Am I on Correct Path?

Summary

Podcast Summary: "Am I on Correct Path?" – Jill on Money with Jill Schlesinger

Episode Details:

• Title: Am I on Correct Path?
• Host/Author: Audacy – Jill Schlesinger, CFP®
• Release Date: August 11, 2025

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1. Introduction to the Episode

In this episode of "Jill on Money with Jill Schlesinger," host Jill Schlesinger alongside co-host Mark T. Williams delves into a listener's comprehensive financial plan aimed at early retirement. The show emphasizes making informed financial decisions by balancing emotional instincts with practical numerical analysis.

2. Listener Call Segment: James’s Financial Plan [01:34 - 19:00]

James from Texas joins the conversation seeking validation and advice on his aggressive savings and investment strategy to retire at 55. Below is a breakdown of his financial profile and goals:

a. Personal and Financial Background

• Age: James is 44, and his partner is 36.
• Employment: James earns $200,000 annually, while his partner earns $120,000.
• Marital Status: Married without children, though they do not plan to have any.

b. Retirement Goals and Strategy

• Primary Goal: Retire at 55 to enjoy life without the constraints of corporate employment.
• Financial Positions:
  • James’s Accounts:
    • Traditional 401(k): $380,000
    • Roth 401(k): $235,000
    • Health Savings Account (HSA): $50,000
    • Traditional IRA: $64,000
    • Roth IRA: $7,000
  • Savings Strategy:
    • Contributes 6% to traditional 401(k) with a 6% employer match.
    • Allocates 15% to an after-tax bucket in the 401(k), followed by in-plan Roth conversions.
    • Maintains a $20,000 emergency fund in a high-yield savings account.
    • Brokerage account valued at $125,000, with plans to add $50,000 annually.

James: "[...] I just don’t want to be a corporate person for the rest of my life if I don’t have to because time on earth is limited."

c. Real Estate Investments

• Primary Residence: Recently paid off an $800,000 home with a 6% mortgage rate.
• Rental Property: Maintains a rental property valued at $400,000 with a remaining mortgage of $123,000 at a 3.1% interest rate, generating $700 net monthly cash flow.

James: "I have just paid my home off last month... My rental property is paying itself off."

d. Partner’s Financial Contributions

• Partner’s Retirement Accounts:
  • Traditional 401(k): $161,000
  • Roth 401(k): $65,000
  • HSA: $27,000
  • Roth IRA: $42,000
• Savings Strategy:
  • Contributes 23% to Roth 401(k) with a 7% employer match.
  • Maxes out HSA and Roth IRA contributions annually.

James: "She adds 23% into her Roth 401(k)... and she gets a 7% match."

e. Future Financial Plans

• By Age 55: Aim to have $300,000 in high-yield savings as a safety net.
• Post-Retirement Income: Plans to rely on rental income totaling $6,000 monthly to cover $5,000 monthly expenses.
• Investment Approach: Prefers maintaining a diversified portfolio without bonds, comfortable with market fluctuations, and focuses on long-term growth.

James: "When I'm 55, I will carry up to at least $300,000 in a high-yield savings account. That's the plan. That's what I would retire with."

3. Hosts’ Analysis and Discussion

Jill Schlesinger and Mark T. Williams commend James's disciplined approach and robust savings plan, highlighting his strategic use of retirement accounts and real estate to secure early retirement.

• Jill: "This is incredible. You are a hyper saver. I think you're in good shape now."

• Mark: "He's contributing a minimum of $70,000 a year... he's going to have well over $2 million and then he'll..."

They discuss the sustainability and practicality of James’s plan, considering factors like market volatility and the absence of children or dependents, which allows James the flexibility to pursue aggressive savings without immediate financial obligations beyond his and his partner's needs.

Jill: "One question that I have that we haven't answered yet is how much do you guys spend on an annual basis?"

James: "Right now it's around $60,000."

The hosts explore the feasibility of maintaining a $60,000 annual expenditure solely on rental income, assessing James's ability to handle market downturns without jeopardizing his retirement timeline.

Mark: "Based on that response, I'm liking a lot... Maybe be conservative and say $70k and play that out for the next 10 years. He's totally on track."

4. Key Insights and Takeaways

• Aggressive Savings Pays Off: James demonstrates that a high savings rate, combined with strategic investments in retirement accounts and real estate, can set the foundation for early retirement.

• Diversification and Risk Management: By maintaining diversified investment portfolios and not being swayed by market drops, James illustrates the importance of a long-term investment perspective.

