Ready to Retire: The Ultimate Pre-Retirement Checklist

Mindy:
Welcome to the BiggerPockets Money podcast, show number 125, where we talk to Fritz from The Retirement Manifesto about transitioning into retirement at any age.

Scott:
You can’t really put yourself in the mindset of being retired. You don’t know what it’s going to be like, it’s impossible to know. But, to the extent that you possibly can, try to replicate a short period of time in your life, and just pretend you’re retire. Or, more importantly, take that time to think about what you want your life to be like once you are retired.

Mindy:
Hello, hello, hello, my name is Mindy Jensen, and with me, as always, is my 1970s pinup cohost, Scott Trench.

Scott:
What’s a pinup?

Mindy:
Back in the day, we had magazines that would have pictures of all your favorite stars, and you would pull them out of the magazine, and pin them up on your wall because we didn’t have the internet.

Scott:
So, you’re calling me a poster child for finance?

Mindy:
Scott is the poster child for financial podcasting, that’s exactly what I’m referring to, and not at all talking about your very puffy, very puffy hair. You look like David Cassidy. Scott-

Scott:
I don’t know who that is either.

Mindy:
oh my God, I quit.
Okay, Scott and I are here to make financial independence less scary. Less just for somebody else, and show you that by following the proven steps you can put yourself on the road to early financial freedom, and get money out of the way so you can lead your best life.

Scott:
That’s right, whether you want to retire just five or 10 years early and travel the world, go on to make big time investments in assets like real estate, or start your own business, we’ll help you build a position capable of launching yourself towards those dreams.

Mindy:
Scott, I am delighted to talk to Fritz today, because he walks you through the step by step, all the things you need to do for your retirement, that you’re not thinking of right now, most likely.

Scott:
Yeah, that’s right. Retirement process is a financial one, and we have dived exhaustively into the math behind financial independence on many of our shows. Whether it be real estate, stocks, cash cushions, financial planners, social security, whatever it is, those buffers, we’ve covered them.
But, there’s also just a mental challenge to doing this. The successful early retirement stories that we’ve heard all involve a period of planning, usually several years in advancing, leading up to a specific date where people will go ahead and retire, and make the transition. We talk about Christine Bryce from Millennial Revolution, you and Carl with 1500 Days, Tim and Amy from Go With Less, all of these folks, many of our guests, have completed a similar style, years long build up to true early financial freedom and retirement, the transition out of wage paying work.
But, Fritz, this guy today, gives you that in great detail, in a really comfortable, thoughtful, specific, detail approach, which I think is going to be really fun for everyone.

Mindy:
Yes. From the position of I did it this way, and this was the smoothest way to do it.

Scott:
Yes.

Mindy:
Okay. Before we bring Fritz in, let’s hear a note from today’s show sponsor.
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Okay, huge thanks to the sponsor of today’s show. From the worldwide headquarters of The Retirement Manifest, Fritz joins us today to talk about the journey after you get to retirement. Our average listener is somewhere on the path to financial independence. My own personal experience is that money is just the beginning. Once you have your finances in place, you still absolutely no idea what you’re doing with this whole retirement thing. So, imagine my delight when I found this pre-retirement checklist online, at this website called The Retirement Manifesto. I thought, I really want to talk to Fritz about this.
Tell me about your pre-retirement checklist, Fritz.

Fritz:
Well, thank you Mindy. That is, your taste, I guess is …

Mindy:
Delightful.

Fritz:
Yeah, delightful, there we go. That is definitely one of my most read articles, so your taste for talent, I guess … this thing has really become popular.
Really, I think it was actually triggered by a recommendation by a reader. I have really good reader engagement, and somewhere along the line in a comment or something, somebody said, “Hey, can you just put a checklist together, based on everything you’ve learned?” It turned into this post. Basically, what I did is I thought through … Let’s see, I wrote this when I was right on the cusp of retirement, I was two months away. I was basically there, and I was looking back over everything I had done in the five years previously, to get myself in the position to retire.
I think, what’s interesting about it, I basically did it chronologically. I said, “What was I thinking about five years ago? What’s the right sequence of steps to take, as you’re getting close to the starting line?” As I call it, not the finishing line. “As you’re getting close to the starting line, what’s the right sequence of steps to take that increase your chance of having a successful transition into retirement?” That was the genesis of it.

Scott:
What was your position like at that point, five years ahead of retirement?

Fritz:
That’s a good question, Scott. I would say I wasn’t traditional fire, I had always saved … My dad taught me early, it’s not hard to get wealthy, just spend less than you make, and do it for a long time. I was a bit more of a traditional approach, but I probably started my career saving 15%, I probably moved into my 20%s by my early 30s. The last couple years of my retirement, I was saving probably 50%. I retired at age 55, I could have retired a little bit earlier. But, I tend to be more on the conservative side, so I did the one more year thing. I also have a pension at work, so there were some incentives to stick around, to get that thing … It’s a compounded curve, and it was worthwhile to stick around for a while.
Five years prior, I was really just getting serious about, wow, I’m pretty close to actually being able to do this. I was 50 years old, at the time. I hadn’t really been thinking about it, I wasn’t traditional fire where you’re, “Okay, I’m seven years away, I’ve got to save X, I’m cutting cable.” We were traveling every year, we were just always saving aggressively. Not hyper-aggressively, we were enjoying the journey as we went. I was an international business guy, so I had a lot of frequent flyer miles, we took vacations every year. But, we always paid ourselves first. If I got a raise, let’s say I got a 3% raise, 2% of it would automatically go into savings, and we’d take home 1% more, so we were always growing our savings rate. But, we were also enjoying the journey.
So, as I wrote this article five years out, we were just at the point of getting serious. Starting to look at the numbers and saying, “Hey, you know what? I think we can make it out of here in the next five years.”

Scott:
Awesome. Was most of your position in retirement accounts, stocks, home equity? Was there anything kind of creative or unique that was going on with your investment portfolio? The pension, as well?

Fritz:
Yeah, the pension, I tracked my net worth and I exclude the pension from that. Because I really look at funding the gap, right? The pension covers X, you need Y, so what’s the delta between the X and the Y? You need your net worth to cover that, so I’ve always looked at it that way.
But, in terms of the assets, one of the problems, I guess, being a Baby Boomer, when I was starting out in the workplace, the 401K was just getting started. The only option, really, was the before tax, so we didn’t have access to the Roth. Now, I’m paying the price for that, I’ve got “too much money,” good problem to have. But, I’ve got too much money in the before tax accounts, I’m doing Roth conversions every year now that I’m retired, the income’s dropped off. We’re doing Roth conversions, trying to get as much of that pre-tax money out before we get hit with the required minimum distributions.
Probably, over half of our net worth is tied up in retirement accounts. Even there, fairly early in my career, we started maxing out the 401K. Even as I was not yet optimized or maxed out in the 401K, I was still saving in after tax accounts. I always liked having a little bit of money that you could get before waiting until you were an old man, so we were building up our mutual funds at the same time that we were building up our retirement funds, so I’ve always had a blend of both.

Scott:
Okay. You say mutual funds there. Are you an index fund fire guy, or do you still invest in those mutual funds?

Fritz:
I’m pretty much a Vanguard guy. Ironically, or coincidentally, our 401K started with Vanguard. I didn’t know a lot about this stuff at the time, I just started plugging away. And, obviously got more knowledgeable, and love the low expenses. You know, Vanguard’s a great fund, so I tend to go broad index funds and diversify a bit. But, I keep it relatively simple, not as simple as, maybe, JL Collins, but it’s not hyper-complicated.
The other thing I’ve got is I’ve got about, maybe 10% of our net worth, I call it fun money, it’s in a TD Ameritrade account. I trade options, I do stupid stuff, but it’s a small enough amount of our portfolio that it’s not going to really kill us, and it scratches my itch to be a trader. I’m a trader wannabe, I do some stupid stuff, but the vast majority of it is just dollar cost average, save every month, and just let it ride.

Scott:
I love it. I’ve got this picture in my mind of just a very responsible, successful guy, five years out thinking, “Hey, I’m potentially five years out from retirement here, and I’ve got a pretty good position.” Just sound, good habits for a long period of time. Is that how you would describe it?

Fritz:
Spot on, spot on.

Scott:
What changes once you realize you’re five years out from retirement? How does this journey begin here?

Fritz:
Yeah, it’s an interesting shift. I think one of the things I encourage fire advocates to be careful about, if you focus so much on the fire, you can lose the excitement of living every day. And, as I focused more and more on reaching the starting line, you get so absorbed in that, that everything is just waiting until tomorrow. You want to get there, you want to get there.
Prior to that five year realization, it wasn’t even really in my mind. It was like, “Okay, I’m saving aggressively, I’ll get there in time.” But, I didn’t really think about it. I just knew, at some point in the future, it was going to happen.
Once you start dialing in a specific date, and you run your numbers, you almost start a countdown clock. I actually started a countdown timer on my phone, I was 1000 days away from retirement when I actually picked my retirement date. And, I held to it. As you get closer, you tend to live much more in anticipation of that retirement date instead of just savoring every single day you’ve got. Which I really encourage people, enjoy the journey, don’t just put it all off until you hit fire. Enjoy it as you go, because you never know what tomorrow’s going to bring. You might not get there.

Scott:
I love it, I think that’s great advice.

