Skip to Content
Financial Advice

Fritz Gilbert: Early Retirement Made Simple

The author and blogger shares tips for finding balance, purpose, and friendship in retirement.

Listen Now: Listen and subscribe to Morningstar's The Long View from your mobile device: Apple Podcasts | Spotify | Google Play | Stitcher

Our guest on the podcast today is author and blogger Fritz Gilbert. Fritz spent more than 30 years in corporate America, before retiring at age 55. He and his wife moved to a cabin in the Georgia mountains, where they enjoy community involvement and charity work. Fritz has been writing about the experience and giving advice at his blog, He also wrote a book about retirement, called Keys to a Successful Retirement: Staying Happy, Active, and Productive in Your Retired Years.



What I've Learned From 2 Years of Retirement, by Fritz Gilbert; June 3, 2020

Wise Advice for a Successful Retirement, by Fritz Gilbert; April 22, 2020

Freedom for Fido, by Fritz Gilbert; May 7, 2019

Freedom for Fido website

The Dark Side of Retirement, by Fritz Gilbert; Nov. 19, 2019

Karsten Jeske: Cracking the Code on Safe Withdrawal Rates. The Long View podcast. Oct. 13, 2020.

Retirement Readiness

10 Steps to Make Sure You Have Enough Money to Retire, by Fritz Gilbert; May 26, 2021

20 Steps to Take in the Year Before Retirement, by Fritz Gilbert; Jan. 2, 2019

The Ultimate Pre-Retirement Checklist, by Fritz Gilbert; March 27, 2018

How To Build a Retirement Paycheck From Your Investments, by Fritz Gilbert; Oct. 4, 2016

Retirement: Decumulation and Investments

How to Manage the Bucket Strategy, by Fritz Gilbert; Jan. 15, 2020

A Step-By-Step Guide for Your Annual Financial Update, by Fritz Gilbert; Jan. 1, 2020

Our Retirement Investment Drawdown Strategy, by Fritz Gilbert; June 20, 2017

How to Move Your Retirement From Good to Great in 7 Days, by Fritz Gilbert; May 31, 2017


Christine Benz: Hi, and welcome to The Long View. I'm Christine Benz, director of personal finance and retirement planning for Morningstar.

Jeff Ptak: And I'm Jeff Ptak, chief ratings officer for Morningstar Research Services.

Benz: Our guest on the podcast today is author and blogger, Fritz Gilbert. Fritz and his wife retired at age 55, and he has been writing about the experience. His blog is called, and he also wrote a book about retirement called, "Keys to a Successful Retirement: Staying Happy, Active, and Productive in Your Retired Years."

Fritz, welcome to The Long View.

Fritz Gilbert: Hey, thank you very much, Christine and Jeff. I've been a longtime fan, and I'm excited to be on your show.

Benz: We're excited to have you here. We wanted to talk to you because you retired early, which a lot of people aspire to do, but not crazy-early. So, can you give a little bit of background on your career and how and when you decided to retire?

Gilbert: Sure, Christine. You know, I think mine was a pretty typical course. I went to college, liberal arts school, majored in business, got out and just started doing the interview circuit, got a job in the aluminum business thinking, "I'll do it for a couple years, get some experience." Thirty-three years later, I retired from the aluminum business. So, it turned into a very good career for me. Basically, a corporate America career, worked around corporate headquarters last 10 years of my career, but spent quite a bit of time moving to sales offices, plant manager jobs, things like that. So, kind of a diverse corporate environment. And basically, just saved as I went, didn't go crazy, but every time I got a raise, I tried to save most of it. And really didn't even think much about retiring early until probably my mid-40s. I had some friends that were in their 50s that were getting out and started looking at the numbers and said, "You know, I can do this," and just started, I guess, getting serious about analyzing everything and made the decision to get out at 55. And I've had no regret since.

Benz: Were you a personal finance enthusiast along the way during your career?

Gilbert: Absolutely. It's always been a hobby of mine. I call myself a personal finance hobbyist. And I've always had an interest in this stuff. Back when people still got magazines, I got all the money magazines and read all the articles, and I've always managed my own investments. And it's amazing--especially now with podcasts, and blogs, and everything else--you can get very educated on any topic that interests you. And fortunately, personal finance was one that I had an interest in, and I've always just continued to grow and learn as much as I can.

Ptak: You read extensively about the financial and also nonfinancial aspects of retirement. One of the nonfinancial topics that you discuss in your blog is the lack of structure that often accompanies retirement. So, was that a difficult adjustment for you to make?

Gilbert: Yeah, that's a great question, Jeff. You know, I think most people focus on the financial side. And one of the things I've learned writing about preparing for retirement, now three years into retirement, is how important the nonfinancial aspects are, and they really have to be addressed in your retirement-planning phase. And one of those is structure. People don't realize, when you leave work, you're not just leaving work, you're leaving that structure that work provided. And suddenly, when you retire, there is no structure in your life. Fortunately, in my case, to answer your question, I was aware of that. Obviously, I've been doing a lot of research, I've been thinking about it, and I did not have a difficult adjustment. I had a very smooth transition into retirement, wrote a book about it because it went so well. But I've seen a lot of people that struggle with that. And one of the big reasons they struggle is because they don't recognize how much that structure is a part of their life until it's gone.

Benz: So, how do you counsel people on that front? Because it seems like it would be really difficult to find a happy medium where you could either be like, "Woo-hoo, vacation, I'm just going binge Netflix," or get super structured, where are you really…

Gilbert: Yeah.

Benz: How do you thread that needle?

Gilbert: Yeah, and you know, I think it's different for everybody. The advice I typically give is number one, recognize it's going to happen. That's a huge component of it, just being aware of it and thinking about it before you actually cross what I call the "starting line" when you enter retirement. And I think recognizing it and then thinking about "What do I want to do?", and almost everybody wants or needs some structure in their life. In my personal situation, basically I just kind of experimented with it and I've got probably three hours of my day that are pretty structured. I exercise. In the morning, I go to the gym. I carve out that time. I carve out time in my writing studio to work on the blog. And then, the afternoons are pretty unstructured. We'll go out and go kayaking or hiking or whatever strikes our interest in an afternoon. So, the mornings tend to be structured and the afternoons tend to be less structured. And I think most people I've talked to find some kind of balance. And the advice I'd give is just experiment with it, recognize that it's going to take some time. And if you're feeling a little bit off-balance, add a little bit more structure or take a little bit away and just find what works for you.

