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This is the third in a series of interviews with retirees from all walks of life. The goal of the series is to hear from a broad range of retirees about their mistakes and successes to help better prepare mentally and financially for retirement.

“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.”

Warren Buffett

I’m never sure where these interviews will go at the outset, but they always seem to lead somewhere interesting. Today’s interview with Ana; a retired executive, was no different as she provided some great insight as to why people go back to work after retiring.

“The best preparation I have had for this retirement, was my first (unsuccessful) retirement.” – Ana

Highlights include:

  • Why Ana retired twice,
  • Surviving market crashes,
  • What to focus on during the transition to retirement,
  • Why she prefers to manage her own investments instead of the high net-worth firm she used before,
  • Her path to dividend growth investing and some resources she uses, and
  • Advice to her younger self at different stages in life (From age 20 to retirement).

OK let’s jump into the interview…

Retiree Interview: Ana the Retired Executive

DGI&R: What’s your story?

I was born and raised on a small Southern Ontario farm.  My father was a farmer and my mother a school teacher. We always understood that money was a limited resource, but there was always enough for food, clothes, vacations, and treats.  Conversation around the dinner table was of family, crops and teacher stories.  The world of business, finance and investing was never part of our lives.

Farmers didn’t retire, so that whole concept just didn’t exist for my parents.

I knew from a very young age that I would not be living on a farm.  I worked hard at school, went to university and left the farm life forever.

I studied mathematics and business, then entered the workforce during the technology boom of the 80’s.  There were more jobs than there were qualified developers, so moving up and moving on was pretty easy.  I discovered I had the mind and temperament for management and by the time I was 35, I had my first executive position, as a VP.  Over the next 15 years, I worked for several companies, each paying more than the last.  There was always plenty of money and my savings were growing nicely.  At 52 I decided to leave the big city and slow down.

I had about $2MM invested with a ‘high net-worth investment firm’ and the future looked rosy.  That was in 2007, just before the market crash.

The day my investment advisor called and told me not to open my monthly statement was memorable.  He went on to explain that I was quite fortunate to be with his firm because I probably lost less money than if I had been with a less prestigious firm.

The next day I started reading, and a month later I opened a brokerage account and moved all my investments there. I had stumbled upon Derek Foster’s books (AL) and the concept of dividend growth investing and it resonated with me. This was in 2009 when prices were low, dividend yields were high and anxiety was rampant.  I bought all Canadian equities – banks, insurance companies, utilities and telcos.  In the heady days of 2009 / 2010 it was almost impossible to make a bad buy. Since then, I have learned to be much more discerning in picking where my investment dollars are spent and I have built up a dividend income stream to support my retirement.

DGI&R: In preparing for retirement (Financially and mentally), what did you do right and what did you do wrong? What would you have done differently? What is your biggest regret?

The first time I retired, in 2007, the biggest mistake I made was in trusting my ‘high net worth’ investment advisor.  It turns out all he did was turn my high net worth into his high net worth through management fees and frequent trading.

After 2009-2010, the losses in my portfolio were so significant that I decided to go back to work part time as a consultant to shore up my accounts.

Mentally and emotionally, I was fine with retirement.  Actually, I reveled in it.  I traveled, volunteered, basically did all the things I’ve loved doing all my life and, in retirement, had ample time to pursue them even more.

This time around, I have spent the last few years building a solid dividend growth investment portfolio with solid companies; companies that have a 5- to 10-year record of dividend growth.  I have no debt at all.  I know where I spend my money every month and I have been ‘practicing’ living on the amount of income I expect to have when I retire next month.

Because I have invested exclusively in dividend growth companies, I have reasonable confidence that my income will increase every year and inflation won’t be a problem for me in the future.

I also have the comfort of knowing I probably will not outlive my money.

My biggest regret is that I didn’t come to dividend growth investing years earlier.

DGI&R: You mentioned that “After 2009-2010, the losses in my portfolio were so significant that I decided to go back to work part time as a consultant to shore up my accounts.” and later you said, “I had in excess of $1MM invested with a high net worth firm and they managed to lose a very large piece of that in the crash.”. Can you talk about what it was like to go through a major market crash? How did you react, and what have you learned from that experience that will better prepare you for the next crash?

In hindsight, crashes seem to happen overnight.  In reality, they don’t.  A good crash takes a bit of time. When the market started oscillating, the ups and downs were downplayed by the media and the ‘experts’ and, of course, the optimistic investor (me) will assume / hope the market will stabilize and then resume its upward trend. I had spoken with my investment firm several times about the rumors of the mortgage crisis and was assured it was overblown in the news and really not much to worry about.  I had the same conversation with my independent investment adviser and got pretty much the same message. When the big crash happened, I was on a Mediterranean cruise for two weeks with little access to the internet.  I remember watching the news every day and the markets were dropping 200, 300, even 500 points in a day.  My investments were in the hands of a highly regarded high-net-worth investment firm, so I recall being a little worried, yet confident that the firm had taken precautions and was managing my portfolio proactively. Regardless, there was very little I could have done even had I been at home.

