A Broken Marriage Ruined Their Finances. Here’s How They Turned It Around.

Introduction: Fear and Financial Independence (0:00)

Lori: My therapy was spending.

Rick: He’d always say, you know, you’re going to be poor in the middle of the street with no money and no one’s going to care. That fear kind of drove me.

Brian: Does that mean through y’all’s entire life that y’all have always been on the same page or is this a new thing?

Rick: Is that microphone working?

Lori: When we hit that rock bottom, are we going to sink or swim?

Brian: How does that make y’all feel where you are on this financial independence journey?

Meet Rick and Lori (0:27)

Brian: Welcome to another episode of Making a Millionaire. This is where we help our guests build their great big beautiful tomorrow.

Bo: That’s right, Brian. We are so excited because we get to talk to millionaires and millionaires in the making because we believe there’s a better way to do money. And today is no different. We are with Rick and Lori and we are so excited that you guys are here.

Rick: Excited to be here.

Bo: Awesome. So, you guys decided to come on and be on this show. So, I want you to tell the audience, who are you guys? Like, what’s your background? Where’d you come from? Married, kids? Do you know each other? Walk us through that kind of stuff.

Lori: We’ve been married 32 years. And we have four amazing kids. We live in Texas. Our oldest is Reagan and she is 29. Liam is our old—our second but oldest son and he is 27. Kieran is 22—almost 23. And then Chobin is our youngest and she was adopted from China. She’s amazing. And she is 19.

Brian: That’s awesome.

Rick: She’s a freshman at Arkansas.

Bo: So hold on. 19 through 29. That makes you guys like empty nesters-ish, right? Like kind of sort of almost halfway there.

Rick: Yeah, we’re one semester in to being happy. We’re looking at each other at night going, it’s just—it’s just you and I, babe.

Brian: Is that a good thing, right?

Rick: That’s—just so you guys understand, date night becomes every night. It’s crazy. It’s crazy.

Lori: True.

Brian: That’s awesome. So, but and talk about—because that’s family stuff. How about—obviously to come on a show like this, you had to make a living doing something. So give us a little background—working, retired, where are you at in your financial life?

Career Background and Early Retirement (2:14)

Rick: So, we’ve been married about 32 years, a little over now. And I have mainly been in the medical field either in surgical sales or pharma from almost my whole career. And we just—my company had a reorganization and they had an offer of—me to take a severance in an early retirement and I was planning on working two more years, you know, and they said, “Well, we’ll almost pay you for a year and a half of that. Why don’t you?” And I thought, “I think I’m going to leave.” I can work for two years or I can get paid to not work for a year and a half. Yeah. And so I weighed that one on and we decided to take the package and we’re doing it and I’m going to still work—probably do a consulting gig with a company that I helped start a long time ago about eight years ago. But then that’s where we’re at. So we had this jumping off point and I was actually reviewing that package and I was watching two of my favorite financial guys on the YouTube and I thought, man, I wonder what they would say. And then you said, “Hey, we’re having a show. We like to talk to you.” I’m like, “Oh, should we do this? This is—we were speaking to you. That’s to my heart.” Because you know, there’s a lot of anxiety and fear when you are jumping off and retirement sounds like something. You understand? Just like becoming an empty nester. When that—you turn that page, you’re like, “Okay, I never really thought on how this was going to play out and I never really thought about how an early retirement would play out.” And so being here is such a gift. I mean, other people may have had a great ticket that they paid a lot of money for or won to go to a great game last night, but this is the financial Super Bowl right here. We’re glad to be here.

Brian: Flattery will get you everywhere.

Rick: And my lovely wife, she’s been a school teacher.

Lori: Yeah. So, I’m a teacher. And I taught for three years and then I took a 21-year sabbatical and helped raise kids and we were blessed enough that I could stay home and I loved that. And then I went back and I’m in my 10th year. I went back and taught second grade and now I’m a dyslexia therapist.

Bo: Awesome. That means—okay, so you are retired now.

Rick: I am three weeks in.

Bo: Three weeks into retirement, but you love work and you love what you do. What does retirement look like for you?

Lori: You know, that’s a great question. That is something we might want to talk about. I don’t really—we thought smart people that know finance could tell us how to work.

Brian: It’s our job to tell them. No, no pressure. No pressure.

Rick: Yeah. We actually had a plan. We thought we’re going to both work for about two more years. And we did this and she does really love what she does. It’s not really a job. It’s a mission. Sure. And she’s still got two years in her or a year and a half in. And so we’re thinking that’s going to work. And she says, what are you going to do? I’m like, I’m gone. No, no, no. I had a—we have a small software company that I helped start about eight years ago. And that small software company doing a little medical need has grown almost into a $16 million company and it’s doing really well. It’s not a small company anymore. It’s got real office space and things and coffee rooms like you guys have. It’s like wow, this is a real company and so there’s a chance to go back there and help them grow. Oh, awesome. And so I’m going to probably be doing that and I don’t know what that looks like either. That’s just kind of another—

Bo: So retired but pseudo retired trying to figure out what the next chapters are.

Rick: And we’ll get into this when we get—because I think it’s probably a good time to talk about numbers and other things, but there’s something different about when you work because you want to work, not because you have to work. I mean, there is a power—

Lori: Amen to that.

Brian: That’s why we kind of on the show, we’re always pushing to buy and own your time as fast as you possibly can.

Net Worth Statement (5:48)

Brian: And that’s why I can’t wait to jump in, Bo, because I want to know as we share this, what was the secret sauce? Is it discipline? Is it you made a great investment here or there? We’re hopefully going to be able to jump into and figure out what actually created what you’ve—all that that y’all built.

Bo: So, let’s look at your net worth statement. You guys were kind enough to share. Let’s talk about sort of where you are right now today. So, right now you can see a very healthy cash bucket. You have about $92,000 in cash. How did you guys come up with that? Because now three weeks ago, have you thought through the process of emergency fund? Was this—and now it should be this that I’m retired—or has that even entered into the lexicon yet?

Rick: Yeah, people we know that are good at finance have said that we should have like a six months worth of liquidity and I actually have used—the way we’ve done it is our taxable brokerage has got some money and we kind of have that in fairly conservative investments. We hadn’t really thought we were going to need, you know, we’ve kind of used that as our emergency fund, if you will. And a little bit of the scenarios changed because the severance that I got from my employer did hit. Okay. Last week. Awesome. Was it a severance paid all at once for a certain period of time? It sure was. Awesome. Yeah, that hit. And so everything’s a little—the tide waters have gone up on some of those accounts. And so we are—we have enough now for two years off to keep us steady state at what we’re salary making. And so we’ve got that in cash. And I’m really kind of wondering what to do with it because I thought I’d put it in money market. And then I was also thinking about on the second year that we tucked back, I was thinking about putting it in US treasuries, but I haven’t—in my Schwab account. I haven’t done anything because I thought what if I could ask two really smart guys what to do.

Brian: We might have some thoughts.

Rick: You guys always do.

Bo: Well, I think it’s interesting. You know, you said you listen to us and we talk about having six months of liquidity in current living expenses readily available. And that’s true while you’re in the accumulation phase, but we do have a thought that as you enter into retirement, as you enter into living off those resources, your emergency fund probably should expand. Rather than now being six months of living expenses, it should probably be somewhere between 12 to 18 months of living expenses. So hearing that you have 2 years of expenses and readily available cash, you’re probably not as overweighted on cash as you might think. I think that’s actually fairly close to where you should be.

