Mindy Jensen: What if you could build a $2 million portfolio without ever earning massive income? Today, we’re talking to someone who recently crossed that milestone after earning a good but not stellar income, saving and investing consistently the boring way, and owning a little bit of real estate. And now at age 54, he is preparing to retire at the end of the year. So how did he do it? And what can the rest of us learn from a simple, consistent approach to building wealth? Hello, hello, hello, and welcome to the BiggerPockets Money Podcast. My name is Mindy Jensen, and with me as always is my loves-achieving-FI-the-boring-way co-host, Scott Trench.
Scott Trench: Thanks, Mindy. That always is the way to Anchorage—I mean, anchor a really good financial story here. So we’re super excited, speaking of Anchorage, to talk to Mike today and hear his awesome money story. Mike, welcome to the BiggerPockets Money Podcast.
Mike: Thanks, glad to be here.
Scott Trench: Awesome. Well, let’s start from the beginning. Can you take us back to about 2001, where I think your money story begins? Or if not, tell us about where you think your money story begins.
Mike: So, 2001, moved to Anchorage, Alaska. I ended up buying and flipping a little condo, ended up adopting a kid. So we ended up with a newborn, and ended up with my first big boy job with access to a 401(k). And, you know, 29 years old, first started investing. That’s kind of where it started.
Mindy Jensen: What took you up to Alaska to begin with? Did you have a job waiting for you, or did you just go up there because it’s cool?
Mike: Well, it was me and my wife, and, you know, we were young and footloose and fancy-free, and we decided to go up and pursue some love and adventure. And we went up there for what we thought would be two years. And twenty-two years later, we ended up moving back to Tennessee. I just fell in love with the place.
Mindy Jensen: It’s gorgeous.
Scott Trench: What was your profession? What was the work you got there at age 29?
Mike: So at the time I was in the HVAC business. I actually was working on tools at the time. Then, of course, as my career progressed, today I’m a construction manager. I manage industrial construction.
Scott Trench: Yeah, what they don’t tell you about the HVAC business is how hot and cold it can get. Anyway, well, I guess mostly hot in that—in Alaska there. But yeah, tell us about how things progressed. So it sounds like you had a 401(k), that things there—what happened with money along the next couple of years?
Mike: So started out, got access to a 401(k), figured out really quickly that I had absolutely no idea what I was doing. You know, back then it was a little bit different—weren’t quite the resources we have today. And I ended up buying a book. It was Smart Couples Finish Rich by David Bach. I don’t remember anything else from the book, but it’s probably the first book I read that actually, you know, taught me how to build wealth, how to save money for the future. It was more than just the nuts and bolts of, you know, don’t go into credit card debt, here’s how you balance your checkbook, that kind of thing. That’s really kind of where it started. So I started saving money there. Career grew, got pretty savvy on the fact that if you’re wanting to build wealth, as your income grows, your savings has to grow along with it. I ended up with a couple of pretty good, amazing job opportunities. Career kind of took off there. Just kept saving money and investing kind of the boring way. And then, actually, I announced my retirement yesterday.
Scott Trench: Oh, well, congrats. Fantastic.
Mindy Jensen: That’s awesome.
Mike: I’ll retire at the end of the year. I’ll be 54.
Scott Trench: Oh, what I would love to do is get into the nuts and bolts of the journey here. So you read this book, and tell us about this first flip, the live-in flip. Was it an intentional live-in flip, or how did that transpire?
Mike: The first flip sort of happened by accident. We were kind of looking for a place to live, and remember, I’m in the HVAC business. So we find this condo. It’s a little bitty place. It’s just barely 500 square feet. It’s been a college rental for about 10 years. It’s a little bit beat up, needs some cosmetic work. But the thing is, it’s electric heat, so it’s extremely expensive to heat in Anchorage, Alaska. So I converted it to gas heat, did it all myself, put in some flooring, put in some paint, tiled the shower, spent probably $1,300, $1,400. And then, of course, from the time we started the flip till the time we finished it, we ended up with an adoption. So, you know, six, eight months later, we’re looking to go to a bigger place now that we’ve got a newborn. We bought it for $28,000 and sold it for $52,000. Pretty happy about that. And that was sort of the first, you know, gosh, there’s a way to make money that’s not just working for a living.
Mindy Jensen: So you said you spent $1,400 fixing up this building. Does that include the gas heat thing? Because how did you take it from electric to gas heat for only $1,400?
Mike: Because I had installed it all myself. The furnace was $900. I did all the labor myself. That’s 2001 pricing, so it’d be considerably higher today.