Mindy:
I love that you call it the starting line. People call it the finish line, “Oh, I’m finished working.” Yeah, but now you’re starting your life, and I really love that. That slight little shift in mindset is going to be huge when you’re considering what you’re going to do after retirement.
I think I’m in a unique position, because I don’t want to quit my job, I have the best job ever. But, my husband did not have the best job ever, so he did want to retire. He has been working towards early retirement, he hit it, I don’t know, three years ago. I can’t remember now. But, when we got there, when he got there … I say he because I still have a job, but when we got there, once we hit our number he’s like, “Oh, I can’t do this, I have to do it one more year.” One more year, one more year, one more year. It was three years before he actually left.
How do you get over that? You said you had one more year syndrome, I think a lot of people have one more year syndrome. There aren’t that many people … there’s a ton of blogs out there, talking about how to get to retirement. There’s not that many blogs talking about how to actually retire, and how to go past afterwards.

Fritz:
Yeah. I think, Mindy, that’s a lot of the feedback I get from my readers is exactly that. I think the one more year syndrome, it really comes down to two things.
One is as you’re running your numbers, obviously there’s a ton of assumptions. Any spreadsheet you want to put together, what are your returns going to be, what’s inflation going to be, what are you going to do for healthcare, what’s it going to cost? What are your living expenses going to be? On and on, throw in some black swans, what’s going to happen with bear market, et cetera, all those things are anxiety inducing because you cannot answer those questions. They’re forward looking, and they’re unknown.
You can look at the last 50 years of stock returns say, “Okay, 10% return.” But realistically, do you want to project a 10% return on your equities when you’re putting your cashflow forecast? No way. What do you project? Well, I’m going to use five, but what if it’s really three? You get all caught up in this what if syndrome. That’s, I think, most people.
I’ll tell you why I did one more year. It was a combination of that, but it was also advice from two people. My uncle, who retired as soon as he was able, and probably cut it a little bit tight. I talked to him a couple years later and he said, “You know what? If you’re pretty close, but you’re not quite sure, you might want to think about doing one more year because have that padding in there is nice. Once you’re in retirement, to have a cushion, it makes your retirement a lot more enjoyable.” Okay, I listened to that. The second piece of advice was from a good friend of mine named Kirk, he was getting ready to retire. When I had that discussion with him, of what my uncle said, he decided to wait one more year. A couple years go by, he’s into retirement and he’s saying, “Fritz, that was the best advice I ever received, I am so glad I did one more year.”
That was where I was at, I wanted a little bit of a cushion. I’m a more conservative approach, I’m not as big of a risk taker. Now that I’m retired, and having that cushion, man, my uncle was spot on. It really is nice. I mean, my withdrawal rate right now is 3%, even in the bear market. I’m not worried in the least, we’ve got a bucket strategy filled up, three years of cash. I can cut spending, I’ve got a lot of wants in there as well as needs, so there’s cushion that gives you a lot more comfort. When you know you’re walking away from your paycheck, that’s a tough step to make. That, I think, is the primary motive.
The one that concerns me more is the people that do one more year, one more year, one more year, strictly because they’re scared of the transition to retirement. They’re financially able, they’ve got 33 times their annual spending, they’re looking at a 3% withdrawal rate, and they’re still not retiring? That’s not a financial question, at that point, that’s a psychological question. You haven’t gotten your head around what you want your life to be like, on the other side of the starting line. That’s really where I focus.
My latest book that I wrote, The Keys to a Successful Retirement, a lot of the stuff in this checklist that you mentioned, it really hones in on that psychological element. Because you’ve got to start working on that a couple years before you get to the end, or the beginning, to really power through that transition. It’s a big transition.

Mindy:
Yeah. Let’s look at this pre-retirement checklist. It starts off five years before retirement.

Fritz:
Yeah.

Mindy:
Before we jump into this, let’s look at what happens if I’m reading this way farther out than five years before retirement. What are some things I should be doing before I get into your checklist?

Fritz:
Yeah. Again, recognize that my perspective, I wasn’t coming at this as a hardcore fire advocate, I was a more traditional approach, but it worked really well for me. What I would encourage people to do, if you’re more than five years out, don’t get obsessed about your retirement date. Save as much as you can comfortably save, make sure you pay yourself first, automate your savings, take advantage of compounding, all those things that we all should understand. Save as much as you can comfortably save, but enjoy life along the way.
Wait until you get a big enough nest egg that you’ve got a realistic chance, and then about five years out, start getting serious about looking at the numbers. Before that, just save as much as you can save, and don’t worry about it. Enjoy life.

Scott:
Yeah, I love that. When you’re just getting started on this journey, it is about cutting back your spending, working on your career, growing your income, investing in automating your investing, and passive things like index funds, retirement accounts, maybe real estate or house tax, whatever you’re interested in there. Then, you’ve reached this point, I call it the grind, and it’s boring, you don’t do anything. Every month, you just save a few thousand bucks, it accelerates slowly to 3000, 4000, 5000, over the years, as your income grows and your expenses stay reasonably flat. If you’re in that period, keep grinding it out, try your hand at some things, whatever.
But then, you get to this point where we’re at now, the starting point … the beginning of the journey to the starting point, as you would put it, I guess, where you’re five years out. That’s really where this show is focused.

Fritz:
Yeah, exactly Scott. I think, thinking through that, what I thought about is, okay, you’re 15 years out. Do you really need to check your net worth every month? Come on, automate it and forget it, and just know that you’re saving money.

Scott:
Enjoy life.

Fritz:
Even now, I’m retired, I check my net worth once a year. It doesn’t matter, you know you’re doing the right things, you know the math is going to work out. Don’t freak out about every single month, “What’s going on, on my net worth? Oh, it’s going from 100 to 110, oh great.” So what? You need a million, you’re years away. Don’t worry about it. Just save as much as you can save, and get yourself into stocks. You don’t have to over complicate it, until you get close enough that you’re really getting serious about making the decision.
Mindy’s wiping her eyes, I made her laugh so hard. That’s good.

Mindy:
I am crying, because that’s my husband except the exact opposite. He checks it every single day.

Fritz:
Carl, Carl, Carl, we need to talk to him.

Scott:
All right, literally how does the checklist begin, when I’m five years out? What are the things on there?

Fritz:
Yeah. The way we went about it, we talked about the softer stuff in this transition, thinking about it. Don’t worry about that stuff, when you’re five years out, you’re really focused on the numbers. For the first couple years in this five year window, it’s all about the numbers. You want to start running retirement calculators. I recommend running at least three retirement calculators, they’re all a little bit different. But, really get comfortable with what your net worth is, what your asset allocation is. Start thinking about rebalancing a little more strategically, rather than just randomly or not at all. It’s really starting to understand your spending, starting to understand how much income you’re going to need, and how much of a portfolio are you going to need to have a safe withdrawal rate and cover those spending needs. Years five down to year three, it’s all about the numbers. Don’t worry about the other stuff, yet. Just focus on, okay, am I getting there? Am I getting there?
Then, maybe about three years out … We can talk some more, on the five year side. You can start high level thinking about your retirement lifestyle, it’s never too early to think about that. The reason I say that, the life that you decide to live in retirement, number one, it’s entirely within your control what life you want to live. But, the answer to that question is going to drive your income requirements, right? “Hey, I want to travel the world,” whatever, it’s going to take more money versus, “I’m a minimalist, I’m happy being a minimalist, and I’m content to do that until I die.” Okay, fine. You do have to have a high level thought about how your lifestyle to be, and that’s the macro level that I would suggest people think about it when they’re five years out.

Scott:
Got it.

Mindy:
Okay. Moving into three years out, you just jump over year four. Apparently, you don’t do anything in year four.

Fritz:
No, you just let it float.
By the way, I should say, within this article I’ve got links to articles that I wrote all through the time period. I started my blog when I was three years out, but obviously some of it was drawing on the last couple years experience. So, there’s stuff in there that’s relevant to each one of these time frames.
But, when you get down to three years out, now you’re really starting to fine tune it. When I was three years out, I’d been running the retirement calculators, that’s fine. But, every retirement calculator is a bit of a black box. What I did is I actually built a spreadsheet, and I’ve got a free copy of it on my blog, The Retirement Manifesto, I built a cashflow model out to age 95. I put in major budget categories, I had different inflation assumptions for each category. I tracked actual spending for a while, which we don’t normally do. We save first, we spend the rest because we know we’re saving enough. Well, I really started tracking our spending so we could look at it by budget category, and really get accurate spending data, and accurate cashflow projections for what life would look like, financially, after we retire.
What’s it going to come from? Where are we going to pull these withdrawals, and how much are we going to need? That’s what you want to start doing, getting into that level of granularity at year three, is really helpful.

Scott:
One of the things, here … I love that, that’s going to be no problem for BP Money Show listeners, we all track our spending. That’s a table stake.

Fritz:
Exactly.

Scott:
We learn that … what? In 50% of episodes. But on this, when you’re thinking about those types of things, how do you think about home mortgage, and paying that off? Is that a function in this? What are some of the big categories there?

Fritz:
People would argue, “Hey, I’ve got a 3% mortgage, I can earn 10% in the market, look at the arbitrage. I should carry my mortgage.” Okay, maybe mathematically the answer is yes, but I’ll tell you what, there’s a real emotional appeal to going into retirement debt free. That’s what we did.
We had a plan, and we actually had a second home, a cabin, which is now where we’re retire. We were renting it out, Airbnb, the income was paying for it. I wouldn’t say we were making any money, but we were building the equity, it didn’t cost us anything, it was being paid for by the rent. But, part of our plan was okay, as we would retire, let’s sell the big house in the city, take the equity out of the house, pay off the cabin, and go into retirement debt free, which we did. You can argue the numbers, but I would argue there’s an intangible benefit.