Ptak: You've written about sort of the idea of maybe experimentation, especially flexibility and being willing to go with the flow is a key ingredient to success in retirement. So, based on your experience, why do you think that's so important? And how can those of us who are especially good at it become more flexible?

Gilbert: Yeah, great question. And I appreciate you guys focusing on this nonfinancial stuff, it really is important. The way I think about it, if you think about what you thought your career was going to be when you were in your 20s, you missed it by a mile, right? There's a lot of things that happened that you didn't see coming and whatnot. Retirement is no different. When you're in your final couple years of work, and you're thinking about what retirement is going to be, I guarantee it's going to be different than what you think it's going to be. You just don't know how it's going to be different. So, I think, recognizing that you're just going to have to be flexible, and be willing to move with things--I'll give you a quick example.

Our daughter was up in the Pacific Northwest. She married an Army guy, and he was based out there. So, we're doing long-term RV travel, we'll spend the summers out there, we'll visit. They've got a granddaughter--a daughter, granddaughter for us. Well, he got transferred back to Alabama, which is probably five hours from our house. So, being flexible, we evaluated things. We ended up buying a small little condo down there. And now, our retirement lifestyle includes a week a month in Alabama, visiting our granddaughter. Had no plans on that, never saw it coming. But just taking advantage of opportunities as they present themselves, and recognizing that things are going to change, is a big part of finding a way to be successful as you manage your way through your retirement.

Benz: So, one thing that you come back to again and again on your blog is the importance of having a sense of purpose in retirement. And this is something we've discussed with other guests as well. You've written about how you and your wife discovered a new sense of purpose, especially in the charity that you started together. I was inspired in reading about that charity. Can you discuss that and tell us a little bit about what you do there?

Gilbert: Yeah, thanks Christine for the chance to shout out. It's called Freedom for Fido. And all the credit goes to my wife. And we can talk about her transition, we'll talk about that, I'm sure as we go. But basically, she's always had a passion for dogs. We live in kind of the Southern Appalachians up in North Georgia near the start of the Appalachian Trail, and there's a lot of dogs on chains in this area, and it just broke her heart. She saw a thing on YouTube, Mike Rowe, the guy from "Dirty Jobs," was doing a feature focus on a charity out in Oregon that did this. And she said, man, we need this here in Blue Ridge. She's like, I can do this. And son of a gun, she started taking the first couple of steps. And two years later, it's turned into a major charity. It's kind of like, if you think of Habitat for Humanity? We go out and we build fences for free for low-income families that have dogs on chains. It's developed this whole sense of community with the volunteers. It's rewarding beyond words when you release the dogs in the chains, and they go running around their enclosure. And it's just turned into this wonderful aspect of our life, which is really what the definition of purpose is, something that you do with your time that brings a sense of fulfillment, that you--you have to find a way to do that. And in her case, and the thing I tell most people: Pursue something that interests you, something that you're curious about, some cause that you see, find a way to give back to others. Those are the avenues that you go about finding a purpose. And we were just lucky with her that she landed on this Freedom for Fido, and it's really turned into a big part of our life that we're enjoying together, which makes it even better.

Ptak: You know, I hadn't planned on asking about this, but I just find this charitable pursuit you describe fascinating. How do the people that you approach and offer this to, how do they tend to receive it? Are they sort of just so grateful for it? Or is there a bit of a negotiation that has to go on to convince them to…?

Gilbert: Yeah, we get exactly that question, Jeff, a lot. Amazingly, and fortunately, because this charity that she modeled after was based in Oregon, she reached out to them and they were mentors, basically, and helped her getting set up. And one of the things they said which we now do is, we never knock on doors. Word of mouth will get the word out. We have a website, people kind of apply,, and they basically fill out an application. And the reality of it is there's so many people that want to do better for their dogs--they just don't have the money to do better. They could let them run loose, right? They're trying to be responsible, but it's the best they can do. And as a neighbor gets it, you're out doing a build and you suddenly notice the neighbors looking around, next thing you know, you get a couple of applications down the street, right? It's a word-of-mouth thing. And the demand is so strong right now we've got like 22 fences in the queue, applicants, and all the ones in the queue are people that have come to us. So, it's pull, not push. And because of that I think they're very, very appreciative. There's no pushing from us to say, "Hey, how dare you treat your dog that way." We've had people come up to us in stores in town that we will just run into randomly, you know, literally hugging my wife crying, saying "You've changed my life." I can't tell you how great--I mean, they are really, really appreciative. So, it's not what I had expected going into it, but it's turned out to be a really pleasant surprise.

Benz: Well, I would urge people to watch that video on The Retirement Manifesto. I really loved watching that and watching the dogs get released. It was a beautiful thing. I wanted to ask, as you were kind of developing this charity focus, Was it a goal of yours to home in on something very specific as you've done? Because I think that's what's so neat about your charity is that you're not trying to solve problems for every dog in the U.S. You're trying to solve some very specific issues. Was that something that you focused on, trying to sort of hone your mission?

Gilbert: I don't know that we had that much foresight going into it. I think it's like a lot of things in retirement. You kind of take the first couple steps, and you see where it leads. The first step was I hate seeing dogs on chains, let's try to do something about it. And it's developed in time to being a very focused thing like it is. We didn't really know--you know, sometimes--we got into a case where this lady had a handicapped son, and she had no money. And she said, I had been wanting to get a carpenter to build a ramp, I have to carry my son out to the car down the steps, you know, just real sad story. So, we've got a carpenter on our team. And we said, hey, Tim, would you mind building a wheelchair ramp? So, we will do things based on the need as they arise. And I think it goes back to that flexibility question you asked. It's no different with anything that you decide to pursue, you just kind of have to be open to see where it leads and make adjustments as they are required and have fun with it.

