Am I on Track at 39 Years Old?

Summary

Podcast Summary: Jill on Money with Jill Schlesinger Episode: Am I on Track at 39 Years Old?
Release Date: May 8, 2025

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Introduction

In the episode titled "Am I on Track at 39 Years Old?", hosts Jill Schlesinger, CFP®, and Mark T. McGowan delve into critical financial questions submitted by listeners. The episode focuses on retirement planning, investment strategies, and mortgage management, providing actionable advice tailored to various life stages and financial situations. Skipping over the promotional segments, the hosts engage in meaningful discussions that empower listeners to make informed financial decisions.

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Listener Questions and Discussions

1. Pension Planning and Annuities

Listener: Dan (Submitted at [03:33])

Question:
Dan seeks advice on managing his private pension, which offers a fixed monthly payout or a lump-sum annuity. He is contemplating whether to take the lump sum of $1.1 million and invest it or purchase a different annuity with a 20-year period certain.

Discussion:
Jill and Mark dissect Dan's options, considering his retirement goals and risk tolerance.

• Jill Schlesinger ([03:34]):
  "You have a lot of money and Plenty of money to basically sustain you. I think the question is how you feel about having a fixed amount of money that comes to you over that 20-year period."

• Mark T. McGowan ([03:58]):
  "I am not the kind of person who wants an annuity product. I would take the money, I would invest it, and I would make it much simpler."

Key Insights:

• Control vs. Security: While annuities offer a guaranteed income, they tie up funds and limit financial flexibility. Investing the lump sum provides control and potential for higher returns but comes with increased risk.
• Professional Guidance: Both hosts recommend consulting a certified financial planner to explore personalized strategies, emphasizing the importance of understanding the long-term implications of each option.

Conclusion:
Dan is advised to weigh his comfort with financial products against the benefits of maintaining control over his investments. Seeking personalized advice from a fiduciary financial planner is encouraged to tailor the strategy to his specific needs.

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2. Considering a Financial Advisor

Listener: Austin (Submitted at [07:35])

Question:
Austin and his wife, both in their early thirties, own a home with a substantial mortgage and possess various retirement accounts. They are contemplating whether to hire a financial advisor, particularly a family friend who offers services at a 1% fee.

Discussion:
Jill and Mark evaluate the merits of hiring a financial advisor versus managing investments independently.

• Mark T. McGowan ([08:39]):
  "Is it ever worth paying somebody to get a better return? That's the first question. The answer is that is not worth it because those advisors will not get you a better return."

• Jill Schlesinger ([07:35]):
  "Is it ever worth paying somebody to get a better return? That's the first question."

Key Insights:

• Cost-Benefit Analysis: Paying a 1% fee for a financial advisor typically does not translate to higher investment returns compared to self-managed strategies like investing in S&P 500 ETFs.
• Customization vs. Simplicity: While advisors can offer personalized financial planning, for young individuals with straightforward investment needs, DIY approaches may be more cost-effective and sufficient.
• Debt Management: Attention is drawn to managing high-interest mortgages as a potential area for financial improvement.

Conclusion:
Austin and his wife are advised to continue their current investment strategies, which are sound for their age and financial status. They should focus on addressing their mortgage's high interest rate before considering hiring a financial advisor, unless they require highly customized financial planning.

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3. Evaluating Financial Health at 39

Listener: Matthew (Submitted at [09:53])

Question:
At 39 years old, Matthew assesses his financial trajectory, including retirement savings, mortgage repayment, and investment consolidation. He seeks validation on whether he is on track to retire comfortably by 59.

Discussion:
Jill and Mark thoroughly analyze Matthew's financial portfolio and goals.

• Matthew's Financial Snapshot ([10:43]):

  • Traditional 401k: $588,000
  • Roth and Roth 401k: $100,000
  • Brokerage: $800,000
  • ESOP: 16.5%
  • Cash: $415,000
  • 529 Plan: $25,000

• Mark T. McGowan ([11:36]):
  "Do more. I think the goal should be to max it out."

• Jill Schlesinger ([12:00]):
  "This completely depends. I would not even look at this right now. This is so it's 20 years from now."

Key Insights:

• Investment Diversification: Matthew has a robust mix of retirement accounts, brokerage investments, and equity in his home, indicating a well-diversified portfolio.
• Maximizing Contributions: Advising to maximize retirement account contributions can significantly enhance long-term growth, bolstering retirement readiness.
• Mortgage Strategy: Matthew's plan to aggressively pay down his mortgage is examined for its efficacy versus potential investment gains.

Conclusion:
Matthew appears to be on solid financial footing for his age. The hosts recommend maximizing retirement contributions and enhancing his 529 plans for his children's education. Regarding mortgage repayment, they suggest maintaining flexibility with investments rather than tying up funds in paying down the mortgage early, especially considering current interest rates and the potential for future financial opportunities.