Brian: It makes me happy because it allows—because when we look at your investments next, you are very heavy in retirement accounts and I was—and Bo and I even when we were doing pre-show prep, I was like, how are we going to backfill because I’d love to have more taxable assets, specifically more taxable cash and this I think this creates a tremendous opportunity to kind of backfill that so you can mitigate the risk, mitigate the emotional stuff that comes as you go into this new transition of life.

Bo: But I love hearing you say that if I am going to sit on this cash, I might as well have it yielding something. I want to have it in some sort of high yield money market somewhere where it’s at least doing something for me. Maybe even treasury. So I think there’s nothing wrong—even though your new standard will probably be keeping 18 to 24 months of liquid expenses and cash—at least earning something so long as cash is still rocking and rolling for you. And then you have an investment portfolio. And your total investment portfolio right now is a little over $3.6 million which is incredible. The way that’s broken down is the lion’s share, Rick, is in your 401(k) from your prior job. So, $2.5 million there. Thinking through rolling that over to an IRA, living in the 401(k). I mean, all this is pretty new. Have you begun to have those thoughts or conversations yet?

Rick: Yeah. The cool thing about our company is, we can keep it in there and there’s no fee. Awesome. And so, and it’s a—they both have target funds and they also have index funds. Great. And so I’m kind of in—and some S&P index funds and people I know that are real smart on YouTube have told me that’s a good strategy. And so I think the reason I’m loving this conversation and being here at the Super Bowl of Finance because I want to make sure that we are—I feel overweighted in that area and I’m thinking I don’t understand the mechanics of the Roth, you know, the how you buy out or convert—Roth conversion. Mhm. I mean, I watch your shows and I’ve read your book pretty well, but I didn’t really read those pages double time. So, I don’t know if I know the process and I haven’t gone on money.com to figure it out. So, I was just kind of hoping to get your guidance today on that.

Bo: Okay. Great. Love it. And so, then as we continue to go to the net worth statement, your Roth 401(k), Rick, has about $112,000 in it. You have a rollover which has $636,000. So, again, that’s another pre-tax account. Then you have a taxable brokerage account that has about $251,000 in it. And it looks like you have some vested RSUs from your prior employer sitting there at about $115,000. Any thoughts on—are you going to continue to hold the company stock now that you’re no longer there or—

Rick: Yeah, knowing what I know, I think I’d like to hold because it’s a—you know those are growing very aggressively. I have a little heartbreak story I’ll tell you later if you want to hear it, but it’s horrible. Yeah, because I cashed out of those—some of those RSUs to pay our house off and it was like a two and a quarter interest house and I paid it off and so I do the—oh just oh—kick the spurs on that one. It was very painful to me because you know I do the math every day and the stock’s gone really well—the appreciation and I do—well—that you know that feeling good about paying off the house just cost me about $190,000.

Brian: So, but don’t—let’s—I mean hindsight’s 20/20. Me and this guy debate this all the time. You are at the stage of life where if it brought you peace of mind and also—and I can already see what I think—this is not a bad thing because we—there’s going to be lots of things in your life that you can look back on and go would a should have could have. And that’s what I love. And I noticed there’s zero debt here which I thought was actually a healthy thing.

The Financial Crossroads (11:36)

Brian: But does that mean through y’all’s entire life that y’all have always been on the same page and especially with debt and other things or is this a new thing? Is that microphone working?

Lori: Testing. Testing.

Rick: Yeah. Yeah. We really had a crossroads I’d say about 13 years ago where we kind of came together and I am a sales guy and so we get commission and so debt is the enemy. Yeah. Because it makes you know—it makes you crazy because you want to believe and hope your commission is going to come in. It’s going to be great, but if it’s not, that’s a harsh reality. So, I’ve always been very fearful of debt. And I think we came to a crossroads where we realized we weren’t on the same page financially. A lot of really life basis things. And we actually went to some counseling, some church counseling. It was awesome for us because it was like I’m panicking. I don’t feel like our life’s going the right way. And, we had a chance to get through that and I think we came to understand each other a lot better. And that kind of righted our financial ship.

Brian: So, but what I—I need you to go a little deeper into that because what I’m trying to figure out—this is a great net worth statement. You y’all have—y’all have done incredibly well and then to hear y’all had some conflict or differences. I need to know what that means. Does that mean that you’ve always been super tight? And Lori, does that mean you’ve always been a spender? Where are y’all—where do y’all fall on that? I mean, how have y’all—

Lori: Yeah. I mean, I think I definitely at one point we had—we had some struggles and I think my therapy was spending and that was kind of how I coped with some of those emotions.

Rick: We had a health issue with—we have four kids and we adopted our daughter from China. But before that we had another daughter. Yeah. That when she was two she was diagnosed with medulloblastoma brain cancer. And through the next two years we went through a surgery, chemotherapy and just a lot of emotions and a medical journey that was stressful. And I think one of the outcomes of that was—she didn’t want to burden me because I’m kind of tight with the debt and the thought of money. And so she put away the fact that we were overrunning our money expense and so I didn’t really know about it. And then when I found out that—oh my gosh we have all this money on credit cards. She’s like I don’t want to make you mad. I’m like well this is going to—and this kind of triggers me but it was hard because it wasn’t about—I don’t want to make it about the money. It was about we were going through a very hard time and psychologically you know you do crazy things to—and through that whole thing we—I don’t want to burden the show or make it hard but we lost our daughter after two years and it was a hard thing but you know recovery came through getting to know each other—going to counseling and then through that when our kids—you know they said hey I know we lost our sister and it’s horrible but we have room in our heart and we have room in our house for another girl—we go find a girl that needs it and that’s why we have Chobin and she doesn’t replace Marin at all, our daughter that we lost. But she does give us a place to direct our energy and our love. And through that experience, we started talking about, man, we can’t do this debt thing again.

Overcoming Fear (14:39)

Rick: And my dad, my father a long time ago, you know, yeah, I’m the last of 10 kids. And he’d always say, you know, you’re going to be poor in the middle of the street with no money and no one’s going to care. And it was kind of—and I never realized it but we found out through the counseling and going that that fear kind of drove me—

Brian: Were you telling all the kids or just you specifically?

Rick: No, he used to do it to all the kids. He used to have a lecture and it was really hard because he’d even drive places where there’s homeless people—goes “oh there’s our people” and I’m like what? We’re not homeless. We’re okay. And so he—and I think he was—he was trying to make us be thoughtful about money and it was the old school hard—you know—hard sell. And but I could tell you that I told her a lot of that fear in me and a lot of the panic that I do in my career and our life is probably driven by irrational fear. Yeah. And you know, we’ve gotten through that and by going and talking about it and owning it as a couple, I think we kind of came to the same page and I think that’s why we got the debt under control. We paid off the house and you know, we’ve been pretty clear for 10 years.