Ptak: That's really awesome and inspiring, I have to say. I did want to turn from that and talk about the benefits of work or more generally purpose. I mean, it seems that we now have a lot of data pointing to working longer being good for people and not just financially, but because it provides social connections, gives them a sense of purpose. But it sounds like your experience--it's been your experience that you can obtain many of those same benefits without paid work, right?

Gilbert: Absolutely, Jeff. And I tell you, I think the advantages of getting them without paid work is everything you're doing is now something you're voluntarily doing, right? So, it makes it even more rewarding. But I think the thing that people don't realize, and you touched on it, is how much more--I think I mentioned this earlier--but how much more there is to your work life than just the financial. You've got your social network. You've got a sense of purpose. You've got structure. You've got somebody telling you what to do. Yu get a pat on the back when you do a good job, you get feedback, you've got objectives. And it's not just the financial that you need to find a way to replace when you retire. You really need to think about all those other things. And you're right, a lot of people continue working, and that's OK.

The thing that I would encourage people is, Don't just continue working because you need money. Well, if you need money, you need money. But if experiment with trying to fulfill those other areas that you are currently getting met through work. Try to develop other avenues to get those met. I've got my blog; my wife has got her charity. There's a lot of things that we've developed in our retirement that provide a lot of those other things that work provided, and these are the best years of our life. We're absolutely loving it. So, you're right. There are things that you get from work that you do need to think about how you're going to replace those, because your life will struggle a little bit if you suddenly lose all that and you have no plan for how you're going to build some of those back in.

Benz: I wanted to ask about the social connections piece. I interviewed Michael Finke, who's a retirement researcher, and he mentioned that men especially tend to get a lot of their social interaction through work. So, I'm wondering if you can kind of talk about navigating your social connections post-retirement, how that has gone for you, especially in light of COVID-19, which has made socializing difficult for all of us in some fashion.

Gilbert: Yeah, and a key topic. I mean, you look at relationships, there's a whole chapter in my book on relationships and I think people, especially men--I was the same way. The majority of my relationships were work-related. And I run a--I don't know if you guys ever looked at Raptitude. It's a really interesting post by a guy named David. And he wrote a post once named "How to Make Friends as an Adult." And I read it and thought that kind of makes sense, and he goes, "It's not hard," he said, "just invite people to do stuff with you." Like, if you're going to go out and have dinner, invite some friends to go to dinner with you. So, we've been intentional. And as a matter of fact, for Halloween we've got coming up here in a couple weeks, we put together--there's a haunted mine tour because there's an old copper mine up the road. And we invited two other couples to go with us. So, it's going to be the six of us. And I think it is something you have to be intentional about. And it doesn't come naturally. But your retirement will be better if you make the effort to do it. And the thing is, that guy that you invite to lunch, that person you invite to go out and go golfing or whatever, they're probably in the same boat you are. People like to have that social interaction, but it's not intuitive how to go about it. And people are typically pretty responsive to go out and do things because they're retired, they're sitting around, they're looking for things to do. Hey, that sounds fun. So, I take people mountain biking and golfing and kayaking and hiking; you know, we do a lot of things. And really, I would say I've got more friends now than I ever had when I was working. And it's been by design. It's intentionally taking those acts to find ways to interact with people.

Ptak: Yeah, we were going to ask you about that. We had Dr. Laura Carstensen from the Stanford Center for Longevity on the podcast a few weeks ago. And one of the things she mentioned is the way social networks often shrink for older adults. But a lot of that is intentional. People maintain close bonds with a few friends rather than an expansive social network. We're going to ask you if you and your wife are finding this to be the case. But it sounds like for you, it's the antithesis because you have been so purposeful about making sure that you are maintaining those relationships. Is that right?

Gilbert: Yeah, that's correct, Jeff, and I'll tell you the other thing. We did not really see this as a benefit of starting the charity, but we have really--we call it the Fido Family. There's a group of volunteers probably 100 people strong, and some of those people are now our best friends. And we still got maybe two couples that are probably closer friends than the rest, and we'll do more things with them. But if we go out in town, we always see people we know. We moved to a smaller town on purpose, right? We wanted to be in a place where you know your neighbors, and you see people that you know when you're walking down the street. But the real benefit of this Freedom for Fido thing is people are looking for ways to get involved in charities. They like what we're doing, so they show up at a build. Next thing you know we've got one or two more friends, right? Because one or two new volunteers have shown up and they start showing up on a regular basis, we get to know them, oh, you're from Iowa, you know, you get talking about their backgrounds. And it really--it's surprising to me how big our network of friends has become in retirement. And it really is because we were intentional, as I mentioned, but also because we got involved in this charitable work. And I think that's another avenue for people that are looking for relationships will reach out and get plugged in somewhere. There's people doing things, just become a part of it.

Benz: You've written about how people should have a "bucket list" for retirement, many people do, but that it shouldn't all be about travel or sort of stereotypical aspirations. It should be broader. So, can you talk about that sort of developing and evolving your own bucket list for retirement?

Gilbert: Yeah, Christine, this is actually a sad story. I wrote about it in my book. But when I was in my 20s, I knew a guy that committed suicide, he was on a class with me. And the next day, we came into class, and we were like, hey, where's Bob? You know, I won't use his name. But where's this guy? And the instructor said, he said, you know, terrible news, but Bob committed suicide yesterday. And he goes, let me just tell you something about Bob, he said, what I've come to know. And the story he told has resonated with me ever since. What he said was, he said, life is like a wheel, and you've got all these spokes in your wheel. And if you keep your spokes roughly the same length, the wheel rolls a lot better. And he said, Bob had his spokes out of line. He had one--you know, some spokes were too long, and some were too short. So, for the last 30 years that's always resonated with me. And it's about finding balance in life and all those things, but it's no different in retirement. And when I think about building a bucket list, everybody goes to travel. But I would encourage people--I have five buckets in my bucket list, you know, I've got travel, I've got kind of personal development hobbies, I've got charity, spiritual development, relationships we talked about. So, be intentional on thinking about how you can develop all the spokes in your wheel and focus on trying to keep them the same length. If you're aware of a spoke that's too long, work on bringing it back in. If one's too short, OK, let's go work on that for a while. You've got the freedom to focus on what you want to focus on. And it's a really good time to focus on that balance in your life. You'll have a better life as a result.

