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Finally in Charge

Marla McCune

I WAS A CAREFREE girl who grew up on a farm in Washington state. There never seemed to be any money worries. I had the freedom to roam 2,000 acres on my motorbike. The woods were my sanctuary. My father had a plane and landing strip in the field next to our house. I was the baby of the family and he was very generous with me. My mother was hard working and believed everything should be earned. She taught me about gardening and about being frugal and resourceful.

I was naturally industrious. In third grade, I was reprimanded for selling plastic molded creepy crawlers, along with fun flowers I’d made, to my fellow schoolmates. I babysat and sold greeting cards around the neighborhood, and started working in a card shop as soon as I could drive.

My education was funded by my parents, but I helped out by working in a bakery while at college. I had my nursing degree by the time I turned age 21. I didn’t know if I’d like nursing, but I figured I could start making money and then map my life out from there. I have always loved the art of negotiation. While in college, I talked my parents into funding a trip to Hawaii. I was able to pay them back quickly because, while home for the summer, I worked at the local hospital.

Surrendering control. When I was age 14, my dangerously rebellious 15-year-old sister had a religious conversion and turned her life around overnight. This seemed so miraculous that I immediately joined the same extremely conservative Christian group, believing it was God’s only true way. It changed my thinking in every way. I no longer trusted my intuition or felt I had a choice, but instead submitted to external authorities, taking guidance from them.

After graduation, I married an unemployed laborer who appeared to convert to my faith. I believed that it was shallow to consider his wild history or employment status to be a red flag. “My love and my job will save him,” I told myself.  Often, it isn’t until many years later that we clearly see the underlying motivations for the choices we make, as well as the folly of our reasoning.

Together, we made financial mistakes such as buying whole-life insurance from my husband’s friend, including policies for the kids, and paying large fees at brokerage firms. We also, against my will, helped support my husband’s parents. His father had a gambling problem, as well as a penchant for various get-rich real estate schemes.

We ended up buying numerous properties from my father-in-law, first 10 acres, then another 10, then their home. We rented out their house, while they moved into a mobile home on our property. Subsequently, we moved into my in-laws’ house and rented out ours, and my in-laws moved in with us. We built several more homes for them and helped support them until they died.

All this led to many real estate deals. My husband had the vision and knowledge. I controlled the budget. I made sure we lived beneath our means and insisted we pay off our bills as rapidly as possible. I was working two jobs. Sometimes, my whole paycheck would go to support my in-laws. I was determined that we would be financially responsible, never finding ourselves dependent on others. We subdivided the land we owned and sold the various parcels. We were able to come out ahead, even after numerous legal disputes.

Along the way, I was furious to learn about the high cost of mortgage borrowing—not something I’d been exposed to growing up. I negotiated with my parents once again, asking to borrow from them. In return, I offered them a higher interest rate than they were getting on their Treasury notes but less than the double-digit rates we were paying on our two home loans. We refinanced with them and thereafter paid extra on the loan every month. By the time I was age 40, we were completely debt-free.

At around age 50, I came to my senses and realized I’d been submitting myself to something that was not, as I had believed, the absolute truth. I had a choice. This meant leaving behind the support network that the church had offered. A few years later, in 2010, my husband and I divorced.

Feeling emotionally insecure, I worked obsessively for a few years, not knowing what to do with an empty nest and no husband. From the divorce settlement, I received two properties, which I sold. One was a development we had started. The other was a condo. In both cases, the parties decided they didn’t need to follow through on the contract they’d signed. I had to hire legal help to get paid.

In 2013, I met the man of my dreams—it is possible—and we quickly married. We were both clear on what we wanted and didn’t want in a relationship. He had three daughters. I had three sons. We both had similar histories. At one point, we had even worked at the same hospital, but we never met. I bought a house, he and his youngest daughter moved in, and we both rented our previous homes. As much as I had reined in my spending when I got divorced, he wanted to live large. We’ve compromised, negotiating what’s most important to each of us.

Expensive advice. In 2016, we were wooed by a financial planner, who promised to help us coordinate our retirement and tax planning. We transferred $1 million from our brokerage accounts to his firm. In the past, I’d been frustrated with financial advisors telling me to get advice from a CPA, while the CPA told me to get advice from my financial planner. This new planner’s holistic approach was appealing.

