In this episode, we sit down with Scott Darling to discuss his 35-year career at ExxonMobil, the Retire in 5 Yammer group for ExxonMobil employees approaching retirement, and how Scott worked through his retirement readiness.

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Welcome back to another episode of FPO CEO Angie Financial Planner for Oil and Gas Professionals. This week on the podcast, we are visiting with Scott Darling on the idea of retire and five and all things retirement planning.

Scott, thank you for joining us on the podcast.

Yeah, thanks, Jared. Been looking forward to this.

Yeah, we're really excited to have you. I know you've recently retired, so this is all kind of fresh on your mind. So you know you have a, you're a career, super major employee, right?

You worked at ExxonMobil for over 34 years. Your last role, you've had a bunch of roles, but you last, you know, your ultimate role was serving as a CFO of ExxonMobil's low carbon solutions.

And Scott, I thought a good place to start this conversation to kind of intro you. I definitely want you to talk about your career, but you had this awesome post on LinkedIn that I just want to share.

I'm just going to read through it as kind of like an introduction of you and you posted. It was numerical reflections on my career from the vantage point of my last day. You worked for one company.

You worked in three cities, four different businesses, eight locations, 18 jobs, 22 supervisors, almost 35 years, 63 countries, 417 paychecks, 805 vacation days, 7,995 work days, 84,000 hours, not including hours worked at home, 403,000 miles, commuted, lots of friends, made countless memories, no regrets. Man, I love. That is such an awesome way to just kind of summarize it. I guess my two questions are like, related to that.

How long did it take you to aggregate all that information and had you been keeping it along the way, knowing that post was coming someday? And then are you at all surprised with how much you did and that your whole career was spent with one employer?

Yeah, no, I did not expect to work for one employer. But that came. I retired last year on April Fool's Day. On April 1, I thought it was a fitting day to retire.

And that post came as I was trying to reflect on what I wanted to say to people.

And there's this tradition in ExxonMobil where people write the proverbial email out to their entire email list and say, this is reflections on my career. And everyone knows me as a numbers guy.

So I started thinking about numbers and I thought, well, what can I say about quantifying in some way the career that I had starting with, like you said, one. One career, one company. And so that actually came to me at two in the morning as I was on my, on my very last day.

And I was just thinking through it and I got up out of bed and I tallied all those numbers together and posted on LinkedIn that night. So, so no, I did not. I did not.

I did not keep track of it as I went, other than a few things like, you know, the number of jobs I had and the number of supervisors I had and stuff like that.

But when you think about a career, you know, one of the things I've said to a lot of people is I think very few people actually end up doing what they study in college. And I was no exception to that. I studied petroleum engineering, you know, from the Colorado School of Mines, because I was interested in stem.

And I also thought it would be a great place to make some money because petroleum engineering paid a lot when I got out of undergrad. And.

But the reality is my career took none of the path that I thought it would take in the course of, you know, working, including the idea that, that, you know, even my dad didn't work for only one company and, you know, from his generation, that was kind of the thing to do. So.

Yeah, and I think, like, it's interesting because, like, as you gave a numerical reflect, like, when you say somebody works for one company, it seems like, like you're doing one thing.

But the interesting thing about, like, ExxonMobil, and I'd love for you to, like, talk about maybe some of the stops along the way is it probably felt like new companies, right?

Like, as you worked in different divisions and segments of the business and because of, like, the size and scope and the diversity of revenue base of a company like ExxonMobil, like, it probably didn't feel as monotonous as I worked on the assembly line or I worked in this really tiny office doing, doing the same task for 10, for, you know, for decades.

Yeah, yeah, for sure. And that's really one of the selling points.

One of the things that kept me at ExxonMobil for 35 years was, was that I, I worked for a lot of different groups, a lot of different people with a lot of different people, and frankly, in a number of different companies, you know, ExxonMobil is a large entity. And it's got a lot of different kinds of businesses, all related to oil and gas.

But I started out in the downstream, always in a financial capacity, but I worked in supply and trading.

I worked in our corporate environment, I worked in our chemical company, I worked for our upstream company 20 years after I got a petroleum engineering degree. So you didn't want me drilling any wells at the time, but nevertheless, I worked in upstream.

And then when we formed our Low Carbon solutions group about what, four or five years ago, I had that, right. Mix of commercial and finance experience that they were looking for someone to start up a new company effectively within ExxonMobil.

And for a while, my claim to fame was that I was the only individual out of the 68,000 people in ExxonMobil that had actually worked in all four businesses that we had, because Low Carbon Solutions at the time only had five people. And now we've grown to 3, 400 people, and the business keeps growing.

But the beauty of a finance career in a company like ExxonMobil, and you know, that's capital intensive, is that, is that, you know, you got to mix the engineering with finance and all the, all the business decisions that go with that, and it gives the opportunity to work in those different business environments and different opportunities and frankly, if you want to, in different countries and cultures as well, all within the umbrella of, you know, the sweat equity, if you will, that you build within one company.

Yeah, that's the interesting thing is, like, younger generations are much more mobile. Like, the idea of being a career person for decades is kind of a. It feels like a relic of, of the past. Right.

And so, like, as that changes, how do we, you know, like, yeah, you could jump and get an increase in responsibility or pay or compensation, but your relational equity, you're building off of a base of zero. So, like, there's, you know, that's, it's like a phantom cost. It's not easily observed, but I definitely think it matters.

Yeah. And the reality is, you know, I looked at different points in my career at outside opportunities, testing the market, seeing what was possible.