Mindy Jensen: Yeah, I’m factoring in Alaska taxes. Okay, so wow, it really doesn’t cost that much to go from electric to gas heat. Did you ever consider doing that again? Like, hey, I’m going to get another one of these and try?
Mike: That was fairly stressful. So we decided we didn’t really want to do that again. Like I said, we intended to live there. I mean, at the time we didn’t have—that’s kind of one of the disadvantages when you adopt kids. They tend to happen very quickly, with little warning. So it’s not quite like you get the nine-month runway. We were right in the middle of remodeling this place. We’re kind of living in the construction zone. And then we get the call. And so my wife flies out of state to start the adoption process. I’m working all day and then coming home, and I’m remodeling half the night trying to get this place finished before we bring a newborn home.
Mindy Jensen: That sounds familiar.
Scott Trench: So we have a live-in flip. We’re 29. What’s the next kind of major money move you make over the next couple of years?
Mike: So the next major money move I made is I got a pretty good opportunity to go to work for a fairly large Fortune 500 corporation. My income went up considerably. So at that point I just thought, you know, we’ve been living on—I’ll just use kind of a round number—you know, we’ve been living on $60,000 a year for the past three years, and we’ve done fine with that. Now my income’s up, you know, $90,000 or $100,000. So I just really amped up my savings rate.
Scott Trench: What was the order of operations? Did you—was this all going into the 401(k)? Was it going into the after-tax brokerage, real estate? Where were you deploying the increase in savings?
Mike: So that was all going into the 401(k). Keep in mind, this is probably just about the birth of the Roth IRA. So everything’s going into the 401(k). I came late to the Roth party. I didn’t really start the Roth thing until 2018. And the after-tax brokerage, I was kind of late to that too. I really didn’t start that until 2019.
Mindy Jensen: That’s okay. You started it.
Mike: Oh yeah.
Mindy Jensen: Did you do any more live-in flips?
Mike: We did not. We did invest in our primary residences after that. Did really well on one, did really not well on another one, and the one I was in the longest, you know, kind of middling. I think if I average out the rate of return for all of my real estate investing throughout the last 30 years, probably 3.25%. It’s pretty nominal stuff.
Scott Trench: And that’s mostly living in the property as owner-occupied properties. Is that right?
Mike: That’s right. They’re all owner-occupied. I did have one rental. We had an ADU in our last house we had in Alaska, so I rented it out. It was essentially a garage apartment.
Scott Trench: So kind of like a little mini house hack or something.
Mike: Yeah, exactly. It was one structure and had a one-bedroom apartment over the garage, separate entrance, separate meters. It was set up to be a rental property.
Scott Trench: Walk us through—so we got this new job at the Fortune 500 company, we amp our savings rate. What’s kind of the next inflection point on your journey?
Mike: So started really saving, you know, pretty heavily in the 401(k), really kind of got interested in finance, really enjoyed that quite a bit. Next book I read was probably something by John Bogle. So I really glommed onto the index fund fairly early in my investing journey. I just understood the concept, understood the math, and to this day I’ve never owned anything else. The only single stocks I’ve owned were stock awards by my employer. I pretty much sell them as soon as I’m able and convert it into my investing plan. You know, back then it was S&P 500, almost exclusively. And then a little bit later on, Total US Stock Market Index. Along about 2015, really got into the three-fund portfolio, mainly stocks early on, and then the last five years I’ve sort of increased my bond allocation. Today I’m probably 75/25.
Scott Trench: One of the things I really like about your story, Mike, is that there’s really nothing unusual about the story. I would call it—I think you would agree—a very kind of standard career progression here. You started off in construction. You climbed the ranks over 25 years, and gradually increased your income with a few opportunities that are perhaps common in the construction field to people who show up every day and try hard for a couple of decades. You invested in index funds. You had a handful of primary residences that you made responsible decisions on, but no unremarkable real estate investing story. It worked. You’re now retired early and about to enjoy that benefit for a long time, and life is good. And I think that’s what’s so awesome about what you’re doing here.
Mike: In the personal finance world, particularly in the FIRE community, you hear people say, oh, I was a Google engineer and I made $350K and I lived in a van in Google’s parking lot and I retired at 30. Yeah, that’s a cool story, but it’s completely unrelatable for 99.9% of everyone. I think my salary, once I started at the Fortune 500 corporation and had a management role there, I’m in the mid-hundreds my entire career. I’m in the mid-hundreds today. So it’s, you know, a good, not stellar income, a good savings rate. Didn’t live on rice and beans or in a cardboard box under a bridge, just sort of normal stuff. And it’s just very approachable for people to be able to do that.