• Importance of Safety Nets: Accumulating a substantial emergency fund and rental income provides a buffer against unforeseen financial challenges.

• Partnership and Communication: James and his partner’s aligned financial goals and strategies are crucial for achieving their retirement aspirations.

• Flexibility for Early Retirement: Without dependents, James and his partner have the luxury to plan for retirement earlier, reinforcing the significance of individual circumstances in financial planning.

5. Conclusion

The episode concludes with Jill and Mark applauding James for his meticulous planning and financial discipline. They encourage listeners to evaluate their own financial strategies, emphasizing the balance between saving for the future and enjoying the present.

Jill: "Living today is important. So if you're thinking about this and you're trying to figure out whether you can maybe make a big shift, maybe it's going to be something different in your life... Change your work, change your wealth, change your life."

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Final Thoughts: James's financial journey serves as an inspiring example of how dedication and strategic planning can pave the way for an early and secure retirement. Listeners are encouraged to assess their own financial paths, consider their personal circumstances, and seek professional advice to tailor their strategies effectively.

Transcript

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[Amazon Prime Narrator]

You know there are a lot of passions. Some days it's sports, other days it's cooking or music or just diving into a great documentary. The thing is, whatever you're into, it's on Prime. Amazon prime isn't just about fast delivery though. Getting stuff the same day is pretty great. But it turns out it's so much more Prime Video, Amazon, music, the whole range of services. It's, it's like a hub for all kinds of curiosity. Prime helps people stay connected to what matters and keeps the journey of exploration going. Whether it's watching something inspiring, listening to a new artist, or getting gear delivered fast to chase a new hobby, prime makes it easier to dive in. So yeah, whatever you're into, it's on Prime. From streaming to shopping, it's on Prime. Visit Amazon.comprime to get more out of whatever sparks interest. Amazon.comprime welcome to the Jill on Money Show.

[Jill Schlesinger]

It's Monday, August 11th and we are here trying to help you make better, more informed financial decisions. Now here's the problem about financial decisions. We're human beings. Breaking news, right? And because we are human beings, we have this whole emotional dialogue that's going on. It's in our bodies, it's in our brains. So it's like your head and your heart are talking to each other. And, and what Mark and I try to do is we bring the numbers in and try to make it all work together. Because there are things that you would like to do that you wish you could do and maybe the numbers won't allow it and maybe there are things that you are not doing and the numbers will allow it. And we want to sort of give you the best options possible. Or maybe not the best, maybe just different options. You choose which way you want to go. But the easiest way to get in touch with us is to go to our website, jillonmoney.com click the contact us button. Let us know if you'd like to come on the air. By checking the box, Mark will do all of the arranging. And by the way, if you are on the website, don't forget to sign up for the free weekly newsletter comes out every Friday. And also all the other cool stuff that lives on the website. We have another podcast called Money Watch. Got a blog. We've got a radio show. The videos, the things that I've done with CBS News, that all shows up there. Lots of stuff is there. And all that you have to do is bookmark jillonmoney.com and you'll get all of it. See how great that is. Okay. Today we are talking to James, who joins us from Texas. Hello, James. What can we do for you?

[James]

I would like to run some numbers with you guys, starting with age of me and my partner.

[Jill Schlesinger]

Let's do it.

[James]

I'm 44. She's 36. Would you like me to divide them separately for each of us or.

[Jill Schlesinger]

Together you do whatever you want. Now, you're not married, right? You're.

[Mark T. Williams]

You are.

[James]

Correct.

[Jill Schlesinger]

So you're just. So. I know that. So she's 36, you're 44. Let's do it separately only because that's how you're treated from a tax perspective. Separately. So, James, you're working full time now?

[James]

Yes, I am.

[Jill Schlesinger]

And what are we trying to do? Like, what's the game plan here? Are you trying to do something, or do we have a goal in mind, or you just want to know if you're on the right track?

[James]

Both. Goal is to. For me to retire at 55, 100%.

[Jill Schlesinger]

And.

[James]

And if it's earlier, the better.

[Jill Schlesinger]

Wow, you don't like working. You're a real slug. Okay, I like it.

[James]

I love to work. But I also know that time on earth is limited. I just don't want to be a corporate person for the rest of my life if I don't have to because.

[Jill Schlesinger]

They'Re so loyal to us. Of course you would. No, I'm just kidding. I mean, I'm with you, man. Okay, let's see if this is possible. So right now, James, how much do you earn?

[James]

Okay, so it's around 200.

[Jill Schlesinger]

Okay. And you're putting money into a retirement plan of that?

[James]

Yes. So I can give you some numbers. So my traditional 401k is at 380.

