From Debt and Grief to Financial Freedom | Making a Millionaire

Summary

Episode Summary: "From Debt and Grief to Financial Freedom | Making a Millionaire"

Introduction

In this heartfelt episode of the Money Guy Show, hosts Brian Preston and Bo Hanson delve into the inspiring journey of Rick and Lori, a couple who transformed their lives from financial struggles and personal loss to achieving substantial financial freedom. Released on May 12, 2025, the episode titled "From Debt and Grief to Financial Freedom | Making a Millionaire" offers listeners a comprehensive look into the couple's challenges, strategies, and triumphs in building a secure and fulfilling financial future.

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Guest Background

Rick and Lori have been married for 32 years and are proud parents of four children. They reside in Texas, with their oldest daughter Reagan (29), sons Liam (27) and Kieran (22, soon 23), and their youngest, Shoban (19), who was adopted from China and is currently a freshman at Arkansas [01:04-01:37]. Recently transitioning into the empty nest phase, they are enjoying newfound time together while navigating their financial independence journey.

Financial and Personal Challenges

Thirteen years ago, Rick and Lori faced a devastating personal and financial crisis. They tragically lost a daughter, Marin, to medulloblastoma, a form of brain cancer. This heartbreaking loss coincided with significant financial strain, including mounting credit card debt that Lori had accumulated as a coping mechanism for their grief [12:31-15:38]. Rick's upbringing instilled a deep fear of poverty, driven by his father's ominous statement: "you're going to be poor on the middle of the street with no money and no one's going to care" [00:02-00:07].

Debt and Financial Crossroads

The couple's financial turmoil peaked during a 10-year anniversary trip to Hawaii, where Rick discovered Lori's hidden credit card debt [16:14-16:36]. This revelation forced them to confront their financial disunity head-on. Rick took decisive action by liquidating assets, including U.S. Treasury bonds, and paying off high-interest debts, a move that cost them significant potential investment growth but provided necessary immediate relief [17:36-18:02].

Financial Strategies and Achievements

Rick, with a background in the medical field, transitioned from a career in surgical sales and pharma to early retirement after accepting a severance package. Lori, a dedicated school teacher, took a 21-year sabbatical to raise their children before returning as a dyslexia therapist [02:05-04:09]. Their combined efforts and strategic financial planning have resulted in a robust portfolio exceeding $3.6 million, with $92,000 in cash reserves aimed at covering two years of living expenses [06:05-08:06].

Key Financial Strategies Discussed:

1. Emergency Fund Expansion: Moving from the traditional six months to 18-24 months of living expenses to ensure greater financial stability during retirement [06:28-08:06].
2. Investment Diversification: Maintaining a significant portion of their portfolio in retirement accounts, primarily index funds, while considering further optimization through Roth conversions to manage future tax liabilities [09:18-10:07].
3. Pension Benefits: Leveraging pensions that include healthcare benefits, albeit without cost-of-living adjustments, as a cornerstone of their retirement plan [37:24-38:17].

Current Financial Status and Retirement Planning

Rick and Lori are in the early stages of retirement, balancing their desire to continue working with the newfound freedom to enjoy personal pursuits. With a sizeable portfolio and multiple income streams, including pensions and consulting gigs, they are well-positioned to sustain their lifestyle. Financial experts Brian and Bo introduced Monte Carlo simulations to assess their long-term financial security, projecting a 98% probability of maintaining their lifestyle until age 95 without the need to significantly cut back on spending [44:36-47:47].

Personal Reflections and Lifestyle Changes

Rick and Lori reflect deeply on their journey, emphasizing the importance of communication and overcoming emotional barriers related to money. Lori shares how financial stress impacted their relationship and parenting, yet through counseling and mutual understanding, they realigned their financial goals and overcame their adversities [12:31-18:02]. Now, as empty nesters, they express a strong desire to fully retire and embrace travel and leisure activities without financial constraints [57:49-65:12].

Notable Quotes

• Rick: "We hit that rock bottom, are we going to sink or swim?" [00:14-00:17]
• Lori: "My therapy was spending." [00:00]
• Bo: "We believe there's a better way to do money." [00:35]
• Rick: "This is the financial Super Bowl right here. We're glad to be here." [03:45]
• Lori: "I taught for three years and then I took a 21-year sabbatical and helped raise kids." [03:51]
• Rick: "She does really love what she does. It's not really a job. It's a mission." [04:25]
• Bo: "We recommend expanding your emergency fund to 18 to 24 months of living expenses." [06:28]
• Lori: "I didn't want to burden me." [12:52]
• Bi Lauren: "You’re officially retired... It’s okay to let go." [57:51]
• Bo: "Homework number one. Answer the question. Why are you working? Are you working because you want to, or are you working because you have to?" [63:50]

Conclusions and Takeaways

Rick and Lori’s journey underscores the profound impact of addressing both financial and emotional challenges in tandem. Their story highlights the necessity of:

1. Open Communication: Addressing financial issues together to prevent misunderstandings and conflicts.
2. Strategic Planning: Utilizing financial tools and strategies, such as expanding emergency funds and optimizing tax strategies, to ensure long-term security.
3. Emotional Resilience: Overcoming personal grief and financial anxiety through counseling and mutual support.

The episode serves as a powerful reminder that financial independence is not just about accumulating wealth but also about fostering strong relationships and emotional well-being. Rick and Lori’s transformation from debt and grief to financial freedom offers valuable lessons for anyone striving to achieve their own financial goals while maintaining personal happiness and fulfillment.

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Final Thoughts

Rick and Lori’s narrative is a testament to the resilience required to overcome life’s financial and personal hurdles. Their story, enriched with transparency and strategic insights from Brian and Bo, provides listeners with both inspiration and practical advice on navigating the complex path to financial independence.

For more episodes and resources, visit moneyguy.com.

Transcript

[Lori]

My therapy was spending.

[Rick]

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

[Brian]

Does that mean through yalls entire life that y' all have always been on the same page or is this a new thing?

[Rick]

Is that microphone working?

[Lori]

We hit that rock bottom, are we going to sink or swim?

[Brian]

How does that make y' all feel where you are on this financial independence journey? Welcome to another episode of Making a Millionaire. This is where we help our guests build their great big beautiful tomorrow.

[Bo]

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

[Brian]

We are excited to be here.

[Bo]

Awesome. So you guys decided to come on and be on this show. So why don't you tell the audience. Who are you guys like, what's your background? Where did you come from? Married, Kids? Do you know each other? Walk us through that kind of stuff.