Bo: I think it’s so amazing as a married couple. But what you just described, and I think a lot of people can connect with this, is that the poor financial situation was actually a symptom of something else going on. It was less about making bad financial decisions and it was more about not being on the same page as a couple and not having the communication around that. And so, just for the folks out there that are listening, I’d love to—for you—how did you know this is the time? Was it like, hey, I got this credit card debt and you got to know about it or did you miss a bill or did you get a bill? Like what—how did you guys finally decide, okay, this is the time when we need to go get some outside help to speak into what’s going on with us?

Rick: Yeah, it came in waves. I mean, we’re on our 10 year anniversary and I found out about a credit card she had and I didn’t even know and we were upset about that and we’re in Hawaii and I found out about it. So, I’m like, let’s get peanut butter sandwiches. We’re going to eat peanut butter sandwiches the whole time we’re in Maui. What could go wrong, you know? We’re going to fix it, right? We’re making memories. Yeah. Happy anniversary. Bad strategy. Don’t do it.

Brian: Well, it probably—because Kauai is not the cheapest cost of living place. If you’re there and then you find out about this debt, you’re like, “Oh my gosh, what are we doing here?”

Rick: I did. I did. I started—maybe I can go in that cane field and work for him and make some money. But yeah, and so we found out there and we managed through that drama and it was okay. But you know, it was to a point where we had to, you know, I had to drain all my liquidity out of several accounts. I had some US Treasury bonds, cashed all of those out and found out what a signature loan was and then we got out of that high interest debt and then we got it down to low and then we paid it off real quick and that was hard. And then later on about—you know that was a long time ago—22 years ago and then you know about 10 years—10-12 years ago I was like you know we’re getting ready for our kids to go to college and we’re trying to set up funds and we just weren’t directionally correct and I could see that the onslaught of college expenses was going to torpedo our ship and I’m like we got to do something. She’s like ah we’re good we’re good. I’m like no no no we’re really not.

Lori: And because it all—you know—it kind of created that stress between us. I knew that he was worried about living in a box on the side of the road and not—and so I didn’t really—every time we tried to talk about money it became like this big issue. I have abandonment issues and so I was always worried that if I talk about it he’s going to get mad and then he’s going to leave. Right. And so it was—there was so much around that emotion behind it. That’s exactly right—on top of all of the emotions with with our Marin, you know, and so it just kind of compounded—rolls into a bigger ball and then all of a sudden you’re getting crushed by it.

The Debt Reality (18:21)

Brian: You mentioned the 10 year anniversary, Lori, I’d love to get your take. Did that debt—because it was multiple? It was in the five—five figures.

Lori: Yeah.

Brian: Did it happen quickly? Was there something or was this something that built up? And I want to know emotionally what was going on. Is this something you knew this was a bomb that was sitting out there? And I mean, how did that go?

Lori: It built up definitely. And yeah, it would like—I would wake up in the middle of the night and just sick to my stomach. Because I knew, you know, and then I’m like if we would go to Costco and I remember thinking, okay, he would say, “Oh, let’s get some—whatever—eggs or you know, whatever it is or maybe some fluffing stuff, you know, that we don’t really need.” And I’m like, “Oh, no. I don’t really need that.” Because I knew what was happening.

Rick: That’s exactly right.

Lori: I’m typically the bill-payer. Have always been. And so I kind of knew. We weren’t really talking about—I would just pay that visa and pray to sweet baby Jesus that there was going to be money in there, you know, and so we didn’t really talk about it that much. And I also think me not working during that whole—I mean that was 21 years that I didn’t work. I don’t think I had a real appreciation—when I went back to work. I was like, “Oh, so this is what it’s like.” And I took pride in what I was doing and in being able then to contribute to our family, but more than that, my appreciation for Rick and what he had done for our family for that many years, it just made me respect him. All of the hard work, the early mornings, the late night flights, I mean, all of that. He was gone a lot. And so, it made me really understand and appreciate him so much more.

Transformation and Authenticity (20:17)

Bo: So, have you guys been able to have these—as your kids have seen this transformation—your financial life? Have you guys had open conversations with them around this and as they are entering into adulthood? What—I mean—my wife and I always—my wife and I joke about—what’s the baggage we’re giving our kids to take into adulthood as you think about—what do your kids know about finances and how they’re starting out their financial lives?

Lori: I definitely think that it has changed and they’ve seen us change. We do talk about it and I think when we became really authentically ourselves and really go—I mean we finally—when we hit that rock bottom and it was like okay are we going to sink or swim—you know we’ve been through all of this heartache and all of that but to then be able to look at each other and go okay here’s my cards—here’s what I am—what are we going to do with it—and it was never—

Bo: How freeing was that when you finally said this is who I am, right? I mean, yeah. And such a weight—and you’ve breathed better.

Lori: You mentioned and we liked each other to begin with a lot. It was a really good thing. We have our faith. We’re very—so that was a huge part of our journey. But we really liked each other. And so it wasn’t ever a matter of we’re going to get divorced, but you know what, honey? This has got to change. We got to do something different, right? And so when I became okay this way, I think we became this way so much more. Kids see it. I mean, we were—and just to tell you, things have gone a little off the hook. We took our youngest daughter on her senior trip over spring break. We normally go to West Odessa or somewhere—you know, 12 miles away, maybe a Motel 6. We went to Italy.

Bo: Oh, I hear Italy is different than West Odessa. I’ve never been to either, but I hear—

Rick: Good night, Irene. We get there and then our son, he’s serving in the army, our oldest son, and we just flew him in because we thought, how often are you going to be—how often is this going to happen? Never. And he’s like, he got time off and we’re like, so—time with your kid in the military—so precious. So, we flew him in. He goes, “What do we do now?” I said, “Let’s just go rent motorcycles.” He’s like, “Who are you?” Yes. He’s like, “This is weird.” I said, “No, no, this is dad out of debt.” Yeah. Because he goes, “You’re just so different. You’re so relaxed.” And I said, “Well, this is—mom and I struggled through this. Now we’re authentic.” And you know, I want you to know that when I came home from work, the reason I was upset.” And he’s like, “Oh, I can imagine—you had debt. We weren’t performing. You were traveling all the time.” And I said, “Yeah, and I felt like I got 48 hours on the weekend. I’m going to write this ship.” Yeah. And he’s like, “That must have been awful.” I said, “Well, you got the user end of it. I was not a very nice person.” Yeah. And so, and I tell you, that was a real transformation. You mentioned it in your book a little bit about living your best life and authentic and work becomes not work. It becomes an expression of who you are and a way to give back. And we saw our careers really turn into that where—okay now do I want to show up here and the way I do—I love what I do. My mission and my healthcare—what I was doing in healthcare mattered and what she does with kids with dyslexia mattered and we want to stay doing it even if we don’t have to. And so that’s—and then you imagine the weight of credit communication issues. You’re not exactly being the best mom and dad. And then all that gets right just because you figured out a way to better steer your financial ship and communicate authentically. It affects all the different—all the other areas of your life, not just the financial areas.

