Free at 40
by Donna Rosato

February 22, 2008

[Continued, page 2]

STICKING TO THE PLAN

Those early years set the pattern for the next two decades. The Nielsens' goal, vague at first, gradually became more focused: They shifted from simply wanting to retire in comfort one day to wanting to retire early (although they didn't decide just how early until later), to wanting Julie at least to be able to quit as soon as she qualified for her military pension.

Looking back, Julie admits there were times she wanted to abandon their 20-year plan, especially once they became parents. The couple had struggled to have children and were married for six years before IVF helped produce Kayla, then Colin in 1996. Julie desperately wanted to stay home with the babies. By then she had eight years invested in her military career and staying on for another 12 seemed like an eternity. But Todd urged her to hang in, arguing that the kids would still be young enough to need her at home if she held off retiring until she'd served 20 years.

When Annika, a happy surprise, was born in 1998, going off to work every day became even harder for Julie. "It was gut-wrenching to drop her off at day care. They had to peel her off me," she says. A low point came when Annika was three and Julie had been in the Air Force for 14 years. Julie was studying for her master sergeant's exam and would return to the base after dinner and on weekends to study. Promotions were critical to their plan—the higher the rank at retirement, the more lucrative their pensions would be. One morning Julie got a panicked call from Todd saying Annika was missing. The little girl was found a short while later wandering around the base, looking for her mom. "I felt so guilty I wanted to abandon our plan right there," says Julie.

But by then Julie was only six years away from retirement. Talking it over with Todd, she reluctantly agreed not to give up when they were so close to their goal.

FRUGAL LIVING

In 1999, a year after Annika was born, the Nielsens were posted to Scott Air Force Base outside St. Louis. Expecting to be stationed there a few years, they bought their first home for $189,000 in 2000. But the day they closed on the house, Todd and Julie got orders to ship out to Portugal. In 2003 they were transferred again, this time to Germany, then to London in 2004. Todd had always considered staying in the service beyond 20 years. But with the constant moves and two deployments to Iraq (in 2003 and 2006), the Nielsens decided the extra money Todd would earn by serving longer wasn't worth the risks. Their goal sharpened again: When Julie retired at the 20-year mark in 2007, Todd would too.

But the new plan had a hitch. Their portfolio, worth about $200,000 in the late '90s, had lost nearly half its value during the stock market downturn in 2000 and 2001. "I switched into tech stocks at the worst time," says Todd.

So they went into savings overdrive. It helped that Todd had just been promoted to chief master sergeant and gotten a big raise, bringing the couple's combined income to $127,000 a year. They banked Todd's take-home pay (he earned $75,000 a year) and lived off Julie's more modest paycheck. "We probably saved more the last three years before we retired than the previous 15," says Todd. Grocery lists were based on the coupons they clipped. "It became almost like a game to see how much we could save," says Julie. They cooked all their meals at home, shopped at yard sales and bought the kids' clothes at the thrift store on base. By the time they left the Air Force, their retirement nest egg was up to $380,000 and they were confident they could live comfortably on their pensions in low-cost St. Louis.

FRESHMAN RETIREES

Last August the Nielsens finally returned to their house in suburban St. Louis. They call themselves "freshman retirees" and say the motto for this new phase of their life is il dolce far niente—the sweetness of doing nothing. Once a week Todd and Julie go to the café at the local Barnes & Noble after dropping the kids at school. "We have coffee and read the paper while the rest of the world works," says Todd.

But there hasn't been that much down-time. Todd, a three-handicap golfer before his children were born, has yet to play a round. And Julie's crafts table in the basement is covered with boxes. They're fixing up their home after seven years of renting it out, and sorting through countless boxes of belongings that had been in storage. The biggest difficulty has been helping their children acclimate to going to school in the U.S.; they get far more homework than at the British schools they attended overseas. "If we worked, I don't know how we'd get it all done," says Julie.

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The opinions and views expressed in this publication are for general information only and are not necessarily those of Mutual of America Life Insurance Company.

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