When I returned home, I spoke with my investment firm and got the news that my portfolio had lost $450,000 in value while I was on vacation.

That was sobering.  This was the time when I finally understood that I needed to take control of my own investments and financial future.  After all, my investments are more important to me that to anyone else. Within a few days I had opened an account with a discount brokerage and fired the investment firm. Then I started reading about investing.  The big ‘ah-hah’ for me was understanding the difference between investment and speculation.  I was paying the investment firm about $30,000 per year in management and trading fees, so I figured I would be ahead of the game by just not paying them.  When I look back, I cannot believe the number of trades they were executing in my portfolio.  In and out of the same equities month after month.  I think I make about 5 trades per year now, so my trading fees are less than $50.

Today it is hard for me to believe I was so naive and cavalier about my investments.

In preparation for the next bear (and I really hope it comes soon) I have invested in great quality dividend paying and growing companies.  I expect my dividend income to continue and since I have no intention of selling any of these equities, I try not to obsess about the day to day stock prices.  I am more interested in the income stream than the value of the stock these days.  I keep a reserve of cash, so when the crash hits, I will pick up more stock in my target list and keep on collecting dividends.

The big lesson I have learned is that you really need to be in control of your own destiny, as much as possible.  I will hire someone to cut my grass, but will manage my investments myself.

DGI&R: What was your perception of risk before the crash vs. afterward? Did your advisor at the time have an accurate sense of your risk tolerance? What would you have liked to hear from your advisor prior to the crash or in general to better prepare you?

I always had a good sense that I am not terribly risk tolerant.  I have a very clear recollection of the day I met with the investment firm to open my account.  My personal investment advisor was there too, the gentleman who had introduced me to the firm.  They were filling in the KYC form (Know Your Client) that is required by law. I distinctly remember that when I answered the questions about risk, when I was tending to prefer less risky investments or suggested I would like to have an income stream from my portfolio,

those were not the answers they liked and they were steering me to the riskier investment styles.  All done with frowns and smiles.

I expected my personal advisor to offer unbiased advice.  He did not and he decidedly did not want to hear that I expected to live off the income of my portfolio. With the size of my portfolio at that time, I could easily have invested in good quality dividend growth stocks and been retirement ready within a couple of years.

It was a disappointing yet educational experience.

DGI&R: What is the biggest mistake people make leading up to retirement?

I think there might be more than one ‘biggest’ mistake.

I suspect many people overestimate how much money they will need in the early years, and underestimate what they will need as they become less independent. Retirement homes and assisted living facilities are very expensive.

I strongly recommend keeping a record of your spending habits for a year or so before you retire and use that as a base to determine what you will need and be ready to make some trade-offs.

Have a plan for how you will spend your time after retirement.

No matter how much you love your hobby, you probably can’t engage in it every day forever.

Variety is the spice of life.  Sometimes the hobbies we are so crazy about when we are working, have less appeal when they are the primary activities in our life.

DGI&R: What resources did you find the most helpful when planning your retirement? (Websites, Books, People, etc.) What resource had the most profound effect on your life?

The best preparation I have had for this retirement, was my first (unsuccessful) retirement.

It has been my experience over and over again, that I am a ‘hands-on’ learner.  LOL.

Derek Foster’s books (AL) were a wake-up call to me and got me started on the dividend path, though I don’t DRIP.  Tom Connolly’s site has been on my weekly reading list for the past 5 years.  His writing has had the biggest impact on my thinking and his references to articles and books have sent me off on reading and learning sprees regularly.  And, of course, the DGI&R site; I have learned a great deal about valuing companies from the many excellent articles on this site.  And I love the All Stars spreadsheet.

DGI&R: How did you decide it was time to retire and what were you most excited for?

A few things came together to let me know it was time to retire this time.

The first time I retired, I was in my 50’s and working in a very high-stress job.

I believe the biggest mistake I made that time was that I was retiring to get away from a difficult situation rather than retiring to move forward to the next phase.

And for me, it was too soon. After a few months, I missed work.

This time, I’m in my 60’s and find I have a different outlook on life.  My children are in their 30’s and starting families and I am looking forward to having the time to spend with them.

I have recently re-married a wonderful man and we are looking forward to having a great many adventures together – from traveling to renovating our new home, taking road trips to music concerts, exploring our hobbies or whatever takes our fancy.

DGI&R: What were you most worried about (Financially and personally) before retirement and were those worries justified in retirement?

I do worry a little that I might be bored.  I’m not overly fussed about the financial side this time.

DGI&R: What strategies (Financial or otherwise) did you use to make retirement or early retirement happen?