Ptak: You've often written about embarking on retirement together with your wife. Were there any aspects of your respective retirement visions that didn't sync up and how did you close any gaps that may have existed?

Gilbert: Yeah, that's an interesting story actually. We thought so. We talked a lot about it as I'm getting ready to retire and we thought we were aligned, everything is good. And then, a couple of months into retirement, my blog is doing well, I'm busy, I'm loving life. And my wife, she was taking care of her mother. She had Alzheimer's. She lived with us for four years. And then, she moved into a nursing home and my wife was over there, you know, probably five days a week. And back when I was working, earlier in my career, she had been a stay-at-home mom. What we came to realize after the fact was basically my wife's job was caregiving. She'd been a caregiver to our daughter, she'd been a caregiver to her mother--and when her mom passed away three months after I retired, that just stopped. And in a way, it's no different than losing a job, right? The difference was, we hadn't really been planning for that as a retirement transition. We knew she was going to pass away, obviously, but we had no appreciation for how core of an element that was in my wife's life. And she went through a transition. Now, suddenly, her primary task is gone. I'm out there doing great, I'm loving my retirement; she's kind of like, well, you know, I got to figure this out. And that's when she came upon this, you know, Freedom for Fido and starting the charity, and everything is fine now. But it was a really good reminder that you don't always have to just think about retirement as traditional retirement. If you've got a stay-at-home spouse, it's going to be as big a change for them as it is for you. Suddenly, you're home all the time. Make sure you're talking about it upfront and get prepared for that, but also recognize that if they're doing caregiving, when that stops, that's going to be a big transition as well. Not only do you lose a loved one, but you lose that thing that's been giving you your structure, and your sense of purpose, and all those things we talked about earlier. It doesn't have to be because of a job. So, that was a that was a really interesting experience. I'm pleased to report that it's gone great, and things are good. But it was a transition. And I think retirement is all about transition. And that was kind of her story of what her transition was like.

Benz: You and your wife made the decision to move prior to retirement to downsize a little bit. What are the key considerations that people should bear in mind when they're thinking through their housing choices in retirement?

Gilbert: Yeah, we did. We lived in the city, and we had a weekend cabin up in the mountains, and we decided to move up here for retirement. We had decided that a few years before retirement. But to answer your question, I think the first thing you need to think about, and do this while you're still working, you've got a couple of years left to work, really start visualizing what you want your life to be in retirement. If that's going to be an outdoor life and I want to do a lot of hiking and whatever, decide on the activities that you think will bring you satisfaction and joy in retirement, and then decide where's the best place to do them. If you've got the luxury of being able to have a place like we did before you retire, it's really nice because you can spend some time there, you can get to know some people, you can start getting established in the community. Not to say it's impossible to wait until you've retired and go through it. But it was nice in our case and I would encourage people if at all possible to start getting serious about it while you still got a couple of years left, maybe get a weekend place rented out on Airbnb, make a little bit of money out of it, develop your options and have it be driven by what you want your lifestyle to be and then where it's best. You know, a lot of people say I've got all my friends here, I've been here all my life, fine, that's OK. But recognize for the first time in your life--now you can argue with COVID people have been able to work from home--but more broadly, for the first time in your life, you're able to live anywhere you want to live. You're no longer dictated by your job requirements. So, consider taking advantage of it.

Ptak: So maybe we can talk about the keys to your ability to retire earlier than the traditional retirement age of 65 or 66 or so. What do you think you did right in your accumulation years to put yourself in that position?

Gilbert: Yeah, that's--I've looked back at that and wondered because it wasn't really by design. I guess, I would say, I was always responsible, my wife and I both. Number one, I married well. We have very similar outlooks. We're not materialistic. We don't want to keep up with the Joneses. Those have just been inherent traits. So, marry somebody who has got a similar view to yours. And then, really, as I was going through my working years, I just focused on saving as much as we could, but we still enjoyed life. So, if I got a pay raise, I'd save the majority of it, increased my 401(k), but we still enjoyed life. I had frequent flyer miles. So, when our daughter was home, we'd take vacations every year. We didn't scrimp to the point that we were sacrificing today for tomorrow, because tomorrow may never come. So, you've got to find a way to again, it's all about balance, and have enough balance that you're enjoying the life as you're living it, but you're also preparing well for tomorrow. I got out at 55. I could have retired at maybe 45 if I would have been super-aggressive. But I have no regrets about maybe losing 10 years of retirement because those 33 years that I was working, we truly enjoyed life. We had quality time with our daughter, we enjoyed life as we lived it. And we saved responsibly without--obviously, I got out 10 years early. So we did save, and we saved aggressively. But most of that saving came as I continued to move up the corporate ladder, and I was getting more money. We basically didn't inflate our lifestyle. And I think that was the biggest factor that gave us the option of considering early retirement.

Benz: One big impediment to early retirement for a lot of people, for everyone, is how they will cover health insurance in the years before Medicare is available. How did you approach that issue in your own plan?

Gilbert: Yeah, and obviously, you got all this stuff going on. At the time that I was going through it, the ACA was coming through, and it was a lot of uncertainty, still is. And really, to me, it's kind of a math problem. You know that you can buy insurance, but you know it's very expensive. So, in our case, as we were building out our numbers and saying, "Hey, can we afford to retire yet?", I used an assumption of $2,500 a month. I said, OK, based on research that I'd done, that's kind of the high end of the expected range for private insurance. I did COBRA for the first 18 months. It was easy, it was available, and it was fine. And then, as the COBRA expired, we ended up getting a private insurance plan. We're paying $1900 a month, so it's not cheap. But given that I'd planned for $2,500, hey, we built it into our numbers, and you need to get on with life. So, I just encourage people, if the only reason you're working is for your insurance, and maybe you can't afford private insurance, I recognize it's very expensive. But if you plan for it and build it into your numbers, you'll be able to find private insurance. You just--you're going to have to pay for it. So, recognize the cost, build it into your numbers. If your numbers say you're able to do it, do it. Do COBRA for a while; you got time to figure it out. But in our case, it's worked out fine. It's a lot of money, but that's just the reality of what it takes to retire early.

