Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.
If you’d like to be considered for an interview, drop me a note and we can chat about specifics.
This interview took place in March.
My questions are in bold italics and their responses follow in black.
Let’s get started…
OVERVIEW
How old are you (and spouse if applicable, plus how long you’ve been married)?
Both my spouse and I are 55 years young.
We have been happily married for 28 years (!)
Do you have kids/family (if so, how old are they)?
We have 2 kids, ages 26 and 17. The oldest is a college graduate and is gainfully employed in the workforce.
The youngest is finishing High School and is likely headed for the Trades (which I’m totally ok with when you consider how many new college grad jobs that are getting wiped slick by AI).
What area of the country do you live in (and urban or rural)?
We live in the suburbs of a large coastal city on the West Coast.
We are in a very high cost of living area.
What is your current net worth?
Our current net worth is $1.3M. Approximately $1.2M of this is in tax-deferred retirement accounts.
I do not count home equity towards net worth because our retirement plans do not involve a housing ‘trade down’ or ‘mouse-hole’ to generate cash.
We have about $1.0M in home equity, so our ‘accounting textbook net worth’ is $2.3M.
What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?
At present, all of our investable assets are in publicly traded stock and bond securities that are in brokerage, IRA’s or 401k-type accounts.
We had some rental property real estate for a while (2012-2024). I will discuss some of the other investment ‘cats and dogs’ that did not work out so well in a later question below (Hit ‘CTRL-F’ and search the page for ‘Booby Prize’ if you can’t wait that long).
EARN
What is your job?
My career was mostly mid-level Engineering Management jobs.
Since the end of 2021 (age 50) I semi-retired and have been working part-time managing small projects for a municipality. There was one year stint in the middle of that time span where I went BACK to full-time for the municipality.
However, I rediscovered how much I disliked the pace and politics associated with full-time work. I actually feel more effective working part-time, as I have more energy when I am in the office, and my supervisors don’t carpet bomb me with administrivia- Because they have limited use of my hours during the work week.
What is your annual income?
I’m working part-time with a salary of $30K per year. However, my taxable income varies based on the timing of portfolio dividends, capital gains, and investment income every year.
I’m doing the part-time work to stay engaged in the community and have some camaraderie at the workplace. None of my friends are retired yet, so if I ‘fully’ retire right now, it means I have to make new friends with people in their 70’s(!)
Tell us about your income performance over time. What was the starting salary of your first job, how did it grow from there (and what you did to make it grow), and where are you now?
I’m a retired Naval Officer (from Navy Reserve), so my active duty income tracked the junior officer pay scale through the rank of O-3. I started out earning a small amount in ‘Base Pay’ (around $40k) but made significant compensation in tax-free Housing Allowances (equivalent to $120k+ salary per year).
After 7 years active duty, I transitioned to the civilian workforce and earned a bit more through the next few decades doing Engineering Program Management jobs in both the Private Sector and as a Federal Employee. My salaries in this phase ranged from $75k to $170k per year.
I had anywhere between 12 ‘direct reports’ and 25 engineers ‘matrixed’ to me during this time.
Note that it wasn’t until about 10 years into the civilian workforce that my ‘take-home’ paycheck exceeded the amounts I took home as a junior military officer stationed in an expensive region.
Over the years in the full-time workforce, my highest salary was about $170K per year. This was my final year’s salary as a full time employee, and there was also a year around 2011 where I earned significant of overtime pay.
In parallel with the ‘day job’ activities above, I participated in a ‘parallel universe workforce’ in the Navy Reserve. I achieved retirement eligibility through the Navy Reserve at a mid-grade Officer rank (O-5).
(I know this career path screams ‘MEDIOCRITY’, but the payoff is down below in the ‘NET WORTH’ Q&A section — I promise).
What tips do you have for others who want to grow their career-related income?
Don’t be a ‘surf rat’ like me! (Same goes for ‘ski bum’, ‘dirtbag climber’, etc.).