And even, you know, folks on my staff, I told them, you know, I love you to work for ExxonMobil, but every, you know, in your fifth year, in your 10th year, in your 20th year, you should be looking to see if this is what you still want and, you know, convince yourself that the company that you're working for is the company that you want to continue to work for and that it's doing right for you. And that it's got the right kinds of opportunities that you're looking for and that your market, you know, isn't better elsewhere.

And I tested that, but the reality is, you know, ExxonMobil kept throwing opportunities at me and, and I had 18 jobs within a 35 year career, which meant I was moving jobs every couple years. And, and that's exciting.

It kept things fresh and, but like I said, I, I kept, I continued to work with people, you know, our, our paths crossed over the years again and again.

And, and so, you know, it's, it's, it's a great comfort to, to not have to reinvent yourself socially within your work environment all the time as well.

Absolutely. So I want to talk a little more about, you know, your kind of experience.

You, you exist at this inner intersection of like petroleum engineering, kind of oil and gas and finance. Right. Like you, eventually you got an MBA in finance from ut, you know, finance a bunch of different finance related roles within your tenure.

And we'll talk about the retire in five yammer and just kind of personal finance stuff.

I'm curious, like did that interest, you know, did that predate or post date petroleum engineering and, or did you kind of always have that and what led you to ignore that if you did have the, if the finance passion?

Yeah, sometimes I wish I hadn't ignored it because I think I might have been, you know, I went into finance, but I actually think I might have enjoyed a career like what you're doing in financial planning as well. Because I really, I really like that we talk about it later, but I can remember when I was five years old telling my parents I wanted to be a banker.

You know, I didn't want to be, I didn't want to be a fireman or a policeman or whatever. I like counting money.

I thought it was fun and I like keeping track of things and it was my early planning days and, and so, you know, I always kind of had a intuitive feel for finance and what I learned was finance over time. But when I was in high school and you really don't know what you want to do in high school. When I was in high school I was good at math.

I was, you know, I was interested in the sciences. My dad was a geologist. So I grew up in the oil and gas industry, if you will.

I think in time, in History, because of the industry was so depressed at the time.

And during my time at the Colorado School of Mines, I kind of figured out that there were things that I was more interested in than just strictly engineering and that typical technical path. I took a class from Frank Stermal. At the time, it was financial decision making in an engineering career.

And it was all my introduction to NPV and things like that. And I was much better at that than I was at engineering. And so I got an MBA straight through. I wouldn't advise that to anyone.

I don't even think you can do it anymore.

But I got an MBA straight through from the University of Texas and with the intent of working in the oil and gas industry, but on the finance side, and I went to work for Mobile. And then, as I said, I transitioned through all those different businesses that Mobile had.

And then when Dexa Mobile merged, I had a bigger envelope to work with, so. But my interest in finance goes kind of way back. And. And the energy industry is a great place for that because it's.

It's capital intense, which means you got to spend a lot of money, which means you got to find a lot of money. And so a big portion of my career was focused on structured financing, doing really big financings, like, you know, multi billion.

Tens of billions of dollars of debt that we raised on, on behalf of our partners and us to finance really big projects around the world. And that took me around the world, and it was. That was a fascinating place to be. So, like, that intersection you said of.

Of, you know, oil and gas and finance comes right there because it's. It's all a collaborative effort between, you know, engineers, business people, esg, all those. All those kinds of things along with finance.

Yeah, it really is like, you know, having that, like, holistic experience is, you know, I just think so. So valuable. Right. Because you just, you learn so much.

And like, you know, for me, for example, like, I studied finance, and it kind of sounds similar to why you did petroleum engineering.

Not because I necessarily woke up really excited about finance, but it seemed to leave more doors open because I think even at my, like, even in college age, I knew, I, you know, I knew that if I wanted to, let's say, do marketing, it'd be easier to go from finance to marketing than it would to be for marketing to finance. Right.

So just having like a, you know, a baseline amount of like, numerical competence, I think is just, you know, something that'll serve you, like getting a more technical degree, even if you end up doing softer skills. Stuff I think is a, is a really good way to go. I've always been kind of really blown away by oil and gas capex.

It's so fascinating because like, it's so high, like in like the financial engineering involved to execute these big projects is so big, but also like the delayed gratification is so substantial. Right.

Like if you're going to build a new plant or a new pipeline, like the infrastructure to do that and like when, when the cost is deployed to, when you receive the. Receive any economic benefit from that. Economic environments can be drastically different.

So it's just really interesting, like thinking through all of the different iterations. And I'm sure there was just a really robust modeling process.

But even with that, because of how delayed the payoff is, it's, you know, it's really kind of your best guess at what you think the future is going to be like. And hopefully having a margin of safety where, you know, your breakeven rates are pretty compelling.

Yeah. It means that your principles have to be really strong, especially your financial principles.

But everything that you do, the way that you invest, and I think this is one of the strengths of ExxonMobil is, you know, we didn't necessarily blaze any new paths, but we were really good at optimizing the path that we were on and frankly, really good, except for a few notable exceptions, at avoiding the bad mistakes that so many companies in our industry make. And that's what causes that cyclicality.

I think Exxon was really strong and still, and continues to be really strong at investing through the cycle and not investing so much on the basis of a projection, but on the basis of, of principles and how we, you know, how we want to operate.

Yeah, that makes a ton of sense. So one of the things about ExxonMobil is they had a yammer, which from my understanding, I've never been on it.

It seems like a Slack equivalent, like an internal kind of messaging platform.

So on that platform there's a, there's like a retire in five group, which is basically my guess, just, you know, just this place where people can go to ask questions. In light of who I know you to be and who you've described yourself to be, you were an active participant in that group.