The Secret Sauce: Set It and Forget It (23:51)

Brian: Thank you all for being so honest. Because I think that it’s incredible. A lot of people will see your net worth statement and they never see the journey. They don’t see the pain. They don’t see the loss of your—just sharing the loss of your daughter and but also the struggles in a marriage because I think a lot of us we always internalize to our specific situation and life is not easy. I mean that—nothing is promised to us to be easy and it’s easy when you see somebody who’s got a multiple seven figure portfolio and go—well they don’t struggle with what I did and I think you guys are a testament to—no they probably—there are—everybody I don’t care how good your situation is—there are going to be bumps in the road—obstacles in your life that will completely take this thing in different directions than you ever intended or planned on but you can still—the good news is just like you guys and you’re a testament to this. You come out if you do it and you just plan and you kind of just accept whatever is coming and you and you plan for it and you try to navigate it as well—you will end up in a better place if you don’t just bury your head in the sand—just let it become who you are—essentially become the victim of the situation but I think that that is something that is a great teachable concept and that’s why I don’t want to make sure that the negatives of what you struggled with—with the loss—with the discipline—that doesn’t have to define you. There obviously has to have been some really good stuff going on in the background as well because you don’t end up with multiple seven figures. I would love to get a little detail on savings behaviors, investment behaviors. How did that all kick in? Because it wasn’t just all credit card debt that doesn’t create success.

Rick: There’s several things about this conversation with you I was worried about and that was one of them because I can tell you I’m—we’re doing fairly well. But we never did the 20%. We never did the 25%. We were more like around 18 or 17% in my 401(k). Okay. And so—and I got to be—I think another thing—

Brian: Now does it—does that count the match as part of that 17 or 18 or is that only what you put in?

Rick: Yeah, I never count the match. Because I just don’t think that’s enough. Yeah, mathematically on some years it probably was over the match, but not all the time. So, but I thought, well, I’m not like one of their typical people that—oh, I saved it and I did it. I know we don’t do that. We didn’t do that. And when you have four kids and you’re trying to make everything meet, you know, expenses come out of the blue, but so I’m more like an 18-percenter. But I did do the thing you mentioned in the book and I loved it and I didn’t know what to say. You set it and you forget it. You set that thing, that 401(k), and you forget it. And it’s automatic for the people. It’s never—it’s never money you lost. You never see it. And she’s like, “Do we have a 401(k)?” “Yeah.” “What is it?” “It’s good.” You know, I’m going to play a little poker here. No, but the point of it was is that, you know, it did. And I will be honest with you. I look at that number sometimes and like—what? How did we get here? Yeah. And you guys talk about once you hit $100,000, it really grows. And once it hit a million, it really grows. And then after a while you look at it and I mean the last year it’s just been—the bigger the numbers get—the bigger the numbers get.

Brian: Something you just said that struck a chord with me is that I think about the money. You look at the account and you feel separated from—how did it get this big—especially when you start seeing it makes more than you made in in your best working years. And when I think about I’m like did I not do enough? You know, sometimes—what I mean by meaning experience life, but then I always come back to I can’t—I don’t remember which dollars turned into what. Meaning that I don’t know if maybe I should have spent $2,000 more when I was 26 years old than I did. Or maybe when I was 33, maybe I should have spent $12,000 more on this car or something. I find myself because you start realizing I’ve built up enough that I don’t think I’m not going to be able to take this with me. So I mean what did I sacrifice somewhere I shouldn’t have? And I always come back with I don’t know which dollars it was but it was that behavior of set it and forget it. And I think in America we are very good on the consumption side and not very good on the actual discipline and saving side.

The Lemon Squeezy Story (28:12)

Brian: So is there—does that—because you said I set it and forget it and that’s what I kind of draw. Was there ever any moments now that you look at this that you wish you had done more or you have regrets or is that—are you pretty happy with it?

Rick: The one time that I remember this—I’ll remember this the rest of my life. We were in San Diego going to the San Diego Zoo. Oh. And we saw all the animals and everything and I thought, “Wow, we’re going to post this on social media and show my friends. We’re having a good time.” And all the kids were eating a lemon, a little lemon squeezy, those lemon ice things you eat. They’re all eating it and I took a picture of them all eating it and then my friend comes back. I mean, in a minute I posted it and my friend comes back and he texts me, “Did you buy one lemon squeezy for four kids to eat?” And I go, “Well, what do you mean?” He goes, “The picture has one lemon.” I said, “I’m—four spoons in it.” I’m not buying four of them because they’ll throw half of it away and I’ll be standing by the trash can looking going, “Oh, there it all goes—or you’ll be eating it.

Lori: I will consume and I’m the full figure gal because my kids don’t eat the food I buy them.

Rick: Yeah. And it was like that. I’ll never forget that because my friend goes, “Oh, McGrath, he can say, you know, he’s Mr. Spend it and forget it. He’s Mr. Hi. But he bought one lemon squeezy for four kids.” And I don’t even think about it. But now I look back and you ask that question. I go, I guess I could have bought two. Could have—two spoons, not four. Yeah. Two. The boys and the girls. They got two girls, two boys—they could eat. You guys share among yourselves.

Brian: I love it.

Current Fears and Concerns (29:33)

Bo: So you said you had this irrational fear growing up, right? Like that was something your father laid on. Well, now as you sit here with $4.5 million net worth, $3.5 million of that liquid. Do you guys still have fears? I mean, you said you had this plan where we’re going to retire in two years and all of a sudden this package comes your way and we fast-track it now and you’re still working and you’re not working. Do you guys now feel great? Has all that fear gone away or are there things that you’re nervous about?

Rick: No. No. No, it’s not.

Lori: I mean, you know, I think it does in some ways, but then there are other times where, you know, we’re going to stay in the, you know, the Hyatt Place and we’re going to all share one room because that’s what we do.

Rick: And she said about the hotel last night, she—this is so nice.

Brian: Is that what you—you say we do? Is that because this is what Rick wants to do or is this because you want us to stay in the one room? Be honest.

Lori: Yeah. You know, it really doesn’t bother me honestly. I mean, would I love the big room at the Harpeth Hotel? I told him last—I’m like, we’re not staying in Hyatt Place anymore. We’re staying in places like this.

Brian: They upgraded our room, too. So, it’s even worse.

Lori: It’s beautiful. And it’s just the two of us. I’m like, “Wow, we have so much room with our four kids because we would probably still share the same room.” And they gave us two cookies.

Rick: I only—I wouldn’t buy them anymore, you know.

Lori: That’s exactly. Yeah. We could all have half. But I—I mean I probably—it doesn’t—no, it really doesn’t bother me. I mean and I grew up—my—have a single mom. She worked—she provided for four kids. She did an amazing job with that. She’s very—was always very financial. The decisions that she made, she lived very much within her means. And so, you know, probably part of my problem as we got older and in our marriage was is I’m like, I’m kind of tired of living in that. You know, I want those jeans right now. I don’t want to wait until the end of this season or, you know, whatever that is. And so, but I mean, but to answer your question, I mean, I really think—

Rick: Normally economical. You know, I met her and I knew she was the girl that I loved and wanted to marry because we went to a Mexican restaurant and the total bill was $9.70 with a tip. Oh, wow. And I’m like, did y’all—love? No, she got a half order of nachos and I got the number six. No, it’s in San Antonio. She’s a big San Antonio girl. And yeah, we went to her favorite restaurant and you know, you date other girls and you go out and you’re like, “Oh, no. This is so expensive.” And then I’m—I’ve dated those and I date her and there’s $9.70. I’m like, “This is the one. I have got to—you got to put a ring on that one.” Yeah. 6 months later we were engaged. So I will tell you we’ve always been kind of—we’ve had a—I would say we had a pretty financial conservative platform that we—because our kids would bring it up. Do you know most people don’t spend—six—all six of us in one room. Well they don’t travel as much. You don’t understand.