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Key Takeaways and Recommendations

1. Retirement Planning:

   • Maximize Contributions: Fully utilize retirement accounts to benefit from compound growth and tax advantages.
   • Diversify Investments: Maintain a balanced portfolio across different asset classes to mitigate risks and enhance returns.

2. Debt Management:

   • Evaluate Mortgage Strategy: Consider current interest rates and investment opportunities before deciding to pay down a mortgage aggressively.
   • Refinancing Opportunities: Keep an eye on interest rate trends to refinance high-interest mortgages when favorable.

3. Financial Advisor Consideration:

   • Cost vs. Benefit: For individuals with straightforward financial situations, self-managing investments through low-cost ETFs may be more beneficial than hiring an advisor.
   • Personalized Advice: If complex financial planning is required, such as estate planning or managing significant assets, a fiduciary financial planner can provide tailored strategies.

4. Investment Control:

   • Maintain Flexibility: Retaining control over investment decisions can offer greater flexibility and potential for higher returns compared to fixed annuity products.
   • Professional Guidance: Seek advice from trusted financial professionals to navigate complex investment choices.

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Notable Quotes with Timestamps

• Mark T. McGowan ([03:34]):
  "I am not the kind of person who wants an annuity product. I would take the money, I would invest it, and I would make it much simpler."

• Jill Schlesinger ([07:35]):
  "Is it ever worth paying somebody to get a better return? That's the first question."

• Mark T. McGowan ([11:36]):
  "Do more. I think the goal should be to max it out."

• Jill Schlesinger ([12:00]):
  "This completely depends. I would not even look at this right now. This is so it's 20 years from now."

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Conclusion

In "Am I on Track at 39 Years Old?", Jill and Mark provide thoughtful, jargon-free financial advice addressing real-life scenarios. Whether contemplating pension options, considering financial advisors, or assessing one's retirement readiness, listeners receive pragmatic guidance to enhance their financial well-being. The episode underscores the importance of personalized financial planning, maximizing investment opportunities, and maintaining flexibility to adapt to future financial landscapes.

For more detailed discussions and personalized advice, listeners are encouraged to visit jillonmoney.com and reach out through the "Contact Us" button.

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Transcript

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[Mark T. McGowan]

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[Mark T. McGowan]

Welcome to the Jill on Money Show. It's Thursday, May 8th and we are here helping you make better, sometimes less bad friends financial decisions. If there's something going on in your life. If you're thinking about an early retirement, if you're weighing two different job offers, if you're trying to figure out how to finance your kids education, if you are seeking to sell or buy a home, anything that touches your money, get.

[Jill Schlesinger]

In touch with us.

[Mark T. McGowan]

Go to jillonmoney.com, click the contact us button and write us a note. And if you'd like to join us on the air live or all you need to do is check the box and we will do everything else. When I say we I mean Mark will. I don't do anything on our website. All of our content is living right there. Podcasts meaning this one and Money Watch, our second podcast. And that Money Watch podcast is really great for those of you who want to brush up on some of your fundamentals or someone in your life who would like to learn more about the financial process and how it impacts them throughout their lives. Money Watch is our second podcast. We've got a radio show, we've got a blog, videos, resources and of course the free weekly newsletter which comes out every single Friday. So check that out. It is [e-mail] okay, let's do some emails. We are starting with Dan who has it says S Pia. Now Mark, you know I have to actually do this here. So this is a single premium immediate annuity joint life with period certain using the pension payout. Boy, that's like a lot of words, right? Period certain means the money has to come out over a certain period of time and I don't know what the pension payout is, so I'm going to see what this is. Here we go. From Dan.

[Jill Schlesinger]

Hello Jill and Mark.

[Mark T. McGowan]