Ptak: You said that the most popular article ever on the Retirement Manifesto site is called "20 Steps to Take in the Year Before Retirement." One of those steps is to create an in-retirement budget and then try to run living on it. Can you walk us through that process?

Gilbert: Yeah, and that "20 Steps to Take in the Year Before Retirement" has gotten a lot of comments. It's an interesting post. But yeah, definitely. Retirement ultimately is a math problem. And you can't solve a math problem without numbers in it, right? You've got to put some numbers to it. And what we did, we've never tracked our spending, we've always saved a certain percent, increased that every year, and lived on the balance. But we knew we couldn't be that informal in retirement. So, we actually tracked every penny we spent for a year. We made it 11 months. We didn't do a full year--it's pretty onerous. But we knew it was important. So, we tracked every dime we spent. And we basically looked at, OK, here's what it is today, we know what it is today, it's grounded, it's solid, it's fact. How do we think that's going to change in retirement? Healthcare, we just talked about, right? So, you change those things that are going to increase. You know you're not going to be commuting anymore, you're not going to be buying clothes for work, you're not going to be buying lunch in the office, whatever. Make the adjustments. You're not going to be saving anymore. So, you can take the savings and take those off, and make a before and after retirement. We were conservative in almost all of our assumptions, again, insurance, I talked about $2,500 a month, and then it'd be at $1,900, fine. But be conservative and build a solid estimate as you can, because all the math is driven by what your expected expenses are going to be, and you've got to get that as accurate as you can. So, that's the most important thing.

The trial run basically then, OK, you say we're going to live on X per month. So, you basically--what we did--you know, I was still commuting, I was still having those expenses--but we adjusted our savings to as accurately as possible reflect income that would represent what our post-retirement would be adjusted for the expenses that would go away, if that makes sense. So, it's basically putting yourself in the mindset of living on an allocated budget and making sure your assumptions are reasonable and recognizing the importance of getting that part right. The nonfinancial is important obviously, but the financial is absolutely--you've got to have the financial, it's necessary, but not sufficient, right? You've got to get it. It's necessary. And this is, to me, the most important thing that most people overlook, “Oh, I'll use the 80% rule. I'll be fine.” No, don't do that. Are you going to pay off your house? Are you going to relocate? Are you going to downsize? We modeled all that stuff. And because of it, we know that we're comfortable with a very conservative, safe withdrawal rate. And we really don't have a lot of financial concerns because everything that we're spending is pretty much in line or slightly below what we had planned when we were making the decision.

Benz: Well, I want to ask about how you approached withdrawal rates. But before we get into all that, I wanted to talk about this one-off expense reserve account that you've written about. It's kind of an emergency fund for retirement. Can you talk about how you decided how much to hold in it?

Gilbert: Yeah. I give all the credit--I read an article or a book from The Wall Street Journal, it's on my bookcase, I could go over there and get it, but I won't. But it's the retirement planning book that The Wall Street Journal put out. And that's where I got the concept. What I call it is the "expected unexpected expenses," right? You're going to have unexpected expenses, but you should expect that. You're going to have to replace your roof every 15 years. You're going to have to get new air conditioner every 20 years, right? You're going to have to replace your car every however many years. So, what we did based on this book is, if you look at a car--let's just do easy math. Let's say you've got $20,000 in a car, and it's going to last 10 years. Let's say it's $12,000, and you got to replace it every 10 years. So, it's $1,200 bucks a year. So, it's 100 bucks a month. And if you basically go through all of those things that you know are going to need to be replaced--and it really primarily focuses on the maintenance emergencies, maybe a health issue you could throw in there as well. But in our case, we added all those up, and I've got outlines of this on my blog, and it's in my book as well. It came out to $12,000 a year. Now, you're not going to spend $12,000 every year, you're only going to buy that car every five years. But if you set aside $12,000 in January of every year, and then if you've got a repair, you've got to do that was unexpected, you can pull it from that fund. The next January, you put another $12,000 in there, the next January, you put another 12,000 in there. And basically, over time, that should give us a buffer that when we need to replace the car, unless it's right away in the first year of retirement, obviously. But over time, the money that we've set aside every January should be sufficient to cover all of those unexpected expected expenses. And we do that first. So, we take the 12,000, we put it in there, we count that in our withdrawal rate, because it's money that we know we're going to spend, we just don't know when we're going to spend it. And then, we set up our monthly paycheck, if you will, with the balance of the amount of money we can take out each year. Hopefully, that makes sense.

Ptak: It does make sense. It seems like one underdiscussed aspect of retirement is making the mental transition from saving to spending. There are lots of ways to calibrate how much you can spend, which of course we could discuss. But how about the mental hurdle of getting comfortable with spending? Was that difficult for you? And what steps did you take to get over it?

Gilbert: Yeah, you're spot on, Jeff. That that is a big struggle, especially for people like us, and many, I'm sure of your listeners that have been lifelong savers, making that shift from saver to spender does not come naturally. And I wrote a post, it's called, "It's Time to Live Like No One Else." And it was based on the Dave Ramsey quote "Live Like No One Else So Later You Can Live Like No One Else." Most people focus on the first half of that sentence, "live like no one else." So, that means I've got to save, that means I can't keep up with the Joneses, that means I don't need to drive new cars. I would encourage people as they get close to retirement to focus on the second half of that, "Later You Can Live Like No One Else." To me, and that's what this post was about, that means you can be free to spend within your predefined limits without having to worry about it, right? You've made it, you know you've got a big enough nest egg to cover a certain amount of spending per year.