My career goals were to earn enough to make a decent living, stay close to the beach, and NOT move my family. Ever. That limited my job opportunities to companies or government agencies headquartered within reasonable commuting distance from the house.
If you’re willing to take on more responsibility (and much more compensation), it usually involves a moving truck. This works great for some people, but I decided early on that it wasn’t for me (having experienced it during my childhood).
There’s tradeoffs to my career choices. I will never have a building named after me at my alma mater.
However, my kids both went through the same school district K-12 and we have lived in the same home for 25 years. For me, I was able to put away enough in savings and luck my way into enough government pensions to have enough to support an early semi-retirement.
What’s your work-life balance look like?
To be honest, I’ve got it dialed in right now with Part-Time work.
I work three days a week and play a round of golf with my 84-year-old Dad every Monday morning (this is a non-negotiable). I have 4-day weekends and plenty of time away from work that enables me to pursue hobbies, friendships, and new activities.
I tried to achieve work-life balance over the decades when I was full-time, but my efforts always seemed to come up a bit short. A ‘critical project milestone’ or ‘important cross-country trip for work’ always seemed to get in the way of way too many family and kids’ events.
Do you have any sources of income besides your career? If so, can you list them, give us a feel for how much you earn with each, and offer some insight into how you developed them?
I have a very small consulting business that earns anywhere from nothing to a few hundred dollars per year.
The consulting business primarily allows me to have a Solo 401k- And the flexibility of terminating the Solo 401k (and simultaneously, the business) to do ‘Rule of 55’ 401k withdrawals before age 59.5.
SAVE
What is your annual spending?
Our annual spending is about $135K per year.
What are the main categories (expenses) this spending breaks into?
The main categories are:
- $34K: Medical Insurance and Healthcare (we pay out-of pocket for Military Tricare health insurance. Also had expensive dental work last year)
- $25.4K: Housing Expenses
- $20.5K: Sailboat and Sailing expenses(!)
- $14.7K: Travel
- $14.1K: Shopping (not groceries)
- $8.6K: Groceries
- $8.5K Utilities/Bills/Insurance
- $8.0K: Auto/Transport expenses
Do you have a budget? If so, how do you implement it?
We don’t have a ‘hard’ budget, but I notice if spending gets out of whack with historical values.
My wife and I discuss major purchases, even if she is purchasing something with ‘her’ money. After about a decade of me doing all the bills (and me grinding my teeth), I finally decided to hand this task over to her.
That way, she sees exactly how much we have to pay for everything every month, plus she knows how to handle the family finances in case I get hit by a beer truck.
We were using Mint for expense tracking but they shut down 🙁 I’ve found Tiller to be a good (paid) replacement for Mint since I’m comfortable with spreadsheets.
What percentage of your gross income do you save and how has that changed over time?
As a W-2 earner throughout the decades, we saved about 10 percent per year.
Sometimes more, depending on employer contributions to 401k’s.
What’s your best tip for saving (accumulating) money?
- Don’t leave free money on the table. If there’s a company match, put in enough to get the full matching contribution.
- Get more compensation at work. This could be taking on more responsibility with your present employer, or leaving for a new employer. And it feeds more $$ back in to #1 above.
- Keep your investment costs low.
- Repeat 1 through 3 above and let Compounding do its job.
What’s your best tip for spending less money?
- Imagine the Bright Shiny Object you want in your right hand, versus the same amount in cash in your left hand. If you’d rather have the cash, then the Bright Shiny Object is not worth it. (Hat Tip to Paula Pant (?))
- Get Groceries at ALDI if you have a small family. Shop at Costco if you have a large family.
What is your favorite thing to spend money on/your secret splurge?
As you can see above, it’s the sailboat!
But it opens opportunities for us to visit new and exciting places by chartering (renting) a boat. I don’t know how to explain it, but there are few things I find more enjoyable than dropping anchor in a new location and immediately firing up the grill.