Scott Trench: Tell us about your lifestyle during this, right? You said you—I think it’s great that you just didn’t seem to move the goalposts much. But tell us, what was life like living in Alaska for those 22 years and raising your family there?
Mike: Yeah, I mean, pretty typical lifestyle there. We tended to avoid the quote-unquote “Alaska toys.” We had a few of them, but, you know, a lot of times it’s very common, particularly in the community we were in, you go to somebody’s house and they got a whole yard full of stuff with a payment book that rolls—snowmobiles and four-wheelers and boats and all. We tended to avoid that kind of thing. We kind of kept that part of our lifestyle under control. We lived in a house we could afford. We would go out to eat and we’d go on vacation. We keep things sort of reasonable, always focused on living below our means. Probably the one thing I really recall out of the David Bach book was pay yourself first. So the first thing that happens in the paycheck is the 401(k) contribution that gets pulled out before we ever see the money. That was kind of the big thing with the 401(k).
Mindy Jensen: Yeah, I think that a lot of people who aren’t in the same financial position and the early retirement position that you are in—you know, traditional Americans more so than the FIRE community—I think they’re like, well, I’m going to spend what I need to spend, and if there’s anything left over, then I’ll put that into investments or I’ll save that for retirement. And the pay-yourself-first is so powerful. I want to say that to anybody who’s listening who’s just getting their first job: don’t even get used to that income and then try to live on less. Start by putting money into your 401(k) from the very beginning.
Mike: I think the industry has really changed. There’s been some laws the last few years that have really helped that. I compare my son, who’s now 25—I compare it to my experience getting my first quote-unquote “big boy job,” where the HR person does our onboarding. We’re in there, she hands us a form, it’s a paper form, and we’ve got to fill out the 401(k), and what we want, and didn’t know what any of this stuff meant. And we all sit around on coffee break later hoping we had done it right. There was absolutely no guidance from the 401(k) provider or the HR people. Now my son, he onboarded with a company and he signed up for the 401(k) automatically. They’re putting in, you know, 8% of his salary. They’re putting in the match. They’re putting him in a target date fund. They’re setting him up for success, and he doesn’t have to do anything—way different experience than what I had back then.
Mindy Jensen: We’ve talked to people in the past who were like, yeah, and Bob who sat next to me was like, oh, put this much in, you want to be maxing out your 401(k), or you want to be putting a lot of money into your 401(k). And Bob sitting next to them changed their whole financial life, and he didn’t even explain it. He’s just like, you got to put money in the 401(k). And that’s more guidance—I remember going into a corporate job with an HR department and they’re like, here, fill this out. You’re like, well, I know what I’m supposed to do, but the person next to me is like, well, what do I put in here? And I’m like, well, how much do you want to save for retirement? I don’t have any to save for retirement, I need my whole paycheck. I’m like, you really don’t need it all if you don’t get used to it at the beginning. But, you know, back then I wasn’t quite so outgoing.
Scott Trench: Let’s talk about some other items here. I think I know some of the answers to these, but I would love to hear it. Well, tell me, tell us about your relationship with debt across this journey.
Mike: So early on, you know, we had the kind of usual young couple debt. We got very fortunate, didn’t have any student debt. My wife came into our marriage with just a very little bit of student debt. We paid that off pretty much within six months. We had the usual car loans, credit cards, mortgages, that kind of thing. Probably my relationship with debt changed dramatically in 2010. In 2010, my employer at the time decided to just gut my benefits plan. My health insurance went from like $100 a month to like $1,000. Froze my pension, froze my 401(k) contributions or matches—really pretty rough. And then, keep in mind, this is the tail end of the global financial collapse. So I’m sitting here in 2010, the only thing I own that’s gone up in value is the heating oil out in the tank in the yard. It’s getting more expensive every time I fill it up. But everything else is down. We’re probably underwater on the house. And at that time, I just said, you know, I’ve had enough of consumer debt, period. We’d pretty much conquered the credit card thing by then. But at that point, I decided that the only debt I was going to be okay with was a mortgage. Got rid of the car payments, got rid of all that.
Mindy Jensen: So you’ve mentioned a couple of different houses, and you lived in Alaska for, I think, 22 years-ish. How many houses—you had the condo, then you moved into a different house—how many houses did you own in those 22 years?
Mike: Four in Alaska and one in Tennessee.
Mindy Jensen: Okay. So why did you move all those four times? Like the first time you needed a bigger space because you had 500 square feet and you were getting a baby. They take up 500 square feet.