[Lori]

We've been married 32 years and we have four amazing kids. We live in Texas. Our oldest is Reagan and she is 29. Liam is our old. Our second but oldest son and he is 27. Kieran is 22, almost 23. And then Shoban is our youngest and she was adopted from China.

[Bo]

Amen.

[Lori]

She's amazing. And she is 19.

[Rick]

She's a freshman at Arkansas.

[Bo]

So hold on. 19, 329. That makes you guys like empty nesters. Ish. Right? Like kind of sort of almost halfway there.

[Brian]

Yeah.

[Rick]

We're one semester in to being happy. We're looking at each other and I.

[Lori]

Going, wow, it's just you and I, babe.

[Bo]

That's a good thing, right?

[Rick]

Just so you guys understand, date night becomes every night. It's crazy. It's crazy.

[Lori]

It's true.

[Bo]

That's awesome.

[Brian]

So, but talk about. Because that's. That's family stuff.

[Rick]

Yeah.

[Brian]

How about obviously to come on a show like this, you had to make a living doing something. So give us a little background. Working, retired. Where are you at in your financial life?

[Rick]

So we've been married about 32 years, a little over now. And I have mainly been in the medical field, either in surgical sales or pharma from almost my whole career. And. And we just. I. My company had a reorganization and they had an offer of me to take a severance in early retirement and I was planning on working two more years, you know, and they said, well, we'll like almost pay you for a year and a half of that. Why don't you? I thought, I think I'm going to leave and I can work for two.

[Bo]

Years or I get paid to not work for a year and a half.

[Brian]

Yeah, yeah.

[Rick]

And so I weighed that one on and we decided to take the package and we're doing it and I'm going to still work, probably do a consulting gig with a company that I helped start a long time ago, about eight years ago, but then that's where we're at. So we had this jumping off point and I was actually reviewing that package and I was watching to my favorite financial guys on the YouTube and I thought, man, I wonder what they would say. And then you said, hey, we're having a show. We like to talk to you. I'm like, oh, should we do this?

[Bo]

We were speaking to you that you were.

[Rick]

Because, you know, there's a lot of anxiety and fear when you are jumping off. And retirement sounds like something you understand. Just like becoming an empty nester. When that you turn that page, you're like, okay. I never really thought on how this was going to play out and I never really thought about how an early retirement would play out. And so being here is such a gift. I mean, other people may have had a great ticket that they paid a lot of money for one to go to a great game last night, but this is the financial super bowl right here. We're glad to be here.

[Brian]

Flattery will get you everywhere.

[Rick]

And my lovely wife, she's been a school teacher.

[Lori]

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

[Bo]

Awesome. That means. Okay, so you are retired now.

[Rick]

I am. Three weeks in, three weeks into retirement.

[Bo]

But you love work and you love what you do. What does retirement look like for you?

[Lori]

You know, that's a great question. That is something we might want to talk about.

[Rick]

Okay.

[Lori]

I don't, I don' we thought smart.

[Rick]

People that know finance could tell us.

[Bo]

It's our job to tell them.

[Rick]

No pressure.

[Bo]

Okay.

[Lori]

Pressure.

[Bo]

Awesome. Awesome.

[Rick]

Yeah. We actually had a plan. We thought we're going to both work for about two more years and we did this. And she does really love what she does. It's not a, it's not really a job. It's a mission.

[Brian]

Sure.

[Rick]

And she's like, I'm still, she's still got two years in her or a year and a half in her. And so we're thinking that's going to work. And she says, what are you going to do? I'm like, I'm gone. No, no, no. I, I, I had a, we have a small software company that I helped start about eight years ago. And that small software company doing a little medical need has grown almost into a $16 million company. And it's doing really well.

[Bo]

It's not a small company anymore.

[Rick]

It's got like real office space and things like, and coffee rooms like you guys have. It's like, wow, this is a real company. And so there's a chance to go back there and help them grow.

[Bo]

Oh, awesome.

[Rick]

And so I'm going to probably be doing that. I don't know what that looks like either. That's just kind of like another.

[Bo]

So retired, but pseudo retire. Trying to figure out what the next.

[Brian]

Corrects are correct at the point. And we'll, we'll get into this when we get. Because I think it's probably a good time to talk about numbers and other things. But you, there's something different about when you work because you want to work, not because you have to work. I mean, there, there is a power to that. That's why we kind of on the show, we're always pushing to buy and own your time as fast as you possibly can. And that's why I can't wait to jump in, Bo, because I want to know as we share this, what was the secret sauce? Is it discipline? Is it you made a great investment here or there. We're hopefully going to be able to jump into and figure out what actually created what you've created. All that you all built.

[Bo]

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

[Rick]

Yeah, people we know that are good at finance have said that we should have like a six months worth of like liquidity. And I actually have Used the way we've done it is our taxable brokerage has got some money and we kind of have that in fairly conservative investments. We hadn't really thought we're going to need. You know, we've kind of used that as our emergency fund, if you will. And a little bit of the scenarios changed because the severance that I got from my employer did hit okay last week.

[Bo]

Awesome. It was a severance paid all at once for a certain period of time.

[Rick]

It sure was awesome. Yeah, that hit. And so everything's a little. The Tidewaters have gone up on some of those accounts. And so we are, we're. We have enough now for two years to keep us steady state and what we're salary making. And so we've got that in cash. And I'm really kind of wondering what to do with it because I thought I'd put it in money market. And then I was also thinking about on the second year that we tucked back, I was thinking about putting it in US Treasuries, but I have it in my Schwab account. I haven't done anything because I thought, what if I could ask two really smart guys.

[Brian]

Sure. What to do? We might have some thoughts.

[Rick]

You guys always do.

[Bo]

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

[Brian]

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

[Bo]

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

[Rick]

Yeah, the cool thing about our company is we can keep it in there and there's no fee.

[Bo]

Awesome.

[Rick]

So. And it's a. They have those, they both have target funds and they also have like index funds.

[Bo]

Great.

[Rick]

And so I'm kind of in some S and P index funds and people I know that are real smart on YouTube have told me that's a good strategy. And so I think the reason I'm loving this conversation and being here at the super bowl of finance, because I want to make sure that we are. I feel overweighted in that area. And I'm thinking I don't understand the mechanics of the Roth, you know, how you buy out or convert Roth conversion. I mean, I watch your shows and I've read your book pretty well, but I didn't really read those pages double time. So I don't know if I know the process and I haven't gone on money. Com to figure it out. So I was just kind of hoping to get your guidance today on that.

[Bo]

Great. Love it. And so then as we continue to go to the network statement, your Roth 401k, Rick, has about 100,000, $112,000 in it. You have a rollover which has 636. So again, that's another pre tax account. Then you have a taxable brokerage account that has about $251,000 in it. And it looks like you have some vested RSU's from your prior employer sitting there at about $115,000. Any thoughts on are you going to continue to hold the company stock now that you're no longer there or.