Since 2024 I've listened to your podcast daily while commuting and I'm also one of your subscribers. I appreciate all the direct, even indirect advice you give to your listeners. My my question is related to a pension. Okay, here we go. I have a private pension, meaning this is not some government pension. It does not have a cost of living adjustment. The fixed pension amount $5,000 a month with a 100% spousal benefit. It starts in January 2027 or $1.1 million in a pension payout in August of 2026. The company offer pension plan which is essentially a single premium immediate annuity for life either with no cash refund or for a period certain. I always like period certain gang which means the money has to be paid out to you or whoever your beneficiary is over that period. Most of the people who retired took the pension payout and invest or bought some annuity with better options from another insurance company. I am leaning towards taking the payout and would buy a better policy with a 20 year period certain or just invest the pension payout. I'd like your thoughts on better ideas. I will be 62 years old when I retire. My wife is eight years younger than I am. We need $12,000 a month in income. I plan to take Social Security at 70, which would be $4,500 a month and my wife will start at 62. That would be $2,000 a month. Okay, we have retirement assets of IRA 401 about $2.2 million and Rotha Brokerage which is about 800,000. I mean you have a lot of money and you have Plenty of money to basically sustain you. I think the question is how you feel about having a fixed amount of money that comes to you over that 20 year period. And I tell you what I would do. I am not the kind of person who wants an annuity product. I would take the money, I would invest it, and I would make it much simpler. That said, if that is something that is really scary to you, the other opportunity would be to go talk to somebody who is a certified financial planner, someone who's a fiduciary, someone who could really walk you through what the choices are. Because my fear is that once you get into this annuity contract, you know, it's not a ton of money, but it's enough, thank you very much. $1.1 million. I don't know if I'd want it tied up in a, in a product. I think I might want control over it. But if you wanted to get some help, you could certainly go to letsmakeaplan.org or you can go to the national association of personal financial advisors, NAPA.org and someone could help you really understand the cost of doing it one way versus another. I again, lean towards not having a annuity because I just think that's, you know, you've lost the money once it goes in. But if you're really freaked out about this, I get it. Okay, next is from Austin who writes Super Duper. Appreciate your show and I've learned a lot from it. Thanks so much for your work. Okay. I'm 30 years old. My wife is 32 years old. No kids. We live in Texas. We own a home worth $275,000. Ah. They've got a big mortgage marked $258,000. 6.99%. So they must have just Vanguard. Retirement accounts include Roth 25,000, wife's Roth 6,000, rollover IRA, hers 3,000. I have a pension through my work as a clergy person. I'm not even sure how it works or its eventual value. I assume the longer I work in my denomination, the better the payout that it will become. I've got term life of $500,000. Question. Does it make sense for us to hire a financial advisor?

[Jill Schlesinger]

Hmm.

[Mark T. McGowan]

I'm going to say no right now, but here's the extra piece of it. We have a family friend who we trust who works at a big box retirement company. If we decide to sign on with him, a 1% fee. I'm not a huge fan of that from your show. I think your general advice is to just invest in the market S&P 500 total stock market ETFs. That's true. And maybe even a bond ETF also. Is that the best way to go? Is it ever worth paying somebody to get a better return? That's the first question. The answer is that is not worth it because those advisors will not get you a better return. Okay. But what they could do is give you customized financial advice. That's the only reason I would pay a fee if I were getting ongoing real financial planning advice. But in your case, to be honest with you, you guys are so young, you're just starting out. Mark, would you just clarify this and tell Austin whether or not to hire the good friend who will soon become his bad friend?

Yeah, I don't, not yet. I don't think they need it yet. I think they're probably just based on what I'm reading, they're doing what they should be doing. They're investing in total stock market ETFs. They're young, they can take a lot of risk. I'm fine with that. I don't see the need right now.

Me neither. And by the way, one thing we will say, and Mark has done this himself, is you've got a 6.99% mortgage. Keep an eye on those interest rates. See if there is something you may want to do going forward. If rates change, maybe we can get you a refi. But that's the only thing that I would look at right now. So hopefully if you want some more information about the pension, you get the get find out from work. We'll happily hold your hand through that. Do what you're doing. I say no to the financial advisor. Okay. I like this is like the young show. Matthew is 39 years old, he's married, he's got a six year old and a three year old. And here's the question. I've been with my employer for 15 years and I plan to retire with him. Oh my God. Isn't that amazing? Very old fashioned notion like I'm going to retire with these people. My wife took. I almost read this as my wife took off, like left me. But it's not that. She took off a few years when we were living out west to spend time with our kids. She started working part time and I worked for a great company, good benefits. Okay. So Matthew has been contributing 17% since he started working with them. And check this out. He puts in 3%, they match 7% and then he puts in another 7%. So he puts in 10, they match 7. Okay, we are also an employee owned company, ESOP and I've been in the stock program since day one. And an employee stock ownership plan is a very interesting plan. Very few places have it, but the majority of that plan is a traditional 401k and ESOP. They've recently added a Roth option. He rolled over some of his pre tax money, not all. He started contributing 10% to the Roth and the company. Match of seven will go to the pre tax. I started a 529 for one of the kids and then an in state prepaid plan with the idea that one might stay in state, the other might.

[Jill Schlesinger]

Go out of state.

[Mark T. McGowan]

All right, you ready for these numbers? Mark, I just want to say one more time. These folks are 39 years old. Okay, here we go. Traditional 401k, $588,000. Roth and Roth 401k, 100,000 brokerage. 16.5esop. 415 cash, 40 grand and 529 of $25,000. So they're doing incredibly well. And they got a couple, they own a home and they've got some equity in that home. A couple hundred thousand dollars of equity. Okay, here are the questions, Mark. You're going to. I'm going to say the. I'm going to. I'm going to read the question. You're going to give the answer.