I'd love to hear a little more about like, like that, what that being in that was like and like how helpful that was to you, how you might maybe have helped others in there and kind of like, who are the people in there and what are they talking about?

Yeah, yeah. So it, yeah, it Wasn't it was a yammer group, which was, I think a somewhat outdated technology that's now been replaced by, by Facebook group.

So there's still, you know, a couple thousand people in the ExxonMobil Retire in 5 Facebook group. And then there's a, there's one for some unofficial groups in Facebook for, for various retiree groups around the country from the company.

But, but you know, what I'd say is first of all, ExxonMobil does a pretty good job of helping people along in the retirement process or the financial planning process. They, they sponsor a set of trainings at early career, mid career and late career that help you think about what you need to be thinking about.

And doing what you need to be doing doesn't replace being active in your own financial planning and having a financial advisor. But at least it helps people understand the specific benefits of ExxonMobil.

But what these Facebook groups now do is it allows people to come in and ask really specific questions to people that, who have just done it.

So the idea of retiring 5 if your company doesn't have it, I think they, you know, talking to listeners, they should create one because it's, it's a valuable group of, of folks that can share information.

And Retirement 5 is for people that are, you know, in theory within about five years of retirement, where you're starting to really think about the logistics of it and what does all that mean? And, and so the biggest questions are, you know, specifically logistics and how do I get this done?

You know, it's not so obvious in a big company with, you know, lots of policies and things, you know, how do, what are the order that I need to do things in? Where, where are the hang ups, what do I need to bring with me, all that kind of stuff. What do I need to know? We have a pension, okay, It's a rarity.

But you know, oil and gas, they have pensions. ExxonMobil has a pension.

And gigantic decisions that, you know, need to be made at the point of retirement about whether you're going to take just an annuity or a lump sum as an example. So those kinds of, it gives people the opportunity to ask those questions.

And it's amazing the perspectives that you get from people and you realize that financial decisions are not just about the math, right? They're about behaviors, they're about choices. And it's all very, very personal.

And then there's other things like NUAs and rollovers and Roth conversions and trusts and giving every topic that you can imagine people ping and Say, has anyone thought about this? And then assignment.

I love that too because like it's a, it's a comparable peer group.

Like I think if you just ask the general public, it's just like I would say oil and gas, like retirees have a very unique, you know, homogenous set of circumstances, but unique relative to the rest of the population. Right. The match historically has just been remarkable.

The contribution to, you know, defined benefit pension plan, you know, your mix of pre tax to Roth or after tax assets is, is really, you know, it's kind of, it's very skewed one way and there's some opportunities and kind of some planning complexity that that comes with that. But being able to talk to a peer group I think is really helpful.

It's wild because, you know, as I think about the next generation, I think one of the interesting things about compensation is like the number of variables and decisions you have to make before retire, before retiring. 5 has like increased. Right.

So like if you think about, you know, if your two primary savings vehicles are 401k and a pension, the only decision you can really make is how much am I going to contribute to the 401k and when do I leave and what's the value of my pension?

You know, but, but as we, as, as businesses start to migrate towards lower pensions or less, you know, less defined benefit and more equity compensation, there's so many more decisions in TR year. Do I hold it? When does it vest with the taxation, investing, Is it an rsu, is it a stock option?

So it is kind of wild how, you know, as, as I think executive compensation in general gets more complex. You know, it's almost like you need to retire in 20 group because, you know, with how many more moving pieces in terms of compensation.

And it makes sense that companies are doing this to kind of get that liability. You know, defined benefit plan is a huge liability that just sits on their balance sheet for a while.

So I get that, I get the migration, but it has kind of made planning more interesting. As you look at the people coming up now versus the number of variables, you know, that might have existed 20 years ago.

Yeah, I get that. Trying to just help my kid, four kids, and trying to help my kids through, you know, coach them through that whole process.

They're between 22 and 32 and it's kind of like what, what do we need to be paying attention to? And they, and they grew up listening to me talk about finance at home.

We know we were pretty open family about where we sat and Things like that and what I was thinking about. But, but when you're off on your own in your, in your 30s and even 40s, you know, it's, how do you, how do you think through all those things?

They, they, the, the knowledge base. What's interesting about a, you know, a crowdsourcing for information group is, is there's a lot of, there's a lot of knowledge out there.

There's a lot of misinformation as well. And so you got to be kind of be careful about, you know, and expand that to the Internet.

You got to be careful about what you read and what you hear and, and everything that you read in here is not accurate, even from some so called experts.

Yeah, intensity doesn't equate to competence. The loudest voice isn't necessarily the smartest one. And usually the inverse, the inverse of that could be true.

I would love for you to just, you know, based on your kind of fly on the wall and just chiming in observation, what would you say?

Are there any like, common misconceptions or things where it was like man, this piece of the, you know, whether it's hey, pension and interest rates really misunderstood or, or like hey, this benefit is, isn't even talked about but should be. Are there anything like misconceptions or things you noticed as you were participating in that, that kind of caught your eye?

Well, certainly the, you know, even not understanding what happens with a, with an IRA, with a, with a 401k, the concept of RMD and what that means from a tax taxable position as you get older and the effect that that may have on your, on your taxable income as you get older is, is an example of that. But the basic math of, of equating an annuity with a lump sum is really poorly misunderstood.

And, and I'm not surprised it's complex math when you, when you work it all out. But the idea that the annuity, there's no embedded advantage between an annuity from a, from a retirement plan and the pen and a lump sum pension.

But everyone takes a view that, oh well, interest rates are high now, so it must be, you know, the, the lump sum must be worse or, or vice versa. So there's just, that's an area where it does get tricky and then you get into more complicated topics that not everyone participates in.