[Rick]

Yeah, knowing what I know, I think I'd like to hold. Sure. Because it's a, you know, those are growing very aggressively. I have a Little heartbreak story. I'll tell you later if you want to hear it. But it's horrible. But yeah, because I cashed out of those, some of those rsu to pay our house off. And it was like a two and a quarter interest house and I paid it off. And so I do the. Oh, just. Oh, kick the spurs on that one.

[Brian]

I'm not.

[Rick]

Look, it was very painful to me because, you know, I do the math every day and the stock's gone really well. The appreciation. And I did well that, you know, that feeling good about paying off the house just cost me about $190,000. So.

[Brian]

But don't let's. I mean, hindsight's 20 20. Me and this guy debate this all the time. You are at the stage of life where if it brought you peace of mind. And also.

[Bo]

And I can already say that was.

[Lori]

What I was going to say.

[Brian]

This is not a bad thing because there's going to be lots of things in your life that you can look back on and go, woulda, shoulda, coulda. And that's what I love. And I noticed there's zero debt here, which I thought was actually a healthy thing. But does that mean through yalls entire life that y' all have always been on the same page and especially with debt and other things, or is this a new thing?

[Rick]

Is that microphone working?

[Brian]

Testing, testing.

[Rick]

Yeah, yeah. We really had a crossroads, I'd say about 13 years ago where we kind of came together and I am a sales guy and so we get commission. And so debt is the enemy.

[Brian]

Yeah.

[Rick]

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

[Brian]

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

[Lori]

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

[Rick]

We had a health issue. We have four kids, and we adopted our daughter from China. But before that, we had another daughter that when she was 2, she was diagnosed with medulloblastoma, brain cancer. And through the next two years, we went through a surgery, chemotherapy, and just a lot of emotions and a medical journey that was stressful. And I think one of the outcomes of that was we. She didn't want to burden me because I'm kind of tight with debt and the thought of money. And so she, like, put away the fact that we were overrunning our money expend. And so I didn't really know about it. And then when I found out that we. Oh, my gosh, we have all this money on credit cards, she's like, I didn't want to make you mad. I'm like, well, this. This is gonna. This kind of triggers me. But it was hard because it wasn't about, I don't want to make it about the money. It was about. We were going through a very hard time. And psychologically, you know, you do crazy things to. And through that whole thing, we burden the show or make it hard. But we lost our daughter after two years, and it was a hard thing. But, you know, recovery came through. Getting to know each other, going to counseling. And then. And even through that year, when our kids, you know, they said, hey, I know we lost our sister, and it's horrible, but we have room in our heart and we have room in our house for another girl. We go find a girl that needs it, and that's why we have shogun. And she doesn't replace Marin at all. Our daughter that we lost, but she does give us a place to direct our energy and our love. And through that experience, we started talking about, man, we can't. We can't do this debt thing again. And my dad. My father, a long time ago, you know, yeah, I'm last of 10 kids. And he'd always say, you know, you're going to be poor on the middle of the street with no money, and no one's going to care. And it was kind of. And I never realized it, but we found out through the counseling and going that that fear kind of drove me.

[Brian]

Like, I'm telling all the kids or just you specifically?

[Rick]

No, he used to do it. All the kids. He used to have a lecture and it was really hard because he didn't even like drive high places where there's like homeless people goes up, there's our people. And I'm like, what? We're not homeless, we're okay.

[Bo]

And so I think he was doing that in.

[Rick]

He was trying to make us be thoughtful about money. And it was, it was the old school hard, you know, hard sell and. But I could tell you that I told her a lot of that fear in me and a lot of the panic that I do in my career in our life is probably driven by irrational fear.

[Brian]

Yeah.

[Rick]

And you know, we've gotten through that and by going and talking about it and owning it as a couple, I think we kind of came to the same page. And I think that's why we got the debt under control. We paid off the house and you know, we've been pretty clear for 10 years.

[Bo]

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

[Rick]

Yeah, it came in waves. I mean, we're on a 10 year anniversary and I found out about a credit card she had and I didn't even know that we were upset about that. And we're in Hawaii and I found out about it. So I'm like, let's get peanut butter sandwiches. We're going to eat peanut butter sandwiches the whole time we're in Maui. What could go wrong?

[Brian]

You know, we're going to fix it, right?

[Rick]

We're making memories.

[Bo]

Yeah.

[Lori]

Happy anniversary.

[Rick]

Bad strategy. Don't do it.

[Brian]

Well, it probably because Kauai is not the cheapest cost of living place. If you're there and then you find out about this debt.

[Bo]

You're like, oh my gosh, what are we doing here? I did, I did.

[Rick]

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

[Lori]

And because it all, you know, it kind of created that stress between us. I knew that he was worried about living in a box on the side of the road and not. And so I didn't really. Every time we tried to talk, it became like this big issue. I have abandonment issues. And so I was always worried that if I talk about it, he's going to get mad, then he's going to leave.

[Brian]

Right.

[Lori]

And so it was. There was so much around that emotion behind it. That's exactly right. And then on top of all of the emotions with our Marin, you know, and so it just kind of compounded.

[Rick]

Rolls into a bigger ball.

[Lori]

Yeah.

[Rick]

And then all of a sudden you're getting crushed by it.

[Brian]

You mentioned the 10 year anniversary. Lori, I'd love to get your take did that debt because it was multiple. It was in the five figures. Did it happen quickly? Was there something or was this something that built up and I want to know emotionally what was going on. Is this something you knew? This was a bomb that was sitting out there. How did that go down?

[Lori]

It built up, definitely. And yeah, I would wake up in the middle of the night and just sick to my stomach because I knew, you know, and. And then I'm like, if we would go to Costco and I Remember thinking, okay, he would say, oh, let's get some whatever eggs or you know, whatever it is, or maybe some fluffing stuff, you know, that we don't really need. I'm like, oh no, I don't really need that because I knew what was happening. That's exactly right. I'm typically the bill payer, have always been. And so I kind of knew we weren't really talking about I would just like pay that visa and pray to sweet baby Jesus that there was going to be money in there, you know, and so we didn't really talk about it that much. And I also think me not working during that whole, I mean that was 21 years that I didn't work. I don't think I had a real appreciation when I went back to work. I was like, oh, so this is what it's like. And I, I, I took pride in what I was doing and being able then to contribute to our family. But more than that, my appreciation for Rick and what he had done for our family for that many years, it just made me respect him. All of the, all of the hard work, the early mornings, the late night flights, I mean all of that. So he was gone a lot and so it made me really understand and appreciate that him so much more.