Fritz:
You can argue the numbers, but I would argue there’s an intangible benefit to being debt free that is really helpful when you get into retirement. I really encourage people to get very serious about trying to be debt free, a hundred percent debt free, including your mortgage by the time you retire.

Mindy:
Yeah, I made a note right here that says on the three-year checklist, it says develop a plan to eliminate 100% of your debt by retirement. I am one of those oh-you-should-carry-a-mortgage people, but I don’t really want to have a mortgage after I’m no longer bringing in income. That’s a conversation that I have to have with Carl. One thing that we do to mitigate that is we have enough money to pay off the mortgage invested somewhere, so we could do it if we want to, but we can also make more money in the stock market, so we don’t currently choose to. Again, that’s something that we have thought out and spoken about, and that’s not for everybody. I’m not trying to make people think that my way is the only way. I mean it is, but…

Fritz:
And that’s the opportunity cost argument, and you’re spot on, Mindy. Everybody has to make that decision for themselves. There’s no right answer. You could well have a better return. Look at our case. We took the equity from our home. I could have dumped it in the stock market and then you have a bear market or I’d paid off a 3% mortgage. Well, okay, it’s basically investing at 3% fixed, right? That’s not very attractive, but you’re not guaranteed a stock return either. It eliminates that anxiety of future return potentially at the expense of opportunity costs, that you could have generated a little bit more money. It is a very personal decision and people go both ways and there’s nothing wrong with either way, as long as you’ve thought it through and there’s logic behind your decision.

Mindy:
That’s the best way that I’ve heard anybody describe it. There’s no wrong answer, and that’s true. I was just joking before when I said it was my way or the highway. There’s no wrong answer, but you have to have thought it through. That is perfect. Okay. I am going to veer us off the rails just a little bit to ask you about your retirement home and your main home. You had two mortgages at one point.

Fritz:
Correct.

Mindy:
Could you comfortably pay both mortgage payments without any sort of income from the other property? On your salary?

Fritz:
Yes.

Mindy:
Okay.

Fritz:
Oh, yeah. Again, we were looking at a 50% savings rate, so we could have dropped that savings right down to whatever. I haven’t done the math, but we could’ve dropped our savings rate down and carried both mortgages without a problem. We would have been saving less, the rental income basically was going into savings.

Mindy:
Okay, perfect. In the current market, there are… where bigger pockets is primarily real estate and I’m hearing a lot of people having a lot of problems paying their mortgages almost as soon as their renter stops paying. That tells me that they have no reserves, which I would have chastised you, but I don’t need to now because you did it right.

Fritz:
Yeah. That’s a blinking red light. I would be really nervous getting yourself too extended. There’s a lot of stories about people in recessions. That’s when it happens, you lose your rental income, your mortgage isn’t going to go away. Maybe you lose your job. If you’re going to take on a lot of mortgage and you’re going to assume that the rental income is going to cover it, you better make sure you stocked up a bunch of emergency savings to be able to cover a year worth of however many mortgages you’ve got. Because it could happen, and it’s happened to a lot of people and they end up losing houses as a result. It’s not a good place to be.

Mindy:
No, it isn’t. And I hope anybody listening way down the road to this episode, takes that to heart because I remember 2008 and there were a lot of people who were really, really struggling. My daughter was born in 2009. Her entire grade is an entire class smaller than the year before because people stopped having babies because the market was so bad. The economy was so bad. And here we are, yes, we can’t predict a pandemic, but here we are again 12 years later, 10 years later, what’s… 11 years later.

Fritz:
12 years later. You’re good with numbers, Mindy. We got it.

Mindy:
Math is hard. 10 years later, 12 years later and we’re back where we were. The economy is horrible. People can’t pay their mortgages after two weeks and you lost all of the lessons that we learned 12 years ago, or 10 or nine or whatever math I’m doing wrong in my head.

Fritz:
Yeah. What I would argue that was even worse, 12 years ago, 2008, which we haven’t really seen yet. You guys are closer to the market than I am, but you also had real estate prices just get crushed. Everybody was trying to sell their second home at the same time and nobody was buying, so real estate values plummeted on top of it. So now you’re upside down in your mortgage. Even if you can fire sale your place, you still can’t pay off your mortgage. That shoe hasn’t fallen yet in this one, let’s hope and pray it doesn’t. That makes it even worse.

Mindy:
Yeah. Yeah, exactly.

Scott:
I think there’s a lot of merit and a lot of consistency amongst the people who have actually gone on to retire early. There’s a very small minority it seems that are comfortable keeping substantial debt after true, “I’m done. I’m not going to go back. I really truly intend never to get another job and earn income there”. A lot of the 30 somethings, I’ll be 30 this year, I’m not interested in paying off my mortgages yet. And I don’t think I should be-

Fritz:
No.

Scott:
… even though I consider myself to be in a position of financial independence because I do intend to continue working and earning money throughout the course of my career, or my traditional career age range. I think there’s a different level of comfort there, but we see folks that are retiring after 50 that’s typically debt-free. It’s pretty consistent.

Fritz:
Yeah, and even if you want to get there through real estate, let’s say you’re going to strictly through real estate, how much peace of mind would there be to say, “Okay, I’ve got five rental income properties and they’re generating all the revenue I need to live on and I’m debt free.” If that income drops off, okay, fine, you cut back your needs a little bit and you get by on your subsistence level wants for a while, until you get renters back in, but you’re not forced into a panic sale because you can’t cover the mortgage because now you’re retired, you have no income. Even if you want to go strictly real estate, that’s a very good approach, obviously.
You guys have a huge fan base, it’s a proven model, but I would argue even that is again, you get into the opportunity cost, but the peace of mind side of it, of having rental income that has no mortgage behind it, brings a huge peace of mind when you get into retirement. So however you get there, getting rid of the debt is a good strategy.

Mindy:
Yeah.

Fritz:
Sorry, Mindy.

Mindy:
No, no, I’m not close to retirement, so I can still have a mortgage.

Fritz:
That’s right.

Mindy:
Okay, back to the ultimate pre-retirement checklist. You have a note that says consider hiring a financial professional to give you an opinion on your retirement readiness. I just want to plug our episode number 41 with Kyle Mast another time. We interviewed him, he’s a CFP, he’s a fee only CFP and he goes step by step how to choose a fee only CFP who can help you get a big picture of what’s going on now, what you need to do to get where you’re going in the timeframe that you want to be there. That’s a really great piece of advice. You think you’re doing great. What if you’re doing better than you thought? And you just didn’t know because retirement is weird. Nobody’s ever been retired… well, I can’t say that… nobody’s ever been retired and then popped back out again and done it again. Brandon Turner did it. You know, lots of people do that, but you don’t want to have to pop out of retirement.

Fritz:
Exactly. And the reason I put that on there, I’ve been a do-it-yourselfer for my whole career. I’ve always been, I call myself a personal finance hobbyist. I’ve always loved this stuff. I’ve tracked investments since I was 22 years old. I’ve always had a net worth statement. I think my first net worth statement, I was like 25. I still have the same. Basically, I have that continuation of my net worth. It’s pretty cool to look at it over a 30 year time frame. I’ve always been into this stuff. I still had a certified financial planner just give me a one time checkup. Hey, how much could… do a one time thing, mainly because you don’t know if you have any blind spots. They deal with thousands of people.
I tend to be encouraged DIY. I don’t think the assets under management model is great, but I think a one time fee only planner looking over your numbers and making sure that you’re not missing something. They see thousands of people, they know all the scenarios. They can… “Hey, you don’t have anything in here for… how are you going to cover your healthcare?” They see the obvious things that you might not have thought about. I think it’s worth, it’s not that expensive and just have a professional just do a spot check for you. I think it worked for us. I think it’s worth doing.

Mindy:
Yeah. I’ve always been DIY too, and I do think that it’s worth having, for your exact reason. You don’t know if you have a blind spot.

Fritz:
Right.

Mindy:
Okay. Let’s get to two years out.

Fritz:
Okay. Two years out-

Scott:
Well, we’re missing one here, which was your last bullet point, which is evaluating long-term care insurance, which I think is an interesting one to point out there. What’s your thoughts on that?

Fritz:
Yeah. You know, I think before you retire, you have to think about this. Again, writing as a baby boomer, I was early fifties at this point. That’s typically when they recommend you buy long-term care and it’s kind of like that mortgage question, you can either buy long-term care or self insure, which is what we chose to do, but don’t ignore the topic. You’ve got to make a decision. You’ve got to understand the concept and legitimate expense and the risk. If you get into a nursing home and you have Alzheimer’s and you’re in a nursing home for five years, talk about something that could drain your net worth.
Recognizing that risk, you buy car insurance, you buy house insurance. This is just another risk that you face as you get older that you need to make a decision on. Do I, or don’t I buy third party insurance. I think about three years out, again this factors into your spending decisions. If you’re going to buy long-term care, you need to build that into your spending forecast. If you’re going to self insure, you need to make sure that you’ve got enough in your portfolio that even if you run a scenario where you’re going to need nursing home care for five years, it’s not going to wipe you out. That’s what I recommend doing at the three year time frame.

Scott:
Love it. I’ve got an article on that too. I don’t remember the name of it, but we can put it in the show notes, basically why we decided to self insure on long-term care. I did a side-by-side comparison of paying the insurance premiums, option one. Option two is investing that premium in typical mutual fund and then comparing those two columns over 20 years and the break, even for us, was early eighties. By the time you get to your early eighties, you’re able to self insure for three to four years is your break even point. And if you don’t need it, obviously you’ve got money that you can spend or give away as a legacy. Our decision was to self-insure. So there’s some stuff on my blog about that.