Maximizing Memory Building (32:32)

Brian: But I do want to challenge because you said something—that trip y’all flew your oldest son to meet with you—to be with—that was not cheap. I’m sure that was an extra to maximize the memory because the memory was more important than the money being spent. So I have to challenge you on this as your adult children. Yeah. Do you think there still may—now maybe you’ve done—because y’all seem like y’all are a great time and sometimes you can overcome a lot with charisma and a lot of just being fun to be around. But I got to think with adult children—especially as they start expanding. I haven’t asked if any of your children are married or anything. They’re going to start expecting maybe their own bed. My oldest daughter, we like to go cruises. She told me, she goes, “Yeah, dad, if you want me to go on any more of these cruises, I want my own bed because we—I even packed a blow-up mattress on a cruise on the floor.” But to my daughter’s point—that is a mistake because she’s going to quit coming on trips if I don’t start realizing—now fortunately like Disney they have beds that come out of the ceiling so that works but when you go on Royal Caribbean or Norwegian for some reason they don’t put as many beds that drop out of the ceiling so we did blow up mattresses. I’m just telling you there is a risk—yes it is what created success but there is a risk that you actually hurt yourself in the long term, especially when you have—because it’s back to that maximizing every decade of your life. Yes, you need to be disciplined in your 20s and your 30s, but now that you can accomplish, and that’s what I want us to spend some time on. Have you accomplished your goals so that you can not hold on so tight? I mean, because I think that is an important thing for you guys to figure out. Because I asked, are you—are there fears that you have? And you said, oh, yeah, yeah, yeah. What are those fears? I mean, are you afraid that you don’t have enough money to retire? I mean, what’s the concern?

Rick: Well, two, I was worried because I want to see if we get a B+ or B minus on your scorecard. But the point is, two things. One, I think we’ve gotten better because I’m out of debt and I definitely know that now that my kids are adults, the time with them is more precious. So, no more inflatable bed memories hopefully in our life. And we’re getting, I think, better. We’re doing a cruise this summer to Alaska and I just told—I had all the kids—told them you can come and—oh what are we going to do—I said you can do any excursion you want—oh nice—they’re like no seriously—seriously you can do whatever you want because I realize that yeah—time is more precious than the dollars we save but and I can say that and I think we’ve turned the corner and I think you know we do a lot of crazy stuff—she let me get into motorcycling—I may or may not have four motorcycles at home—it wasn’t on the net worth statement—

Lori: No, no, that’s not on that.

Rick: It’s—I own those in my heart. But and so I think we’ve turned the corner, but I would say—I mean it’s important and I think about this when I watch a lot of your shows is we just came through a significant inflation crisis where a lot of that shrunk. Sure. And even though it was growing—that what you could buy with that dollar shrunk and you know and when you think about retiring you realize that this is the course—you’re setting a course with your ship and you’re off in that course but there could be a storm and it could blow—that inflation storm can blow you right back. And I’m thinking so yeah am I worried? Yes. I’m worried about how do I make sure that you know if that happens again—you know inflation. And I do have one guy that’s kind of helping me manage the Roth 401(k) and he goes, “Rick, you’ve been through two black swan—pandemic event and then 2008 and you’re all right.” I said, “Well, what if there’s another one and it’s bigger, you know, and I don’t know—and I don’t know. I’d like to have an assurance, you know, somewhat of a reasonable assurance that that’s not going to happen.”

Pensions: The Hidden Asset (36:27)

Bo: So, we sit down with people all the time who say that exact same thing. How can I have some assurance? And we know that nothing in the financial world is guaranteed, right? Or very few things are guaranteed. But what we can do is we can assign some probabilities—how likely is it that things are going to be okay? How likely is it that—okay, I made it through two black swans. What if the third one happens? Am I going to be okay? Well, there are ways that we can approach that. There are exercises we can do that never take the fear completely away, but they at least alleviate some of the fears. And we thought it might be valuable for us to kind of walk you through one of those exercises. Mhm. Now, one of the really interesting unique things that we didn’t really talk about on the net worth yet is you have something unique that a lot of people don’t have that even should allow your financial security to feel even better than maybe people otherwise situation. You guys have some pensions sitting in the background.

Rick: Yeah, we do.

Bo: Right. Tell us a little about the pensions and how that factored even into your decision to think about leaving the workforce early and having some confidence in that.

Rick: So, one of the things that you guys—and this is all good, but you know, you worry about it because you’re saying, “Well, you could retire early if you have a path to healthcare.” Well, our pension offers healthcare. Amazing. Which is amazing. Amazing. And so, taking this jump was a little easier for me because I thought, well, we got healthcare and that’s a good thing and that’s going to be somewhat controlled. And so, yeah, we have a pension and we have a health plan and I have another company I worked for a while back and a lot of people forget this. If you’re vested with that old company that has a pension, you’re vested and they’re not going to come give you the money, knock on your door, you got to go remember to call, you got to turn it on. So, yeah, I have that pension and then she is a teacher and we have a teacher’s pension early and then if she stays until 62, it gets a little better. So, yeah, it’s great. But I want you to notice none of those are inflation adjusted. There’s no like—no cost of living—in there—you go.

Brian: Yeah.

Bo: And so that’s what we said, “Okay, hey, you have these pensions, so they’re certainly part of the plan, but if we don’t have any cost of living adjustments, we’re not increasing it. What does that look like?” So, we know that we have these income sources coming in. So, you have this plus a $3.6 million liquid portfolio. And the question becomes, is that enough money or probabilistically, does it seem like that’s going to be enough money for us to be able to live the rest of our lives?

Brian: By the way, I have to pick on you guys a little bit is that when I was reviewing this because I do try to financially triage everybody’s situation. And as I’m going through the notes, I’m like, “Oh, I see an issue here.” Because I see you have all these retirement assets. You don’t have as many taxable accounts. I’m like, “Man, they’re going to have trouble in the first two to three years of liquidity. This could be.” And then I flipped the page and I’m like, I basically threw everything. I was like, “What the heck are these people worried about?” I mean, these pensions, they’re incredible. I mean, I was like, “Oh, this fixes a lot of problems.” I mean, it is. And so I mean, and I want us to go into this because we actually did a deep dive to see if we could give you peace of mind, but there’s something we haven’t completely laid out—all your financial goals because there was another perplexing thing, Bo, that I had is that when—and one of the goals, and you have to tell us if our people didn’t write the note right, but it said Lori’s retirement date was either—was it now or 2032. And I couldn’t figure out why. I was like, why did they put such a spread on? She looks at—

Lori: Ring—because—

Brian: That’s what we talked about, right?

Lori: You can’t—you have to work for seven.

Brian: I’m trying to figure out because I want to make sure I understand all the goals and how all this works.

Rick: She’s doing a mission to the children and I’ll pack her lunch every morning.

Brian: Well, truthfully, as we were talking, I was like, maybe this is the case because I could see the passion you have towards helping the children. But then I was like, but is that really or do you want to have the option to actually retire?

Lori: I absolutely want to have the option.