For example, you know, if you don't, if you don't participate in executive comp in a, in an oil and gas major, there's, there's a whole side of, of of that equity participation in stock and what that means and what that's going to, how that's going to affect your financial planning even after you retire. Because, you know, those RSUs or those options, they don't vest in the same way that your, your salary does, obviously.

So things like that, it, unless you've thought about it a lot and kind of modeled it out, I can understand where people really don't have a great handle on where, how that all fits together.

Yeah. And the other crazy thing is like, how it all fits in concert with everything else. Right.

Like, it's interesting because you could do the math to figure out the complex math of figuring out, hey, pension versus lump sum on a net present value basis. But if, like, if I take the annuity, it's created less income flexibility in my plan, which could potentially be a liability.

Like, as we think about optimizing lifetime tax rate, having volatility in income can actually be an asset because it creates planning opportunities. But if you have a baseline amount of income that's, you know, you have a tax floor essentially because that income is there.

So, you know, it's like, it's hard, it's hard in and of itself. But then if you actually take a step back and think about all the other things it touches, it adds a whole nother layer of complexity. City.

Yeah. Yeah.

So question for you, like, is, you know, like, as you were looking at these people who might have been prepared unprepared, you know, how, how did you think about like retirement preparedness?

Like, like, you know, were you, was there like a number where it's like, hey, I, I, I think I'm prepared, or hey, I've been in retire in five for three years, so I think I have all the tools in my belt. You know, what, what led you to kind of decide, is it a number? Was it a feeling? Was it a, hey, I've satisfied these four things at work?

And then kind of like tangentially to that, like, you know, maybe this is kind of connected to your definition of success.

So I'd love for you to talk about coming to make that decision, how you viewed success in that, and kind of define that as you were thinking through all this in your own life.

So how did I know that I was ready to retire? That was like the easiest decision I've ever had. It was kind of funny.

It was obvious when it, when it came about, but it didn't come without a lot with, without a lot of forethought. First of all, I had been a financial Planner all my life from a personal perspective, and we can talk more about that.

You're aware of some of the things that I've taken to the extreme when it comes to financial planning, but I always had in my head that there were two numbers out there. I had a dollar number in my head that seemed about right, and it was kind of like a proxy for the lifestyle I wanted to have in retirement.

And that moved. Things changed in my life. You know, it got higher as, as I made more money and my career was more successful.

And I thought, okay, well, maybe my number's higher than it was. But the reality was I had an age that I didn't, I didn't like. Work wasn't my passion. There were other things in life that I like doing besides work.

I enjoyed my job, I enjoyed my career. I loved my career, but I don't miss it. And I didn't want to ever work past 60. And at ExxonMobil, you can retire at 55.

And in my 40s, I was convinced that my, my number was 55, that I was going to go as soon as, as I could take the pension that was available to me at the time. And I was going to do something different. I was going to change careers.

I haven't woken up, I'm not working, and I haven't woken up a day since I retired and said, gee, I wish I was back working again. I've got plenty of things I want to do. So it turns out that that wasn't the plan.

And as, as things, as, as I got new opportunities at work, that age also crept around.

But, but I guess what I'm trying to say is that, you know, people can put numbers out there, whether it be age or dollar figures, and my advice to them would be, yeah, yeah, have a general idea what that might look like. But, you know, take life flexibly and, and figure out as, as things change, be adjustable, you know. You asked, what does it take to be successful?

I, I have maybe a different answer than a lot of people would probably have for that. And maybe it comes if you'd asked me, what does it take to be successful?

When I was in my 20s and 30s and even 40s, I would have said, you know, it's all about talent and it's a little bit about, you know, your, how hard you work. And I'll call that discipline.

Looking back on it now, I think about all the things that fell my way and all the things that, that did not fall my way but didn't matter.

I almost think that 50% of where you get to in your career is, is due to luck, good luck at the right time and avoiding bad luck at the right time as well.

Being in the right place at the right time, meeting the right people, having the right person speak, you know, the right things about you in the right, meaning the aisle, you can put yourself, you can do the right things to put yourself in the, in the right positions. But, but there's a lot of luck involved and we shouldn't dismiss that. And then after that, it's kind of like equal parts of, of talent.

You know, what, what knowledge do I have, what experience do I have? What's my intellectual curiosity? Behaviors Are are. I, I think as you get older, as I got older, I noticed that behaviors are more and more important.

So finding that kind of right balance between, you know, collaborating with people and, and, and working with people and also being a little bit stubborn about, you know, holding the line when you thought you were right. And then discipline, it's just sticking with it. You know, it takes time. And a lot of things I think I just named off are, are applicable.

You know, moving to retirement, to, to how you invest as well. If you, if you retire at the wrong time, if, if you don't happen to, you know, you're, you're right, your earning years aren't, aren't on.

When the markets are doing well, there's a lot control that I, I'll chalk up to luck. And then after that it's, you know, what talent can you provide, what, what behavior do you have and how long can you last? So I'm not 100.

Sure I answered your question, but.

No, no, no, it's good. There's a few things, few things I want to talk like, I want to touch on. There were.

I love that like, so Carl Richards, he's a, he's right for a column for the New York Times. And he's like, he draws these sketches about financial concepts. One of his ideas that I love is called Lux surface area.

And essentially what you talked about, hey, luck, is it going to play a disproportional impact in my career?

But there are things I can do to increase luck service surface area, whether it's being ethical, whether it's going above and beyond for the people that need it, or, you know, just using your relationship, like using your lunches to network and build relationships with your peers. Right.