Mindy:
Okay, and we will include all of these links in our show notes, which can be found at biggerpockets.com/moneyshow, one to five. Okay.

Fritz:
That’s a busy Saturday morning with your three there, right?

Scott:
Yeah, that’s right.

Fritz:
By the way, the article, I’m actually looking at it here. It’s actually linked in this article it’s called Why We Are Not Buying Longterm Care Insurance. All of these articles we’re referencing are linked in this one article. This one article will take you to all this stuff we’re talking about.

Scott:
Awesome. All right, so you do that one Saturday morning and then you wait a year. What happens in year two from now?

Fritz:
This is when it starts getting fun. Now you have a date picked out at this point. We tried to make it fun. You’re in the final phase for the only time in your life. You’re in the final countdown to reaching the starting line, have some fun with it. I did the countdown app on my phone. My wife did this neat thing on our refrigerator, where it has like a river going down to our cabin and all the way along the river we had each month. We had the retirement date as we reach the cabin and every month we just put an X through one more date and move our way down the river. It was really motivational to see those months getting crossed off. We looked forward to the end of the month. “Oh, there’s one more X”.
Find a way to have some fun with it. Recognize you’re pretty much going to make it now. If you’ve done years five through to, now you’re in year two and you’ve done it right, you’re to the point now where the numbers are pretty good. You’re starting to… and this is a part that a lot of people miss, and I really encourage people to think about this when you’re two years out, start transitioning your thinking from purely looking at the numbers to starting to think about what I call the softer side of retirement. The psychological stuff, the what are you going to do when you retire? All those things that can really make a retirement great if you do them well, but they can make a very difficult transition if you don’t do them well, or heaven forbid if you don’t do them at all. This is the timeframe two years out where you start making that shift to thinking about the softer stuff.

Scott:
Got it. What does that stuff look like for you as an individual?

Fritz:
Well, it’s harder to answer now because I’m retired, but where I was at the time. I think the best thing we did, Scott, and I really encourage people to do this, we took a mini retirement. I call it a mini retirement. It was Thanksgiving and I took the extra week off after Thanksgiving so we had 10 days. We came up to the cabin and my wife and I both said, “Hey, let’s just pretend we’re retired. It’s slow at work. It’s a holiday. I’m not going to check my email every day. I’m going to really try to stay offline. And let’s just kind of think about what’s our life going to be like, if this really was a retirement, what’s it going to be like”.
Finding a way to do that, you can’t really put yourself in the mindset of being retired. You don’t know what it’s going to be like, it’s impossible to know. But to the extent that you possibly can, try to replicate a short period of time in your life and just kind of pretend you’re retired or more importantly, take that time to think about what you want your life to be like once you are retired.
I think creating that mini retirement really helps foster that mental activity and the communication with your spouse or partner. “What do you want?” “I don’t know, what do you want?” You have that back and forth and you talk about it, and maybe you look at a couple of organizations that you might want to get involved with, charitable organizations. We do a lot of things like that. Spend time and if you’re thinking about relocating, go spend a week or two where you’re thinking about retiring. Don’t just be a tourist, but do it with the mindset of what would it be like if we actually lived here. It’s those types of things to try to foster as much as you can, mentally putting yourself into the state of retirement and thinking about what you want that to look like.

Mindy:
I love that advice to go to where you think you want to retire. There’s nothing wrong with retiring where you are, but if where you are, isn’t where you want to be, make sure where you think you want to be is where you actually want to be. That’s great advice. Thanksgiving… nobody’s doing anything between Thanksgiving and Christmas, except me. I’m always doing work between Thanksgiving and Christmas, but nobody’s doing anything during Thanksgiving and Christmas. They’re not going to miss you. You’re not going to miss anything except maybe that office party where somebody puts a lampshade on their head or whatever. That’s a great time to take time off and just check out what you’re going to be doing. Especially if it’s a warm place and you’re coming from a cold place.

Fritz:
The other thing I would encourage people is start experimenting at that point. I started my blog three years out. Okay, it didn’t quite hit the two year checklist, but conceptually, it’s the same. Start thinking about things that you have an interest in and start implementing a few of them. Start a blog. “Hey, I’ve always thought about a blog, that might be something I’d… Hey, that’d be fun in retirement I have more time. I got a lot of stuff on my mind”. Okay. Start a blog. Don’t wait until you retire. Start it now.”Hey, I really love dog rescue”. Well, great. Go volunteer at the dog rescue place on Saturdays.
Find ways to start getting engaged in activities. Ramp up. Begin ramping up at the two year point those activities that you think you might want to do more of in retirement and start worrying a little bit less about work. I mean, work’s going to go away in two years. You still give 110% when you’re at the office, but don’t let it absorb your mind on the weekends. Make your weekends be retirement mindset and do stuff that you’re thinking about doing in retirement. This is the time that you start doing that kind of stuff.

Mindy:
Oh, that’s great advice. Okay. Now, we’re moving over to one year out.

Fritz:
Okay. This is getting serious.

Mindy:
The final count down.

Fritz:
I loved the final year, by the way. I retired in June, so my final year started in July and I was like, “Wow, this is going to be my last 4th of July vacation from work. My next 4th of July, I don’t have to go back to work”.

Scott:
[crosstalk 00:39:50] sixteen year of high school?

Fritz:
Yes, exactly, it is like that. You know what that was like. Everybody can relate to that and it is similar. You get into your annual budgeting process at work or whatever, and you’re “Man, this is the last time I’m going to have to do this annual budgeting process”. All the way through, this is my last performance review. Enjoy that stuff. This is the last time you’re going to do it and just savor. “Hey, I’ve been doing this for decades. This is the last time I got to do this stuff.” really enjoy that last year and really start ramping up those post retirement activities. This is the time when you move beyond the obvious of, “Hey, I want to go to New Zealand”. You need to start thinking about… the way I’d encourage people to think about a bucket list.
Think about your life. I write in my book that life is like a wheel. A terrible story, a guy I knew committed suicide back when I was in my twenties and I was in a class and the instructor… we came into class, we’re, “Hey, where’s Bob?” And he said, “Hey, horrible. Bob killed himself last night”. We were shocked. Horrible story, but one of the things the instructor said that’s always stuck with me. He said, “You know, life is like a wheel. You’ve got all these different spokes in your wheel. You’ve got your spiritual, you’ve got your financial, you’ve got your charitable. All I can say about Bob was his spokes weren’t the same length and his wheel didn’t roll very well. So really focus on keeping all your spokes approximately the same length.” That always stuck with me.
I write about this in the book. As you’re making this bucket list, try to think about things for each one of those spokes in your life that you want to explore and develop in retirement. That makes sense. Take it beyond the travel and really get into the things that give more meaning than travel. I would really encourage people… what most people find after they retire is the more things you can do that are focused on other people and less focused on yourself, those tend to be the things that give you the best sense of satisfaction.
I know it’s true in my life. My blog, I get emails from readers all the time about the impact I’m making. I love that stuff. Find something you can do, it’s time to give back. If you find a way to give back in an area that you’ve got some talent in, you’re not doing it for money anymore. You’re doing it purely because it’s something that you can help other people with. That’s the stuff you need to be looking at as you’re getting into this final year, really start ramping that stuff up because that’s where you’re going to find that your retirement is just going to soar is if you can hone into a few things like that.
My wife started a dog rescue and we build fences for low income families that have their dogs on chains. It’s called Freedom for Fido. Talk about a fulfilling thing to pursue in retirement. We’ve got a whole group of volunteers out there building fences. We got donors that are giving us money. We’re doing big fundraiser events. We go to wineries and hang out together and we’re out on fence builds, having a blast. Finding stuff like that, that’s what you really need to start thinking about in your final year of work.
The second thing, that’s the soft stuff. There is some tactical stuff you need to do on the financial side as well. As you’re getting into the final year, you’re getting close to moving from that accumulation phase. Instead of accumulating, you’re de-cumulating. You’re going to start withdrawing instead of investing into your portfolio and setting up, we use the bucket strategy, but whatever system you want to have in place, you’ve got to build that liquidity. You’ve got to have a couple of years worth of cash. Setting up that transition from accumulation to withdrawal is the financial piece that you really need to focus on in that final year as well.

Scott:
I think that’s great. We actually had a similar conversation a few months back with Bryce and Kristy from Millennial Revolution. They did something very similar. They wrote the book, Quit Like a Millionaire. They actually started three years out because they were even more conservative than this and started back testing their portfolio and saying, “Hey, is this actually working and sustaining our lifestyle right now?” It sounds like you’re advocating for a very similar type of approach. Just build it, test it out, start seeing how that goes or you’re out.

Fritz:
Yeah. A similar approach, which I think that they’re spot on. I’ve had a lot of readers ask me, “Hey, this bucket strategy, your bucket one covers three years’ worth of expenses. Should I start putting one year worth of expenses into that when I’m three years out from retirement?” Sure, you can do that. You can start one year in year three, one year in year two, your final year in the final year you work. By the time you retire, you have three years. The point is, recognize that you’re going to move from accumulation to withdrawal and have a strategy for it because that’s a big change.

Scott:
With withdrawing, I suspect that some of our listeners have a little bit of trouble conceptually with the idea of selling off stocks, as opposed to me spending dividend income, which feels more like income or interest income from that portion of their portfolio holding bonds. What’s that like in this scenario, making that mental transition, was that difficult for you? Or was that something that this helped with?