Mike: So yeah, just kind of walking through it. So 2001 was the little condo, and we were only in it about a year, and we had to upsize because of, you know, the baby concerns. We bought a slightly bigger townhouse. We liked it. We were there a couple of years. Then I got a job in a different community that was 400 miles away. So sold that house, moved, moved to the interior of Alaska, and lived there until 2019, and then moved to Fairbanks and were there until 2022.
Mindy Jensen: Okay, so these are—you’re not upsizing your house, you’re just moving for a different job?
Mike: Correct.
Mindy Jensen: Okay. And I think that’s really important because until mid-2022, when the Fed raised rates, people would move rather frequently. I don’t like this house anymore, I want a bigger one. Oh, I got a raise, therefore I need a bigger house. I have another kid, therefore I need to buy yet another house. And I’m not shading you with that—I lived in a 400-square-foot condo, and there’s not enough room for two people, let alone throwing a baby in there. So I totally understand that upsizing, but it’s like most people aren’t really thinking about how much it costs to sell a house, how much it costs to buy a house, and they’re just going to go buy another house. And I think if there’s one benefit from having these horrible interest rates that we have right now, which aren’t even horrible, they’re like historical norms—but if there’s one benefit from that, it’s people are stopping this treadmill of, oh, I gotta get a bigger house, a bigger house, a bigger house, which comes with a bigger payment. Like now, if you get a bigger house, it’s probably coming with like a double or triple payment. So people aren’t moving as much.
Mike: You know, and asset prices weren’t quite where they are today relative to income. It was pretty common back then, you know, okay, we were going to buy a house, you know, sort of the average house you would want to afford is maybe two and a half to three times your income. In the community I’m in right now, the median house price is seven times what the median income is. That’s pretty unaffordable.
Mindy Jensen: That is pretty unaffordable.
Mike: If you’re living on the local economy, for sure.
Mindy Jensen: Yeah.
Scott Trench: So tell us about how your portfolio evolved across this time, right? You said you found Jack Bogle early on, so index funds, and then you said you graduated or evolved to a 3-fund portfolio. Can you explain what that is and when these portfolio transitions happened?
Mike: So early on, looking at my 401(k), it was a lot of actively managed mutual funds, but there was an S&P 500 index fund. It was the only index fund in the whole batch. So yeah, I started investing in that. Then when I changed employers, we had a little bit better options. We had an international index, we had a bond index. And by then I’d read Taylor Larimore’s Bogleheads’ Guide to the Three-Fund Portfolio — the most unimaginatively named book in the world, but totally accurate. Really understood that concept. So I built a 3-fund portfolio. Didn’t have a lot of bond exposure, maybe 10%. As I’m getting closer and closer to retirement, I’m upping that bond percentage. And today I really don’t have a quote unquote 3-fund portfolio. I’m in a lot of target date funds. I know Uncle Jack would be very upset by that, but there’s a reason for that. One, I think when you see people who have these extremely complicated portfolios, it takes them at their best to manage. And now that I’m a little older and I’ve dealt with some situations with friends where a spouse dies, you’ve got to have a portfolio that your spouse can manage at their worst. So for me, that’s a target date fund. If something happens to me, if I unfortunately get hit by a bus, I’ve got a cash position so my wife doesn’t have to make any decisions for a year. And then once she does make those decisions, they’re pretty simple. It’s 5 accounts, it’s 3 different kinds of investments, and they all have a job.
Scott Trench: Tell us about the balance of these accounts in terms of tax-deferred, brokerage, and Roth. And did anything — was that engineered, or did it kind of happen? How did you come about this balance?
Mike: It kind of happened a little bit by accident, not entirely so. Like I said, I came a little late to the Roth party, so I started investing into Roth IRAs in 2018. The brokerage account happened when I sold a house and took quite a bit of gains out of that. So I put that into a taxable brokerage account. By then I had really gotten very, very interested in early retirement, and my account balances were like, yeah, this is going to work, I can definitely retire in a few years. So that tax location built out a little bit on accident. I really wish I’d invested in Roth earlier than I did. So right now I’m probably 80% traditional, probably 15% brokerage, and probably 5% Roth.
Mindy Jensen: Okay, so how do you plan on funding your life from 54 to 59 and a half, when you can start accessing your 401(k) and traditional accounts without paying a penalty? I mean, you can always access them and just pay a 10% penalty, but do you want to pay a 10% penalty? I don’t want to pay a 10% penalty.
Mike: So when I switched employers the last time, I rolled over my 401(k) assets into a rollover IRA. So my plan is I’m going to leave that alone. And my current employer, I’ve built up a 401(k) that I can access through Rule of 55.
Scott Trench: You mean your former employer? Because you retired yesterday.
Mike: Well, I’m working till the end of the year.
Mindy Jensen: Future former employer.