Like, you know, so like, I love the admission of, hey, luck was a part of it, but also, like, it sounds like there were things you did to, you know, make the surface area of luck hopefully a little bit better. Right. So, you know, it doesn't necessarily mean that someone with the tiny service. Service here isn't going to get lucky.

It's just, you're just helping with probabilities. So.

Right.

I love, I love that you kind of talked about that. I think the other thing that I loved, it was just such a, such a, like, just an admission of, you know, you liked your job.

Is it like your burning passion in life?

Like, I think, like, especially, like I have a lot of peers and I see like some of our younger clients, like, there's like a maybe a burden of, like, is this exactly what I'm supposed to be doing?

And, you know, sometimes, you know, if I would say if the work is stimulating, if it creates a balance in your life where you could do the things you want to do and you're fairly compensated for it, that's a great job. I think, you know, we kind of have this, this paradox of choice where if anything, anything is available to you.

You know, it's like, am I doing the right thing? You know, for most of human history, you, you, there were two jobs in the town you grew up in, hunter or gatherer.

And, you know, it's kind of like I didn't have the space for this, this existential crisis of am I doing the right thing? So I loved your kind of admission there. And it wasn't that, hey, I don't dislike my work, but is it like, is it the thing you dreamed of doing?

I don't know, probably not. But it was, it was rewarding enough relationally, financially, intellectually, where it's like, hey, this is a, this is a great thing to do.

So you definitely answered my questions, but those are the two nuggets, as I was just listening, that I thought, man, those are, those are good. And our listeners can learn something from that.

Well, Jared, you bring up something else. And I was talking with a friend of mine. We get together.

He actually, who was my boss for 10 years, we get together and every once in a while, and he's got a son that is super smart and he's way in the math, and he's also really into fixing up old Stratocaster guitars, and that's his passion.

And I was saying to, to this friend of mine that I'm reading the Scott Galloway's algebra Wealth right now, and Scott has this concept that says everyone wants to work in their passion. And they, and they say, they start out, find my passion, then and go Find a job. And he goes, that rarely works. A lot of passions don't pay.

Instead, figure out what you're good at and go do that.

And, and over time, that talent will become your passion, which is a, which is a cool way of doing it in my, or thinking about it in my mind, because, yeah, I didn't, I didn't wake up going, gee, I want to be, you know, a finance guy in the oil and gas industry. That's my passion. But it had a lot of ingredients that I liked. And over time, I thought it was a, you know, it was a great place to spend 35 years.

So obviously I liked it. But by the same token, I also read a lot of literature around retirement, said, you got to find your purpose.

And it's almost maniacal that people are. They get a lot of anxiety that I can't retire until I have a purpose.

And I would tell people that may be true for some people that are really ingrained into what they do and maybe they shouldn't retire. But for me, at least I didn't need a purpose in retirement to supplant what I was doing in my job.

I found plenty of things to do that are smaller in nature than a career, but they, they're very fulfilling. And, and I can, I have no problem spending my day, you know, doing those kinds of things. And we can talk about it if.

You want, but that's a great place to go next because, like, one of, I think one of the things, I've talked about this before, but, like, I think hard stop. Retirement's tough for everybody. Really demanding job, and then going to. Doing nothing. Right. Like, it is kind of weird how abrupt that all is.

And I find a lot of people work, and I, I say work generally, whether it's like, increased volunteering, whether it's some consulting on the side, whether it's being more active in the lives of your kids and traveling and, you know, being grandparent duty. Right? Like, you know, there's some void that's filled there with work.

So I'd love for you to say, like, hey, in this season, like, how do you, how do you stay sharp? How do you measure success? How do you kind of like, define your ideal? Like, what's your ideal day kind of, kind of look like?

And how are you using your time in the season?

I do have a set of goals. I was never a big, I was never a big believer in writing down goals until very late in my career.

And I especially hated it when my boss came to me and said, I got to write down your goals and I'm going to hold you accountable for them. And here I am in retirement. I wrote down 10 goals for 20, 25. I won't go through them all, but they're not earth changing.

But it's like I want to read one non fiction book a month. And when I was working, the last thing I wanted to do was come home after a long day. We'd make dinner, we'd do things.

I'm a business, I'm a triathlete. I'd get on a bike and ride for an hour and a half on the trainer. Last thing I want to do at that point was sit down and read a book.

But now I have time to do that. I want to take a painting glass, I want to cook one new meal a week. You know, those kinds of things. I work at the food bank on Tuesdays.

I'm on their finance committee. There are just those different kinds of things. Saturday I'm running the Woodlands Marathon.

I want to try and qualify for Boston, the Boston Marathon this year. So little goals like that, that all kind of adds up to when you think, what am I going to do today?

Well, today I'm, you know, I'm going to work on, on my physical training or today I'm going to sit down and, you know, on purpose, read a book for an hour or two. I just like having that time to do that in the core of the day. I used to get up at 5 in the morning and swim three times a week.

And then I would, like I said I'd get, I'd get home and I'd go up on the bike at night to ride because it was. And I'd run in the dark. It was the only time I could do the physical activities I wanted to because of my job.

Now I get to do all that stuff in the daytime. I go through swimming three times a week at lunchtime. It's great.

So yeah, I, and I love your answer too, because I think, like a lot of people think, what are you gonna do in retirement? It's got to be this big like one sentence thing that's consuming 40 hours a week. Like, no, like you made it much more manageable.

What are the six to ten rhythms that I, you know, didn't get to nurture in my work time that I would like to build and grow upon in this season where I have more time to do that? Yeah, I think people get stuck.

I've had to get more comfortable being by myself too. You know, having been in A work environment especially, you know, a dynamic one like we had at Exxon.