I read the book he’d written, and asked him many questions and got satisfactory answers. But he blatantly lied. The planner appealed to our desire for safety, outlining how we could retire immediately with an attractive income. But we ended up with a majority of our money in illiquid, non-publicly traded real estate investment trusts (REITs), with the rest in a deferred annuity and mutual funds with very high fees.

I liked the idea of the non-publicly traded REITs. I thought it would be great to have rental properties that delivered income every month, without the hassles of being a landlord, so I was okay with the illiquidity, as long as the investments were producing income. But at this juncture, the REITs have mostly stopped paying income and their values are down. The income was not a 6% to 8% return, as projected, and the payments seem to have come at the expense of our principal.

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The planner soon told us that the fiduciary laws were changing, which required him to charge a 1.5% annual management fee, over and above the mutual fund fees. By then, I was on to him. I moved the mutual funds to another brokerage firm. I also sued. We’ve recovered only a fraction of what we invested. The REIT money is tied up indefinitely, still incurring fees. I kept the annuity. It’s with a reputable company, but I probably wouldn’t make the same choice again.

 I shudder to think of all the others who staked their retirement on his advice and didn’t have a backup plan. Many filed grievances against him. He got off by retiring. The securities firm he worked with took the hit.

Because of all these experiences, I’m now highly suspicious of authority figures. I no longer passively assume others have my best interest at heart. Instead, I’ve tried to educate myself on financial matters—and negotiate better terms when I can.

Testing retirement. In 2017, my husband and I took off most of the year to travel and play. I was pleasantly surprised by how much we saved in federal income taxes during that year and that, even as we spent, our net worth didn’t go down. It gave us a taste for retirement. Now, we often travel internationally, while working far less than before.

We’ve also been preparing our finances for the day when we no longer have any earned income. I love mentoring younger nurses, both in nursing and in the basics of finance, and I plan to continue doing so for as long as I enjoy it. I also continue to contribute the maximum allowed to my 403(b) account. A few years ago, my employer started offering a Roth option in the 403(b). I now direct my income there first, with the goal of maximizing my contributions each year, while living off the savings in our taxable account. I no longer contribute to my traditional IRA. I would rather pay the tax now than worry about what my tax bill might be when I have to start taking required minimum distributions.

In recent years, a big challenge for my husband and me has been health insurance. We no longer work enough to qualify for employer-sponsored care. I turned age 65 last year, so I now have Medicare coverage. But my husband, who is younger, is getting by for a few more years with an inexpensive health share program. It’s a catastrophic coverage plan with a high deductible, which can work well, provided you’re healthy. We could limit our income and qualify for government tax subsidies. But if we did that, I couldn’t continue with my aggressive annual Roth conversions. Our plan is to keep our income just below the IRMAA limits that would raise my Medicare premiums.

Over the past few years, I’ve been studying investing and preparing for retirement, and I find it relaxing. I have various people I go to for advice, while maintaining my need to make final decisions on my own and with an eye to keeping things simple. I’ve always had a fairly high tolerance for risk. But now, with recent market losses, I’m trying to navigate this last stretch in the workforce. We’re switching our investment focus more toward portfolio preservation than growth.

I realize I’ve been lucky in countless ways. We’ve set aside five years of income in certificates of deposit and Treasury bills, all held in our taxable account, which we can access as desired. At age 70, we’ll claim Social Security and start annuity payments, which will be supplemented by our IRA funds and what remains in our taxable account. We hope to have money left over for our children. But our first priority is to make sure we can take care of ourselves, even if we live to a ripe old age.

My husband and I often reflect on a paraphrased quote from the Italian movie, The Great Beauty, “There came a time in life where I stopped doing what I don’t want to do.” Although it was profitable to be landlords, it was also hugely stressful. We don’t want to be landlords anymore and we don’t want more lawsuits. During COVID-19, to get nonpaying tenants out of our last rental property, we downsized and moved into the property ourselves. It’s a low-maintenance, minimal expense oasis for us, one that serves as a home base between adventures. We have a huge garden, water barrels and a greenhouse, and soon we’ll add chickens, so we can be more self-sufficient. We share the produce with neighbors, who help maintain things when we’re gone.

As I write this, I’m on a plane home from Paris. I smile, feeling I’ve finally found a good balance between enjoying the now and planning for the future.