Mike: Future former employer. So I can access that through the Rule of 55. That’s why I’m waiting — it’s pretty tidy. That’s why I’m waiting until the first of next year to formally retire, January 4th. That’s the year I turn 55. So I’ll access that fund. And then I’ve got my brokerage account that I can access and just basically pay capital gains, trying to control, of course, MAGI — trying to control the modified adjusted gross income for ACA purposes, that kind of thing.
Scott Trench: So that’s a great segue here. We have our plan to access the funds, and then we have healthcare costs. Have you mapped those out — what those are likely to be starting January 4th next year, and what your MAGI needs to be? Can you tell us what those numbers are and what you’re thinking?
Mike: So right now in Tennessee, for a family of 2, because I no longer have a dependent, that number is going to be inflation-adjusted, $86,000 a year. You have to stay under that for MAGI. Healthcare cost with that subsidy is going to be $305 a person. Of course, that will adjust in November when new pricing comes out — probably going to be 15% on top of that.
Scott Trench: Awesome. And what’d you say your premiums would be?
Mike: About $305.
Scott Trench: With the tax credits?
Mike: With the tax credits, yes. Without the tax credits, add about $1,600 a month to that.
Scott Trench: I have an estimate here — it can be changing a little bit, but the statewide average for 2 55-year-olds with no children for a Bronze plan next year is $1,700 a month, or $21,200 a year. And then with the premium tax credits, assuming you stay under the cliff there, that $86,000, that gets largely offset — almost entirely offset — because of the way it intersects with the benchmark Silver plan. So it sounds like you’ve already thought that through. And yeah, I think in your case, I would imagine that’s a load-bearing assumption. There would be a difference in when you would be retiring if not for that dynamic.
Mike: I don’t know if there would be a difference in when I’m retiring. It would certainly change what I’m going to do in retirement. We’ve kept our living expenses pretty low. So what we want to spend that first 5 years of retirement — kind of looking at it as the quote unquote go-go years — we have quite a bit of travel planned, that kind of thing. If I were paying full-ride health insurance, that’s probably going to get curtailed a little bit.
Scott Trench: This is fantastic. You just absolutely crushed the game here. And the textbook wasn’t around in 2001 — you largely crushed the textbook entirely here. And your big mistake was not contributing enough to the Roth. That’s a pretty good mistake relative to what we’ve heard here on BiggerPockets Money all this time. But I do think it’s an interesting challenge, I will say, this cliff, right? For those who are listening, if Mike goes over — I think it’s at $85,000, $84,500, somewhere in there.
Mike: In 2027, it’s probably going to be $86,000-something with the inflation adjustment.
Scott Trench: That’s right. Yeah, because this is a next-year problem. And by the way, these health insurance premiums will go up 17% on average across the states before we get to the subsidies. So yes, we hit that number — we must stay under that number, because it’s basically all or nothing in your situation in Tennessee. You either get almost all of the premium refunded, or you get none, basically regardless of your MAGI, as long as it is under that cliff. And that becomes the dominant planning assumption for you for at least next year, maybe for the foreseeable future. And it overrides things like a Roth conversion that we’ve talked about on the show here, or a 72(t) distribution, which you don’t need to do because you’re Rule of 55 here. That’s what we’re talking about. And I think it’s an interesting challenge that, at least until that changes — which I think it’s a good bet it will change at some point in the next 10 years — that’ll be a constraint on accessing the dollars in those tax-deferred accounts. Is that how you see it — the minor but central planning challenge, it sounds like, for you?
Mike: Oh, it’s a significant planning challenge. And if you think about it, if you go over that cliff, it’s probably orders of magnitude over the largest tax bracket you can get into. I mean, you’re talking a huge amount of money just to go $1 over the cliff. It is a significant planning challenge. That’s one of the reasons the brokerage account really, really comes into play. One, only the capital gain counts toward MAGI. And any money you’re sitting on in cash — which I’m sitting on a fair amount of — I can spend that and it doesn’t count at all. It’s just like spending money out of a savings account. Doesn’t count toward MAGI.
Scott Trench: One tip here for folks going through this: definitely, if you are so fortunate as to be able to use a Bronze plan because your health allows for it — this is assuming a healthy household here — but if you can do that, the HSA, most Bronze plans, many Bronze plans are compatible with the HSA, and that HSA contribution directly reduces MAGI. So that’s always a good little tip to think about as one of the first levers to pull to make this just a little easier for that income buffer.
Mike: Just to touch on that a little bit — so with my HSA, I normally fund that at the first of the year. Now in retirement, I’m going to fund that at the last of the year, because if I go over, that gives you kind of a safety valve to say, oh, I’m $20 over, whatever the income cliff — well, now I can just contribute money to the HSA and get it back under that cliff.