Fritz:
It wasn’t difficult for me, but I think the reason it wasn’t is because I spent so much time in advance thinking about it. There’s been a lot of research on what makes a successful transition into retirement versus a not successful transition. A lot of people have a unsuccessful transition. They really struggle. The number one difference between those two camps is how much time you spent preparing for it before you got there, and that includes the soft stuff, that includes the financial stuff.
I wrote a post about how we were going to make this transition, how it’s basically a withdrawal. It’s called Our Retirement Investment Draw Down Strategy. It’s linked here in this article and we laid out, here’s what we’re going to take first, here’s what we’re going to take second, here’s how we’re going to refill bucket one, which is selling stocks to raise cash. We had thought through all that stuff. I think because we had done that, when it actually comes time that you’re actually doing it, it’s, “Okay, we’re just implementing the plan. No big deal”. You’d love to live on dividends, but in this low interest environment, instead, let’s say right now you use the 4% rule. Okay-

Fritz:
… environment, instead of, let’s say, right now you use the 4% rule, okay, you need 25 extra you’re spending, right. Saved in your portfolio. If you’re going to try to live on dividends, you probably need something like 40 X, right? Because dividends are low interest, rates are low. Sure you can do that, but you’re probably going to end up working longer, because your withdrawal rate is going to be whatever your dividend rate is, right. 2%. And it’s going to take a lot more savings. So I think you do have to have your head around, how are you going to start selling some of your assets over time?

Scott:
Got it.

Mindy:
I’m so glad you said that. That was really clear in a way that I’ve not heard it vocalized before. I’m not a huge dividend stock fan.

Fritz:
Well, thank you.

Scott:
All right. Hope you’re enjoying the show. We’ll be right back after a word from today’s show sponsor.

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Scott:
What are some of the other nuts and bolts that we need to be thinking about at this point?

Fritz:
The biggest takeaway I would have for people is, get out of just thinking about the financials, right? It’s very easy, okay, I’m going to set up for this transition from accumulation to withdrawal. You can easily absorb all of your time, focus strictly on getting the financial stuff right, and your retirement may be miserable. You may be pulling 2% withdrawal rate. You may have money coming out the ears, but if all you’ve done is focus on the money side, you’re not going to have as good a transition into retirement as if you take three quarters of that effort. Once you get to year two, maybe year one, you should be spending maybe 10% of your time thinking about the money, and 90% thinking about the other stuff. That’s really, what’s going to make a difference when you get into retirement.
I’ve had a lot of people that retired before me and almost universally, they’ve said, “It’s funny, once you retire, you know what you have. You know what you can spend. You set up some kind of a paycheck system, which is what we do with this bucket system.” I do an automatic transfer every month from our Capital One money market, into our checking account. And we know whatever’s there, we can spend. Once you have that stuff set up, you know what you can spend.
And it sounds so counterintuitive, but I heard it from many, many people, and now I’m experiencing it myself. “Once you get into retirement, you don’t really think about money that much.” It’s weird, but it’s very true. At least for me, in my personal experience, and many other people I’ve talked to, it’s a lot less of an obsession than it is while you’re trying to get here.

Scott:
Love it.

Mindy:
This is going to sound a little contradictory, because before I said, “Oh, my husband had one more year syndrome.” And then now I’m going to recommend that if you don’t know what you’re going to be doing, if all of your time has just been thinking about the money, like you said, maybe you shouldn’t retire. Maybe now isn’t the time for you to leave until you have all of these things, especially if you don’t hate your job. If your job is just sucking the life out of you, of course, maybe you should go find something else, but you do need to have something to occupy your day. And what are you doing on the weekends? What you’re doing on the weekends right now, before you retire, is what you’re going to be doing all day, every day during retirement. So if you’re just watching TV on the weekends, you’re eventually going to run out of stuff to watch, but you’re not doing anything, your body is just, “Hey, Scott, what are you going to do for the first six months of your retirement?”

Scott:
Yeah, I’m going to get real good at video games. Is that what you did, Fritz?

Fritz:
No. I haven’t played a video game since I retired. And we don’t watch much TV. We chill a little bit in the evenings, that’s fine, but no, I’m outside all day. I’m on the river, fishing. I’m building fences. I’m riding my mountain bike. I’m kayaking on the river. Or camping, we went cross country and spent three months going to Seattle. I could go on and on, how long do you want to make this podcast? No, we’re living life, and we’re living every minute of it and we’re loving it, but it can’t be understated how important it is to spend time thinking about that. And if that is something you’ve not thought about and the numbers say, “You’re good to go,” okay, forget the numbers. Work one more year. But spend that year thinking about the softer stuff. You’ll look back and you’ll be glad you did.

Scott:
All right, so, well, before we get to talk about some other things, what’s going on in the final six months before retirement? We have one more stop, right?

Fritz:
Yeah. Yeah. And actually I wrote another article, it’s called, 20 Steps to Take in the Year Before Retirement. It’s referenced in this post. I tell you what, that last year, it blows your mind, how much stuff you’ve got to do to retire. You think about, in my case, I’d been using my work computer for years. All my contacts, all my email stuff, all my passwords, I kept them on my work computer behind the firewall. There’s so much stuff. So I wrote, 20 Steps to Take in the Year Before Retirement, that walked through that final last year, and all of those things that you need to think about. You got to set up your personal email, you need to, all those emails that you subscribed to the blogs and everything else that maybe come to your work email, and you never tell your boss you’re reading them, but we all do. All that stuff. You got to get it all moved over to your personal email, because on the day you retire, your work email’s blowing up, and anything coming to that email, you’re never going to see again. Right?
So all your usernames that you were using your work email for. You got to take a while. So in my six month checklist, what basically what I’m encouraging people is, monitor your work email, everything that comes through there, that’s personal. As soon as it comes it through, change email address, right? Start setting up a, I use last pass, some kind of password keeper, if you don’t have one already quit using that word document that got hidden on your company firewall and set up a system that’s going to work with you in retirement. Buy that Chromebook, move into those things.
I didn’t want to pay for Microsoft. I’m cheap, right? I am so sick and tired of Microsoft Excel. Okay, I learned Google, right? I can do Google Docs, Google worksheets, it’s all the same stuff. So I had all those personal spreadsheets that were in Excel, well I migrated them all over to Google. Easy enough, right? But that stuff takes time, and that’s really, when you get into that final six months, it’s checking the box on a lot of those minor details, because once you leave, that email’s gone. So that’s number one.
The second thing is, take some time in that last six months to really set up your first six months of retirement. Start booking some trips, right? We took a cross-country train trip. My wife always wanted to do it. So we booked a trip out to Seattle to see our daughter, and we took the train. So we booked a bunch of camping trips because we really wanted to get into camping. Well, go ahead and make the reservations, right? So, start building that life now. Don’t wait until you retire. Do it in your last six months of work, so on the day retire, you’ve got six months of stuff booked and you’re hitting the road running. It’s a great way to launch.

Scott:
Awesome.

Mindy:
Yeah. That is brilliant. That is absolutely brilliant. I never would have thought of that, but I’m thinking to myself now. Yeah. What comes to my Bigger Pockets email? Oh, everything.

Fritz:
Exactly. Yeah.

Mindy:
Oh, my goodness.

Scott:
What about some of the, you have some great tips and tricks here and one that’s, finish your medical and dental work while you’ve still got the employer-paid health care coverage, those types of things, right?

Fritz:
Exactly. Exactly.

Scott:
Is there a mental list of those items that are, check the box items?

Fritz:
Yeah, and one that might, yeah. Obviously, get your medical work, get your dental work, make sure you understand if you’re going to go on Cobra, make sure you’re talking to HR at this point, you’re a couple months out, right? You need to start working through those tactical details on your insurance coverage. I think, more importantly, and maybe not as obvious for people, start buying your toys, right? You know what you’re going to… We bought an RV, we’ve got a fifth wheel, we got a truck to pull it with. We remodeled the kitchen in our retirement cabin, right? We had some things that we knew we wanted to do, and it’s been proven that those people that have the more successful retirements tend to do those last big ticket items while they’re still working.
And the reason that’s important is, we talked about having that three years of liquidity sitting there, you don’t want to retire, and then go out and buy the RV and suddenly you’re tapping into that liquidity that’s meant to cover your living expenses, right? Get your toys out of the way now, because if you screw up and you overspend on something, and you haven’t calculated it into your numbers, well you can keep working for a couple months until you get back to where you should have been. If you wait until you retire and then you overspend on something, it’s a whole different story. So do the big expenses while you’re still working. That’s another one I think people should think about.

Scott:
I love that you said that. And I love that it differs. It’s actually opposite of what Kyle Mast said on one of our earlier shows. And I think you’re both right. So, here was what Kyle Mast said. He said something to the effect of, “Hey, don’t do the remodel until after you retire, because you’re in the high tax bracket in the year before you’re retiring. So you have the ability to contribute to the tax advantaged accounts, and those types of things.” But on the other hand, there’s the mental component, which, when you’re one year out of retirement, it just seems like that’s far more important at this point. You’re clearly above the line. You have plenty of cushion, and all these types of things. It’s, “Hey, I’m going to get all these things done while I’ve got the income. So I can live in peace with this stuff as soon as I get to the starting point, in a few months from now.” And I think there’s really good logic to that.