Very simple strategies, nothing new here:

  • I spend less than I make every month;
  • I invest my savings in dividend paying (and growing) equities;
  • I pay off my credit card every month;
  • I save ahead for big expenses so I don’t have to use my LOC.

DGI&R: How did you and different family members deal with the transition financially and personally to retirement? (Money or relationship issues/changes, anxiety/happiness, loss of identity or personal value, depression, etc.) What did you struggle with and what went well? Any tips for readers to help with the transition to retirement? 

I didn’t really have any transition problems, other than those I mentioned earlier with my investment advisor.  And my retirement doesn’t exactly look like the traditional retirement.  I won’t be working outside the home but I have started my own company and with my business partner, we will be running workshops helping others get started with dividend growth investing and preparing financially for retirement.  Stay tuned for news on this as it evolves.

The best advice I can offer is, if it is at all possible, practice retiring.

If you can move to part-time, try working 3 days per week and see how that feels.  Or, if it is financially feasible, try doing something you always wanted to do that didn’t pay enough to live on.

DGI&R: What was it like going back to work after retiring the 1st time and why did you do it? Tell me everything about this experience :).

Well, that was an interesting experience.  I think I explained earlier the why of this question.

Much of my retirement savings were decimated in the 2008 crash and I wanted to have more financial security.

I thought it would be easier to re-enter the workforce in my late 50’s than in my 90’s.  LOL.

I was fortunate in that I had worked off and on with a successful and very smart young entrepreneur for about 15 years prior to my first retirement.  So, when I called and asked if he was looking for some operational help, he was very flexible in structuring a position and contract with me.

It took me a couple of months to get back into the swing of working regular hours and dealing with the loss of freedom to do whatever I wanted when I wanted.  After that, though, it was a wonderful experience.  I have achieved the status of the ‘senior’ in the office and have taken on an unofficial role of mentoring some of the (relatively) younger people in the company.  I love that aspect of it.

As I approach the end of my engagement with this company, I am very happy that some of my colleagues have become personal friends and I am looking forward to continuing those friendships outside the office.

Returning to the work force after retirement certainly wasn’t the end of the world for me. It has been a very positive experience.

DGI&R: I found this old, but relevant publication “Perspectives on Labour and Income” from Stats Canada and wanted to get your thoughts on it as someone who returned to work after retiring. Here is the table I thought was interesting (FYI – It doesn’t add to 100% as the survey respondents could have multiple reasons for returning to work):

All of the reasons for returning to work make perfect sense to me.  In my case, it was a combination of three things:

  • Wanting more financial security as I aged;
  • An interesting opportunity to work with someone I respect very much, and challenging work; and
  • I discovered one day that weekends weren’t particularly special any longer – because every day was a weekend and that told me I was ready to be back in the workforce.

DGI&R: What did your financial situation and investment portfolio look like at different stages of your life? Was there a big change before and after retirement? Any tips for readers?

From the time I started working until about age 40, I was doing the usual things; paying for my house, raising my young family and saving money. At that stage, I knew very little about investing and gave very little thought to retiring so my savings were in mutual funds.  Remember the Wealthy Barber? (AL)

By the time I was 40 I had a respectable amount of money saved and engaged an independent financial advisor.  As it turns out, he wasn’t actually all that independent and the advice he gave me was pretty much what you can read in the Globe every day: save what you can and give your savings to a ‘professional’ to manage.  I had in excess of $1MM invested with a high net worth firm and they managed to lose a very large piece of that in the crash.

In my 50’s I finally took full responsibility for my own financial well-being and started my dividend portfolio.

As I head into this second retirement, it is a gradual transition; as my dividend income has grown, my active income from employment is scaling back.

To repeat myself, if you can find a way to make retirement a gradual transition, I believe that is the way to go.

DGI&R: What is the one piece of advice you would give yourself and what advice would you give to your younger self at:

One piece of advice: Trust your instincts. I had the right ideas about saving and investing when I was quite young, but I let myself be swayed by various people in my life.

Age 20:  Keep doing what you’re doing.  Get a great education.  Get work experience.

Age 30: Buy that house.  Start a life-long saving habit.  Don’t let your husband buy that sports car instead of making a down payment on a house. J

Age 40: Make a serious effort to learn about dividend investing and do it.

Age 50: Keep saving and investing in dividend growth stocks.

Age 60: Enjoy your partner.  Enjoy what you have built.  Spend time with your grown children.  Spend time with your friends. Travel.

Just prior to retiring:  Don’t panic.  It will all work out.

Anything else? (Wisdom or otherwise…) 

I’ve always considered life an adventure.  I have no sense of direction so when my children were young and we were driving somewhere, my son would ask if we were lost and I would tell him, “No, we’re having an adventure.”  That philosophy worked well for me all my life.  Still, there comes a point, somewhere around 60, that you realize you are running out of time to recover from ‘adventures’ and that you actually do have a best-before date.