Brian: But what’s the why behind if it’s bigger?

Rick: I don’t know—I’m not saying it’s rational—it’s that irrational thing—that irrational fear.

Brian: Do you feel that pressure? Do you feel that he wants you to keep working or do you feel like if you wanted to quit you could—

Rick: Oh I think if I really wanted to quit. But I mean I think it would definitely be a conversation because I would want him to go, “Honey, it is okay.” If you want to—if you want to quit, it is okay. And I’ve told him when I moved into dyslexia, I was teaching second grade and then I got into this. It was COVID and I didn’t get—we—school shut down. It was done. I didn’t really get to say goodbye to my kids. And it made me so sad because I didn’t. So I told him, I’m like, I need about a year for you to say, “Okay, you do this next year or whatever.” I need about a year to be able to wrap my head around it. I’m a little bit of a processor and be able to say goodbye and be able to be okay with that emotionally.”

Rick: And I think a seven-year goodbye is—

Lori: I know.

Bo: No, I know we have—nothing wrong with people working even past financial independence because we want people to be able to work because they want to, not because they have to, right? But we do like to be able to answer the question, am I at the want to place or I’m at the have to place. Absolutely. And because obviously if we’re at the place where you don’t have to work anymore, the working any degree farther past that is just gravy. Then you get to show up because you want to do it.

The Monte Carlo Analysis (42:06)

Bo: So that was kind of the case study we wanted to lay out for you guys. So, we have some assumptions we’re going to kind of walk through as we did this. We said, “Hey, let’s go ahead—today. Congratulations. You retire.” Today, gone out of the workforce. So, now you’re both fully retired. Now, you guys were kind enough to share that your annual spend to live the life that you want to live on the terms that you want to live is about $154,000 a year.

Brian: Can we hit pause on that, by the way, because I want to pick on you guys about that, too, because when I looked at the columns, there was must column and then there was ideal or whatever. I don’t even know that they spend $154,000 because the two columns—I mean your property taxes don’t have a delta of $3,000 a year and I was like—and I was like what the heck is this and then I mean there was some categories—

Brian: I’m going to make this look as bad as it possibly could so that I—so that these guys can’t tell her to quit working. I felt like that was actually going on under the—because there was other categories. It wasn’t insurance. I was like, “These are categories that are fixed. It shouldn’t—these two columns should match.” And you had variations on every one of them. And I was like, “This is somebody padding the numbers on purpose.” Who filled out that questionnaire?

Lori: Who do you think?

Brian: Somebody was cooking the books.

Rick: We could downsize to a single wide and ride a unicycle. I mean, you know. Now, maybe a little bit of that because, you know, I like to be conservative.

Bo: Sure. So, we said, “Okay, let’s operate under your conservative numbers and assume that $154,000 of spend plus you have to cover college costs until 2028.” So, we kind of factored that into our analysis. We assume that the severance is going to increase your cash reserves to 18 months. We’re just going to kind of call that done. And then we assume you spend the remainder of the severance. So, whatever you have above that 18 months, you just spend that. All of your conservative—all your future living expenses just come from the portfolio. Holy cow. We also assumed an expiration for both of you till age 95. So we want a nice long robust enjoyable retirement. We’re going to leave your current portfolio invested. I’ll show you kind of the rate of return assumption there. It’s going to be about 7.4% and that’s just roughly a 60/40, a little bit different than your current portfolio, a little bit more conservative, but that’s going to allow us to have appropriate mean return and standard deviation. So that way when we run the simulation, it’ll let us know how accurate are our probability estimates here. We’re going to assume your cash doesn’t grow. We’re just going to park it in a 0%. Again, we’re trying to be—we’re trying as hard as we can to send her back to work, right?

Rick: I appreciate your efforts.

Bo: And then we said, let’s just assume for the base case 3% inflation, right? Let’s assume that over the long term between now and age 95, it averages about 3%. And when it’s time for you to draw social security, we’re just going to wait until age 67. So full retirement age for both of you. Okay, those are our straight line assumptions. Well, we put that in our software. Even as conservative as this is, what you can see is right now you have a consumable portfolio. We’re estimating to the end of this year will be about $3.8 million. And then in today’s dollars, you’ll notice even though you’re both retired and even though you’re living off of these dollars and your pensions, the portfolio goes higher and higher and higher. Every one of those bars is an individual year in your retirement life. And when you get out to 2065, out at age 95, when you leave this earth, you leave behind $6.4 million in today’s dollars to the four kids. So, first of all, do you think the kids, if they’re inheriting $6.4 million in today’s dollars, are they going to be okay?

Rick: They don’t deserve it. I’m kidding. That seems—my kids are listening. I love you guys.

Bo: That seems like a pretty good picture, right? Like most people when they retire, their portfolio value goes down. They live off of it. Your portfolio never actually does that. It continues to grow in real dollars through time. And that’s inflation adjusted. That’s in present dollars. That’s not—that’s not just boosted value because—

Rick: But what if someone kept working till 2032? I’m just kidding. I’m kidding. No, that’s amazing.

Bo: But you do ask a great question. What if we don’t get a straight line outcome? And that’s where this is—this is great because we said 7.4% every year, but we know the market does not deliver to us 7.4% every year. That’s correct. So whenever we try to do an analysis like this, we want to do a Monte Carlo simulation. And a Monte Carlo simulation is where we run a thousand different iterations and we say if we change the return assumptions, we have 2008 followed by 2002 and then 2022 and 1987. We have all these different iterations. Of the thousand scenarios we go through, what percentage of them get us all the way to the end of the plan without running out of money? Right? So that’s the narrative. When we ran this portfolio with all those assumptions that we listed out through our Monte Carlo, you have a 98% probability of success of making it all the way to age 95 without ever changing your lifestyle, without ever tightening your belt, without ever backing down spending. So even at those inflated numbers, yeah, 980 out of a thousand scenarios got you all the way to the end of the plan. You can even see that in the worst 20% of those iterations, like the sequence of return risk, the negative outcomes, the black swans, even in the worst 20%, you still ended the plan with almost $3.6 million, which is where you are today.

Rick: See that 2% failure rate?

Bo: I want to remind you—this is that 2% is not, oh, we ran out of money and now we’re on the street. It’s hey, I just had to tighten my spending. This assumes you live in a vacuum. We all know 2008 happened. What’d you do? You spent less money. You went through COVID—what’d you do? You spend less money. This assumes you operate in a vacuum and you don’t do that. And so even with that sort of behavior, 98% probability success of not having to decrease your living expenditures in retirement.

Rick: So you’re trying to tell me that we won’t have to eat peanut butter sandwiches.

Bo: I’m just saying you can buy the name brand peanut butter if that’s really what you want. If that’s what you want to do. But we said, “Okay, we recognize—Rick’s probably going to be a hard sell on this, right?” Because he’s like, “Well, what if—what if inflation is different? What if, you know, what if—what if we decide that when we both stop working, we just find activities that we love spending money on?” And we don’t want to just go to Maui one time a year. We want to go to Maui two or three times a year and we’re going to spend out of our mind. And we said, “What if his crazy spending, that $154,000 a year, what if he really missed the mark? Mhm. What if what actually happened in real life was you spent $200,000 a year—every year starting this year all the way till the end of your life out to age 95, right? What does that look like? That’s $50,000 more every single year, right? Well, when we run that through that scenario—

Brian: Padded your padded budget because by the way, I think you already are probably a good 30 to 40% higher than you actually are spending. But we essentially doubled it—if you really look at what your actual expenditures are.