So, I think number one was being intentional and recognizing that was going to be a transition. Number two was recognizing that we wanted to be able to spend without feeling guilty. And number three was setting up the logistics that enabled it, which is basically my bucket strategy. We can talk about that later if you'd like. But basically, we've got a certain amount of money flowing into our checking account every month and we know we can spend it. So, if there's money that's starting to build up in there over six months, we haven't spent it all, we're below our spending target, well, we've got a little extra cushion. OK, let's go do something fun. Let's spend that money because there's no reason to save it anymore because we know we can spend the amount of money that's coming into our checking account. So, it was really the three combined. And it's still hard, I'll be honest. Your natural tendency is to save. But I would say we've been pretty successful at freeing those shackles and enjoying life and the opportunities that it brings us even if it costs some money to do it.

Benz: I wanted to ask about that early COVID period. Could you share sort of how that felt for you during that period? Because it was this huge market shock. And obviously, there was a lot of other stuff going on in all of our lives during that period. But how did it feel to see your portfolio balance presumably took a hit, at least a short-lived hit? How did that feel while you simultaneously were drawing upon that portfolio?

Gilbert: Yeah, and it's the first bear market that I'd been through post-retirement. I guess the advantage was, I've been through quite a few of them in my career. You think back over the 33 years prior you learn the cycles of the market. And I knew going into retirement, there would be bear markets. I mean, you've got to be realistic in thinking about those things. And the whole sequence of return risk, which is if the market drops early in your retirement, it greatly diminishes your ability to spend, et cetera. So, really, the way we approached it was building a structure around our investments that had as much buffer as we could manage to build in there and mainly through cash, and we built up three years' worth of cash. OK, sure, you're not getting any return on it. But what's it for? It's for March of 2020, right? It's for those periods when the market drops, and you're like, hey, it's OK, we've got cash set aside, we don't have to sell stocks right now, we can be patient, wait for the market to rebound. And actually--I don't know how to say this. I guess, we had a little too much cash, because a lot of retirees have that problem. You've got too much in cash, what am I going to put it in? So, we actually had a little extra cash above our three-year target in bucket one. I actually was buying some in the market when it went down.

So, the market volatility doesn't really concern me. I think the bigger concern for me is if you have a very long-drawn-out market downturn, a/k/a The Great Depression. Something like that, there's no way you can build a defense really to manage that. You're just going to have to deal with it. But for the typical market volatility up and down, we just built it into our strategy of how we were going to set up our assets. And I really didn't stress about it. It was a surprisingly smooth period.

Ptak: So, that's probably not a bad segue to another thing that we wanted to ask you about, which is the bucket strategy. You mentioned it earlier, you're a strong proponent of that strategy for retirement planning. So, maybe you can talk about how you structured the different buckets.

Gilbert: Yeah, and you know, this is controversial, I like to have fun with the bigger--and I know you guys interviewed Karsten, and he--oh, you don't need it. You know, it's nothing exotic. It's basically just a mental way to view your asset allocation. And if you think about it, it's--in our case, we used three buckets. Bucket one is three years of cash, pretty simple. Bucket two is, let's say, five to seven years of something other than stocks, right? So, it's primarily bonds. We've got some alternative assets, some REITs and things like that. So, things that would potentially be assets you could use if you get into an extended market downturn, you want to protect your stocks and not have to sell them in the downturn. So, you put those in bucket three, and that's things that have the higher long-term growth, but in return for that, you've got the higher volatility. But you need to have that long-term growth to keep up with inflation. So, it's basically segmenting your assets. And the concept is, bucket one is what you use for cash. And in our case, every quarter, we refilled that. I won't get into that unless you guys want to get into it. But basically, you keep three years' worth of cash on hand. And if the market goes down, you quit refilling it, and you just spend that down to give your stocks time to rebound is the concept.

Benz: Well, I did want to ask about that whole bucket maintenance thing because I'm kind of a student of this as well. And it seems like maintaining those buckets can get complicated, especially when you have multiple account types where you have traditional tax-deferred IRAs, Roth IRAs, taxable accounts, and so forth. So, can you talk about how you keep your buckets up and running on an ongoing basis?

Gilbert: Yeah, and this has been an interesting topic. I'm glad you asked to get into the details, because I do think it's important. And this is one of the more popular series I've written on my blog, and I've written articles about how I maintain. Actually, this is coming out on Wednesday. I've got a post coming out tomorrow, "How Much Time Do We Spend Managing Our Money in Retirement?" So, I just did the math, and I was surprised to find out the annual amount of time I spend managing our buckets is about five hours. That's it. And there's basically four steps.

One is you establish that paycheck that you want to set up. I do this kind of at year-end, I do a year-end review. So, I establish a paycheck, and we basically set up an automatic transfer from a Capital One money market fund into our checking account. So, that's number one. That doesn't take long. Then, as I go through the quarter, I can look at how much we've spent, pretty easy. You just look at the Capital One balance, if it started at $100,000, you're down to $80,000, you know you spent $20,000, right? It's a very simple process. OK, we spent $20,000. So, how am I going to refill that? And I like to refill it quarterly, because if the market would tank in April--or let's go even worse--if the market would tank in December, and I haven't refilled it for 11 months, I just lost a year of my buffer, right? So, I try to refill it quarterly. So, every quarter, I look at what the market has done. And thankfully, other than early 2020 as you mentioned, the market has been very favorable. We've had nice tailwind here in my first couple years of retirement. So, we've been just selling stocks, bucket three, right? It doesn't have to go bucket three into bucket two into bucket one. You just look at whatever asset is up the most, and I just take $20,000, sell it, move it over to bucket one. So, that's once a quarter.

