Money Snapshot: A Retired Lawyer Shares Thoughts on Retirement and Past “Bad Money Habits”

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For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with SA in Los Angeles, who is a retired government lawyer. She noted, “[My husband and I] are newly retired and have decided to spend a bucketload of money on travel while we can. This year's travel budget will probably exceed $100,000.” Later, she added, “We are just trying to walk the tightrope between living well while we still have our health, and having our money last as long as we need it to.”

We got a few requests from readers to launch our own “money diary” series, so we’ve asked willing readers to fill out a form with lots of details about debt, spending, saving, and more! If you’d like to fill out the form and be considered for a future personal money snapshot, please click here to submit your response! You can see a PDF of the questions if you want to review them ahead of time. See others in the Personal Money Snapshot series here.

Please remember that this is is a real person who has feelings and isn’t gaining anything from this, unlike your usual friendly (soul-deadened, thick-skinned, cold-hearted, money-grubbing) blogger — so please be kind with any comments. Thank you! — Kat

Name: SA
Location: Los Angeles metro area
Age: 65
Occupation: Retired government lawyer
Partner: 76 years old, most-retired lawyer with his own practice. We are in the beginning stages of starting our own law-related business that we hope will bring in maybe $60,000 per year going forward, with both of us working part time.
Income: Total from all sources about $300,000
Household net worth: Total for both of us about $6.2 million, not including the value of my government pensions — split about 50-50 between the two of us
Net worth when started working: Started working as a teen. I had bad money habits and my net worth was negative due to student and consumer debt until I was in my early 40s.
Living situation: Live with husband; own home and two rental properties

Debt

How much debt do you have currently?
Mortgage on primary residence $514,000 (own, mortgage is $2,240); mortgage on rental property $522,000; mortgage on husband's rental property $477,000

How much money are you spending each money to pay down debt?
Total payments on mortgages (primary residence and rentals): $7,014. The payments on the rental properties are more than offset by the rental income.

Do you own or rent? How much do you pay monthly for your house or apartment?
We own. In addition to our $2,150/month mortgage, we average about $550/month for utilities.

If you have children, how much do/did you spend for childcare and/or education?
My child is 37. I paid for her undergrad (community college, state university) in cash, total maybe $150,000; she paid for grad school with the GI bill.

What does your debt picture look like?
We are fortunate to be debt-free other than mortgages. We do put almost all everyday expenses on credit cards, for the cash back, but pay off religiously every month and never carry any revolving debt.

How did you pay for school?
My parents paid for undergrad, other than a small student loan (low four figures). I paid for law school with a credit union loan for the first year (in the staggering sum of $10,000 back in 1984) and scholarships, a small student loan, and a teaching assistantship for the second and third years.

Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own). 
We refinanced a couple of years ago when rates were at the bottom. It's a 30-year mortgage and we have no need to pay it off or down. Our mortgage is much less than rent on a similar house or even a small apartment would be. My husband bought this house many years ago and although he has taken cash out for a remodeling project, we still have more than a million dollars of equity so we feel like we are sitting pretty.

Have you paid off any major debt? 
Yes! My second husband and I paid off $242,000, including student debt, credit card debt, and about $100,000 of his back taxes, back in the early 2000s. It took us about 3.5 years and we used the “snowball method.” It was a terrible marriage in a lot of ways but we were absolutely on the same page with our finances.

Have you ever done anything noteworthy to avoid or lessen debt?
I took an early distribution from my 401(k) about 10 years ago when I was remodeling my house and costs went over the cash I had on hand after my divorce. It hurt to pay the taxes and penalty but I felt like I was putting the money back into an investment (the house), and the value of the house has increased and it's rented out now with positive cash flow so I don't waste a lot of time on regrets even though it wasn't my smartest financial move.

Savings, Investments & Retirement 

How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
Until I retired I put the max of $200/month in my health savings account and also maxed out my 401(k) and 503(b) accounts.”

How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
At this point we're in withdrawal mode, but up until I retired a few months ago I was saving almost $2,000 a month (including employer match) in my 401(k) and 403(b) accounts.

How much do you save outside of retirement accounts?
I save $750/month in the “Christmas” fund, $600/month in the “property tax” fund, $250/month in the “misc. charity” fund, and $200/month in the “my daughter” fund. These are all automatic transfers to designated savings accounts.

Talk to us about investments. Do you have or use a financial planner or advisor?
My husband has a financial advisor but I have all my money in target date funds.