I spend a lot more time by myself, but I don't mind that because I also have times during, you know, at different points every day during the week I get together with, you know, the folks I swim with or the people I work at at the food bank with or that sort of thing. So, you know, it's a, it's a mix of both.

Awesome. Yeah.

And it's interesting because, you know, you talked about this when you, a little while ago, but really there's, you know, when you, when you think about retirement readiness, there's two components. There's like numerical and then I would say like seasonally, right. Like, am I ready to take on this new season?

And like, do I have an idea of what I want that season to look like? And I would argue the financial one is actually easier to solve because it's a math equation. Right.

And you could, you know, and of course inputs are changing, expenses are changing. But the harder thing is, hey, what is this season going to look like?

And I love that we started kind of in order of operations of like, hey, what are the, you know, what, what does this season feel like from a, you know, life lived perspective? But I'm also curious about the numbers. Like, you know, you're very financial oriented, so I'm curious, like, and you're regimented.

So how do you track, like, how do you assess performance and like where you're at from a retirement numerical perspective? Because my guess is you have a.

You have a framework for that from a financial perspective. Yeah, yeah, definitely. Like I said, when I was five years old, I wanted to be a banker. I've always been a planner and a tracker and accounter.

No offense to those that are, but thank God I wasn't an accountant. But nevertheless, I do like accounting. I like to track things and people don't have to know me very long before they find out about the spreadsheet.

I have this spreadsheet that I have kept since I started working. So for 35 years I've maintained basically a spreadsheet that keeps track of, of everything that, that I want to know about my financial life.

And I could create, you know, a three, a classic three three statement financial model out of it. If, if I wanted to, an income statement, a cash flow statement, a, a balance sheet, I don't do it in that form, but all the ingredients are there.

It's got, you know, it's got my income, my sources, my taxes, my expenses, different categories. It's got all my investments, additions and returns and all that sort of thing.

And I keep track of that by the different structures that we have financially, by the tax and estate treatment. I can do allocations, my target allocations, my actual allocations, my investment diversity. Why do I say all this?

It's because I have the, the numbers built that allow me to, to do, to, to track anything that you want to dream up when it comes to financial, to finances. And that's end up giving me 35 years, looking backwards of monthly data. So where does that get me?

I've every month I've got about 900 rows of data and information that I keep track of on a monthly basis.

And I have that going back 35 years and then I have that going forward 35 years as well till my so called death which I have planned for when I'm 95 and my wife is 98. Just joking. And then I actually look 10 years past that because what happens to our estate with my kids matters as well.

So when, for example, when you make a decision like I'm going to make a Roth conversion, you don't see the effect of that unless you see what happens to estate tax and, and things like that. So in my, in my truly weird way, I went 35 years plus another 10 after death. Anyway, it's all dynamic.

And the reason that it's built that way is, is because I can plan optimizations, I can do future casting and I can look at key metrics and, and I think that's what you asked about. So, so what kind of key metrics do I look at? I look at investment mix, I look at a funded ratio of, of years, expense coverage and fixed income.

I look at sort of a risk bucketing approach to take the bucket approach of three risk buckets, a more conservative, less conservative and then a risky bucket.

I look at total net worth and because we are in this planning phase of how do we think about gifting money to our kids and going beyond my wife and I, I created this metric called the theoretical intergenerational wealth, which is money have we created for the family.

And it sounds really geeky and it is, but it's a way of someone like me keeping track of, you know, what, how do, how do we look as a family unit and kind of planning as a family unit as opposed to just my wife and I.

So financial planning is a hobby for me obviously and it's not for most people the way I do it but, but I, but it does allow me to, you know, to keep track of things and to feel comfortable when it comes time to make big decisions like retirement or buying a second home or things like that, that, that we're in good shape to do those kinds of things.

Yeah, I think the call to action is not develop a spreadsheet as robust as Scott.

The call to add for our listeners should be get a framework that gets you key metrics so that you kind of, you're solving for the right things and you feel comfort in making the big decisions and have a framework for doing that.

Scott, I do want to talk about second homes because that's something we get like we had a whole podcast on that idea and I think it's really interesting thinking about like financial break evens and like, you know, like also like ignoring that and thinking about lifestyle, but also it creates a more complex lifestyle because it's another property to manage.

I'd love to just hear through, you know, the decision and how you think about or any advice you have for our listeners about like, when does the second home make sense? When does it not make sense? How did you come to decide that for yourself?

Yeah, and first of all, I'd say it's a personal decision. We bought our second home in Colorado partly because we had a base in Colorado. I've got some kids that live there.

I have extended family that lived there.

We bought a home in Colorado a couple years ago with the distinct idea and agreement between me and my wife that it was going to be a home that we use for flexibility to do what we want to with as opposed to an investment. And I think that's an important thing for people to get to decide.

I think it's really hard to have a vacation house or a second home if you truly want to use it that way. That's also you're trying to rent out and trying to make a return on.

So, so I quickly came to the conclusion that what I valued out of and what I wanted out of a second place was the complete flexibility to go there whenever I wanted to and to enjoy it and have my things there and, and not have to worry about, you know, having a property manager or worrying about, you know, was I making a good return on this investment? I don't look at it that way. If you want to make an investment in real estate, obviously go for it.

But I, I would advise people to separate those two in their heads if, if they're able to do that financially. I would also say that a lot of friends said, why are you doing that?

You can airbnb for a fraction of the cost that you're paying for that second home. And I said, yes, I could, but I would never do it. I would never, you know, we're going up in a month for a month.