[Jill Schlesinger]

Okay.

[James]

My Roth is at 235. My HSA is at 50k. I have a traditional IRA, which is at 64.

[Jill Schlesinger]

Okay.

[James]

And then I just have a Roth IRA, which is just 7,000.

[Jill Schlesinger]

Okay, great. And right now you're maxing out your Roth or your traditional.

[James]

Right. So right now I'm adding only 6% in my traditional 401k. And I get a 6% match. But I have an after tax bucket available in my 401k and I push 15% into that.

[Jill Schlesinger]

Okay, got it.

[James]

And I do the in plan Roth conversion right away.

[Jill Schlesinger]

Okay, great. That's great. So you're really, you're putting a lot of money there. Are you also adding money and you do the hsa, obviously. Are you adding money to savings or. I mean like you're saving a bunch of money on this 200,000. Is there any other place where the money is going right now?

[James]

Yes. So I have a set emergency fund of 20k sitting in a high yield savings account and then I have a brokerage of 125k and in that going forward from now, I will be pushing in around 50,000 per year.

[Jill Schlesinger]

Wow.

[James]

Yeah.

[Jill Schlesinger]

Do you spend any money? What's going on with you? I mean, that is, that is a lot of savings.

[Mark T. Williams]

So 50 in brokerage maxing out 401k. That's almost 100 right there. And he only makes 200, right?

[Jill Schlesinger]

I know. Well, I mean, maybe he's living on. Maybe his girlfriend's got a big house and he's leeching off of her. Find out about him.

[James]

No, actually what, what I did was. Mark, you bring up a good point. But I actually ended up pushing towards my home and I actually just ended up paying my home off last month. And that's why all this money is going to go into that direction now going forward.

[Jill Schlesinger]

How much is the house worth?

[James]

800K.

[Jill Schlesinger]

And you had a mortgage and you paid off.

[James]

Wow. Yes, I already did.

[Jill Schlesinger]

Yes, because you're. Because why? Because you, you did you have a high interest rate or you just hate debt?

[James]

I just don't like that.

[Jill Schlesinger]

Mark, I'm not going to make any comment right now.

[Mark T. Williams]

What's done is done.

[Jill Schlesinger]

What's done is done is right. We're not going to find out that.

[James]

If you mortgage about 6% as well. No, it wasn't. Yeah.

[Jill Schlesinger]

Okay.

[James]

Okay.

[Jill Schlesinger]

All right.

[James]

It was 6%. Yeah. And I also have a rental property.

[Jill Schlesinger]

Oh, my gosh.

[James]

And on that, I'm not really in a rush to pay anything off. It's 123 left and it's worth 400.

[Jill Schlesinger]

What's the interest rate on the 123?

[James]

3.1. How's the cash flow from that 700 net? Net? Yeah, it's paying itself off. Yeah.

[Jill Schlesinger]

Okay, that's fine. I neglected to ask, do you have children?

[James]

No. No kids and no kids will be there in the future.

[Jill Schlesinger]

All right, any pets?

[James]

One German Shepherd. A big one.

[Jill Schlesinger]

Okay. All right. Just want to make sure. You made sure you had that love. So far, so good. You are saving a lot of money, James. Okay, so your girlfriend's a little bit younger. She's eight years younger. Is she working?

[James]

Yes, she's working.

[Jill Schlesinger]

How much does she make?

[James]

120.

[Jill Schlesinger]

And what's her retirement plan option?

[James]

Okay, so traditional 161k, Roth 401k, 65k, HSA 27k, and Roth IRA, 42k.

[Jill Schlesinger]

Does she also have an emergency reserve fund?

[James]

No, that's ours. Together. We do brokerage and. Together. Yeah.

[Jill Schlesinger]

Okay, got it. All right. And you live together, right?

[James]

Yes, we do.

[Jill Schlesinger]

Okay, got it. Is she on board? Like, okay, let's just pretend in 11 years we figure out, like, oh, my God, you can retire. What? She'll only be 47. Does she also want to stop working or at least slow down? Or do you think she's like, no, she's going to keep going.

[James]

Yeah. No. So we have discussed this thoroughly. So. So just to let you know, I wanted to add, though. She. I. I have actually asked her to add 23% into her Roth 401K. So she's adding 23% in there in her 401K today, and she gets a 7% match. She's maxing out HSA as well. And we also try to max out Roth IRA every year for her until she obviously out of the band, where she can't push into Roth anymore. Like me.

[Jill Schlesinger]

Amazing. Amazing. Yeah, it's incredible.