[Bo]

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

[Lori]

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

[Bo]

How freeing was that when you did, when you finally said, this is who I am?

[Lori]

I mean, yeah, and such a weight.

[Rick]

And you've breathed better, you mentioned, and.

[Lori]

We liked each other to begin a lot. It was a really good thing. We have our Faith. We're very. So that was a huge part of our journey, but we really liked each other. And so it wasn't ever a matter of, we're going to get divorced. But you know what, honey? This has got to change. We got to do something different. Right? And so when I became okay this way, I think we. We became this way.

[Bo]

Yes.

[Lori]

So much more.

[Rick]

Kids see it. I mean, we were. And just to tell you, things have gone a little off the hook. We took our. Our youngest daughter on her senior trip over spring break. We normally go to, like, West Odessa or somewhere like, you know, 12 miles away, maybe a Motel 6. We went to Italy.

[Bo]

Oh, I hear Italy's different than West Odessa. I've never been to either, but I.

[Rick]

Hear, good night, Irene. We get there, and then our son, he's serving in the army, our oldest son. And we just flew him in because we thought, how often are you going to be. How often is it going to happen? Never. And he's like, he got time off. And we're like, so time with your kid in the military, so precious. So we flew him in. He goes, what do we do now? I said, let's just go rent motorcycles. He's like, who.

[Bo]

Who are you?

[Rick]

Yes. He's like, this is weird. I said, no, no, this is dad out of debt.

[Brian]

Yeah.

[Rick]

Because he goes, you're just so different. You're so relaxed. And I said, well, this is mom and I struggled through this. Now we're authentic. And, you know, I want you to know that when I came home from work, the reason I was upset, and he's like, oh, I can imagine. You had debt. We weren't performing. You were traveling all the time. And I said, yeah. I felt like I got 48 hours on the weekend. I'm going to write this shit.

[Bo]

Yeah.

[Rick]

And he's like, that would. Must have been awful. I said, well, you. You got the user end of it. I was not a very nice person. Yeah. And so when I tell you that was a real transformation, you mentioned it in your book. A little bit about living your best life and authentic. And work becomes not work. It becomes an expression of who you are and a way to give back. And we saw our careers really turn into that. We're like, okay, now do I want to show up here? And I. In that way, I do. I love what I do. My mission and my health care. What I was doing in health care mattered, and what she does with kids with dyslexia mattered. Yeah. Like, well, we want to stay doing it, even if we don't have to. And so that's. And then you imagine the weight of credit, communication issues, you're not exactly being the best mom and dad. And then all that gets right just because you figured out a way to better steer your financial ship and communicate authentically.

[Bo]

It affects all the different, all the other areas of your, of your life, not just the financial areas.

[Brian]

Thank you all for being so honest because I think that it's incredible. A lot of people will see your net worth statement and they go, they never see the journey, they don't see the pain, they don't see the loss of your just sharing the loss of your daughter, but also the struggles in a marriage. Because I think a lot of us, we always internalize to our specific situation. And life is not easy. I mean nothing is promised to us to be easy. And it's easy when you see somebody who's got a multiple seven figure portfolio and go, well, they don't struggle with what I did. And I think you guys are a testament to know they probably there are everybody. I don't care how good your situation is, there are going to be bumps in the road, obstacles in your life that will completely take this thing in different directions than you ever intended or planned on. But you can still. The good news is just like you guys and you're a testament to this, you come out, if you do it and you just plan and you kind of just accept whatever's coming and you, and you plan for it and you try to navigate it as well, you will end up in a better place. If you don't just bury your head in the sand, just let it become who you are, essentially become the victim of the situation. But I think that that is something that is a great teachable concept. And that's why I don't want to make sure that the negatives of what you've struggled with, with the loss, with the discipline that doesn't have to define you. There obviously has to have been some really good stuff going on in the background as well because you don't end up with multiple seven figures. I would love to get a little detail on like savings behaviors, investment behaviors. How did that all kick in? Because it wasn't just all credit card debt. That doesn't.

[Rick]

There's several things about this conversation with you I was worried about and that was one of them because I can tell you I'm. We're, we're doing fairly well, but we never did, we never did the 20, we never did the 25. We were more like around 18 or 17 in my 401k.

[Brian]

Okay.

[Rick]

And so. And I gotta be. I think another thing now, does it go up more?

[Brian]

Does that count the match as part of that 17 or 18? Is that only what you put in?

[Rick]

Yeah, I never count the match.

[Brian]

Okay.

[Rick]

Because I just don't think that.

[Brian]

So it was probably over 20%, if you counted the match.

[Rick]

Yeah, mathematically, on some years, it probably was over the match, but not all the time. So. But I thought, well, I'm not like one of their typical people that, like, oh, I saved it and I did it. I know we don't do that. We didn't do that. And we have four kids and you're trying to make everything meet. You know, expenses come out of the blue. But some. More like an 18er. But I did do the thing you mentioned in the book, and I loved it. And I didn't know what to say. You said it and you forget it. You set that thing, that 401k, and you forget it.

[Brian]

And automatic for the people.

[Rick]

And it's never. It's never money you lost.

[Bo]

Yeah.

[Rick]

You never see it. And she's like, do we have a 401k? Yeah. What is it? It's good. You know, I'm gonna play a little poker here.

[Brian]

Yeah.

[Rick]

No, but the point of it was, is that, you know, it did. And I will be honest with you. I look at that number sometimes and like, what?

[Bo]

How did we get here? Yeah, right.

[Rick]

And you guys talk about once you hit 100,000, it really grows, and once it hit a million, it really grows. And then after a while, you look at it and, I mean, the last year, it's just been, the bigger the.

[Bo]

Numbers get, the bigger the numbers get.

[Brian]

Something you just said that struck a chord with me is that I think about the money, you look at the account and you feel separated from you. Like, how did it get this big? Especially when you start seeing it makes more than you made in your best working years. And when I think about, I'm like, well, did I not do enough? You know, sometimes what I mean by that? Meaning experience life. But then I always come back to. I can't. I don't remember which dollars turned into what. Meaning that I don't know if maybe I should have spent $2,000 more when I was 26 years old than I did, or maybe when I was 30, maybe I should have spent $12,000 more on this car or something. I found myself because you start realizing I've built up enough that I don't Think I'm not gonna be able to take this with me. So, I mean, did I sacrifice somewhere I shouldn't have? And I always come back with I don't know which dollars it was, but it was that behavior of set it and forget it. And I think in America we are very good on the consumption side and not very good on the actual discipline and saving side. So is there. Does that. Because you, you just, you said. I said it and forget it. And that's what I kind of draw. Was there ever any moments now that you look at this that you wish you had done more or you have regrets or does that is. Are you pretty happy with it?