Fritz:
There’s a good debate to have on either way. The thing I would say is, valid point about the tax rates. One of the other things you could think about as a counterpoint to that is, yeah, that’s true, you can save in it before tax and reduce your taxable income, but then you’ve got more money in before tax that now you’re going to have to withdraw and pay the tax rate on. Now, granted you’re at a lower tax rate, so it can be argued, but instead of that, okay, just do Roth conversions.
We’re tapping out right now. We look at whatever income we’ve got, and we look at the difference between that and the top of our marginal tax bracket. And let’s just say it’s $30,000. We’ll take a $30,000 withdrawal from our IRA or 401(k) every year, usually about October, because you have a pretty good feel of what your income’s going to be for the year, and we do a conversion to Roth, right? So we’re still tax optimizing because we have a lower income, but it doesn’t necessarily have to be reflected in, “Well, just save it all in before tax and then spend the money after you’re retired.” There’s other ways to slice the apple.

Scott:
Love it. On this point, sorry, I’m getting sidetracked here, but I’m gathering a, a lot of bias towards the Roth, which I share. I don’t contribute to a 401(k) at all anymore, it’s all to my Roth. Would you have changed that mix, given the option, looking back, in the years into retirement?

Fritz:
The advice I would have for your listeners, more so than for me, is if you’re in one of those lower tax brackets, let’s say, 12% married file jointly, it goes to $78,000. So if you’re like $78,000 or less, man, it’s a no brainer. Don’t do any before tax savings. You’re only paying 12% marginal tax, put it all into Roth, right? So if you’re early in your career, and you’re in a lower tax bracket, a hundred percent Roth, no doubt about it. If you’re $20,000 over a tax bracket, right? So you’re now up in the 22%, and let’s say you’re making a hundred grand, and up to 80,000 is taxed at 12%. That incremental 20,000 is taxed at 22%. Well then go ahead and consider maybe doing that as a before tax contribution, play the tax hurdle game strategically.
What I did, I was in a pretty high income situation my last couple of years of my career, I still contributed to a Roth, because I was so underfunded in the Roth, and so overfunded in before tax, that I wanted to get some money put into that Roth so that we’d have optionality in retirement for how we wanted to pull our withdrawals to optimize our tax strategy post-retirement. So yeah, you definitely need to focus on the Roth, but don’t ignore the before tax 401(k) stuff, because if you can knock off that marginal income, that’s at a higher tax bracket and deal with it later, may not be a bad strategy.

Scott:
Great.

Mindy:
Now we’re six months out and that checklist is amazing. I just flipped through it, that, 20 steps to take in early retirement.

Fritz:
Yeah. That one’s a huge, that one’s been read, I don’t know, both of these have been huge articles. That 20 Steps, that one’s a very, very good article. If you’re in the final year of retirement, that’s more important than the ultimate checklist is that, 20 Steps to Take in the Year Before. It’s got everything in there.

Mindy:
Yeah. Because most of those, I think 17 of those are things that I would not have thought of.

Fritz:
Yeah.

Mindy:
Okay. Six months checklist. Decide when and how you’ll notify your employer of your retirement date. Obviously this is different, depending on what level you are. My dad gave a two year notice, and he was in a good position in his company. They actually ended up hiring three people to replace him. So two year notice was pretty adequate for him. I can’t remember what Carl gave. How much notice did you give?

Fritz:
I gave about a year.

Mindy:
Okay.

Fritz:
Yeah. I gave a long, I was in a really critical role that was hard to replace, and I knew the importance of this role to the company. And I knew I was fine, right. You never say you’d never get fired, but I would have had to been a real idiot to get fired at that point. I had 30 years of the company, I was in a very strategic role, and I wanted that role to be replaced with the right person, and I knew that would take some time. And then, after they got the person, I wanted to have a really good transition period, where I could do an absolute brain dump. So I decided to take the risk, because I felt secure in my job to give them, a year is unheard of, right? That’s out there. Maybe not as bad as the two years your dad gave, but yeah, that’s the stuff you need to think about at this point, right? When do you tell them and why do you tell them at that point?
And don’t just wait and give them a two week notice, right? Be responsible. Chances are not, they’re going to say, “Oh, you’re going to leave in a year, or three months, just leave now.” That’s a pretty shocking, if you’re working for that type of employer, you should be leaving now anyway. Be courteous to your employer, do it right, and really think about how, and it all comes down to your relationship with your boss and your trust levels, and all those kinds of things. But you got to think about it. It shouldn’t be just something you do.

Scott:
It depends on the job, too. And the role, right? If you’ve been there for a year and it’s not a senior leadership position, maybe two weeks is perfectly appropriate for certain types. But yeah, I love that.

Mindy:
Consider getting a HELOC on any property which has substantial equity. I think this is really important to note, that once you no longer have a steady source of income, you no longer have the option of getting a mortgage, getting a HELOC, getting any sort of loan like this on your property. And it sounds mean, you have enough money to retire forever. You don’t need any money. They don’t care. Lenders look at your ability to repay based on your job. So if you are thinking about opening up a HELOC, and let’s dive into the HELOC for a minute. I have a HELOC right now. It has no money out of it. It’s still sitting there and times are weird and maybe they’ll close it. They probably won’t because it’s $200,000 on a house that’s worth 500, and only has a $90,000 mortgage. So there is some room in there for the HELOC to be all withdrawn and they could still cover it if they had to repossess my home. But we didn’t get that until after my husband separated from his job. And that was a much more difficult process to get that loan.

Fritz:
Yeah. So, I think there are some advantages to HELOC, even if you’re not planning on drawing on it. I think maybe it’s Michael Kitces, you said he had him on the show, it might be Wade [inaudible 00:01:03:30], I can’t remember. One of those two guys has a lot of information about strategically how you can use a HELOC in retirement. We decided not to go with it. I just, we have plenty of cash reserve, we’re in good shape, but there are some advantages to having it, and there are some people that use it as a strategic way to build into your withdrawal strategy of using a HELOC as part of that. And if you’re thinking you might want to use one, absolutely do it while you’re still working.

Scott:
I like the simple elegance of no debt, that you posted earlier.

Fritz:
Me too. Me too.

Scott:
So there’s a lot to be said for that.

Mindy:
I still want to buy more real estate. And again, begin focusing on your life outside of work in preparation for the retirement living. I love that. That is so key. And I lived it firsthand with Carl’s father. He went into retirement, he was a union electrician going into 2008, 2008 happened, all of a sudden, nobody needed any electricians, let alone union electricians. So all the jobs dried up and he went into retirement and he went into a funk for a little bit, because he didn’t retire on his own terms.

Fritz:
Yep. And 60% of people don’t, by the way.

Mindy:
Oh, I didn’t know that.

Fritz:
60% of people are forced into retirement earlier than they planned on.

Mindy:
Oh my goodness. Why didn’t you say that at the beginning?

Fritz:
Sorry. It’s in my book. You got to learn to read my book. No, it’s-

Mindy:
Wait, wait. What’s that book?

Fritz:
It’s huge. I’ll tell you-

Mindy:
That is huge.

Fritz:
Yeah, it is. So, and typically, your father wasn’t unique. The people that get forced into retirement tend to be the ones that have the harder transition, because they didn’t have time to mentally prepare. All right, there’s a pride factor, “Hey, I lost my job,” right. That doesn’t help. But I think what’s interesting is the things that you miss when you get into retirement aren’t necessarily the things that you think about while you’re working, right? It’s the social interactions with your coworkers. It’s the sense of achievement, right? You get a project from your boss, you accomplish it. You’ve, “Hey, I crushed that one, right?” You give a presentation to the CEO, man, you’re nervous. You’re putting all this work into it. You crush it. Right?
Sense of achievement, having clear objectives, having a purpose for your time, all that stuff. The social side is huge. All that stuff goes away. Right? And if it goes away unexpectedly, well, no wonder people have a hard time with it. They’ve suddenly lost all this stuff they didn’t even realize they had. And they’ve got no thoughts about how they’re going to build it back into their lives. And a lot of people go through that shaky period for a year, or two years. It’s not uncommon.

Scott:
Yeah. It just seems, this is one of the fundamental things about the show and why I’m so passionate about what I do. And I know Mindy is about what she does, is like, if you’re forced out of retirement, isn’t it better to be in a really strong financial position that’s approaching capable of sustaining that indefinitely? And if you’re not forced out of retirement, isn’t it better to drive that on your own terms than for something, maybe the company performance turned around over the next 10 years, and you were forced to leave in 10 years. What a completely different mental ability for you to take on retirement, then you navigating the entire thing, sticking to your plan and nailing it. It’s just a completely different way to go about life.

Fritz:
Spot on. And this goes back to your earlier comment about, this is the grind, right? The grind period, when you’re just saving every year, saving every year, man, grind it out, because if you lose your job, “Hey, it’s okay. I’m covered.” The other thing is, like Mindy, “Hey, I love my job.” Hey, a lot of people love their job. Well guess what? When you’re 50 and you’re still doing the same thing ,and you’re really tired of it, you may not love your job anymore. And if you haven’t taken the steps to get through the grind, you may be grinding out for another 15 years, not retiring until you’re 65 and can pull social security. What a miserable life that’s going to be, right? So for that reason, plus all the ones you mentioned, man, get yourself in a position where you’re not going to be dependent on that paycheck. And then the choice is yours. It’s not forced on you.

Scott:
Or in two years. What if they bring on somebody that you can’t stand to work with anymore, and the job’s turned around, like, “Sorry, you’d love your job now.” That’s great. You cannot be dependent on your employer. You have to be financially independent.