INVEST
What is your investment philosophy/plan?
Keep things simple and keep expenses low during the retirement savings/accumulation phase. I have used mostly broad index ETFs in individual accounts and low-cost target date funds inside of employer sponsored 401k-type plans.
However, during the retirement DE-cumulation (spending) phase I am using the Buckets Strategy to avoid ‘Sequence of Returns Risk’, with 5-year intervals for each of the 3 ‘Buckets’:
- Bucket 1= Current Income: 1-5 years in Money Market Fund or short-term bond ladder)
- Bucket 2= Medium Term Income: Years 5-10 in Longer target-maturity-date Bonds/Bond ETFs, Utilities, Covered Call ETFs, 5+ year Target date funds)
- Bucket 3= Growth: Stock Index ETFs or long-dated (10+ year) Target Date Funds.
Keep it simple!
If you are presented with an ‘exciting’ Alternative Investment exclusively for ‘accredited’ investors LIKE YOU, it is probably garbage. Non-traded REITs, Investment Notes, Private Placements, New FinTech opportunities… are all garbage.
If the product cannot be completely described on a one-page Summary Prospectus, then the product is a dog turd with a bow wrapped around it.
Also, if the product description takes more than one page to explain, that means that NOBODY understands it-Not even the Lawyers! You can ask 3 different lawyers and you will get 12 different opinions on what the product description means (and under what conditions you can get your money out). YIKES!
If you STILL get the itch to do ‘Alternative Investments’, go and look at the annual (publicly-disclosed) returns of large endowments like Harvard Endowment, Yale Endowment, and the CalPERS pension system. In some years active management and use of alternative investment products underperform broad-based index ETF’s.
Are they doing better year-in and year-out than your 401k?
What has been your best investment?
I owned some large company “Dot Com” stocks back in the mid-1990’s when I was picking individual stocks. I sold those in 1999 and used them for a down payment on a house (which we are still in).
I could be much more wealthy (on paper) today if I still held the stocks, but my family would be renters instead of homeowners.
What has been your worst investment?
It’s a 3-way tie for the Last Place ‘Booby Prize’.
- My discount broker sold me a Variable Annuity at age 25. With hindsight this was not that horrible of an idea, as;
- it was the mid-1990’s and the Roth IRA didn’t exist yet; and
- I was Active Duty Military and the only Military retirement system was the ‘all-or-nothing’ 20 year pension- There was no option to participate in the Thrift Savings Plan back then.
- I managed to escape the Variable Annuity with minimal tax damage after the 5-year surrender charges expired at roughly the same time as the dot-com bust.I bought a non-traded REIT (mid-5 figures) in the mid 2000’s. We broke even, but it was dumb luck that we got out before the subprime mortgage lending crisis hit everyone hard in 2008-2009.
- LendingClub/PeerStreet during the mid 2010’s. Both were initiated by water cooler conversations, which triggered a bit of foolish ‘FOMO’ on my part. I invested very-low 5 figures in each and probably netted mid-4 figures back. I’m still waiting for the Bankruptcy settlement check from PeerStreet (3+ years after Bankruptcy).
…This 3-way tie for the ‘Booby Prize’ makes me run in the other direction whenever I am offered a ‘free’ steak dinner to sit through a pitch for a ‘unique investment opportunity’. No Thanks. Give me investments that I understand and can liquidate with the click of a mouse during trading hours, thank you.
What’s been your overall return?
I actually ran the XIRR spreadsheet function on my 401k’s, and it’s been in the 8-10 percent range overall. The Lost Decade(s) from 2000 through 2013 were tough- It took a lot of determination to ‘stay the course’ and continue salary deferrals into the 401k plans.
In many of those “Lost Decade” years, the only ‘return’ for the year was the Company Match(!)
How often do you monitor/review your portfolio?
Too Often!