I would just never get around to picking out another place and go in there. So that I really value at this point in my life having that ultimate flexibility to do what I want and when I want that. That's really important.

In doing that. You have to be realistic about what it costs. The cost of our second home is as much as we spend on our primary house with a mortgage.

So, you know, and, and they don't all have to be that way, obviously, but, but you do have, and I know you guys had a piece on this in one of your podcasts recently. You got to look realistically and, and, and say, you know, is this something I want to afford and something that I can afford?

Yeah. And also too, how near and dear is the place to your heart?

One of the things, like, I'm definitely not in a financial position, I think through a second home yet.

But like, the other thing is like, how do you trap, like what places are special enough for you for it to eat up a high percentage of your travel time? Right.

Like if I look at my 12 trips a year that I take as a family, you know, two of them are to see family and then four of them are probably to places never been and then two of them are places I have been. Right.

So like, you know, if, if you pick a place, you know, you're not going to have the energy or the time or the finances to really, you know, maybe do the exploring to the extent that you would otherwise.

Also thinking about like, hey, what's your, what's your travel, you know, appetite and what does that look like going, you know, spending less time and fewer and less time in more places or, you know, more time in fewer places.

Yeah, that, that's a good point because when, when we bought it, we thought, oh, it's not going to change what we do. And the reality is it does change what you do.

Yeah. So two more, two more things as we kind of wrap up, you talked about, you know, thinking about terminal, well like wealth created for the family.

And it led me to remind me, it reminded me about this thing you told me about, you know, you have a rising equity glide path. So as time you've decided that your allocation is going to get more aggressive.

Said another way, 90 year old Scott is going to own more stocks than you do today, which on the surface sounds crazy because over time, you know, risk tolerance tends to go down as you get older and like a lot of like target date funds and investment products, like they get more conservative over time in retirement. So like some people, you know, it seems counterintuitive, but as you explained it to me before, it's not at all.

But I would love for you to kind of talk with our audience about that because on the surface it's a different idea. I will say yeah, yeah.

And it's not for everybody, but I can see where it would. It may apply to a lot of your listeners. And I'll say I didn't set out that way.

Isn't like I had some grand scheme that said I'm going to allocate this way when I'm young and I'm going to allocate this way when I retire and this way when I, when I am retired. In fact, as I was young I followed the conventional wisdom of allocation and I started out with more equity.

I don't know what it was 90, 10 when I was in my 20s and given my situation over time I maintained a healthy equity to debt ratio. I probably should have maintained something higher given the fact that I had a pension.

That was one of the things I wish I had learned when I was that age. But we had a debt like pension, we had a stable job, we had no years in the 35 years that I worked that we had any drawdowns.

And so you could afford a fairly high equity to debt ratio. Now when I'm at retirement, I'm not particularly concerned because of our asset mix and our asset level.

I'm not particularly concerned about the typical things that retirees are concerned about like drawing an income, feel like I've got enough cushion to be able to survive the volatility. What I'm more concerned about is sequence of return risk where you happen to be drawing at the wrong time.

And so I so currently that now that I'm in a place where I've just gone from having an income to not having income. I'm very conservatively invested, 50 to 60 versus 50%, 60% equities.

One of the things I learned as I was thinking about this because it was right around the time I was thinking about retiring, my father passed away and. And I started managing my mother's money. She's in her 90s. I know for sure given her asset level that she's not going to spend more than she has.

And so it dawned on me that what I'm really investing for and what, and how I should be investing that money is with the risk of my brothers and sisters. And I noticed not for a 94 year old woman, given that she's got what she needs. And so I started to think, well, how does that apply?

How should I therefore allocate money in retirement if I feel like I'm in that sort of same situation where I'm not worried about the volatility of assets, I'm worried about the sequence of risk. And so what I do now is the way I've planned it is to allocate to fixed income the next eight years of expenses, net of income.

And so I look at that and say that's how much fixed income I should have.

And that results in what is a classic rising equity glide path smile where you start out when you're young and you have a high equity debt ratio and then at retirement it's at its lowest when uncertainty is highest. And then over time as you become more certain, as you get closer to, to passing away, you can afford to invest more in equities over time.

And there's been studies that show that that actually helps people in meeting their return objective better than a lot of other types of investing.

I mean, that's great, right? Like, essentially like it's really like, it's simple, right?

The net present value of your future cash flows go down and as you like, as your life expectancy decreases, you know, the variable, you know, it's like that liability that you're, that you're principally funding has, you know, it's a smaller percentage of what this, of your asset mix is spoken for. So it's really just duration matching.

Who is the ultimate, Ben, who is the ultimate person who's going to have control in spending this dollar and needs to spend it and what is their time horizon?

And in your case it's, you know, it's, hey, as I, as I hit my 90s, I, I want to kind of do that and I, you know, the need of the portfolio, for me personally, you know, the range of outcomes is tighter because the odds of you living to 130, you know, much, much lower. Right. You know, you might have 10, 10 to 20 good years depending on medicine. But so yeah, I think, I think that makes a, makes a ton of sense.

What, what I might build on that, Jared, is that also, you know, you would expect the returns on your assets to outstrip inflation.

So if your expenses are going up by inflation, your assets are some return, some real positive return, then you would expect your asset base to be growing. And so you can afford to take more risk with that asset base to fund the same set of expenses.

If that doesn't work and markets go down, then that funded ratio that I have actually forces me, rather than some arbitrary equity to debt mix, it forces me to say I have some logic for what the fixed income portion of my portfolio should look like. And in fact, if that happens, you end up dollar cost averaging into equities at a lower rate if the markets go down.

So like I said, it's not for everybody.