Fritz:
That’s right. 70% of people quit their jobs because of a bad relationship with their boss, right. And how many people, bosses change all the time. Right? I had a 30 year career, right, I’d have to go through it, but I had a ton of bosses, right? So you might love your job because you love your boss, and your boss might get promoted, or fired or whatever. And you get some real jerk. Now you’re stuck, right? It can be that quick. So yeah, you never know.

Mindy:
Oh my God, it’s-

Scott:
That other term for what you’ve got is called F you money. Right?

Fritz:
Exactly. Exactly.

Mindy:
I think you guys are reading my mind. You’re talking about, “Oh, you don’t want to get forced into retirement.” Carl decided he was going to quit. He gave his notice, his last day, and then two weeks later they canceled the project that he was working on. And he’s like, “Oh, I should’ve stayed. And then I would have got,” and I’m like, “No, no, if you would’ve stayed and gotten let go, you would have been crushed. This would not have been some fabulous experience.” And then, my sister is a teacher. She loves being a teacher. She loves her job. She loves her school. She loves all the people in it. And then one of the people left, and they got a new person and she’s like, “Oh, I totally understand.” Because I had a job that I didn’t love, and complained to her all the time about. And she’s like, “I totally understand what you were going through with that now. I never understood that before, and now I know exactly what you’re going through,” and you can still love your-

Mindy:
Now I know exactly what you’re going through. And you can still love your job and work there and be financially independent. I’ve seen it done.

Fritz:
Yep.

Mindy:
But if you don’t love your job and you’re not financially independent and you have to stay there, it sucks the life out of you.

Fritz:
Exactly.

Mindy:
Oh, so you have alluded to your book multiple times. You even flashed it up there for us. Flash it up there again, but hold it back a little bit. So we can see the whole book. What is this book called?

Fritz:
I’ll do it so I can see my, there we go. It is called Keys to a Successful Retirement. And basically what this book is about. It came out on May 6th. So this is hot off the press. Number one, new release, by the way, for retirement planning. So it’s been well received. And basically, what this book does is this book looks over my last three years of work and my first two years of retirement. And it boils everything down, not unlike the checklist we were just talking about. It boils down everything that I’ve learned in that process of preparing for, and now living in retirement. And it summarizes it down to 24 keys that are the big hitters, the ones that really matter.

Mindy:
That’s awesome. I’m super excited for you. I’m sorry that your timing was terrible and it comes out in the middle of Corona virus.

Fritz:
It’s okay. You know what? It doesn’t matter. I don’t need the money. I just wanted to write a book. It’s one of those accomplishment things. I’m financially independent. I don’t care if it sells or not. Fortunately it’s selling, but somebody said, “Oh, you should delay the release date.” I’m like, “No, it’s done. It’s ready. The publisher says go, I’m totally fine with that.” That’s the joy of being financially independent. None of your decisions are driven by the financial calculation anymore, right? Yeah, you still think about it, but it doesn’t matter, right? I could give this away for free and it wouldn’t matter. Don’t send me an email and ask for that.
But it’s not driven by financial, it’s driven by, this was a passion project of mine. This was a purpose thing, right? This was something I loved to write. I’ve had a really great story the last five years and I’ve helped people through my blog. Hey, this is just one more avenue of reaching people that are on the same journey that I am, that I can reach back and hey, follow my footsteps, it worked out pretty well, food for thought. And that was my motive for writing it. It wasn’t financial at all.

Scott:
Yeah. I love that. The point of doing any of this, right, is to be read, to help people, to help to solve those problems. You can tell that that passion is clear on your blog and I’ll have to check out the book as well. I got a question here that’s been bugging me. In the early retirement community, we see a theme and this is changing slowly over time, but it tended to be male dominated, by younger men, often in the software space, the tech bros, who are looking to achieve that kind of financial independence as rapidly as possible. And a lot of feedback we get sometimes in the groups is “How do I bring my wife or my spouse along?” Now, that’s changing and that’s great. We’re seeing a lot more engagement there.
In some of the cases with older, early retirees, we see that tending to be driven, maybe more by the women in the relationship is an interesting dichotomy. I’m sure maybe yours is different, but are you noticing that at all in the interactions you have with folks who are thinking about early retirement in their fifties?

Fritz:
I think what I would say is you tend to find in a relationship, one partner tends to focus on the investment side of things. Paying the bills is different. In our relationship, my wife pays all the bills, she handles all that stuff, I don’t pay a single bill. I handle the investments, right? So I think you’re going to be interviewing a guest, Mindy and I have been trading some things I won’t steal your thunder. But you’re going to be interviewing a guest who, the woman does all the financial stuff and the husband just goes along.
I don’t think it matters, which one is which, and I don’t know that I can say I’ve seen a trend towards more women, more men. I don’t really pay attention. It’s just whoever does it, does it. And I would say on my comments, on my blog, I have as many women as I do men. I don’t see a big noticeable difference. I think the important thing, there’s two important things I’d say about that though. If you’re the one that manages the investments and your spouse either doesn’t care at all, or they maybe pay the bills, but they don’t really care. Don’t just continue to do them totally on your own and just make sure you’re talking about it as a couple.
And more importantly, this is something we do. I write what I call basically a love letter every year. I update it when we update our net worth and do all of our financials. And it’s basically a document like the in case of emergency, heaven forbid but if I get hit by a bus, here’s what you do, right? Call your brother, pull out this document with him, reach out to this person, reach out to that person. It’s got all of our username and passwords. Don’t forget the cyber stuff, because that can really screw people up. Make sure you’ve got a strategy that you’ve talked through together that will walk that person through what to do in the event that the person that does handle the investments gets hit by a bus. That’s really important. That’s number one.
Number two is, and this is totally, it sounds like a left hand turn, but I’ll bring it up, because it’s really important on the relationship side. Relationships change when you retire, right. You’ve been going to work for years, right?

Mindy:
Yes they do.

Fritz:
Mindy, Carl’s home now, right? He wasn’t home before.

Mindy:
Well he actually was, but he was working before.

Fritz:
Okay. Same thing.

Mindy:
And Yeah. They change a lot and you need to have an open conversation with them.

Fritz:
Yeah. Many, many conversations. I tell the story in my book about the buddy of mine, Kirk, the same guy that, the one more year guy. He was home from work and he retired and his wife had been a stay at home mom, she had a routine, everything’s fine. And suddenly her husband’s there all the time, right. And it really, it’s a big change. And he was walking around the kitchen one day and she was loading the dishwasher. And he was a process improvement guy at work. So he was watching the way she’s doing this and he starts “Have you ever noticed that if you put the plates this way”, or whatever he said, right? She’s like, “Kirk, I’ve been doing this for 30 years. I know how to load a dishwasher, go do something, get out of my space.”
That transition is real. There’s a lot of stuff in my book I’ll show one more time. But there’s a lot of stuff in my book. Again, it’s the softer side of retirement. You hear about the gray divorce. People are probably experiencing it now with the Corona virus. You’re home all the time together, it’s different. And make sure that in your final year, when you’re thinking about life in retirement, you both are thinking about it. And you’re talking about, “Hey, what are we going to do when we’re both home all the time.” Right? Carve out time for stuff that she wants to do, carve out time for stuff that he wants to do. How much time is that going to be? Are you going to get mad if I’m going to go golfing every day, whatever. And then figure out how much time you want to spend together. And have those discussions before you get there. Relationships change and it’s important to be aware of that.

Mindy:
Yeah. I cannot underline that and exclamation point that enough. It’s exacerbated. Carl and I have a great relationship, we rarely fight. And when he first retired and he’s like, “Oh”, like your process improvement guy. Let me tell you how well that was received. That is not received. “Don’t tell me what I’ve been doing isn’t good enough. Feel free. Jump on in. You do your own self. And now that’s your job.” So process improvement guys, bite your tongue. Or process improvement girls. No sexism here.

Scott:
I could definitely see this being a problem for me. So thank you for the advice.

Mindy:
Yes. Oh, I know you Scott. So yeah, just because you see something doesn’t mean you say something. But yeah, you definitely want to have conversations with your spouse. I mean, communication, here we go, Scott is about to get married. He isn’t married yet. So you and I can tell him…

Fritz:
Congratulations Scott.

Scott:
Thank you.

Mindy:
Communication is the key. You have to talk to your spouse if you want to stay married. If you don’t want to stay married, never say another word. But if you want to stay married, you have to talk to them. You have to tell them what’s bothering you in a respectful tone. Be receptive to them saying what’s bothering them about you. They can’t read your mind any more than you can read their mind. So if you want them to know something, you have to say it,

Fritz:
Is this Bigger Pockets, or is this marriage counseling?

Mindy:
Welcome to the Bigger Pockets marriage counseling.

Scott:
Hey, it’s just half of personal finance, right?

Fritz:
Now I will say Scott, marriage is absolutely wonderful. And congratulations. And there’s something about being retired with the one you love and being free to do the things you want to do together, that is absolutely wonderful. So you know we’re saying all this “Oh, be careful.” No, it’s absolutely great, but it’s just something you have to work through and make sure you have communication, you guys talk to each other.

Mindy:
Yeah. It’s absolutely great if you communicate.

Fritz:
Yeah.

Mindy:
Okay. I think we’ve covered just about everything without just reading your book word for word, or your excellent preretirement checklist. We will link to the pre retirement checklist in our show notes again, they can be found at biggerpockets.com/moneyshow 125. I think we’re time for the famous four, Scott. What do you think?

Scott:
Let’s do it.

Fritz:
Bring it on.

Scott:
Okay. Fritz, what is your favorite finance book?