[Rick]

The one time that I remember this, I'll remember this the rest of my life. We were in San Diego going to San Diego Zoo and we saw the animals and everything. And I thought, wow, we're going to post this on social media and show my friends we're having a good time. And so all the kids were e getting a lemon, a little lemon, squeezing those lemon ice things. Yeah, they're all eating it. I took a picture of them all eating it. And then my friend comes back. I mean, in a minute I posted it. And my friend comes back and he texts me, did you buy one lemon squeezy for four kids to eat? And I go, well, what do you mean? He goes, the picture has one lemon. I said, four spoons in it. I'm not buying four of them because.

[Bo]

They'Ll throw half of it away.

[Rick]

And I'll be standing by the trash can looking, going, oh, there it all goes.

[Brian]

Or you'll be eating it.

[Rick]

I wish I was. And then I'm the full figure gal because my kids don't eat the food I buy them. Yeah. And it was like that. I'll never forget that. Because my friend goes, oh, McGrath, he can say, you know, he's Mr. Spend it and forget it. He's Mr. Thai. But he, he bought one lemon squeezy for four kids and I don't even think about it. Yeah, but now I look back and you ask that question, I go, I guess I could have bought two.

[Bo]

Could have two spoons, not four.

[Rick]

Yeah, two. The boys and the girls, they got two girls, two boys they could eat. You guys share among yourselves.

[Bo]

I love it. I love. You said you had this irrational fear growing up, right? Like. Like that was something your father, like, laid on. Well, now as you sit here with four and a half million dollar net worth three and a half million dollars of that liquid, do you guys still have fears. I mean, you said you had this plan where we're going to retire in two years, and all of a sudden this package comes your way and we fast track it now, and you're still working and you're not working. Do you guys now feel great? Has all that fear gone away or are there things that you're nervous about?

[Rick]

No, no, no.

[Lori]

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

[Rick]

And she said about the hotel last night, she like, this is so nice.

[Brian]

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

[Lori]

You know, it really doesn't bother me. Honestly. I mean, do I would. I love the big room at the Harpeth Hotel? I told him last night, I'm like, we're not staying in Hyatt Place anymore. We're staying in places like they upgraded.

[Rick]

Our room, too, so it's even worse.

[Lori]

Beautiful. And it's just the two of us. I'm like, wow, we have so much room with our four kids. Because we would probably still share the same room.

[Rick]

And they gave us two cookies. I wouldn't buy them anymore.

[Lori]

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

[Rick]

You know, I met her and I knew she was the girl that I loved and wanted to marry because we went to a Mexican restaurant. And the total bill is $9.70 with the tip.

[Bo]

Oh, wow.

[Rick]

And I'm like, did y' all. I'm in love. No. She got a half order of ponchos and I got the number six. No, it's in San Antonio. She's a big San Antonio girl. And yeah. Went to her favorite restaurant and you know, you date other girls and you go out and you're like, oh no, this is so expensive. And then I've dated those and I date her and there's $9.70.

[Bo]

I'm like, this is the one. I have got to find the one. Obviously I got to put it, got.

[Rick]

To put a ring on that one. Yeah.

[Lori]

Six months later, we were engaged.

[Rick]

Yeah. So I will tell you, we've always been kind of, of, we've had a, I would say we had a pretty financial conservative platform that we. Because our kids would bring it up. Do you know most people don't spend six, all six of us in one room. Well, they don't travel as much. You don't understand.

[Brian]

But I do want to challenge because you said something that trip y' all flew your oldest son to meet with you guys to beat that. That was not cheap. I'm sure that was, that was an extra to maximize the memory because the memory was more important than, than the money being spent. So I want, I have to, I have to challenge you on this as your adult children. Do you think they're still. Now maybe you've done because y' all seem like y' all are a great time and sometimes you can overcome a lot with charisma and a lot just being fun to be around. But I gotta think with adult children, especially as they start expanding. I haven't asked if any of your children are married or anything. They're going to start expecting maybe their own bed. My oldest daughter, we like to go cruises. Yeah. She told me she goes, yeah, if. Dad, if you want me to go in on any more of these cruises, I want my own bed because we, we. I even packed a blow up mattress on a cruise.

[Bo]

I love this guys.

[Brian]

My daughter's point, that is a mistake because she's going to quit coming on trips if I don't start realizing now, unfortunately, like Disney, they, they have beds that come out of the ceiling. So that works. But, but when you go on Royal Caribbean or Norwegian, for some reason they don't put as many beds and drop out of the ceiling. So. So we did blow up mattresses. I'm just telling you there is a risk. Yeah. Yes. It is what created success. But there is a risk that you actually hurt yourself in the long term. Especially when you have. Because it's back to that maximizing every decade of your life. Yes, you need to be disciplined in your 20s and your 30s. But now that you can accomplish. And that's what I want us to spend some time on. Have you accomplished your goals so that you can not hold on so tight? I mean, because I think that is an important thing for you guys to figure out.

[Bo]

Because I asked, are you, are there fears that you have? And you said, oh, yeah, yeah, yeah. What are those fears? I mean, are you, are you, are you afraid that you don't have enough money to retire? I mean, what's the concern?

[Rick]

Well, two, I was worried because I want to see if we get a B plus or B minus on your screen scorecard. But the point is two things. One, I think we've gotten better because I'm out of debt. And I, I definitely know that now that my kids are adults, the time with them is more precious.

[Lori]

So more.

[Rick]

No more inflatable bed memories, hopefully, in our, in our life. And we're getting, I think, better. Like, we're doing a cruise this summer to Alaska. And I just told, I had. All the kids told me, you can come and, oh, what are we going to do? I said, you can do any excursion you want.

[Bo]

Oh, no.

[Rick]

They're like, no, seriously, Seriously, Yeah, you can do whatever you want. Because I realize that, you know, time is more precious than the dollars we save. But. And I can say that. And I think we've turned the corner. And I think, you know, we do a lot of crazy stuff. She let me get into motorcycling. I may or may not have four motorcycles at home.

[Bo]

It wasn't on the network statement.

[Rick]

I own those in my heart. But. And so I think we've turned the corner. But. But I would say, I mean, it's important. And I, I think about this when I watch a lot of your shows is we just came through a significant inflation crisis where a lot of that shrunk.

[Bo]

Sure.