There's, you know, there's a certain type of behavior and temperament and asset level that I think all has to come into play for that to work for people. But it works for a subset of people.

Yeah. And I could say, I'd say, like, you know, the principal thing is like, the principal concern for a lot of people is volatility.

I've found that oil and gas retirees have iron stomachs when it comes to volatility because they've seen oil go negative, they've seen booms, they've seen busts, they've seen embargoes. I don't know a lot of them. That's not the principal thing they're concerned about. But I do.

Just like that framework of, hey, what is the time horizon? What is the net present value of my expenses? And then, okay, what's the time horizon of the beneficiaries of all that?

Assuming there's a decent probability that my assets are going to outlive me. So, Scott, I guess one more question for you. Like, I know that at various times you've done this yourself, you've worked with an advisor.

Any advice or thoughts on, you know, when does it make sense to diy? When does it make sense to hire somebody? Any thoughts you kind of have more generally on helping somebody think through that decision?

Because, like, I find that a lot of our client base is like skews engineer. So there's like a lot of technical competence and interest.

And so like, you know, I'm an advisor, so of course my bias answer would be, yeah, it always makes sense.

But I realize, like, there's a subset of the universe, you know, that has a spreadsheet that's probably more as robust as the financial planning software. I would put it into. Right. And so, you know, there's definitely a lot of people we know in this space that are technically competent enough to.

To do all this themselves. And you are obviously someone in that camp. So I'm curious how you've thought about that.

It varies, you know, in general, or maybe if that's changed at various points in your career.

Yeah, there's probably a couple subsets of people that make up a large portion of the population that could do with some financial help. Some. Some, you know, formal financial advisory.

I DIY'd for a long time, as we've talked about, but as I got closer to retirement and my situation became more complex, you know, I, I started working with you all to help me think about the things that I didn't know, to have a second set of eyes on the ideas that, that, that, that I had and to put some structure to what I was doing. I think there's a, a couple bigger groups there. There's what I would call the outsourcers. You know, that, that.

And this is the majority of people, they just don't want to spend the time. They don't have the knowledge.

And that doesn't mean that they can't get the knowledge, but they don't want to spend the time to get the knowledge, and they don't. Even if they had it, they don't want to spend the time working on it. I think that's the majority of people that are out there.

And also people that would benefit from a financial advisor, especially when their assets get to a level that is beyond just a very basic plan. And then there's kind of high earners and business owners where their situation is complex.

They want to apply their times to other things, their time to other things. And then, you know, to.

I mentioned I was a triathlete, and I have a lot of triathlete friends that have coaches and, and they have coaches to design a plan for them and then to give them the discipline to follow it, because people are people and, and a lot of people need help in just the discipline to follow the plan. You can have the best plan in the world. If you don't follow it, it doesn't mean anything.

And financial advisors, I think, provide that discipline for a lot of folks to keep them out of, you know, doing the wrong thing at the wrong time.

Yeah, I love that. And you made me think of like, like, you know, bringing, bringing triathlete into it. Made me think of cyc, like hiring a cycling coach.

It, like, increases your mileage. Right.

So, like, so If I, if I ride my bike five hours a week, just willy nilly with no organization and structure, I can have drastically different gains in fitness if I have a coach helping me optimize the different zones and the types of recoveries that are doing that. Right.

So like, so I'm, I'm exerting the same amount of, of an effort or same amount of time to it, but my results are multiples higher because I understand all of the zones and the, you know, what helps me optimize for recovery and sprints and all that stuff. Uh, so, you know, and again, the same amount of time just getting more mileage.

So as you, as you were talking about that, that made me think of, of that. That analogy gets so good.

Yep, that's exactly what I meant. Yep.

Awesome. And Scott, so as, as we wrap up, I just want to say thank you. I appreciate it.

I'm, I'm really grateful we had this conversation because everything, all this is so fresh in your mind, right? Like, this is like a, you know, it's a fairly new thing for you, so I appreciate it.

It's vulnerable to come on and kind of share and I appreciate how open you've been with our audience. Is there anything else, you know, you'd like to share with our audience that we didn't get to cover?

Whether, you know, it could be a segment of our audience, whether new people starting a career, people that are, you know, would be in the retirement 5 Yammer if they worked at ExxonMobil, but that, you know, they're kind of looking down the crosshairs of retirement. You know, any, any of us advice you would have or anything you want to share?

Yeah, I don't know if I have anything monumental to add to what we talked about. Hopefully it was interesting to your listeners. I would say that, you know, the financial topic is difficult for a lot of people to talk about openly.

I've learned a ton talking to friends in the same situation as me, sharing a little bit more than I was probably comfortable with.

And we learn things from each other, A, that we're going through kind of the same sorts of things and B, that they may have an answer to things that I didn't know.

And so expanding your net a little bit, always with a bit of caution as to making sure that not everything that you hear is right as we talked about, but expanding your network to share and learn from other people I think is a really great way to go and try not to be too insular when it comes to the financial topic, which is something that a lot of people learn are are trained not to talk too much about.

Yeah, yeah, money, money is definitely taboo.

But I think magical things happen when like minded people or people just with different minds been in a similar situation get together and they're just a little more transparent about, you know, the math but also, you know, all the, all the, all the stuff that goes with that. You know, the relationships, the things you're optimizing for your hopes, your dreams, your fears. So.

Well, I appreciate you coming on and taking time to share this with our audience. That's, that's all we got for today. We'd love to hear from our listeners any thoughts or questions or ideas for future podcasts.

We're always just improvising and love having great guests. So if you want to be on the podcast, we'd love to hear your story. Podcast brownlee wealth management.com thanks. We'll see you next time.

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