Scott Trench: And will you mechanically do your withdrawals or distributions from the retirement assets at the end of the year for the same reason?
Mike: I’m probably going to do them quarterly. A lot of that’s for the same reason. I will have a bonus that’ll get paid out in ’27. So I’m probably going to — when I get that bonus, and I won’t know what it is until March — that’s treated as ordinary income, and I’ll do that in lieu of a withdrawal out of my 401(k).
Scott Trench: I would encourage people to bias a little bit towards backloading those taxable distributions from the tax-deferred accounts into the end of the year, because you never know — like, you don’t want the interest that you forgot about in your savings account, that is taxable, and the interest rate went up over the course of the year because of happy circumstances or whatever, and that pushes you over the ledge. So if it’s going to be close, I always like to bias a lot of those actions towards the last quarter of the year. And that’s also potentially one of those good times to hire an hourly person just for a sanity check on some of those moves at the end of the year. Because we talked to somebody who was so close on this front just yesterday — a household, and they were actually employed, a 4-person household. But yeah, it becomes a huge-stakes planning issue, but it sounds like you’ve really well thought through all this stuff and have a great plan. You’ve accounted for this and are way on top of it.
Mike: It’s pretty interesting. When I was younger and accumulating assets, I used to think, oh, this is kind of important, or this might be a little complicated. Yeah, accumulation has nothing on decumulation for complication. Decumulation is a completely different ballgame. I guess once you go through the accumulation — if you look at things I did in my investing life, I started investing in 2001. That’s the dot-com bust. So you learn a lot of lessons. I’m investing my first dollars into my 401(k), and it’s the dot-com crash — so that was really pretty interesting. Then I’ll go through kind of the messy middle — 2008 happened. I invested all through the lost decade. We didn’t know it was the lost decade at the time, but you just put your head down and keep buying.
Mindy Jensen: Yeah, exactly. Dory said, just keep swimming, just keep swimming — just keep buying, just keep buying.
Scott Trench: Decumulation doesn’t work like that.
Mike: No, it does not. So learning those lessons through the accumulation phase, I think, kind of prepped me. Like in 2020 — by then I’d already been through 3 pretty good-sized downturns. And my friends are freaking out, younger friends. I’m like, oh no, no, just don’t do anything, just stand there. Like in 2008, the people who got through that the best were the people who just did absolutely nothing.
Scott Trench: Isn’t that the Bogleheads’ war cry, right? Don’t just do something, stand there.
Mindy Jensen: Exactly.
Scott Trench: Again, what’s so awesome about your journey here is there’s a textbook, you followed it. There’s effectively no deviation from the core philosophy. And the things you count as “I would have done differently” are sort of a matter of degree — like, oh wait, okay, I would have been more into the Roth earlier on. Love that. I love your rationale for the target date fund. It’s like, past a certain point there’s a cost associated with the simplicity, or how easy that is mentally for you, but it’s there. And it does sound like, despite all of your best efforts to simplify, there is a pretty precise planning exercise required for next year that is unavoidable in managing your income to stay under the cliff to qualify for these subsidies for the health insurance. That’s the one piece that was unavoidable planning complexity that you must go into next year. But that’s pretty manageable — that’s pretty light workload, relatively speaking, to people who are working full-time jobs.
Mindy Jensen: So, Mike, mechanically, how did you go about increasing your bond allocation and growing your cash in preparation for retirement?
Mike: Oh yeah, that’s a good question. So one of the things I did was increase my bond contribution. I didn’t really sell stocks and rebalance, I just increased what I was buying in bonds. I did that for part of it. The cash position came from knowing what my tax situation would be in 2027 when I’m retired. I went ahead and bit the bullet and paid some taxes this year in my current tax bracket, just so I had the cash on hand.
Scott Trench: What does that mean? Does that mean you just didn’t contribute to a 401(k), or that you did some kind of distribution from a traditional account?
Mike: No, I sold some of my taxable investments and now hold those proceeds in cash.
Scott Trench: Got it.
Mindy Jensen: And in terms of annual spending, how much cash are you holding — like 1 year, 2 years, 3 months?
Mike: About 18 months.
Mindy Jensen: Okay.
Mike: I kind of figure a year in spending — I’ve got my ’27 income already in cash, and the 6-month emergency fund.
Mindy Jensen: I love that.
Scott Trench: What multiple of your spending is your financial portfolio at this point?
Mike: 24 times.
Scott Trench: Okay, so 24 times portfolio, 18 months of cash — textbook.