[Rick]

And I. And even though it's growing, that what you could buy with that dollar shrunk. And you know, and, and when you think about retiring, you realize that this is the course. You're setting a course with your ship and you're. And you're. And you're off in that course. But there could be a storm and it could blow. That inflation storm can blow you right back. And I'm thinking, so, yeah, am I worried? Yes. I'm worried about how do I make sure that, you know, if that happens again, you know, inflation. And I do have one guy that's kind of helping me manage the Roth 401K. And he goes, Rick, you've been through two Black Swan pandemic event and then 2008, and you're all right? I said, well, what if there's another one and it's bigger, you know, And I don't know, and I don't know. I like to have an assurance, you know, somewhat of a reasonable assurance that that's not going to happen, happen.

[Bo]

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

[Rick]

So one of the things you guys, and this is all good, but you know, you worry about it because you're saying, well, you could retire early if you have a path to health care. Well, our pension offers health care.

[Bo]

Amazing.

[Rick]

Which is amazing, amazing. And so taking this jump was a little easier for me because I thought, well, we got health care and that's a good thing and that's going to be somewhat controlled. And so we have a pension and we have a health plan, and I have another company I worked for a while back, and a lot of people forget this. If you, if you're invested with that old company, has a pension, you're vested, and they're not going to come give you the money, knock on your door.

[Bo]

You got to go, you got to turn it on.

[Rick]

So, yeah, I have that pension. And then she is a teacher and we have a teacher's pension early. And then if she stays until 62, it gets a little better. So, yeah, it's great. But I want you to notice none of those are inflation adjusted. There's no, like, no cost of living. No cost of living. There you go.

[Bo]

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

[Brian]

By the way, I have to pick on you guys a little bit. Is that when I was reviewing this? Because I do try to financially triage everybody's situation. And as I'm going through the notes, I'm like, oh, I see an issue here, because I see you have all these retirement assets. You don't have as many taxable accounts as Mike, man, they're gonna have trouble in the first two to three years of liquidity. This could be. And then I flip the page, and I'm like, I basically threw everything. I was like, what the heck are these people worried about? I mean, these pensions, they're incredible. I mean, I was like, oh, this fixes a lot of problems. I mean, it is. And so, I mean. And I want us to go into this because we actually did a deep dive to see if we could give you peace of mind. But there's something. We haven't completely laid out all your financial goals, because there was another perplexing thing, Bo, that I had. Is that when. And one of the goals. And you have to tell us if our people didn't write the note, Right? But it said Lori's retirement date was either. Was it now? Or 20? 32. 32. And I couldn't figure out why. I was like, why did they put such a spread on?

[Bo]

She looks at Rick, and Rick goes, yeah, yeah, no, that's what we talked about, right? You can't. You have to work for seven.

[Brian]

I'm trying to figure out, because I want to make sure I understand all the goals and how all this works.

[Rick]

She's doing a mission to the children. I don't want those children. And I'll pack her lunch every morning.

[Brian]

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

[Lori]

I absolutely want to have the option.

[Rick]

I'm like, well, if you work longer.

[Lori]

That's right.

[Rick]

It gets bigger.

[Brian]

What's the why behind if it's bigger?

[Bo]

I don't know.

[Rick]

I'm not saying it's rational, that irrational thing.

[Lori]

It is, it's. Yeah, it is. Are we gonna feel the pressure?

[Brian]

Do you feel that he wants you to keep working, or do you feel like if you wanted to quit, you could.

[Lori]

Oh, I think if I really wanted to quit.

[Bo]

She knows she can influence him to do about anything.

[Lori]

Yeah. But I mean, I think it would definitely be a conversation because I would want him to go, honey, it is okay if you want to. If you want to quit, it is okay.

[Brian]

And.

[Lori]

And I've told him when I moved into dyslexia, I was teaching second grade. And then I. I got into this. It was Covid and I didn't get. We like, school shut down. It was done. I didn't really get to say goodbye to my kids. And it made me so sad because I didn't. So I told him, I'm like, I need about a year. And for you to say, okay, you do this next year or whatever. I need about a year to be able to wrap my head around it. I'm a little bit of a processor and. And be able to say goodbye and be able to be okay with that emotionally.

[Rick]

I think a seven year goodbyes.

[Bo]

He said, you asked for a year, I gave you seven.

[Lori]

I know. He's so nice.

[Rick]

Bonus. No, I know.

[Bo]

We have nothing wrong if with people working even past financial independence, because we want people to be able to work because they want to, not because they have to.

[Lori]

Right.

[Bo]

But we do like to be able to answer the question, am I at the want to place or am I to have to place?

[Lori]

Absolutely.

[Bo]

And because obviously if we're at the place where you don't have to work anymore, working any degree farther past that is just gravy. Then you get to show up because you want to do it. So that's kind of the case study we wanted to lay out for you guys. We have some assumptions we're going to kind of walk through as we did this. We said, hey, let's go ahead today. Congratulations. You retire today, gone out of the workforce. So now you were both fully retired. You guys were kind of to share that your annual spend to live the life that you want to live on, the terms that you want to live is about $154,000 a year.

[Brian]

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

[Bo]

Really worried about that. Inflation.

[Brian]

I'm gonna make this look as bad as it possibly could so that I. So these guys can't tell her to quit working. I felt like that was actually going on under the. Because there was other categories. It wasn't like insurance. I was like, these are categories that are fixed. It shouldn't. These two columns should match. And you had variations on every one of them. And I was like, this is somebody patting the numbers on purpose who filled out that questionnaire. I think somebody was cooking the books.

[Rick]

We could downsize to a single wide and ride a unicycle. I mean, you know, there we go. Now maybe a little bit of back. Because, you know, I like to be. Yeah, I like to be conservative.

[Bo]

Sure. So we said, okay, let's operate under your conservative numbers and assume that $154,000 of spend, plus you have to cover college costs until 2028. So we kind of factored that into our analysis. We assume that the severance is going to increase your cash reserves to 18 months. We're just going to kind of call that done. And then we assume you spend the remainder of the severance. So whatever you have above that 18 months, you just spend that.

[Brian]

All of your conservative.

[Bo]

All your future living expenses just come from the portfolio.

[Lori]

Holy.

[Bo]

We also assumed an expiration for both of you till age 95. So we want a nice, long, robust, enjoyable retirement. We're going to leave your current portfolio invested. I'll show you kind of the rate of return assumption there. It's going to be about 7.4%, and that's just roughly a 60, 40, a little bit different than your current portfolio, a little bit more conservative. But that's going to allow us to have appropriate mean, return and standard deviation. So that way, when we run the simulation, it'll let us know how accurate are our probability estimates here. All right, we're gonna assume your cash doesn't grow. We're just gonna park it in a zero percent. Again, we're trying to be as. We're trying as hard as we can to Send her back to work.