Marla McCune is a registered nurse with a career spanning 45 years. She also loves journaling and outdoor activities, including swimming, photography and gardening.

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G W
G W
4 months ago

Incredible journey. Thank you for sharing.

Over many years, I have spoken with more “financial advisors” regarding our retirement planning than I care to admit. While there are no doubt many excellent advisors, etc., out there, I have found it interesting how few will share what I’ll call their performance data, especially over time (other than just the previous long bull run) – client base count, client retention rate, AUM, investment plan performance, etc. Indeed, data can be manipulated, so we’ve got that going for us as well. There are sources to check for registered advisor/planner customer complaints and business malfeasance, I’m not aware of sources that track the other side of the coin in some way.

I’m finding it very difficult to hand over our life savings to one or two such entities. Geez, I guess I have trust issues!

Marla Mccune
Marla Mccune
4 months ago
Reply to  G W

yup, who cares about your future more than you do?! Thanks for commenting!

Susanna Self
Susanna Self
4 months ago

Glad to hear you have overcome personal and financial obstacles and are in a great position to enjoy your life! I am also in real estate, and am increasingly disenchanted with it. My rentals are money-makers, but the maintenance costs have gone up so much with the pandemic and inflation that it’s not a dependable source of income. I prefer my index funds—-lost cost, low maintenance! Thanks for sharing your story.

Marla Mccune
Marla Mccune
4 months ago
Reply to  Susanna Self

At some point it just is no fun anymore, right?

parkslope
parkslope
4 months ago
Reply to  Susanna Self

I fully understand why many people do not find owning rental properties worth the hassle. However, my rental income has more than kept up with my maintenance costs, which is consistent with the dramatic increase in rents in most places. The increase in property values is also a pleasant antidote to the struggling stock market, although we have no intention of selling. Our situation is also helped by the fact that I don’t mind managing our four properties and I have a dependable handyman. Managing the properties myself also qualifies us for the 20% pass-through tax deduction.

steveark
steveark
4 months ago

I admire your positive outlook, a lot of people with half of those financial and relationship crises would feel like life short changed them. A key to happiness is gratitude and you’ve still got yours. You are not looking at what you lost but at what you have, which is more than enough. You are something special, which is inspirational. Some of us have had virtually no bumps in the road, no significant detours and pretty much awesome relationships in our lives. I don’t think we have as much character or wisdom as those who have overcome adversity. But I’m very grateful to learn difficult lessons vicariously, instead the hard way.

Marla Mccune
Marla Mccune
4 months ago
Reply to  steveark

Thank you! I realized awhile back that most of us can tell a sob story of our life or a success story; we can smile or cry and I would rather smile and attract more laughter! This means a lot to me as my first ever published article!

Jerry Pinkard
Jerry Pinkard
4 months ago

Nice article! Thanks for sharing.

I was the IT director for a large organization and saw lots of vendors peddling their wares. I once told my management team that I assumed they were all lying until they proved otherwise. Some were appalled that I did that, but maybe they have never been burned.

Financial advisers definitely fall into that category as well.

You have done very well despite occasional missteps. We all have them. One of mine was buying REITs too. I was finally able to sell mine at a steep discount but by then, I was paying steep fees just to hold onto to those turkeys.

Marla Mccune
Marla Mccune
4 months ago
Reply to  Jerry Pinkard

Glad you got out of your REITS. I hope I will be able to someday too! Thanks for your comment!

Mary S
Mary S
4 months ago

Since you work with nurses I will mention something that you may or may not know. I retired from a Veterans Medical Center in 2019. ( US Government job). We had many nurses come to the VA in their 50’s because once you have Federal Health Insurance for 5 years ( and you can cover your spouse) you can retire and take that insurance into retirement. At 65 I use my Federal insurance as my secondary insurance to Medicare and don’t need Part D because my medications are covered also. I covered my husband and he will retire at 63 and will be insured under my plan until he turns 65 at which time he will use the federal insurance as his secondary. The Federal plan also gives me an $800 rebate towards my Medicare premiums each year as a perk for keep the plan ( blue cross/blue shield). Anyway , just an idea for anyone, not just nurses, to know about one way to be insured before Medicare starts. Not to mention the other benefits of working for the Federal Government!!

candygirl7
candygirl7
4 months ago
Reply to  Mary S

I have BCBS federal as you do and it’s a godsend . One of the reasons I stayed in the postal service all those years. When my husband and I divorced he lost that coverage… not too smart was it? He also would have gotten half my pension had I become deceased before him and would have kept the benefit of the health coverage. I look at some things now like the gent Steve said above, not what I lost but what I have… and I think I am doing pretty well. Good luck to all and thanks to Marla for sharing her story. Most of us in some ways are a phoenix rising from the ashes. Your attitude is paramount in your success or failures.