Mindy Jensen: Yep, that’s awesome.
Scott Trench: What is the actual day-to-day of retirement going to look like?
Mike: I’m still figuring that out a little bit. I think that’s really the neat thing about early retirement, or financial independence. One of my friends asked me, what are you going to do now? And I said, well, I guess whatever I want — I’m not sure. We’ve got some trips planned this winter, going down to Texas, spending about a month down there. We just got back from 3 weeks out in Utah — had a ball out in the desert there. And looking at next summer, going to Alaska, probably do a lot of fishing while I’m there, visiting friends that I’ve still got in that community. I’m pretty young, I’m not going to rule out contract work or some part-time seasonal stuff if something particularly interesting shows up.
Scott Trench: They better provide health insurance for you if they do that.
Mike: Yeah, they’ll have to do that.
Scott Trench: Or pay you more than $21,273 after tax.
Mike: The ACA cliff — it does present a pretty thorny planning challenge, and you just gotta plan your way through that. You certainly have to do your research and learn what you’re doing before you go into that. It does make for a complicated playbook.
Scott Trench: Well, awesome. It sounds like everything is wonderful. Was the last 3-week trip to Utah kind of exactly what you were imagining for your early retirement?
Mike: Yeah, my wife actually called that the last PTO. She was like, that’s your last paid time off. And we kind of set it up on purpose — I wanted a lot of time out to think. And I like to joke with people, and it’s not really a joke, I mean it in earnest: retirement planning starts out as a math problem. It’s all dollars and cents and rates of return and accumulation and all that. It ends as a psychology problem. It’s, okay, I can retire. Okay, once I retire, who am I? What do I do? What does my day look like? It really turns into a psychology issue. So we went out to the desert and stared at the stars and had a lot of long conversations about, is this really the right time for the next chapter of life? And it is — we’re ready to try something new.
Scott Trench: I head out to Moab in 2 days. So it sounds like — is that one of the places you hit up?
Mike: Oh yeah, we ended up with a permit for the White Rim Trail. So we spent 3 days backcountry on the White Rim in Canyonlands. Just love that area. Actually, we like that area so much, that’s kind of our annual thing — winter is desert season. So we go out there in the winter.
Mindy Jensen: Yeah, skip it in the summer. I’ve been there in the summer, that’s not a fun trip.
Scott Trench: September and October are like the peak for me, because it’s chilly but not brutally cold.
Mike: September was still pretty hot — it was in the 90s a couple of days. So, you know, for people who’ve lived 22 years in Alaska, the 90s — we don’t thrive in that.
Scott Trench: So that’s why you moved to Tennessee, right?
Mike: Oh, it’s hot and humid here too. So yeah, summer is Alaska season.
Scott Trench: Well, fantastic. It’s just awesome what you’ve done here, right? It’s simple, it’s powerful, it’s effective. There was no elite income year that people can’t fathom. There was no rental property win. There was no business or side hustle in there. There was nothing fancy at all from a financial standpoint that you could say, oh, I can’t do that. It sounds like you showed up to work and tried hard for 25 years, invested according to a very defensible allocation, had some wins and losses along the way, and now are going to enjoy a very well-earned long early retirement. It’s just awesome — that’s exactly what it’s all about.
Mike: I think some of the best advice I got early on from a friend of mine—he’s older, he’s 15 years older than me—he said, “You know, you’re saving and investing.” He goes, “You got to figure out what game you’re playing.” He said, “Most of the financial media is not geared toward the game you’re playing.” He said, “You’re saving for retirement.” He said, “When you watch CNBC or whatever,” he goes, “they’re talking to people trading stocks. Because you’re not trading anything. You’re buying stocks once every two weeks, and you’re doing it year in, year out, market up, market down. It doesn’t matter.” So I think that was really a good piece of advice I got as I figured out what game I was playing very early on, and I was able to just stay focused on that through 25 years.
Scott Trench: It also sounds like the things you enjoy never really cost a tremendous amount of money. They weren’t free necessarily, but it doesn’t sound like you have very expensive passions here. I imagine fishing, as someone who spent a long time in Alaska, is not a particularly expensive hobby. It’s probably very expensive if you are traveling on a prime weekend in summer and live in New York City, but it’s probably not very expensive for someone like yourself who knows where to go, what to do, and who to call in all those areas.
Mike: I guess when you’re doing it, it seems expensive, particularly when you add hunting in on top of that—it does seem fairly expensive. But then when you compare it to what a week at Disney World costs, not even close. I guess one of the things is I’m kind of an introvert by nature. So when you start talking about, “Hey, let’s go on a cruise,” no, I don’t want to go on a cruise. That’s like going to a Walmart on a Saturday afternoon and sailing away in it. It’s like, absolutely not. I don’t want to go to Disney World. If there are people there, I don’t want to be there. So that tends to reduce the cost a little bit.