Rick: Oh my.

Bo: When we increased your living expenses, $50,000—that can account for any number of things. Inflation, overspending, travel, kids, whatever. You can see that instead of leaving this earth with $6.5 million, you leave the earth with about $2.9 million in today’s dollar straight line. Now again, we know it’s not straight line. We don’t get 7.4. So we got to do the exercise, run this back through the Monte Carlo simulation again. So when we run it back through the Monte Carlo, even at that level of spending, you have a 78% probability of success making it to the end of the plan without having to change your behavior. Just so you know, we as financial advisers—when it comes time for us to counsel and tell someone, hey, you can retire. Hey, we have—80% is our—once we get there, we’re kind of ready to sign off on it. It’s like we got to watch it. But 80% is success rate because we know if our assumptions are conservative enough, things will probably turn out better than what we’re showing. Even with out of this world crazy spending, you guys still have almost an 80% probability success. So I would argue that you guys are not just at financial independence, you are well at financial independence based on the life that you’ve described to us that you want to live.

Understanding Conservative Assumptions (50:09)

Brian: And I think this is a good point to also highlight—when you see the downside exposure and you see that that one potentially could go to zero. Realize the way a Monte Carlo simulation works is it’s doing thousands. It’s taking a thousand different scenarios, but it’s stacking. You said you’ve lived through two black swans essentially. If you think about the fact that—dot-com bubble, you think about the great recession of 2008, even the pandemic that we had in 2020, this stacks all three of them together. I mean that’s when you get into random analysis—that bottom 20% is going to say—and we just know that that’s not the reality of the world—you don’t typically see these things stacked on top of each other but it’s okay for planning purposes to do it. The other thing we know that always I always highlight when I think about behaviorally—everybody and by the way this is a human nature thing. It’s a reason why economies all kind of act in unison is because when markets are tight or the real estate market’s down or people are losing their job. What do we all do? We put off buying the new cars, we put off replacing the fridge, you know, we just—we all tighten it up just naturally. Yeah. So this assume that you went full speed ahead even in those bad years which is disconnected from reality. The other thing—most people when they get beyond 85—you’re not spending. We have you spending wide open even in those years.

Rick: Here we come.

Brian: There is so much conservatism in here. Now I’d like to hit pause because we’ve kind of filled you in as a couple. How does that make y’all feel kind of knowing where you are on this financial independence journey? Does it change any thoughts? I mean, for you, Rick, specifically, does it change your mindset any? I mean, obviously.

Rick: Yeah. I mean, I guess it’s—you know, it seems like you’re always fighting with your amygdala, you know, your emotional brain and your logical brain. I kind of feel like a silent still voice in my—it’s all right, you’re fine. You’re fine. No, no, but what if? I know. And I think the what ifs just kill me. But seeing that, especially with—yeah, your accurate representation of my budgeting, but you know, I mean, it’s—you’re right. I always—I think I’ve always tilted my hand and worried for the future and it’s—I don’t really need to worry and it’s kind of takes a mindset change.

Roth Conversion Strategy (52:36)

Bo: Sure. One of the things we get so excited about, and it’s our favorite part about our job, is once people get to financial independence, once they get to the point to where probabilistically they’re going to be okay, then we get to do the fun stuff. Then we get to say, “Hey, go on the trip. Hey, go buy the lemon squeezes. Hey, go do the thing. Hey, go—right. Go use your money for the things.” And it may not be spending more. It may not be increasing lifestyle. It may be creating memories with the kids. It may be giving. It may be philanthropic. What we hope is that we can free you up to start getting to focus on those things, not be so afraid of the what-ifs, but then you think about the exciting what-ifs. Well, what if we could now use this to really multiply our wealth and change the world around us, change the lives of our kids, change the lives of our community, change the lives of the causes that we really care about. Yeah. And what’s great is when you get to this stage, when you get there, you guys are still so young, there’s still a lot of really fun and exciting planning that you can do. You had alluded to one at the very beginning of the episode. You said, “Hey, I’ve heard about these Roth conversions and I think that’s a thing.” Well, we did a little analysis on your tax buckets, right? And Brian kind of said this when we went through your net worth statement. If you look at the way your assets are currently spread out, you have about 81% of your dollars in tax deferred money. That means that at some point you’re going to have to pay tax on that when you pull it out. You got about 3% in tax-free. That’s the Roth bucket. Then you have about 10% in after tax. So, you are very much heavy-weighted towards pre-tax assets, which again, you’ve got $3.5 million. It’s a great place to be. We’re not suggesting you’re in a bad spot, but this is somewhere where we think we can optimize because there’s a reality that will happen in your retirement that when you get to age 75, the government’s going to start saying, “Hey, mandatory, you got to start pulling this money out.” And fortunately, we were able to project that out. And we were able to say, “Okay, if we look at what your tax situation looks like over the remainder of your lives, what does that look like?” And each one of these bars is an individual tax year, right? And you can see we have the tax brackets as the current law is today and this is indexed for inflation today with the 22% bracket—24—32 and 35—where they start. That’s where they start, right? So you can see obviously this year you have a big severance coming through. So this year is a unique anomaly from an income standpoint. And then you can see really you’re kind of just in the 22% bracket for the majority of your retirement. But then right around 2041-2042 something happens and you jump all the way up to the top of—to the bottom of the 32% bracket and then once your required minimum distributions start you now just race through the 32% bracket even into the 35% bracket—right—so you very rapidly even though you don’t want to spend this money—you don’t want to do it—Uncle Sam is going to come calling and they’re going to say hey you have to now begin giving us some of your hard-earned dollars. Well, when we look at this picture and we know that you guys have pensions coming in and you don’t have an extravagant lifestyle, we get kind of excited and we say what’s beautiful about the stage of life that you guys are at is a little bit of planning, just very little small amount of planning can have a huge impact over the long term. And we said, okay, we know an interesting thing is going to happen that at age 65, at least as it’s currently written, your Medicare changes a little bit, right? You have to, you know, sign up for Medicare. And if you make too much income when you have Medicare, then they charge a surcharge on the amount of premium that you pay. And that surcharge actually looks back two years, right? So around the time you turn 63, you really have to start thinking about what’s happening with your income, right? So we said if all we did is just did a little bit of planning between now and age 63, there’s nothing really crazy going on there. We don’t have to worry about any loopholes. You’re not on ACA marketplace healthcare, you have your company healthcare, so we don’t have to worry about subsidies. You guys kind of have this unconstricted thing for the next couple years. If we just did a little bit of planning, what would that look like? We said, “Okay, what if we just maxed out the 24% bracket?” We just did Roth conversions. So that’s converting either your IRA rollover or your pre-tax 401(k) to Roth. We maxed out the 24% bracket just for three years. Well, you see immediately now when your RMDs start in 2041, 2042, you’re no longer in the 32% bracket. Now you’re squarely in the 24% bracket. And you don’t actually get into the 32% bracket until 7-8 years later, right? What’s amazing about doing this is you’ll notice that when we run this through, and again, look at sort of the straight line assumptions that we had. Mhm. Just doing this planning for three years right here at the very beginning of your retirement could add $750,000 over the life of your plan. But that’s not the exciting part. This is the part that we get really excited about. Even though you’re going to front-load and pay more taxes up front, if you actually live out to age 95, this will save you a million dollars in taxes over the life of your retirement plan—just doing planning for three years. These are the kinds of things that you get to start thinking about and capitalizing on at this stage. If you can get past the fear of, oh, do we have enough? Are we going to be okay? Well, what if? What if? And if you can start doing some of this stuff, it actually even makes the plan look that much better.