I used to look quarterly, but now I look at it monthly since I manually re-invest dividends in the Brokerage and IRA accounts.
I have found that since semi-retirement, it is hard NOT to look at the investments more frequently, because I’m STILL not used to seeing the overall value go sideways or down rather than up!
But if you are in savings mode, note that former Barron’s magazine editor Alan Abelson said, ‘…(listening to daily) market news is like walking up a big hill with a yo‑yo and keeping eyes fixed on the yo‑yo instead of the hill.’
In other words, if you stare at stock news every day, you won’t recognize your progress towards the savings ‘summit’.
NET WORTH
How did you accumulate your net worth?
Before we go any further with Net Worth discussions in this section, I need to disclose something.
The majority of my retirement income will NOT be generated through traditional Earn, Save, and Invest tactics (as they say in Canada,- ‘Sore-y, Sore-y’). My situation is probably different from 99 percent of ESI’s readers.
Through luck and patience, I have accumulated the rights to 5 (FIVE) government pensions. Annual payouts are:
- $40K in Navy Reserve Retirement – Age 60
- $25K in Federal Employee Pension (FERS) – Age 60
- $29K in Social Security – Age 62 (if needed)
- $13K in Spouse Social Security – Age 62 (if needed)
- $9K in State Employee Pension – Age 62
…for a Total of $116K in Pensions at age 62+, all with annual inflation adjustments.
Compare this to our $135K annual spending ‘Nut’ mentioned above, and our Retirement Savings only need to generate about $20k per year at age 62.
(*) I’m ‘spiking the football’ here, but also note that healthcare costs will DROP significantly at age 60 when I am eligible for full Military Retirement health benefits (TriCare)… I may never need the full $20k per year from personal retirement savings, but I’m being conservative.
The 5 Pensions above are what enabled me to semi-retire early at age 50.
Not winning the lottery. Not selling a company. Not an inheritance.
My retirement savings are primarily engineered to ‘bridge the gap’ between age 50 and age 60 when the pensions and healthcare benefits begin to kick-in.
Roughly half of our $1.2M in retirement accounts ($600K) is in 401k products. I have already used brokerage account money and Rental Property sales to generate income from ages 50 through 54.
I am using the ‘Rule of 55’ to WIPE SLICK the majority of the 401k monies by age 60 (mostly through withdrawals, plus possibly some Roth Conversions in low-income-tax bracket years).
All we need from the retirement portfolio from age 62 and onward is $20K per year. Using the ‘4% Safe Withdrawal Rule’ in reverse, this means our Roth IRA nest egg needs to be $500K. It’s already there today (at age 55).
What would you say is your greatest strength in the ESI wealth-building model (Earn, Save or Invest) and why would you say it’s tops?
It’s definitely the ‘Save’ tactic, and my ability to continue saving- Even when faced with the headwinds of the ‘Lost Decade(s)’.
It wasn’t the ‘Earn’ part (unless you count my patience to stick with government jobs long enough to ‘Earn’ the pensions). I only earned moderate-to-good salaries as an Engineering manager through my working years.
It wasn’t so much the ‘Invest’ part. During my working years, my overall investment returns run in the 8-10 percent range.
What road bumps did you face along the way to becoming a millionaire and how did you handle them?
Ignoring the ‘Three Booby Prize Amigos’ mentioned above, the Lost Decade(s) were TOUGH. The end-of-year 401k statements, where it shows all the salary money I contributed, all the money my employer matched, and an account value was STILL lower at the end of the year. OUCH!
I think the running joke during 2009 was ‘My 401k is now a $201k’- Haha.
During the 2012 time frame, I had lost a bit of faith in the 401k/IRA retirement savings model. I didn’t quit my 401k’s or give up the company match, but we re-deployed our Taxable Brokerage savings to purchase some Rental Property Investments.