Fritz:
Well, you know the one I’d like to say, but I won’t. There is one, I actually brought it. When I was preparing for retirement, I read a lot of books, obviously I’m a reader, I’m a writer, I continually learn. And this book that I’m going to show you in just a minute is the one that I found to be the best at setting up the financial, we talked about the transition from accumulation or withdrawal. If that’s of interest to you, Control Your Retirement Destiny by Dana Anspach, see the name there? This is the best single book I’ve seen on that whole transition and how to set it up. It gets into the tax optimization stuff we talked about, the Roth Conversions. It’s very good. So Control Your Retirement Destiny. Answer number one.

Scott:
Love it. That’s an awesome answer. We’ve never heard that book recommended before.

Fritz:
There you go.

Scott:
So I’ll have to check it out. All right, what was your biggest money mistake, as it pertains to retiring?

Fritz:
Looking back, I’m very pleased with our journey. We did well, people say, “Hey, if you could have saved more, would you have retired earlier?” I don’t think so. We really lived life as we lived it. We enjoyed it. We took time to smell the roses along the way. But you got to have a mistake, right? So I mentioned earlier, this play money, TD Ameritrade, and as you’d expect, that’s where I’d take some stupid bets. And my grandmother passed away and I received a bit of an inheritance. So I threw it in there and I didn’t really know what I was doing yet.
And this was back in the 2000, the tech boom, everything was going crazy. And we were implementing the software system at work. And I was like, “Man, these guys are really, these guys are sharp.” I knew the CEO and they really were a good product. So I put way too much money into one holding and it absolutely cratered with the tech burst and I lost it all. So I learned a lesson, diversify and stay away from the high flyer stuff. It’s just not worth it. Diversify into mutual funds, forget about it. And don’t think you’re a rock star. You’re not smarter than anybody else out there. You’ll get slaughtered if you take big bets.

Mindy:
True. Very true. But I do like that you have a little bit that you play with.

Fritz:
Yeah. It’s fun.

Mindy:
What did you say? That satisfies your urge to…

Fritz:
Be a trader, yeah.

Scott:
[crosstalk 01:20:16] companies.

Fritz:
And something else too, when you’re in a bear market like this, okay, fine. You can go sell putz. And I love trading options and stuff, but it’s a small enough amount. If I lose it all, it’s not going to change our retirement. But I’m still doing stuff, it’s fun. It doesn’t matter if you’re doing small amounts, you’re still trading stuff. It’s a hobby as much as anything, but yeah, it’s fun.

Scott:
I can’t resist, what’s you’re thinking right now? What’s one of the plays you’re making with the fun money?

Fritz:
I’ve actually got a post coming out in two weeks. It’s how to buy a bear market. I came up with a new strategy this year. I love it. In ’08, I jumped in too early. I had a bunch of dry powder and the market went down 10%. I was like, “I’m all in”, right? And I threw all my money in the market and it kept going and down and down and down, went down 50% and I was bleeding. Try to catch a falling knife, you’re going to get cut, right? Eventually it came back, it’s fine, the market obviously recovered over time. But what I did this year instead is, I came up with what I’m calling a 5% rebalancing strategy. I’ve got to actually, not to hype your competition, but what I’m doing is, every 5% move down in the market. This was back in March, obviously things have stabilized now.
But every 5% move down in the market, I’m taking 1% of my net worth and I’m converting it from cash or bonds, into stocks. I take a picture on my phone and screenshot of where the market was the day I made that trade. I do the math and other 5% correction. And I just have that on my phone. When the market gets to that threshold, I move another 1% of my net worth from bonds into stocks.
And I’ve just been doing this forced rebalancing and I’m buying the bear on the way down. And the stuff, I made a buy on March 23rd, turned out to be the low of the market. The stuff that I bought on that day, which was 2% of my net worth. So, you’re starting to get into some decent trades. That particular purchase on March 23rd, we’re now early May, it’s up like 30, 35%. So it’s worked out so far. So I always make small moves and I make careful moves, but I think a more aggressive rebalancing during a time of increased volatility, is probably what I would say is my current play.

Scott:
Very interesting.

Mindy:
That’s very interesting, yeah. I would be very interested to hear how that works out in six months.

Fritz:
In time, exactly. And I’m writing this post, you’ll see it. It’s basically how to buy a bear market, or a strategy for buying the bear. And I do plan on tracking it and seeing how it works out. But again, small moves, it’s not going to make or break us.

Mindy:
Cool. Well, I would love to see that. I’m going to follow that. Okay. What is your best piece of advice for people who are just starting out?

Fritz:
The advice I got from my dad, right? It’s not hard to become wealthy, just spend less than you’re making and do it for a long time. When you first get out of college and I actually wrote an article for my daughter before she even got her first paycheck, we had a Roth account set up, we set up the automatic transfers. And we said, “Okay, you automate this stuff and every time you get a pay raise, you increase it a little bit and you forget about it, right.” So it’s, live below your means, automate it so you never miss it and put it on autopilot and you’ll be fine.

Mindy:
Boom.

Scott:
Awesome. All right. Now the most difficult of the famous four, what is your favorite joke to tell at parties?

Fritz:
Well, we talked about my buddy, the process improvement guy, right? Kind of a control freak. So I’ll go with this one. Knock knock.

Mindy:
Who’s there?

Scott:
Who’s there?

Fritz:
Control freak?

Scott:
Control freak who?

Fritz:
No, no, no. You got to say control freak who?

Scott:
Nice.

Mindy:
Like interrupting cow.

Fritz:
Yes.

Mindy:
Okay. Fritz, tell me where people can find out more about you.

Fritz:
Well, they can find me at The Retirement Manifesto and yes, it does have the T-H-E in there, I don’t know why I put it in there, but theretirementmanifesto.com. I’m on Twitter, Facebook, Instagram, or just Google my name, Fritz Gilbert and you’ll find me as well. I’m easy to find.

Mindy:
We will put links to all of those in our show notes, which can be found at biggerpockets.com/moneyshow 125. Fritz, this was awesome. This was fabulous. I love that ultimate preretirement checklist. Clearly I devoted a very long podcast episode to it.

Fritz:
Yes you did.

Mindy:
If you are on your way to early retirement, regular retirement, late retirement, you need to read this article.

Fritz:
Well, thank you very much for having me on. Mindy and Scott, I’ve always respected your show and I’m honored to be on it. So it’s been great chatting with you.

Mindy:
Well thank you and we’ll talk soon.

Scott:
Thank you Fritz.

Fritz:
Okay. Say hi to Carl for me.

Mindy:
I’ll do that.

Fritz:
Okay. See you guys.

Mindy:
Holy cow, Scott, that was an epic episode. It went super long, but there are so many things that you need to consider when you’re going through retirement. This episode is a must listen to anybody who is going to retire. And that’s kind of everybody in our audience.

Scott:
This the way to go about your transition out of work, where you are in control, you hold all the cards and you dictate your fate, rather than having something happen to you. And this is what I think a lot of, if you’re listening to the BiggerPockets Money Show and you’re practicing sound financial habits, you’re spending less than you earn. You’re building your savings. You’re investing for the longterm. You’re automating it. You’re grinding it out. You’re going to be in this position at some point. And I think that taking that multi-year approach, enjoying life along the way as you’ve got it, you’re you can shave decades off of your working experience, and go out in complete control, by following a plan like this, or along these lines.

Mindy:
Absolutely. And just having it all laid out is so key. What did he say? Hiring a CFP can help you figure out if you have any blind spots, this checklist will help you get rid of most of those blind spots, before you even talked to the CFP.

Scott:
Yep.

Mindy:
Okay. In this episode, Fritz mentioned paying off your debts as one of the steps in your retirement plan. Anita just posted in our Facebook group that she just paid off another high interest consumer credit card, Home Depot, $1,625 balance. That’s $3,800 in balances that she has paid off since January. Anita, I am so proud of you. Keep going. You’re doing awesome. And please post when you have paid off another one and when you’re completely debt free. We’ll have a huge party for you.

Scott:
Yeah. It’s just awesome to see that kind of progress from listeners and members of the community. It’s just incredible to see that. And then look how much support, we have 150 likes, dozens of comments, it’s awesome.

Mindy:
Yep.

Scott:
So go Anita and go Bigger Pockets Money.

Mindy:
And if you would like to talk to fellow frugal weirdos in the BiggerPockets Money Facebook group, go to facebook.com/groups/bpmoney. And please answer all of the questions, including the one that says, do you agree to follow all of the rules. Because if you don’t agree, then I can’t say yes, you can come in. And I would love to have you join us because, who was I talking to the other day? They said in my regular life… Oh no, it was today. We did a Facebook live with all the female co-hosts of the BiggerPockets podcast. And somebody commented, “I don’t have anybody in my life that is a fellow frugal weirdo, nobody to talk to about this.” Come on into our Facebook groups. We join, we welcome you and we will chat with you about it. So, okay. Scott, do you have anything else you want to say?

Scott:
Nope. Just really enjoyed today’s show and thought it was another great guest. So Mindy brings on all of the guests, so we appreciate it. I bring a couple now and then. But she’s the one who does all the hard work finding these incredible guests. And so just thank you for all of that great work.

Mindy:
Oh, thank you.

Scott:
And this guy was awesome. Fritz was amazing.

Mindy:
Fritz was amazing, yes or instance, amazing, yes. Oh, it’s such a hard job, Scott. It’s so difficult. Okay. From episode 125 of the BiggerPockets Money podcast, he is your seventies pinup co-host Scott Trench, I am Mindy Jensen and we will talk to you soon.