Do you have an end goal for saving or are you just saving for a rainy day?
We are just trying to walk the tightrope between living well while we still have our health, and having our money last as long as we need it to.

When did you start saving seriously? How has your savings strategy changed over the years?
I was terrible with my money until I was about 40 and my then-husband and I found ourselves in major debt and had to do a big turnaround. That was when I started paying myself first and it's worked out well. Also getting the government job with pension was a huge financial boon.

What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
I track every penny in and out and have for years. That keeps me conscious of what's happening with the finances and avoids debt.

Do you have an estate plan in place? A trust? 
Yes. Wills and trusts for both of us.

How much do you have in cash that’s available today?
A few hundred dollars

How much do you have in cash that’s available in a week? 
We could theoretically get our hands on a couple million dollars within a week.

How much is in your “emergency fund,” and did you include it in the previous question?
I have $12,000 in an online savings account.

How much do you have in retirement savings?
My husband and I have about $2.5 million in tax-deferred accounts, plus real estate, plus my pension, plus his Social Security (which he is taking now), and my Social Security (which I will start taking in a couple of years).

How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
None

If property values (home, car) are included in your net worth, how much are those worth?
Home net $1.6 million, 2 rental properties net $1.2 million total

Spending 

How much do you spend on the following categories on a monthly basis?

Groceries: $350
Restaurants, bars, takeout, and delivery: $700
Clothing and accessories: $1,200
Transportation: $1,000 (not counting husband's car payment, which is paid by his business)
Entertainment: Concerts $600, theatre $400, TV $120, books/magazines/newspaper $300
Other major expenses: Travel $10,000/mo. average. We are newly retired and healthy for now, so we are living it up while we can. Obviously we don't expect this level to last forever.
Health care – premiums and other costs: $500/mo. total for both of us

What’s your spending range for these things? What’s your average?

Vacations – Range: $500–$80,000
Vacations – Average: $40,000

Charity – Range of donations: $5 up to $25,000 currently. Just finished multi-year $100,000 donation.
Charity – Average donation or giving amount:

Individual items of clothing – Range: $25–$500 up to $5,000 for a designer bag
Individual items of clothing – Average: Average $100–$300 for me; husband spends more

Apartment or house – Range: $100,000 to $695,000 purchase price
Apartment or house – Current main residence: Currently worth $2 million; husband bought for $234,000 in 1984

Car or other vehicle – Range: $8,000–$70,000
Car or other vehicle – Current main vehicle: $70,000

Any other large personal expenses?
(1) We contribute probably $3,000/month to various nonprofits. (2) Personal trainer on and off, and gym membership. $350/month (3) Husband spends $800 or so per month on wine. (4) We have done a lot of work on the house, to the tune of more than $200,000, in the past several years.

Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $720 a month if I cleaned my own house but I just don't want to.

If you're married: When was your wedding, how much did it cost (total), and how much did YOU pay?
First: $8,000, parents paid / Second: $15,000, I paid all / Third: Total probably $70,000+; I paid $32,000

Wedding: Tell us about it!
We had a church wedding with 250+ guests followed by a luncheon reception and a dance party in the evening. We like to say our wedding is what you'd expect to get if you left two eighth-graders home alone for the weekend with the checkbook! It was over the top but very fun and we don't regret a bit of it!

If you have vacation homes, timeshares, or income properties, how much did those cost?
My rental property, which was my home before I married, cost $695,000 in 2014. Husband has a rental triplex that cost $410,000 in 2002.

Have any large medical expenses (including nursing homes) for yourself or others played a role in your financial picture?
My daughter may be having some significant medical expenses in the near- to mid-future, and we are prepared to help with that.

How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
My parents gave me a mid-five-figures cash gift when I bought my house after my divorce about 10 years ago. They helped me buy a car after my first divorce.

Does your family provide any non-financial support? 
My mom babysat a lot on weekends when my daughter was small.

Money Strategy 

Do you have a general money strategy?
I just keep an eye on things and try not to overspend. It's like planting a tree: The best time to get your financial act together is 20 years ago, but the second-best time is right now. I was a late bloomer but I ended up doing really well.

Time vs. money — do you spend money to save time (e.g., cleaning service)? Do you donate your time instead of money? What else does this phrase mean to you?
I am a fan of throwing money at problems.

What are your favorite resources for personal finance?
I was a big fan of Mary Hunt's Debt-Proof Living back in the '90s/early 2000s. She helped me get out of that big debt.

What advice would you give your younger self about personal finance?
Don't get into credit card debt!

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