[Rick]

Right. I appreciate your effort.

[Bo]

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

[Rick]

They don't deserve it.

[Bo]

They don't deserve. Right.

[Rick]

No, no, no, no. I'm kidding.

[Bo]

That seems.

[Rick]

My kids are listening. I love you guys.

[Bo]

That seems like a pretty good picture, right? Like most people, when they retire, their portfolio value goes down. They live off of it. Your portfolio never actually does that. It continues to grow in real dollars.

[Brian]

Through time, and that's inflation adjusted. That's in present dollars. That's not. That's not just boosted value.

[Rick]

Because what if someone kept working till 2032? I'm just kidding. I'm kidding. No, that's amazing.

[Bo]

But you do ask a great question. What if this. What if we don't get a straight line outcome? And that's where this is. This is great because we said 7.4% every year, but we know the market does not deliver to a 7.4.

[Rick]

That's correct.

[Brian]

Yeah.

[Bo]

So whenever we try to do an analysis like this, we want to do a Monte Carlo simulation. And a Monte Carlo simulation is where we run a thousand different iterations and we say if we change the return assumptions, we have 2008 followed by 2002, and then 2022 and 1987. We have all these different iterations of the thousand scenarios. We go through, what percentage of them get us all the way to the end of the plan without running out of money. Right. So that's the. That's the narrative. When we ran this portfolio with all those assumptions that we listed out through our Monte Carlo. You have a 98% probability of success of making it all the way to age 95 without ever changing your lifestyle, without ever tightening your bolt belt, without ever, like, backing down spending. So even if those, even at Those inflated numbers, 980 out of a thousand scenarios got you all the way to the end of the plan, you can even see that in the worst 20% of those iterations, like, like the sequence of return risk, the negative outcomes, the black swans, Even in the wor 20%, you still ended the plan with almost 3.7 dollars.

[Brian]

Yeah.

[Bo]

Which is where you are today.

[Rick]

See that 2% failure rate?

[Bo]

And I want to remind you, this is that 2% is not, oh, we ran out of money and now we're on the street.

[Lori]

Right.

[Bo]

Hey, I just had to tighten my spending. This assumes you live in a vacuum. We all know 2008 happened. What'd you do? You spent less money. You went through Covid. What'd you do? You spend less money. This assumes you operate in a vacuum, and you don't do that. And so even with that sort of behavior, 98% probability success of not having to decrease your living expenditures in retirement.

[Rick]

So you're trying to tell me that we won't have to eat peanut butter sandwiches?

[Bo]

I'm just saying you can buy the name brand peanut butter if that's really what you want.

[Rick]

All right, all right, all right.

[Bo]

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

[Brian]

Scenario, added your padded Budget because by the way, I think you already are probably a good 30 to 40% higher than you actually are spending. But we essentially doubled it. If you really look at what your actual expenditures are, oh my.

[Bo]

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

[Brian]

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

[Rick]

Vegas, here we come.

[Brian]

There's so much conservatism in here now, I'd like to hit pause because we've kind of filled you in as a couple. How does that make you all feel? Kind of knowing where you are on this financial independence journey.

[Lori]

Buddy.

[Bo]

She's like, one year later.

[Rick]

That's right.

[Brian]

Does it change any thoughts? I mean, for you, Rick?

[Bo]

Yeah.

[Brian]

Specifically, does it change your mindset any?

[Rick]

I mean, obviously. Yeah. I mean, I guess it's like, because, you know, it seems like you're always fighting with your. Your amygdala, you know, your emotional brain and your logical brain. I kind of feel like a silent still voice in my. It's all right. You're fine. You're fine. But. No, no, but what if.

[Bo]

What if.

[Rick]

I know, and I think the what ifs just kill me. But seeing that, especially with. Yeah. Your accurate representation of my budgeting. But, you know, I mean, it's.

[Bo]

You're right.

[Rick]

I always. I think I've always tilted my hand and worried for the future, and it's like, I don't really need to worry. And it's kind of. It takes a mindset change.

[Bo]

Sure. One of the things we get so excited about, and it's our favorite part about our job, is once people get to financial independence, once they get to the point to where probabilistically they're going to be okay, then we get to do the fun stuff. Then we get to say, hey, go on the trip. Hey, go buy the lemon squeezes. Hey, go do the thing right. Like, go use your money for the things. And it may not be spending more. It may not be increasing lifestyle. It may be creating memories with the kids. It may be giving it, maybe philanthropic. What we hope is that we can free you up to start getting to focus on those things, not be so afraid of the what ifs. But then you think about the exciting what ifs. Well, what if we could now use this to really multiply our wealth and change the world around us, change the lives of our kids, change the lives of our community, change the lives of the causes that we really care about.

[Rick]

Yeah.

[Bo]

And what's great is when you get to this stage, when you get there, you guys are still so young. There's still a lot of really fun and exciting planning that you can do. You, you had alluded to one at the very beginning of the episode, you said, hey, I've heard about these Roth conversions, and I think that's a thing. Well, we did a little analysis on your tax box.

[Rick]

Right.

[Bo]

And Brian kind of said this when we went through your net worth statement. If you look at the way your assets are currently spread out, you have about 81% of your dollars in tax deferred money. That means that at some point you're going to have to pay tax on that. When you pull it out, you got about 3% in tax free. That's the Roth bucket. Then you have about 10% in after tax. So you are very much heavy weighted towards pre tax assets, which again, you've got three and a half million dollars. It's a great place to be. We're not suggesting you're in a bad spot, but this is somewhere where we think we can optimize because there's a reality that will happen in your retirement that when you get to age 75, the government's going to start saying, hey, mandatory, you got to start pulling this money.

[Rick]

Yeah.

[Bo]

And fortunately we were able to project that out and we were able to say, okay, if we look at what your tax situation looks like over the remainder of your lives, what does that look like? And each one of these bars is an individual tax year. Right. And you can see we have the tax brackets as the current law is today, and this is index for inflation. Today we have the 22% bracket, 24, 32 and 35, where they start, that's where they start.

[Rick]

Right.

