Podcast Summary: "Am I on Target for Retirement?"

Jill on Money with Jill Schlesinger
Host: Jill Schlesinger, CFP®
Episode Release Date: February 3, 2025
Episode Title: Am I on Target for Retirement?

Introduction

In this episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger, alongside co-host Mark T. Williams, delves into the critical topic of retirement planning. The episode aims to provide listeners with actionable insights to determine whether they are on track to meet their retirement goals. Through real-life listener calls, Jill and Mark offer personalized financial advice, breaking down complex concepts into understandable terms.

Listener Call: David from Michigan

Caller Profile:

• Name: David
• Age: 62
• Location: Michigan
• Marital Status: Widowed for four years
• Employment: Working full-time with plans to retire at 65
• Annual Income: $120,000
• Housing: Owns a primary residence valued at $425,000 with no mortgage and a cottage purchased last year for $220,000, now valued at $300,000
• Children: Two grown children, financially independent
• Savings and Investments:
  • Traditional 401(k): $660,000
  • Roth 401(k): $1.2 million
  • Savings Account (Credit Union): $220,000
• Social Security: $3,000/month at 67; $3,746/month at 70
• Pension: None
• Health: Generally in good health; manageable health concerns
• Estate Planning: Up to date, except for transferring the cottage into a trust

Discussion Highlights:

1. Financial Overview:

   • Jill begins by assessing David's current financial status, acknowledging his robust retirement savings. She notes, “Wow, that's good.” at [07:06], highlighting David’s substantial Roth 401(k) balance of $1.2 million.

2. Retirement Income Planning:

   • David's plan involves retiring at 65 with a monthly expense need of $3,600. Jill inquires about his Social Security strategy, leading David to express his intention to claim benefits at 70 to maximize his monthly intake.
   • Jill advises, “You've done such a great job converting and you'll be in a very low tax bracket. I'm not scared of the, the converting even more.” [07:16], endorsing his proactive Roth conversions to minimize tax liabilities.

3. Withdrawal Strategy:

   • Jill and Mark discuss the optimal approach for withdrawing funds from David’s traditional 401(k) to supplement his Social Security benefits. Jill recommends withdrawing up to the top of his current tax bracket (around 22%) to optimize tax efficiency.
   • At [09:39], Jill elaborates, “...you take that money out, you're going to whittle down the 401k, you're going to beef up the... brokerage account, beef up any savings you've depleted for the cottage and the toys, and you're set...” This strategy ensures that David maintains liquidity while managing his tax exposure effectively.

4. Asset Management and Long-Term Planning:

   • Jill assesses David's asset allocation, noting his low-cost investment strategy with minimal fees (0.98 basis points). She commends his approach, stating, “Well, maybe you should get a job with them because it sounds like you fought through this thought this through and you're doing a great job.” [12:25]
   • The conversation also touches on estate planning, with Jill urging David to finalize the transfer of his cottage into a trust to ensure smooth estate management.

5. Final Recommendations:

   • Jill proposes a comprehensive plan where David continues strategic withdrawals from his traditional 401(k) up to his tax bracket limit, bolsters his brokerage accounts, and maintains his savings to cover any unexpected expenses or improvements on his cottage.
   • She concludes with confidence, “Enjoy the next few years. And of course, if for some reason you get flummoxed by your 2-mile commute and you actually want to, you know, maybe quit earlier, there's going to be no problem for you have plenty of money to actually do whatever you want to do.” [13:21]

Key Insights and Takeaways

• Proactive Retirement Planning: David’s case exemplifies the importance of early and strategic retirement planning, particularly through Roth conversions and maximizing tax-efficient withdrawals.

• Tax Efficiency: Utilizing Roth accounts and managing withdrawal amounts within favorable tax brackets can significantly enhance retirement income and preserve wealth.

• Asset Diversification: Balancing retirement accounts with brokerage investments and savings provides both growth potential and liquidity, essential for managing unforeseen expenses.

• Estate Planning: Ensuring all estate documents are up to date, including trusts for property, is crucial for seamless wealth transfer and minimizing legal complications for heirs.

Conclusion

In "Am I on Target for Retirement?", Jill Schlesinger and Mark T. Williams provide a comprehensive analysis of David's retirement readiness, offering personalized advice that underscores the importance of strategic financial planning. Listeners are encouraged to evaluate their own financial situations and consider similar strategies to ensure a secure and comfortable retirement.

For personalized advice or to join the conversation, listeners can visit jillonmoney.com and reach out through the contact form.

Notable Quotes:

• Jill Schlesinger at [07:06]: “Wow, that's good.”
• Jill Schlesinger at [07:16]: “You've done such a great job converting and you'll be in a very low tax bracket. I'm not scared of the, the converting even more.”
• Jill Schlesinger at [09:39]: “...you take that money out, you're going to whittle down the 401k, you're going to beef up the... brokerage account, beef up any savings you've depleted for the cottage and the toys, and you're set...”
• Jill Schlesinger at [12:25]: “Well, maybe you should get a job with them because it sounds like you fought through this thought this through and you're doing a great job.”
• Jill Schlesinger at [13:21]: “Enjoy the next few years. And of course, if for some reason you get flummoxed by your 2-mile commute and you actually want to, you know, maybe quit earlier, there's going to be no problem for you have plenty of money to actually do whatever you want to do.”

This episode serves as a valuable guide for individuals nearing retirement, offering practical advice on managing savings, withdrawals, and estate planning to ensure financial stability and peace of mind in retirement.