[James]

So, yeah. So about your other question. Yes. So the plan is. So these are all the numbers, what we have. And my plan is, I. We discussed. We're always on the same page when it comes to financially. And then when I retire at 55, she'll be like 54, basically. She'll be 46, and she'll work for another four years, so maybe until 50. And the question which I'm trying to, like, basically get the answer off is I am. I. I'm not very much into market drops or something. I mean, I simply don't care if market drops. That's how I am. That's how I operate. So I just keep pushing money in. No problem. It's fine. So today, as it stands, I have no bonds whatsoever.

[Jill Schlesinger]

Okay.

[James]

So plan was to keep going the way I'm going. And I'm very specific in my funds, too. I don't play with multiple funds. I have the full markets international, full market domestic here. And I just. I just. I just roll with it. I don't chase returns. Okay, so when I'm 55, because I'm in no bonds, I'm planning to go the same route till 55, but because she'll be working at 46, which Ops gives me basically four years from going from 55 to 59. And that's when I'm planning to build a CD bond letter in that time period to have at least seven years of our expenses covered in that. And then by the time I do plan to retire at 55, I will carry up to at least 300,000 in high yield savings account. That's the plan. That's what I would retire with.

[Jill Schlesinger]

Okay, but what the idea here is that you have the money, it lasts that seven years. Right, and then when you say seven years, are you saying seven years until age 62 so that you can claim Social Security early?

[James]

No, when I said I will build that money is to just build that as a safety net.

[Jill Schlesinger]

Okay.

[James]

Every single year, of course, from 50, 55 to 59, she'll be working anyway, so income will be coming in.

[Jill Schlesinger]

Right.

[James]

But after 59, let's say she also retired that 50. After that, we will just basically use the money from the market every year. The year the market is up, for example. And if it's not up, then we will not jump.

[Jill Schlesinger]

I got you.

[James]

Yeah.

[Jill Schlesinger]

So, okay, so you're going to really. I want to just explain to everybody how rare a character James is in our episode today. Because for most people, James, you know this, right? They cannot bear to have those big swings in their portfolios. But you're basically saying, like, I know that I don't have children. We've got. We'll have. My girlfriend will be working for those four years like you. You're okay. And if you have a down year, you're willing to ride it out and you'll have the cash to be able to afford to do so. One question that I have that we haven't answered yet is how much do you guys spend on an annual basis?

[James]

So right now it's around 60k.

[Jill Schlesinger]

That's it?

[James]

That's it.

[Jill Schlesinger]

That's all in, like. That's all.

[James]

Everything, including property taxes? Yes.

[Jill Schlesinger]

I mean, this is pretty good plan. Mark, how do you. How do you like James and the girlfriend's plan right now?

[Mark T. Williams]

Yeah, well, based on the. On that response there, I'm liking a lot. I mean, you know, Jay, I'm just going. I'm just really focusing on James for the time being. I mean, he's got, you know, 800,000, give or take. He's going to be contributing, it sounds like minimum 70 grand a year.

[Jill Schlesinger]

He's saying 100.

[Mark T. Williams]

Yeah, right, maybe, but just be conservative and say 70 and you know, play that out for the next 10 years. He's going to have, you know, he's.

[Jill Schlesinger]

Going to have well over $2 million and then he'll. But you're also like a hyper saver. You really are. Right? And then if you think about it, if you're done at your age 55, and also, I mean, you're, you're on track for this. So let me just start by saying you're totally on track with this. I get it. I get the game plan. You can test it. You can keep testing it as you move forward, right? I mean, we're saying, yes, you are on track today, but I think you have a good sense of these numbers. I don't know what you do for a living, but you have a good sense for these numbers. You understand that putting the money away is going to pay immense dividends down the line. I guess the only thing we have to watch out for as you come into this, and you probably should test it every year, you could do it on any retirement calculator. I mean, have you used a retirement calculator before?

[James]

Yes, I have.

[Jill Schlesinger]

And it looks good, right?

[James]

Yes, it does. I generally run my numbers on 4 to 5%. I'm conservative that way. If anything comes above that, fine. Great.

[Jill Schlesinger]

Exactly. So that's why, I mean, I'm also sort of just ran the numbers as well. I also think it's going to be interesting to see whether or not your girlfriend wants to keep working and making that money, that 120 a year, for all we know, she wants to keep working beyond that and all. For all we know, once you get to 55, you might say, life is short, but I want to do something. So I'm not convinced that you would do zero, but you want to be in the place to be able to do zero.