Rick: Wow, that’s amazing.

Lori: That is amazing.

The Big Conversation (57:53)

Brian: I have a favor to ask. I imagine that this is going to spark some big conversations with you guys, especially Lori about your working. Mhm. I want you to pretend we’re not sitting in the Making a Millionaire studio and we’re now in either the walk back to the hotel room, that beautiful suite that you guys are staying in—it is quite nice—or, you know, but bring us forward. What is this new information kind of—what does that do? What do y’all—what do you all say to each other? I mean, Lori, does that change any decisions in your eyes on retirement?

Lori: You know, I mean, my first, you know, knee-jerk is, see, I told you. But I mean, yeah, I mean, I think it does. I really—I would like to retire in the next year, year and a half, because I want to go play. I want to go—we’ve talked about all of these, we love to travel, and while we can, I want to go and do those trips. Now, it might be through Costco still because that’s how we book our trips. I’m just telling you. But I want to be able to go and do those things. You know, I feel like, man, we are so blessed and we have had an amazing life and we are not suffering for the life that we have. But I want to be able to relax and to look—go to bed at night and put our heads down on the pillow and say, “We did. We made it.” You know, I love that.

Rick: I think my reaction is going to be—yeah. Yeah. Just that.

Shifting the Mindset (59:32)

Brian: I want to challenge you a little bit though because I think that sometimes as the—you’ve been a great provider, but you need to—I need to flip your fear in a different way. Your fear of not having enough is causing some scarcity of opportunities for memory building and other things. I want to flip it the other way because I think this will help you from a mindset perspective is that you guys are now—you’re officially retired. You’re in the go-go years. Meaning that you’re in that exciting part of retirement where you’re healthy, able-bodied, y’all can make memories. You’re fully able to experience it. But there will come a time that you’ll be slow-go. Yeah. And then you even get to a point if you’re blessed enough to live long enough that you might even be no-go—that you just don’t do as much. What I don’t want—you need to have the fear of how do I maximize every year to maximize these memories while I’m in this go-go phase because unfortunately with what we do for a living I see so many people that are so good—they’ve been rewarded. You get addicted to saving and building wealth because you’re rewarded for deferred gratification which is a healthy thing. Like I said, most Americans don’t get it right. You got it right. But we sometimes have a hard time flipping the switch into the healthy side is where now it’s okay to maximize these years. Because what breaks our heart is when you see the couple that said, “We’re going to build our dream vacation home here. If we just save up to this number or if I get to this number, I’ll now go do it.” And then life, like we talked about with losing your daughter, with, you know, some of the other decision things that have happened in your life, life doesn’t always do everything that you think it will. And I would just hate for you to have a scarcity of some memories that could have been built because of this mindset of we’ll just put it off for another 18 months. You need to—you need to take the cast. You know, if you—I hurt my ankle when I was younger and I was shocked for wearing a cast for four to six weeks how much my calf muscle had essentially shrunk down to nothing. I think that your ability to spend and enjoy that has kind of atrophied in that way and we need to now start exercising that muscle to maximize the moments that you’re building. So that and look, I get it. Costco travel, but Costco travel can buy two or three, you know, rooms for the kids to stay in versus one room.

Lori: I know.

Bo: I mean, it’s—the kids are going to be cheering the loudest at this episode, right?

Rick: They are. They’re laughing. We said, “Hey, we’re going on a cruise to Alaska. We’re all in the same room.” I’m like, “No, no, they won’t let us.” No, they would. They would. They said, “We’re not coming unless you split it up.” I’m like, “All right.” So, I know—now I’m going to put a lemon squeezy in every room.

Bo: There you go. Little perk.

Rick: No, I agree. I agree. It’s hard. It’s—we were talking when we started this conversation. You said, “Hey, what’s it like? You’re kind of just into your empty nester—” and I’m like, well, I never really thought about this day coming. Yeah. And I never really thought about what it’s going to be like. And so, it’s—you get so busy raising kids and working hard. You’re in that groove and it’s so hard to get out of that groove and it’s—and then you get out of it, you’re like, should I be out of this groove or should I be back in it again? So, it’s—I agree. I think it’s a shift that we’re going to have to have a conversation and a commitment to change. I know it’s mainly me, but—

Brian: But by the way, there’s nothing wrong. My favorite thing also of being a financial adviser, and I’ve talked about this before, is we don’t have to be about the no. It’s all about empowering you to live your best life now. And doing these checks—intersecting the math with the freedom to know that it’s okay to let go is an important part of the planning process and that’s what this—so that’s why that’s the conversation I want you guys to have as a couple is how do we now—job well done—high five—hug—whatever y’all do to celebrate and then say now what do we do to take it to the next level to make sure we expand this—this kingdom mindset and all the other things that you have to our family—to our charities—to everything because I don’t want you to put a restriction on it.

Rick: I agree. I agree. I think you’re right. I’m going to splurge and just go get that Members Only jacket. There it is. I always wanted it.

Brian: This is—the salesman comes in when he gets uncomfortable. He comes up with a comedy line. Humor.

Homework (1:03:50)

Bo: Here’s your homework. Number one, answer the question, why are you working? Are you working because you want to or you working because you have to? It’s no longer because you have to. So, when do you want to stop working? That’s a conversation for you two to have. That’s exciting. Number two, adjust your mindset around cash reserves. Now, you shouldn’t be 6 months anymore. You should likely be somewhere between 18 to 24 months going forward for all of your retirement. Start thinking about optimization strategies like Roth conversions. We just showed you an example of a strategy you can do. You’ll be able to do the same thing with social security and other things like that. And then the last one I wrote, go play, make memories, and this is a unique one because we don’t get to say this often. Start building your great big beautiful today.

Lori: Wow.

Rick: Oh wow.

Bo: Tomorrow.

Rick: Not tomorrow. He didn’t bring that up in the consent meeting.

Bo: Awesome.

Brian: Take some liberties. Man, if he could, he’d drop that microphone right there. That was awesome.

Rick: Thanks, guys. This is awesome.

Brian: We have had a blast having you guys on. Y’all have been great. Hopefully, a lot of our audience is going to get a lot out of not only your struggles, but also your successes. And that’s why I would encourage everybody out there watching. We love creating this content so that you can learn how do I make these small decisions to maximize not only the moment but also your great big beautiful tomorrow. Bo, if somebody wanted to come on the show, how do they reach out to us?

Bo: If you’d like to be a guest on Making a Millionaire, you can go to moneyguy.com/apply. Or if you want to have access to any of our resources, you go to moneyguy.com/resources.

Brian: Guys, I’m your host Brian Preston joined by Mr. Bo Hansen, Money Guy Team out.