My advice, then, is to have those adventures early on.  Take the risks when you are young enough to recover if you have to.  But please…

don’t miss the opportunity to do the crazy things.

I could be richer, no question.  I could have had bigger jobs, no doubt.  But what I did have was adventure, fun with my kids, and some great stories to tell my future grandchildren.

Interview Structure

The interviews are conducted with real people by email, and I’ll often change their name to help keep them anonymous. Some of the retiree responses have been edited for grammar and flow, but beyond that, it is in their own words.

Summary

Leading up to retirement is a particularly stressful time as large life changes are contemplated. Hopefully, you learned something from Ana that will reduce this stress and help you on your own retirement journey.

Wanting more financial security after the financial stock market crash, Ana decided to return to the workforce. Having retired twice, Ana provided some great insight as to why people go back to work after retiring and it wasn’t just about money.

“I believe the biggest mistake I made that time was that I was retiring to get away from a difficult situation rather than retiring to move forward to the next phase.” – Ana

Some other highlights from Ana’s interview were:

  • Why Ana retired twice,
  • Surviving market crashes,
  • What to focus on during the transition to retirement,
  • Why she prefers to manage her own investments instead of the high net-worth firm she used before,
  • Her path to dividend growth investing and some resources she uses, and
  • Advice to her younger self at different stages in life (From age 20 to retirement).

If you are a retiree and are interested in being interviewed as part of this series please contact me.

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5 Comments

  1. A very interesting interview. I know several people like Anna who had quite a bit of money and trusted a big company to manage it for them, and they lost almost everything. Like Anna I have a mathematical / engineering background and was also an executive for a large company. I was lucky to have friends who were already on their way to becoming independent through dividend investing and so I got started with it in my 30’s. I retired at 50, and I have always managed my own money. My #1 favourite point from Anna’s interview – if you have a mathematical mind and a business background you can learn dividend investing principles enough to do very well over time. I have been retired for 4 years solely on dividend paying stocks and the strategy has worked just fine. The #2 important point is always have a nice nest egg of cash on hand and never invest more than 90-95% of your portfolio. If you can keep 10% in cash do it, but never go below 5% it is just too risky. The #3 point is never hand your money over to anyone but yourself or they will take it from you and you will be left with nothing.

  2. too many mistakes !

    1. In title she had 2 million = in text is written 1 million
    2. She lost 450.000 in the big crash ( probably October 2008 ) => in few days she open an account with a discount broker => she lost in 2009-2010 so much money and she had to go back to work
    so she lost money too !?
    How much she lost in 2009 and 2010 and why ?

    Why in the article she said : “In the heady days of 2009 / 2010 it was almost impossible to make a bad buy” ?
    So how she lost money and she had to go back to work ?
    3. If she had 2 million $ and she lost 450.000 $ that is a loss of 22.5 %
    A lot of people lost 40-50 % in 2008 so that investment company did well = losing only 22,5 %

    DGI&R: You mentioned that “After 2009-2010, the losses in my portfolio were so significant that I decided to go back to work part time as a consultant to shore up my accounts.”

    So who lost the money and how much ?

    1. Her portfolio value, like everyone else, fluctuates over time.

      1. The $2 million vs. Excess of $1 million statements are from different periods of time in her life which is why they are different.

      2 She stated that her “portfolio had lost $450,000 in value while […] on vacation.”. This is just when she was on vacation, not the whole crash. I assume she would’ve lost more during the whole crash likely closer to the 40-50% like your friends, but this is just a guess.

      When she says “In the heady days of 2009 / 2010 it was almost impossible to make a bad buy” she is referring to buying stocks at historic lows in comparison to today. Everything was cheap back then is the message.

      3. Your math is off as she lost the $450K just on vacation. In all likelihood her total losses from the crash would be much higher.

      DGI&R

  3. ” Tom Connolly’s site has been on my weekly reading list for the past 5 years. His writing has had the biggest impact on my thinking and his references to articles and books have sent me off on reading and learning sprees regularly.”
    We found Tom’s site in 2006 by accident and it seemed someone turned on a Light. His simple approach just made sense. Over the next several years we converted to DG and after continuing to make a few mistakes, finally reduced our portfolio to a select few stocks (now 12) we felt were quality DG stocks. The have a long history and have average current yield and reasonable div growth. Slow but sure.
    Now in our mid 70’s we keep $100k in cash but all our other assets are in the 12 stocks. Whether there is another crash or even extended sideways market worries us not. Our income keeps growing and we only require 35% to offset expenses. The rest get re-invested to keep growing the income.

  4. very sage advice. will have to follow her ideas and invest in dividends. thank you for these informative interviews. seems all are be smart and follow your gut feelings

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