[James]

Yeah, no, we have a plan for that. So also another thing I would like to add is like, by the time I'm 55, my other goal is to pay the rental property off altogether. And we both love to travel a lot. So the key was because our expenses at 60k, which comes to 5,000amonth, I can actually rent my primary property along with the already rented house. And that's why I wanted to pay it off by 55, so they both will generate around 6,000 in rent together.

[Jill Schlesinger]

And so that kind of covers your basic needs and Then you go and everything else is fluff. It's amazing.

[Mark T. Williams]

I was going to say, he just said they love to travel. I'm always wondering with these super savers, are you enjoying life now?

[James]

Yes, we are. We have very balanced life now. We do things. Our dog is older, so we can't really travel much. And also, we, like, haven't been in this country for a very long time. We only came around 13 years ago.

[Jill Schlesinger]

Well, I want to tell you something. This is incredible. You are a hyper saver. I think you're in good shape now. Are you any plans to get married? I'm not, you know, hustling. I'm just. I just want to know because, you know, obviously for estate planning purposes, not being married is a little bit more thorny than being married.

[James]

Right.

[Jill Schlesinger]

So.

[James]

So I. So I like to read a lot. So I figured out that there are ways to say, okay, one of the major reasons we pushed so much towards Roth is because we just like to pay taxes now and call it a day. So we are a huge fan of Roth. I am one of those people. I don't care if I earn 500k, I'll still do Roth. I'll just do it and I'll just call it today. And with that, we have thought that we have looked into brokerage accounts how we can pay 0 cgts based off if we are married and fetch more than 100k out of it. Right. Every year. So that's probably one thing we have discussed and that is probably the main reason which will actually make us just. You know what? Let's just do it.

[Jill Schlesinger]

Yeah, I got it. I mean, there's some things. I know it's sort of like a fun, very romantic, but I understand.

[James]

I know.

[Jill Schlesinger]

Do you guys have. I mean, you said you've only been here for 13 years. Do you have relatives elsewhere that you would have to help out in this journey?

[James]

We have nobody here.

[Jill Schlesinger]

Okay. This is. I'm all in. Mark, let's figure out where are we going next. What's our first big trip, James, or what's your next big trip?

[James]

We would like to go to Japan.

[Jill Schlesinger]

Oh, I love Japan. I was like, very excited about being in Japan. Mark, you were. Were you there or not?

[Mark T. Williams]

I've been there. And Ollie will. I've been there and I'll be there in two weeks.

[James]

Yeah, yeah.

[Jill Schlesinger]

Are you doing Japan also? I thought you were doing just China.

[Mark T. Williams]

Quick stop in Japan.

[Jill Schlesinger]

Okay. Just stopping. Stopping for a little sushi and sashimi.

[James]

Yeah.

[Jill Schlesinger]

James, we wish you the best of luck. You're rocking and rolling. And you know, Mark and I are always mystified by people like James because we are not extreme savers ourselves. Mark, you'll never forget that. I'm sure that that lovely couple, that was the fire couple, the financial independence, retire early couple. And they were in the studio with their two backpacks, backpacks. And I said, where's your stuff? And they pointed to the backpacks and we both said at the same time, that's all your stuff. And I wonder what they're doing now. They said they only needed a million dollars, but that was before inflation. I don't know. I don't know. It's a, it's a lofty goal and if you can do it and it's not feeling like. I think that was a great question, Mark, Just like, are you living today? Because that's always a, you know, that's something that I think about. It's no fun to just deprive yourself. So living today is important. So if you're thinking about this and you trying to figure out whether you can maybe make a big shift, maybe it's going to be something different in your life. It's earlier than sort of traditional retirement years. Get in touch with us. Go to jillonmoney.com click the contact us button. It's in the upper right hand corner, very easy. And let us know if you want to come on the air by checking the box. Mark will do everything else while you're on the website. Check out all of our content that lives there, including our free weekly newsletter. Mark, love it so much. You can subscribe to this program as well as our weekend show Money Watch on the Odyssey app or wherever you find your favorite podcast. Please leave us a rating and review wherever you listen and of course, do something nice for someone else today. Change your work, change your wealth, change your life. Thank you for listening. We'll talk to you tomorrow.

[Mark T. Williams]

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[Jill Schlesinger]

There's this little bit of wisdom people say all the time, you know, that you should live in the moment. Let me tell you something, there is nothing worse than being forced to live in the moment.

[Mark T. Williams]

The Moth podcast features real people telling their stories live on stage to connect and learn from them. Follow and listen to the Moth on the free Odyssey app or wherever you get your podcasts.