Scott Trench: I love it. I wish you a fantastic and enjoyable time in your early retirement starting early next year. I hope you get to all these different places and enjoy the outdoors. I hope there are few Walmarts and few cruises in your future. You have very manageable, very containable risks, it seems like, in particular in your situation from where I’m sitting. I think it’s going to be awesome.
Mike: Yeah, I’m looking forward to it. The reality of it is kind of setting in, and we’re really looking forward to this next chapter.
Mindy Jensen: Yeah. Congratulations on your overnight success in just 25 short years.
Scott Trench: Mike, I think I know the answer to this question too, but where can people find out more about you?
Mike: Probably nowhere.
Mindy Jensen: I will say this: if you have a question or a comment for Mike, you can email me and I’ll pass it along. mindy@biggerpocketsmoney.com.
Mike: All right, sounds good.
Mindy Jensen: And Mike, I really appreciate your time today. This is a great story, and I really think you’re going to have an awesome time in retirement. You’re going to get to about April or May and be like, “How did I have time to work? Look at all this stuff I’m doing. I didn’t have time to work before.” And it’s going to be awesome.
Mike: Well, thank you for the opportunity to do this. I kind of think, when I was weighing whether I even wanted to go on this show and share the stuff that I have, the 29-year-old version of me would have loved to have been able to hear from the 54-year-old version of me. And the 40-year-old version of me would have put the 54-year-old version of me on speed dial. Hopefully there’s somebody out there that can benefit and say, “You know what, this works. It’s not flashy, but it works.”
Mindy Jensen: There’s a reason we have you on the show and not the $300,000-a-year Google guy who lives in—
Scott Trench: I would say we’ve had those people on too, and we would love to hear more from Mike, right? If your story is like Mike’s, we want to hear—we would love to hear more stories. And in particular, one of the challenges that comes up a lot is people feel like they’re not ready to share their story if they haven’t had the big income or their position’s not quite set in the way that they want it to be. But no, this is how most people actually achieve great financial outcomes—through what you’ve done here, Mike. And so you’re sitting there thinking, “Hey, all these stories are kind of crazy here.” No, we would love to hear from you. Please reach out and share it. We like to hear the stories that are repeatable, relatable things—no luck, no crazy good fortune happened here. Just the ordinary luck of decades passing while you’re staying invested in the market, and being born in a good time in a general sense from an investing standpoint. That’s what this is all about, I think, to a large degree. And we’d love to hear more stories like that. So please reach out to us at scott@biggerpocketsmoney.com or mindy@biggerpocketsmoney.com. And Mike, thank you for reaching out to us in response to one of these shoutouts.
Mindy Jensen: Yeah, this is a lot of fun, Mike. All right, we will talk to you soon.
Mike: Thank you. Enjoyed it.
Mindy Jensen: All right, Scott, that was Mike. And that was a super fun story. I love these quote-unquote boring investment stories where you are investing consistently over the course of 10, 20, 25 years, and then all of a sudden you’re rich and you can retire early. I was joking that he’s an overnight success in just 25 short years. But that’s how you get to financial independence—you just keep investing.
Scott Trench: Yep, I think it’s fantastic. Like I said on the show, what was special about Mike’s story is that there are a lot of people in this country who have the privilege and capability set to show up and work hard for a decade or three and consistently invest and build wealth according to a tax-advantaged accumulation plan—a couple of houses, life, nothing spectacular, ups and downs of the market. And I just wish him a wonderful, happy early retirement. I think he’s set. I think he’s in great shape. There’s no foolproof plan, there’s no perfectly risk-free plan, but I think this man has followed the playbook, and I think he’s got a very high probability of success.
Mindy Jensen: Scott, I could not agree more. He is going to be successful in his retirement. He’s going to, like I said, wonder when he had time for work. He is going to have so much fun and just be go, go, going. Awesome. Well—
Scott Trench: Should we get out of here, Mindy?
Mindy Jensen: We should. And Scott, you and I know that our listeners sometimes have trouble finding a flat-fee or advice-only, no-AUM advisor who actually understands financial independence. So we have started putting together a list, not only of these professionals but others like tax planners, and you can find these all on our website at biggerpocketsmoney.com/fipro. That’s F-I-P-R-O. All right, Scott, that wraps up this episode of the BiggerPockets Money Podcast. He is Scott Trench. I am Mindy Jensen saying, gotta jet, baguette.