We accumulated up to 4 houses in a midwestern city, when costs were relatively low and rental cash flows were relatively high. We did ok on these Rental Properties, but it was much more stressful earning 8-10 percent as a remote landlord (with a Property Manager, of course) than simply re-investing dividends in a Brokerage or Retirement account.
The Rental Property investments worked out ok for us, but I would not do this under today’s market conditions (2026) as the cash flow math does not pencil-out.
What are you currently doing to maintain/grow your net worth?
I’m not!
No, seriously- As mentioned above, I’m already in the spending/DE-cumulation phase of Retirement.
The only number I am focused on is to generate $20K per year at age 62+. I have a bond ladder (‘bond tent’) to bridge to age 62, when ALL 5 pensions provide income.
Do you have a target net worth you are trying to attain?
Not directly.
Again, the only number I am focused on is generating $20K per year in investment income at age 62. Using the reverse 4% Safe Withdrawal Rule, this equates to a Roth account balance north of $500K.
How old were you when you made your first million and have you had any significant behavior shifts since then?
I was age 48 when I crossed the $1M ‘Rubicon’.
This was also my 30-year anniversary of earning W-2’s, as well as the year I achieved eligibility to retire from the Naval Reserve. After achieving these 3 milestones, my attitude towards full-time work became much less ‘SpongeBob’ and much more ‘Squidward’!.
What personal habits and/or traits have you developed that have made you successful at growing your net worth?
Tenacity. My ability to stay the course and keep salting away money for retirement.
Even if I sometimes departed from the main ‘highway’ of traditional brokerage and tax-deferred retirement account vehicles, I still traveled in the same direction trying out some alternative investment tactics.
What money mistakes have you made along the way that others can learn from?
‘Free Steak Dinner’ Investment Seminars will only generate Heartburn. (you can Tweet that, Haha).
See the three ‘Investment Booby Prizes’ above.
What advice do you have for ESI Money readers on how to become wealthy?
In addition to Earning, Saving, and Investing, if you are working for a government entity, consider staying long enough at the job until your pension fully ‘Vests’. You can take the annual payment of a Pension and divide by the 4 Percent Rule (or multiply by 25) to determine its lump-sum equivalent.
Example: A $25K per year pension may not sound like much… until you think of it as $500K that you DON’T have to accumulate in your retirement accounts.
FUTURE
What are your plans for the future regarding lifestyle?
I’m pretty much where I want to be right now, both financially and professionally. I will reassess doing part-time work sometime before age 60.
Part-time work is not getting in the way of hobbies or core pursuits right now.
What are your retirement plans?
My goals are to stay sharp mentally and keep active in ‘Core Pursuits’ like Bodysurfing, Sailing, Golf, and Travel.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
The biggest concern is encouraging our youngest child to find a useful career path to pursue. I’m concerned that my early semi-retirement might be sending him ‘mixed signals’ about the workforce.
In the ‘out’ years, my biggest concern is Long-Term Care… but I will cross that bridge when I get to my mid-60’s (when it typically makes more sense to look at long-term care policies).
MISCELLANEOUS
How did you learn about finances and at what age did it “click”?
My Dad is pretty frugal (trained as a CPA), so I lived under the instruction of a good role model.
When I was in college as an undergrad, I had the opportunity to take a graduate-level finance course (Engineering Economic Analysis) as an engineering elective. That course taught critical Time Value of Money concepts like Net Present Value, Future Value, Opportunity Cost, Equivalent Uniform Annual Cost, etc.
Everyone should understand these. These are the tools used by Harvard and Wharton MBA’s on behalf of Investment Banks, but this toolkit is just as powerful in your own pocket.
Car salesmen, Mortgage Brokers, and Annuity Salesmen know they cannot fool you when you break out the HP-12c calculator app on your phone!
Who inspired you to excel in life? Who are your heroes?
My Dad has always been an inspiration to me, and I continue to consult him for advice frequently.
At the leadership level, role models are John McCain and James Stockdale. I can watch footage of Mark Cunningham and Mike Stewart bodysurfing all day long.