As part of that I do look at rebalancing. We've got 60% stock, 30% bond, 10% alternative asset, that's our asset-allocation target. So, I'll do quarterly rebalancing as part of that. And then, at the end of the year, we just do an annual checkup and I update our net worth. I only update our net worth once a year. And I look at our net worth, and I basically say, OK, of that net worth, we exclude the house, we exclude the cars, you know, we just look at basically assets that can be used to fund our spending in retirement. I'll multiply that times 3%, 3.5%, and 4% and I'll kind of say, OK, here's the window of how much we can spend for the coming year. And we set up the new paycheck starting in January. So, it's not a complicated process. I've been pleasantly surprised by how easy it's been to manage it.

Benz: Well, I did want to follow up on the tax piece, because it does seem like things get a little bit more complicated there. And I don't want to get too into the weeds on your plan. But one thing you've written about is that you took advantage of the early years of your retirement to conduct a series of conversions of IRA assets from pre-tax to Roth. So, can you talk a little bit about why that planning can be a really effective strategy in the early years of retirement, especially prior to required minimum distributions? And how did you decide how much to convert each year? Did you get some financial advisor help or tax help?

Gilbert: I've done it all myself, Christine. But to me, it's not that difficult. Basically--and I've written articles about this as well--it is absolutely to me critically important because most baby boomers have too much in pre-tax because when you were first employed, you had a 401(k) and it was only before-tax savings, right? Oh, you got to put them before-tax, your tax rates go down. So, everybody's encouraged to do before-tax, and then you reach retirement, you're like, oh, man, I'm going to get hit with those RMDs, right, when you turn 72. So, what do you do? Do you wait till you're 72 and have it be whatever it's going to be? Bad approach.

A much better approach is to take some of that out every year strategically. And the reason is this. Let's say you're--I don't know, pick a number--$50,000 from the top of your marginal tax rate, OK. And then, that's where you're going to be. You have a $50,000 opportunity every year to convert that pre-tax money at your current marginal tax rate. If you wait until you retire, and you get forced to take, let's say, $100,000, to make the numbers easy, you'd have a big chunk of that go up into the next marginal tax bracket, and you'd end up paying higher taxes over the course of your retirement. So, all we do is every January we sit down, we look, OK, what's our expected income going to be? Where does that put us in the tax bracket? You subtract your deductions, subtract your HSA, you know, make the adjustments. What's our net taxable income going to be? And how much room do we have between that and the ceiling of our marginal tax bracket? OK, that's what we're going to target for our Roth conversion this year. How much is that going to cost us in taxes, OK. And we factor that in, we do quarterly estimated taxes. So, we factor that in. We build it into the bucket strategy, because it's at the same time that I'm calculating our spending. It's just another spending item. What are you going to pay for taxes? Well, it's a quarterly estimated tax, it's pretty easy. You just do the math, that's what's it's going to cost. And that's all we do. And we do it every year. We top off the tax bracket. And the hope is, by the time you get to the RMD level, you've got a lot less in there. So, it will limit your potential of getting forced into a higher tax bracket, not to mention what if tax rates go up, right? If you look at the tax reform in 2018, that was a tremendous reduction in the marginal brackets for people that are married filing jointly. So, taxes are on a pretty historically low rate right now. And not to project the future, but my feeling is you're probably at an opportune time to take some of that off the table.

Ptak: Have you worked with a financial advisor to get a second set of eyes on the plans you've made?

Gilbert: You know, I never really did. I mean, all through my career I saved, and we had a Vanguard 401(k). So, probably in my 40s, you could do a once-a-year thing with a CFP. And I did that a couple of times. Now, as I got about two years away from retirement, I actually did do a one-off with a certified financial planner and said, look, I'm fairly confident on this stuff, but I recognize you can have a blind spot, and I had kind of a retirement readiness checkup. And they confirmed pretty much what I was thinking, but it was nice to have a second set of eyes. So, I do encourage people, even if you're DIY, it's worth a little bit of money to get a one-time checkup and just make sure you're not missing something. Maybe you underestimated what your health insurance is going to cost, you don't really know. Well, the CFP is talking to a lot of people that are actually paying private health insurance. They can give you a pretty good sense of those types of assumptions. And to me, it's money well spent to have somebody take a look at it.

Benz: I wanted to ask a related question. You have been responsible for most of the financial planning aspects of your retirement, so, have you thought about safeguards against cognitive decline, which is something that confronts older adults, especially as we get into our 80s, a high percentage of older adults do confront cognitive decline? So, have you thought about building in safeguards in your plan?

Gilbert: Absolutely. I have my dad suffering from kind of early Alzheimer's, not too severe yet, but he couldn't manage his finances. So, I've seen firsthand the transition that almost everybody goes through. And I would argue another thing is, have you thought about what happens if you get hit by a bus, and your spouse doesn't normally manage this stuff? To me, it's kind of similar related topic. And what I do is I write a love letter to my wife every year, and I give her an update on here's our net worth, and I basically step by step, if I were to get hit by a bus, here's what to do. And one of the things that I tell her in there, and it's the same thing I'm planning on doing when I get to the point that I'm, hey, you know, I'm in my 70s, maybe I shouldn't be doing this, or you know what, maybe I just lose interest in it and don't want to do it anyway. But either way, at some point, I recognize that we're going to move this and what we've chosen for now we'll keep an eye on the market is the Vanguard Personal Advisory Services, you know, 0.3%. So, it's cheap. And they do a pretty good job it looks like of managing your portfolio for you. And I've told my wife, just call Vanguard, here's the number, it's in my love letter. And I plan to do the same thing myself if I sense that I'm starting to decline or others cautioned me or our daughter says, hey dad, you know what, you gave me a 20 only, you know, whatever. If there's signs that I'm starting to decline, I have no problem calling somebody to manage this for us. I think it's important to recognize this is a skill that diminishes in time.

Ptak: I guess in a similar vein, you wrote a post saying that you and your wife have decided to self-fund long-term care rather than purchasing insurance. How did you arrive at that decision?

