How a Woman Planning to Retire at 52 Does Money

Ann (not her real name) is a 45-year-old Senior Director of Client Services for a tech company in Cincinnati.

So, Ann, how much are you making?

I make $120,000 base plus 20 percent bonus opportunity per year. My husband makes slightly more than I do, so last year we earned about $325,000 combined.

How does that compare to your expenses? Do you feel like you have “enough,” whatever that means to you?

More than enough, but this is Cincinnati after all. We bought our house for $240,000, have no car payments, and no consumer debt. We have enough to pay all our bills and save a ton for retirement. My husband is 10 years older than I am, so I want to retire when he does at about age 52.

But it hasn’t always been this comfortable.

What changed to improve your lifestyle?

I was intentionally underemployed when our son was small. My husband had been married before, and has four children from his first marriage, so for the first seven years of our life together we paid a lot of child support.

But I moved jobs every two to three years over the past decade in order to increase my earning potential. I worry that that can be perceived as job-hopping, but they were all very strategic career moves.

Also, living in Cincinnati allows us to live way below our means.

Which in turn contributes to your early retirement plan, yes? You’ll retire when you are 52 and your husband is 62?

Yes. If our financial planner is to be believed, we may be able to make that goal. To me early retirement with a lake house in northern Michigan is the ideal.

I was a absolute financial mess when I married my husband, having come out of seven years of self-employment when I was not as disciplined as I should have been about paying taxes. Everybody brings something to a marriage, and I tease my husband all the time that his dowry was a load of divorced dad but a really disciplined financial mind. I did something very scary as a feminist and gave him almost complete control over my income, trusting that he was going to fix everything. He did—but the older I’ve gotten the much more financially astute I’ve become.

But for a long time I really felt financially subordinate to him. Not that he made me feel that way, but just because I was earning way less money than him.

OH VERY INTERESTING. I don’t even know where to start! Tell us about the taxes first.

Sure. I was self-employed but I had hired an employee. I was billing for his hours and mine, but when invoices were paid late I made sure he was paid and sometimes the quarterly taxes were not.

So I ultimately owed the IRS like $20,000 in back taxes.

I remember being so scared to tell my husband. We had been married for three years at that point. He took out a 401(k) loan, paid off my taxes, and we got through it. But after that I was more determined than ever to never be underemployed and in that position again.

Wow. And he paid back his 401(k) loan, I assume?

We both did. That was priority number one, and that’s when I went back to work after our son was born. He was about 18 months old. And I’ve been taking bigger and bigger roles ever since.

It sounds like you learned a lot about money after your marriage. How did it feel to give over control of your income, and have you since taken back some of that control?

You nailed it. My adult financial education started when I married a guy who was good at it—and it was both frightening and liberating at the same time. Frightening to turn over control of a big part of my life, even if it was to somebody who is so much better at it than I was. Liberating because I didn’t have to worry anymore. I think I walked into our marriage with something like a sub-500 credit score, if that’s even possible, and after fifteen years of marriage my credit score is like an 820.

I don’t ever feel like I am out of control of my finances because my husband is very transparent as to what we owe, who’s paid us, and where we stand. Every month he sends me a spreadsheet of our entire financial picture. If he dropped dead today, I could take it over—but to be honest, although we make all our major decisions together, he still executes them and I’m okay with that. I’m a whole heck of a lot more interested in our financial health now, and we absolutely have common goals, it’s just that this is one thing he’s better at managing.

Now when I get paid 75 percent of my money goes into a joint account that he uses to pay the bills and 25 percent is my money to use as I please. That really works for us.

The ironic thing is that I am probably more obsessed with retirement calculators and investments than he is. Three years ago I bought a rental property and it’s had tenants in it ever since. That was totally my idea and something I was comfortable doing. So I’m not just passive in this relationship.

So back to retirement, then. 62 is earlier than many people retire, right? How did you decide that would be the right time?

That’s the year our only son together will graduate from college. So that was where 62 came from. That may need to edge up a few years, but that’s the goal.

What do you plan to do after retirement?

Sit on a porch in northern Michigan looking at a lake and drinking wine. Entertaining our large extended family when they visit. Then hightailing it back to Cincinnati or parts south for the winter months.

Do you already have the lake house in northern Michigan, or is that on the to-do list?

On the to-do list. I stalk the real estate listings and dream.

Since you said that you didn’t know a lot about finances going into your marriage, what was your exposure to finances and money in your childhood/adolescence? Did your family pass down good advice? Did you pick up bad habits?

My family was absolutely the kind that said discussing money was gauche. I remember being a kid at restaurants with my parents and my father would never even let me see what the bill was. He’d say unless you’re going to pay it you don’t need to know. So no, I wouldn’t say that I had a robust financial education as a kid.

It’s something I struggle with now, raising our son and trying to make sure that he understands the whole concept of cash vs. credit or long-term saving vs. short-term gratification. I try to be very open about how much things cost and what our budget is, but I will admit those kind of conversations are much more uncomfortable for me than the ones about the birds and the bees.

I was going to ask if you were working on passing financial lessons to your son! What is the most important piece of advice you’ve given him so far?

We talk about how work equals money. He lives in a comfortable household and he needs to understand how statistically rare that is in the world. I hope he understands by the time he’s an adult that being born in the United States to an upper-middle-class family who will pay for college is like winning the lottery globally.

I really am going to insist that he spend some time outside the U.S. so he can understand just how fortunate he is and how much we owe to the rest of the world to do the best we can to make it a better place. That sounds really Hallmark card-y, and I know he needs a lot more practical lessons than that about how to handle money, but at the end of the day how we exist as fortunate citizens of the globe means a lot to me. I never take for granted the advantages that I was born with.

I love the idea that you want your son to understand how statistically rare his good fortune is. How do you approach the day-to-day stuff like savings accounts and credit cards?

I have a picture of him opening up his first savings account. It’s adorable. As he gets older we will absolutely talk about credit cards and the proper use of them. If I were president, I’d ban credit card offers on campus for sure. That’s where my financial downfall started.

So now that you’ve shared your advice for your son, what is your financial advice for Billfold readers?

Start saving for retirement as early as humanly possible. Don’t discount living in the middle of the country where costs are lower and your money goes further. There’s an amazing culture to be had, affordable housing to be enjoyed, and great people around.

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