.
Key Insight: When planning your retirement, start by estimating your essential monthly expenses, including housing, healthcare, and daily living. Then, account for discretionary spending, such as travel or hobbies, to ensure your retirement lifestyle aligns with your dreams. Revisiting these numbers annually is crucial to staying on track.
Managing Assets and Income Sources
Stacy and Michael’s portfolio was well-diversified across 401(k)s, Roth IRAs, and taxable accounts. However, 50% of their assets were tied up in company stock, which had performed well but carried risks. Additionally, they owned multiple properties, including a lake house they planned to retire in and two other homes they intended to sell to boost their cash reserves.
Their plan also included Social Security benefits beginning at Michael’s age 64 and Stacy’s age 70. Until then, their income would primarily come from their investments.
Key Insight: Diversification is critical in retirement planning. Relying too heavily on a single asset class, such as company stock, can increase risk. Selling underutilized properties or other assets can provide liquidity and reduce maintenance costs, further strengthening your financial position.
Retirement Withdrawal Strategy
The couple’s withdrawal rates were projected to remain within a sustainable range of 2.5% to 3.5% annually. This conservative approach ensured their portfolio could potentially last for 40+ years, even accounting for inflation and market volatility.
Key Insight: Sticking to a sustainable withdrawal rate, such as the widely cited 4% rule, helps preserve your portfolio over a long retirement. However, it’s essential to adjust based on your portfolio’s performance and your changing needs.
Preparing for Market Volatility
Stacy expressed concern about being 100% invested in equities, particularly given the potential for market downturns. While equities offer growth, having a portion of your portfolio in safer, income-generating assets like bonds or high-yield savings accounts can provide stability during economic downturns.
Key Insight: Balance is key. While equities can fuel long-term growth, having a diversified portfolio with safer investments ensures you have funds to draw from in challenging market years without selling assets at a loss.
Creating a Fulfilling Retirement
Beyond financial planning, Stacy and Michael emphasized the importance of enjoying their retirement years. Stacy spoke passionately about attending live music events, traveling to scenic locations like Red Rocks, and possibly even splurging on a Kansas City Chiefs Super Bowl trip. These experiences represented the rewards of their decades of hard work and sacrifice.
Key Insight: Retirement isn’t just about surviving financially—it’s about thriving. Allocate funds for hobbies, travel, and activities that bring joy. By planning for these expenses, you can enjoy life to the fullest without financial stress.
Annual Monitoring and Adjustments
Stacy and Michael’s plan was built on assumptions about market returns, inflation, and their spending habits. Regularly reviewing their portfolio performance, withdrawal rates, and expenses would ensure they stayed on track and could make adjustments if needed.
Key Insight: Retirement planning doesn’t end once you stop working. Regularly revisiting your plan ensures you can adapt to changes in the market or your lifestyle while staying financially secure.
Conclusion
Stacy and Michael’s journey illustrates that with disciplined saving, smart investments, and thoughtful planning, a comfortable retirement is achievable—even for those who start later. Their story is a reminder that the sacrifices made during your working years can lead to a richly rewarding retirement.
For those nearing retirement, consider these steps: evaluate your expenses, diversify your portfolio, and plan for the life you want to live. With the right preparation, you too can retire confidently and enjoy the fruits of your labor.