[Jill Schlesinger]

Question.

[Mark T. McGowan]

Should I combine my investments into a single provider instead of having them both at Fidelity for work and then Vanguard for personal? What do you think, Mark?

No, that's fine. I mean, you really can't control who your employer uses. If you want to use Vanguard for your personal accounts, that's fine. I mean, one day you might roll all of your work stuff into your Vanguard anyway. So I have no problem with that.

I don't either. Okay, next. Is 10% Roth contribution a good idea?

[Jill Schlesinger]

Is it enough? Should I do more?

[Mark T. McGowan]

What do you think for that? Matthews wants to know if you can do more.

Do more. I think the goal should be to max it out.

Absolutely. Not that I plan on retiring early, but I. But could I be on track to retire at 59? I'm going to answer that. This completely depends. I would not even look at this right now. This is so it's 20 years from now. Let's get your, you know, I get it. You want to see if you can change careers. I think you're probably on track to be able to do that. But if you really want those opportunities, just keep doing what you're doing. All right now, Mark, what else should they be doing with the extra funds. He says I recently started to contribute $150 per week to my cash savings, $50 a week to my brokerage. Is it necessary?

I mean, if I look at this whole thing, the one area of potential weakness is probably the 529 plans.

I see.

Why I see one for 25,000. They have two kids, so if there's extra cash flow, that's probably where I would focus.

Well, wait a second. I'm going to free up a little more cash flow with this next question. Matthew has a mortgage. Okay. And the interest rate is 4.3%. He says we bought the home in 22. We like it, we don't love it. He has been paying an extra.

[Jill Schlesinger]

Wait for it.

[Mark T. McGowan]

$1,500 a month. And he wants to pay this down in five years. Okay. He said the idea is to Pay this down ASAP, then take 5 to 600,000, use a down payment for our forever home. Not saying I would use the full amount. Would like the option. If we find our forever home. Is this a good idea or crazy? I'm not going to say crazy, but Mark, can you talk about why you wouldn't pay down a mortgage if you thought you were going to? Actually, yeah.

I mean, if you think you're going to be moving, I mean, why. I understand you want to build up your equity, but I just don't see the rationale, rationale behind it. And it's 4.3%.

I would say that is not crazy, but I don't think that's a good idea. So now let's go back to your other question. You have not just $1,500 per month, you have $1,700 a month. So number one is, I think, I think there's three things to do with $1,700 a month. Beef up the 529, max out your retirement and whatever is left, put in the brokerage account.

It's more like 2000amonth because he's doing 150 per week through his cash.

[Jill Schlesinger]

Oh, yeah.

[Mark T. McGowan]

Oh, my God.

[Jill Schlesinger]

I missed that.

[Mark T. McGowan]

Okay, so, yes, $2,300. $2,300 a month. Number one, max out your retirement account. Number two, put more money in your 529. Number three, brokerage. That's it.

[Jill Schlesinger]

Don't worry.

[Mark T. McGowan]

I don't. I. Yeah, I agree. That's obviously what he should do, but Matthew is. He's hell bent on getting rid of that mortgage.

Well, I want him to come on the air and talk to us. We'll talk you through it especially Matthew. Dude, if you're going to actually be thinking about selling the house, the money you invest in five, six, seven, eight years, you find that forever home, you have the money to do it. So don't get it tied up in that mortgage. I say no way. All right. That's it. That is the program. If you are looking at paying down your mortgage, especially like in that situation, you know it not always the best idea. I know there is this emotional part that people feel. Let us walk you through some of the math and at least least give you an alternative to consider. So go to the website jillonmoney.com click the contact us button. Let us know if you want to come on the air. This is where we can really talk through stuff. We'll change your name. Don't worry.

[Jill Schlesinger]

It's all good.

[Mark T. McGowan]

You can find all of our content on the website. You can subscribe to this program on the Odyssey app or wherever you find your favorite podcasts.

[Jill Schlesinger]

Please leave us a rating and review wherever you listen.

[Mark T. McGowan]

Put your hands metaphorically on someone's back, will ya? Come on. Someone needs a little pat on the back. Change your work, change your wealth, change your life. Thank you for listening. We'll talk to you tomorrow.

[Jill Schlesinger]

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[Mark T. McGowan]

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[Jill Schlesinger]

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[Mark T. McGowan]

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[Jill Schlesinger]

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[Mark T. McGowan]

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[Jill Schlesinger]

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[Mark T. McGowan]

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[Jill Schlesinger]

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