Gilbert: Yeah, and that's a big topic for people. And it's one I think everybody should do the numbers for themselves. But what I did basically is I talked to our insurance guy, and I said, hey, can you give me a quote on long-term care? We're probably early 50s, because people say buy in your 50s, maybe early 60s. So, we're about the right time. And I got the costs of buying long-term care. So, I basically set up a spreadsheet. Column A was you pay long-term care insurance, you know, it's X per month. I don't remember the numbers now. It doesn't matter. Alternative B, which was Column 2, is you invest that monthly premium every month. And I basically just ran it out until we were age 95. You know what the first column is going to be, you're paying for the insurance, you get the coverage, you can see what that's going to look like. In Column B, you basically just look at the compounded growth of paying yourself those insurance premiums. And in our case, based on the math--and I wrote an article, "Why We Are Not Buying Long Term Care Insurance," I think was the name of it--if we invested those insurance premiums, by the time we were age 80, we'd have about two years of long-term care paid for. If we waited till 85, which is kind of the nominal age, I think somewhere between 80 to 85, we had three years paid for. The average stay is less than three years. So, we knew our breakeven point was kind of 85. And if you go beyond that, it gets even better because your net worth is continuing--or your compounding is continuing to grow. So, by the age of 90, I think it equated to something like $1.5 million we'd have sitting in the bank or in the stock market. And it would cover something like four years at age 90.

So, our decision was, it's close enough that it's kind of breakeven, and in the event we don't need it, we've got a nice legacy that we can leave to our daughter, and the risk you take obviously, and you have to go into it knowing the risks, is if we have a long-term care event prior to age 80 or 85. And in our case, we're healthy, we're active, we don't anticipate anything, but we recognize the risk going in that the one downside to self-insuring it is not having those insurance premiums that you've decided to invest, you've not given them sufficient time to grow to the point where you're self-insured. That's the risk, and that's a risk we decided to take.

Benz: That's helpful. Another topic I'd love to hear your thoughts on is how you set your withdrawal rate. And I think we could probably do this whole interview on that topic because it's so huge. But can you kind of talk about how you arrived at what you consider to be sort of a sustainable withdrawal rate for yourself?

Gilbert: Yeah, you know, everybody knows the 4% safe withdrawal rate based on the Trinity study and all that, and then you've seen a lot of the stuff that's come out since. So, that's a little bit aggressive and Big ERN's on that huge safe withdrawal series, 40-some articles now, and his number was like 3.25%. I'm like, hey, he's smarter than I am. He's saying 3.25%. Let's shoot about 3.25%. So, really, knowing the 4% is generally OK, I'm more conservative and the markets seem a little bit inflated, let's take a more conservative approach and target between 3% and 3.5%. And like I said, every year-end I look at the net worth and I kind of set up the amount that we could take based on 3%, 3.5% and 4%, and right now, we've been probably below 3%. The market has been great, and I've had some unexpected income, wrote the book, et cetera. So, I think plan conservatively and in our case, I worked one more year. The numbers said I could have gotten out at age 54, but I would have been closer to that 4% withdrawal rate, and I was like, you know what, for the peace of mind for the rest of our life to have a little bit of a cushion in the numbers being a conservative investor it was worth it in our case, and we've kind of targeted now the lower end of the range.

Ptak: We have a couple closing questions for you, one of which is what have been the key surprises for you in retirement thus far?

Gilbert: Yeah, I need to write a post about that. I wrote a retirement reality series where all through retirement I've kind of been writing what I've learned. I think I was so excited about retirement. I had very high expectations. And I would say my biggest surprise is that in spite of those very high expectations, it's been even better than I imagined. I mean, I can't tell you guys how much we're enjoying life. We planned for it, we prepared for it, we had a good transition into it, and it's a really good period of life. I think it comes down to the joy of freedom, you know, the ability to do whatever you want to do whenever you want to do it. Yeah, there's adjustments. You've got to deal with the structure. You've got to make sure you got the financial strength. But we spend very little time thinking about the money, and you'll see that post tomorrow. I think it's 20 hours a year we spend managing our finances. We don't spend a lot of time working on that. So, the two biggest surprises are how little you focus on money and how really rewarding it is to have achieved this point. And when we're still young, we're healthy, we're able to do the things we want to do, it's great. I can't say more than that.

Benz: So, you've accomplished a lot during retirement with the charity, your blog, and your book. What's still on your to-do list?

Gilbert: That's a good question. I would answer--I guess I would say this. Serendipity is my favorite word. It is basically following your curiosity and see where it goes, and that's kind of where we're at in our life right now. We are really focused on the present. I love that song by Travis Tritt, "It's a Great Day to be Alive." I don't know if you ever heard it. If not, you got to look it up on YouTube. It's great. Because it's just an upbeat--you know, the sun's out, life is good. And that's where we're at. Now, obviously, we think about the future, but we certainly focus more on the present than we do in the future. That said, there's some things we'd like to do. Obviously, the COVID thing has as dampened any international travel and we'd like to do some of that. Of course, with four dogs that's not necessarily terribly easy to do anyway. But I could see down the road doing some extended travel, New Zealand, maybe Scotland, some things like that.

More importantly, the things I think about the most are really around the legacy type issues. We've got a three-year-old granddaughter. So, it's I guess natural, but what things can you do in your few remaining years that can really leave an impact hopefully for generations to come? That's a big unanswered question, but that's probably where I spend most of my future time thoughts on. What can you do that will make the biggest impact? My writing makes an impact. I'm pleased with that. My wife's charity makes an impact. Those are great things. But it's those types of thoughts that I would say consume most of my planning time.

Benz: Well, Fritz, this has been such a fun and positive conversation. We really appreciate you taking time out of your schedule to be with us today.

Gilbert: Well, thank you, Christine and Jeff. I am really honored that you reached out to me, and it's great to be on your show. I wish you guys the best of luck. You're doing a great service for people. Your content is just the best. And I'm really honored to have a spot on the podcast. I appreciate you taking the time.

Ptak: We really enjoyed having you on. Thank you again so much for your time and insights.

Gilbert: OK, thank you.

Benz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.

You can follow us on Twitter @Christine_Benz.

Ptak: And @Syouth1, which is, S-Y-O-U-T-H and the number 1.

Benz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.

Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email us at Until next time, thanks for joining us.

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis, or opinions, or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)

More on this Topic