After 18 years with an investment firm and a banking career before that, Christine Fahlund is finally getting a chance to practice the preaching.
As senior financial planner for T. Rowe Price, Fahlund, 69, has been the company's public face for retirement planning services and has collaborated on its retirement-services offerings as about 78 million baby boomers follow her into retirement.
She and her husband, G. Gregory Fahlund, who is retired, have bought a recreational vehicle, and she will retire in June.
After many years spent thinking about retirement for clients, Fahlund talked about planning her own career exit:
Question: How did you know it was time to go?
Answer: I really had been practicing retirement throughout my 60s, both emotionally and financially. During that time I would say we were in pretty good shape financially, but emotionally, I was not ready to leave. My husband was fine with whatever I wanted to do and wasn't nagging or pushing me to go, so I had the pleasure of deciding on my own terms. Then I lost several friends last year, one of them very suddenly at the age of 48. She never got the opportunity to retire, and I started to think that if it was within my grasp, I should take advantage.
Q: You've advised clients to get the big retirement expenses - like major trips - out of the way while they're still working, to avoid major cash outflows early in retirement. Did you do that yourself?
A: We did just go on safari in South Africa, but at the time I booked the trip, I had no idea I'd be retiring this year.
Q: What are your plans?
A: We have sons on both coasts, so we'll spend some time visiting them. And I've been working on a biography of Lena Stoiber, who was my great-great-aunt by marriage. When my husband was working at Vassar in the 1970s, he found a book about the women's movement that had a picture of her, and it was the only one I had seen. She and her second husband struck it rich in the silver mines and they were flamboyantly wealthy. She was always buying and selling properties, and a lot was written about her, but no biographies. I started putting the pieces together, and now I have 12 file drawers full.
Q: What about the nest egg? How did you know you have enough?
A: Knowing all that I know, I was concerned that I would be overanxious about that. I don't know what snapped inside, but I'm much more calm about it now. We hit "our number" about seven years ago, where projected Social Security plus an initial 4 percent portfolio withdrawal rate would equal something in the neighborhood of 75 percent of current salary. And if you wait until age 70 to start withdrawals, you can withdraw 5 percent. So we've been able to play a bit [by suspending retirement contributions and using the money for travel and other luxuries] while continuing to work while the nest egg compounds.
Q: Have you begun collecting Social Security?
A: We began some spousal benefits at full retirement age. We both decided to wait until age 70 to collect our delayed retirement credits.
Q: Do you have long-term care insurance?
A: Yes. We bought it in our 50s. To afford the premium, we agreed to a 365-day elimination period [payments won't kick in until 365 days after the disability], so we'll take a hit for 12 months if we need it. And if we need to, we could stop the inflation increases to lower the premium more.
Q: How about annuities?
A: We have them from my husband's career.
Q: How much risk is in the rest of your portfolio?
A: I've always been on the aggressive end of our recommendations. I believe equities will protect me from running out of money, and I personally feel the highest risk is [inflation], but I understand some people are just too squeamish to have a lot of stocks. I've always invested in mutual funds and will want diversification into international and emerging markets as well as bonds. It's going to be a well-diversified portfolio.