[Bo]

So you can see, obviously this year you have a big severance coming through. So this year is a unique anomaly from an income standpoint. And then you can see really, you're kind of just in the 22% bracket for the majority of your retirement. But then right around 2041, 2042, something happens and you jump all the way up to the top of, to the bottom of the 32% bracket. And then once your required minimum distribution starts, you now just race through the 32% bracket, even into the 35% bracket. So you very rapidly, even though you don't want to spend this money, you don't want to do it. Uncle Sam is going to come calling and they're going to say, hey, you have to now begin giving us some of your hard earned dollars. Well, when we look at this picture and we know that you guys have pensions coming in and you don't have an extravagant lifestyle, we get kind of excited and we say what's beautiful about the stage of life that you guys are at is a little bit of planning. Just like very little, small amount of planning can have a huge impact over the long term. And we said, okay, we know an interesting thing is going to happen that at age 65, at least as it's currently written, your Medicare changes a little bit, right? You have to, you know, sign up for Medicare and if you make too much income when you have Medicare, then they charge a surcharge on the amount of premium that you pay. And that surcharge actually looks back two years, right? So around the time you turn 63, you really have to like start thinking about what's happening with your income, right? So we said if all we did is just did a little bit of planning between now and age 63, like there's nothing really crazy going on there. We'd have to be like, worry about any loopholes. You're not on ACA Marketplace health care. You have your company health care, so we don't have to worry about subsidies. You guys kind of have this like unconstricted thing for the next couple years. If we just did a little bit of planning, what would that look like? We said, okay, what if we just maxed out the 24% bracket? We just did Roth conversions. That's converting either your IRA rollover or your pre tax 401k to Roth. We maxed out the 24% bracket just for three years. Well, you see immediately now when your RMDs start in 2041, 2042, you're no longer in the 32% bracket. Now you're squarely in the 24% bracket and you don't actually get into the 32% bracket until seven, eight years later. What's amazing about doing this is you'll notice that when we run this through and again look at sort of the straight line assumptions that we had just doing this planning for three years right here at the very beginning of your retirement could add three quarters of a million dollars over the life of your plan. But that's not the exciting part. This is the part that we get really, really excited about. Even though you're going to front end Load and pay more taxes up front. If you actually live out to age 95, this will save you a million dollars in taxes over the life of your retirement plan. Just doing planning for three years, these are the kinds of things that you get to start thinking about and capitalizing on at this stage. If you can get past the fear of, oh, do we have enough? Are we going to be okay? Well, what if? What if. And if you can start doing some of this stuff, it actually even makes the plan look that much better.

[Rick]

Wow, that's amazing.

[Lori]

That is amazing.

[Brian]

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

[Lori]

You know, I mean, my, My first, you know, knee jerk is. See, I told you. But, but, I mean, yeah, I mean, I think it does. I really. I would, I would like to retire in the next year, year and a half, because I want to go play. I want to go. Like we've talked about all of these. We love to travel. And while we can, I want to go and do those trips now, it might be through Costco still, because that's how we book our trips, I telling you. But I want to be able to go and do those things. You know, I feel like, man, we are so blessed and, and, and, and we have had an amazing life, and, and we are not suffering for the life that we have, but I want to be able to, to, to relax and to look, go to bed at night and put our heads down on the pillow and say, you know, that's a good point. I love that.

[Rick]

I think my reaction is going to be.

[Lori]

Yeah, yeah, yeah.

[Rick]

Just that I want to challenge you.

[Brian]

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

[Bo]

I know.

[Brian]

I mean, it's.

[Bo]

The kids are going to be cheering the loudest at this episode.

[Rick]

They are. They're gonna laugh. We said, hey, we're going on a cruise to Alaska. We're all in the same room. I'm like, no, no, they won't let us. No, they would. They would. They said, we're not coming unless you split it up.

[Bo]

Up.

[Rick]

All right, So I know now I'm gonna put a lemon squeezy in every room.

[Bo]

There you go.

[Rick]

No, I agree.

[Bo]

I agree.

[Rick]

It's hard. It's like we were talking when we started this conversation. You said, hey, what's it like? You're kind of just in your empty nester. And I'm like, well, I never really thought about this day coming.

[Bo]

Yeah.

[Rick]

And I never really thought about what it's going to be like. And so it's like, you get so busy raising kids and working hard. Oh, you're in that groove. And it's so hard to get out of that groove. And it's like. And then you get out of. You're like, should I be out of this groove or should I be back in it again? So it's. I agree. I think it's a shift that we're going to have to have a conversation and a commitment to change. I know it's mainly me, but.

[Brian]

But by the way, there's nothing wrong. My favorite thing, also of being a financial advisor, and I've talked about this before, is we don't have to be about the. No, it's all about empowering you to live your best life now and doing these checks. Intersecting the math with the freedom to know that it's okay to let go is an important part of the planning process, and that's what it does. So that's what. That's the conversation I want you guys to have as a couple is, how do we now Job well done. High five, hug, whatever y' all do to celebrate. And then say, now what do we do to take it to the next level to make sure we expand this. This kingdom mindset and all the other things that you have to our family, to our charities, to everything. Because I don't want you to put a restriction on it.

[Rick]

I agree.

[Bo]

I agree.

[Rick]

I think you're right. I'm going to splurge and just go get that Members Only jacket.

[Bo]

There it is.

[Rick]

I always want it.

[Brian]

This is the cell phone. He comes up with a comedy line.

[Lori]

Humor. Yeah.

[Rick]

No, it's awesome.

[Bo]

Here's your homework number one. Answer the question. Why are you working? Are you working because you want to, or are you working because you have to? It's no longer because you have to. So when do you want to stop working? That's a conversation for you two to have.

[Brian]

That's exciting.

[Bo]

Number two, adjust your mindset around cash reserves. Now. You shouldn't be six months anymore. You should likely be somewhere between 18 to 24 months going forward for all of your retirement. Start thinking about optimization strategies like Roth conversions. We just showed you an example of a strategy you can do. You'll be able to do the same thing with Social Security and other things like that and then the last one I wrote. But go play, make memories. And this is a unique one because we don't get to say this often. Start building your great big beautiful today.

[Brian]

Oh, wow, look at that.

[Rick]

Not tomorrow.

[Lori]

He didn't bring that up in the content meeting.

[Rick]

Awesome.

[Brian]

Liberty.

[Rick]

If he could, he'd drop that microphone right there. That was awesome.

[Bo]

Thanks, guys. This is awesome.

[Lori]

Thank you.

[Brian]

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

[Bo]

If you'd like to be a guest on Making a Millionaire, you can go to moneyguy.com apply or you want to have access to any of our resources, you go to moneyguy.com resources guys, I'm.

[Brian]

Your host, Brian Preston, joined by Mr. Bo Hanson. Moneyguy team out making a Millionaire is.

[Bo]

Hosted by Brian Preston and Bo Hanson. Brian and Bo are partners at Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the securities laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through Making A Millionaire. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss. The guests featured on Making a Millionaire are not clients of Abound Wealth Management at the time of recording. Their participation should not be considered a testimonial or endorsement of Abound Wealth Management.