Marla Mccune
Marla Mccune
4 months ago
Reply to  Mary S

wow, that’s a great plan and something people should know about when they are choosing employers!

R Quinn
R Quinn
4 months ago

Very interesting journey. You write “Our plan is to keep our income just below the IRMAA limits that would raise my Medicare premiums. I hear many people say that.

 I don’t understand why anyone would deprive themselves of $46,000 in additional income (first IRMAA bracket) to save $816 in annual Part B premium.

parkslope
parkslope
4 months ago
Reply to  R Quinn

The current first-level IRMAA kicks in at $182,001. At the extreme, limiting your MAGI to one dollar less at $182,000 avoids the $1,632 IRMAA charges for a couple ($816*2).

R Quinn
R Quinn
4 months ago
Reply to  parkslope

I think that’s what I said as well, but is it worth avoiding another $46,000 in income before the next IRMAA bracket?

Marla Mccune
Marla Mccune
4 months ago
Reply to  R Quinn

If you are close to either bracket it is worth paying attention to!

Kevin Thompson
Kevin Thompson
4 months ago
Reply to  R Quinn

I don’t believe it’s “depriving themselves of income, what many people are referring to is using more tax free income to satisfy their income needs as to keep them below the irmaa threshold. That’s why Roth conversions and having tax free buckets are important because it allows you to control your taxes in retirement.

Last edited 4 months ago by Kevin Thompson
R Quinn
R Quinn
4 months ago
Reply to  Kevin Thompson

You may be right, but Roth conversion mean taxes were paid when a person may have been in a higher bracket while premiums may have been avoided. I’m not sure there is any way to beat the system.

Kevin Thompson
Kevin Thompson
4 months ago
Reply to  R Quinn

Not necessarily. Some do it while they are working while others do it once they retire. Don’t forget, you don’t actually live on 100% of your income when you take into account FICA, savings, mortgage, etc. most people are actually living on 60-70% of their gross income during working years. So when they get to retirement, we actually fill-up their current income tax bracket bucket via conversion.

As for doing that while working, we consider clients to start using their Roth component of their 401k to create an after tax bucket. Most May see this as reverse tax planning, but tax rates in the future need to be considered being that we are unsure where they will actually be.

multiple buckets is better than just one.

Last edited 4 months ago by Kevin Thompson
Marla Mccune
Marla Mccune
4 months ago
Reply to  R Quinn

The way to beat the system is to convert everything you can to Roth and then live a very long life!

Kevin Thompson
Kevin Thompson
4 months ago
Reply to  Marla Mccune

Let’s just hope congress doesn’t come after Roth. You and I will be on that same flight to DC and fight that tooth and nail. Haha

Kevin Thompson
Kevin Thompson
4 months ago

Incroyable (in my middle school French elective voice). You have been through some trying times that have shaped a wonderful person. As a Certified Financial Planner, I am also dubious of the financial industry. Far too many people sell products for their company’s benefit without regard of the client. It’s really shameful and is the reason I decided to join the industry myself due to the fact I was victimized by a Ponzi scheme while playing in the MLB. I figured, I better join the industry as to not rely on it in the future. Now I legitimately feel like the protector of my clients when they ask me questions such as, should I get WL insurance or just buy term and save. Great story!!! So glad you have found your happiness.

Marla Mccune
Marla Mccune
4 months ago
Reply to  Kevin Thompson

Thanks so much Kevin for your nice comments and answers above. I would trust you as my advisor!

SCao
SCao
4 months ago

Thanks for sharing your life story. It is great to be in charge of our own life. Enjoy your phased retirement!

Marla Mccune
Marla Mccune
4 months ago
Reply to  SCao

Thanks so much, sounds like you’ve taken charge too!

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