Do you have any favorite money books you like/recommend? If so, can you share with us your top three and why you like them?
Sure! I will give my book advice based on career phase, as some books aren’t as relevant based on your stage in life.
Early Career Years:
‘Get a Financial Life- Personal Finance in your Twenties and Thirties’ by Beth Kobliner.
Beth’s book is a no-nonsense set of guidelines for avoiding debt traps and starting your retirement savings/accumulation phase. Better than 90 percent of what you need to know about early career debt and savings is in this book.
Mid-Career Years:
‘The Wealth Ladder’ by Nick Maggiulli. ‘The Wealth Ladder’ explains what the different ‘rungs’ are on the Wealth Ladder so that you can assess where you are, what your reasonable spending level is, and determine what it takes to get to the next ladder ‘rung’.
SPOILER ALERT: Getting from ‘Level 4 Wealth’ ($1M – $10M) to ‘Level 5 Wealth’ ($10M to $100M) takes a huge ‘liquidity event’ that most of us mere mortals will never experience. But getting to ‘Level 4 Wealth’ IS achievable by just about anyone who follows the ESI model through their working years.
Nick also introduces the powerful concept of the ‘0.01 Percent Rule’, which I will not Spoil for the Reader.
‘Work Less, Live More – The Way to Semi-Retirement’, by Bob Clyatt. Bob’s book is one of the few books that directly acknowledges that Retirement for most of us is not an all-or-nothing milestone.
Many of us choose the off-ramp of Part-Time work between the ‘Full-Time’ and ‘Full-Time-Off’ years. Bob has dozens of personal stories about people who traded Full Time for Part Time.
Some people choose the same career with fewer hours, while some people choose an entirely new pursuit that semi-retirement opened up for them.
Late-Career or approaching Early Retirement:
‘IRA’s, 401k’s and other Retirement Plans: Strategies for Taking your Money Out’ by Twila Slesnick.
A significant part of retirement planning is understanding WHEN the retirement money is available to you. Ms. Slesnick’s book is one of the few books that provides the EXACT tactics available to withdraw your money (without penalty) from the full ‘alphabet soup’ of retirement accounts.
You’d be surprised to find out that ‘Age 59.5’ is not the answer to all the questions on the Retirement Exam.
‘Buckets of Money’ by Ray Lucia, Jr. I’m of the opinion that Dollar Cost Averaging during the retirement SAVINGS years is a solid tactic.
However, Dollar Cost Averaging during the retirement WITHDRAWAL phase exposes you to ‘Sequence of Returns Risk’ (also referred to as ‘Reverse Dollar Cost Averaging’).
Ray’s book tells you how to ALLOCATE assets to generate income in retirement without exposing yourself to Sequence of Returns Risk. I agree with pretty much everything in Ray’s book with the exception of purchasing Non-Traded REITs (you should avoid non-tradeable/illiquid investments… these are ‘Booby Prize’ investment products).
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
We donate money to Charities through a Donor-Advised-Fund, and I volunteer a few hours a month ushering at Church. Financially, we give about 5-10 percent to Charity, depending on our actual income level for the year (the monthly dollar value extracted from the Donor Advised Fund is ‘flat’, but we put money in the Donor Advised Fund in higher-income years to maximize itemized deductions).
I have also volunteered with Scouting for almost 20 years, which is a commitment of a few hours per week (plus many more when you go on remote campouts with the Troop).
Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?
We have only done the administrative end of estate planning by setting up a Revocable Trust, DPOA, Advanced Health Care Directive, Will, etc. We are not a ‘blended family’, so our succession plan is rather linear.
We put these estate plan documents in place so our kids don’t have the hassle of dealing with the Probate process when that time comes.
We have not seeded or funded any Legacy Planning assets yet. That is something we can think of when we get closer to the ‘Required Minimum Distribution’ phase.
