D (3:15)

I'm wonderful. It's so good to be with you guys.

A (3:17)

Good to talk to you. What can we do for you?

D (3:20)

Well, I want to retire from my current job in two years. About two years. But I don't want to just, you know, not do nothing. So I plan to start the next chapter of my life. And I don't know exactly what that's going to be. I have a few things in mind, but. So I want to make sure that I'm ready to make the transition into the next chapter.

A (3:49)

That sounds awesome. So, Lee, how old are you now?

D (3:53)

I'm 60.

A (3:54)

Are you married, single? Partnered?

D (3:57)

I'm single, but I'm dating. I've been dating the same person for about three years now.

A (4:04)

But you keep your finances separate.

D (4:07)

Exactly. We don't live together.

A (4:09)

Okay. Okay. Very good. That's probably why you're so happy, you know, not being in each other's business. Okay, so how much do you earn right now, Lee?

D (4:18)

$195,200.

A (4:21)

Are you making retirement plan contributions on that $195,000?

D (4:24)

I am.

A (4:25)

How much is in your retirement account?

D (4:29)

I have 992,000 and I've reached the 1 million mark last Thursday.

A (4:39)

Only to have it snatched away.

D (4:41)

Exactly.

A (4:42)

Gosh. Don't worry. Don't worry. You'll get there again.

D (4:45)

And that was for the first time.

A (4:47)

I know. It feels good for a minute. So for that retirement account, is that a traditional or a roth?

D (4:55)

Only about 22,000 is a Roth. Cause I started making all of my contributions into the Roth account. It's a TSP account. So I started making all of my contributions in Roth in 2024.

A (5:12)

Okay, that's fine. Don't worry.

D (5:14)

End of 20. Yeah.

A (5:15)

Will you be entitled to a pension?

D (5:17)

I will.

A (5:19)

Tell us about the pension so we can all be envious of You.

D (5:23)

Well, I'll be getting 65,000 a year.

A (5:27)

When does that start?

D (5:29)

That starts as soon as I retire, which is.

A (5:32)

So if you say in two years from now, it'll be 65,000 dol.

D (5:36)

Right. And then I'm also eligible for my husband. My deceased husband's Social Security, because I'm 60 now, and so I'll take that as well and let my Social Security sit.

A (5:49)

How much will that amount be? That the amount from your deceased husband's Social Security.

D (5:56)

29. About $29,000.

A (5:59)

When you look at your spending, you know, what do you feel like your needs are in terms of income?

D (6:06)

Well, every. Just about every single thing that I think that I have that I spend money on monthly comes out to between 6,000 and 6,500.

A (6:19)

So if I said 6,500amonth, you'd feel good about that? If we could figure out that you would be able to do anything you really want. $6,500 a month, you'd feel good about that? Yes, I would. Okay, great. In addition to the tsp, do you have other money that has been socked away?

D (6:40)

Well, I just spent like 31,000 on reno bathroom renovations, so my high yield savings account is just down to 7,000. Because I bought a new furnace and did bathroom renovations.

A (6:54)

So that you'll be able to replenish that.

D (6:57)

Exactly. Because I have a margin every month of $3,000.

A (7:01)

Wow. Wow, that's amazing. How much is your house worth?

D (7:06)

It's only worth about 550.

A (7:09)

What do you mean, only?

D (7:10)

Seems to me because I still have a mortgage on it.

A (7:15)

What's the mortgage? Outstanding balance, 325. What's the interest rate?

D (7:24)

4%.

A (7:25)

Okay, so that's good. Nice and low. I forgot to ask you, Lee, do you have any children?

D (7:30)

I don't.

A (7:31)

Okay. In addition to the high yield savings account, anything else, like a CD or a brokerage account, anything else that is out there that is available to you to help fund your retirement?

D (7:44)

Well, yes, I have a rental property. It used to be a vacation home, and when my husband passed away, started renting it. It's worth $338,000. And I have a mortgage on it for $126,000.

A (8:00)

And what's the interest rate on that $126,000 mortgage?

D (8:04)

2.99.

A (8:06)

Oh, gosh. Okay. Is it easy to manage or is it a pain in the neck? Like, how do you feel about it?

D (8:12)

I feel good about it. I actually would like to. One of the things I wanted to talk to you about is, I'd actually like to spend some of this margin and pay it off.

A (8:22)

Why? You have a 3% mortgage.

D (8:24)

I want to buy another house. I want to sell my current residence.

A (8:28)

Oh, wait a minute. Wait a minute. Now we're getting into something fun. Okay, so apart from the whole retirement scenario, which I can pretty much declare you're fine for your retirement, I have another property. Oh, let's do that property first. So you have two rental properties, Right.

D (8:46)

And then I have a vacant lot that's worth. It's hard to say what it's really worth, because I share the property line with a university, a private university, and they would love to buy it, but. And there's other people. I get stuff all the time. People want to buy it. So I don't really know the actual value of it. It was a lot that my great grandmother's home sat on.

A (9:13)

Oh, my gosh.

D (9:14)

The lot across the street. There's a vacant lot across the street from it. I saw it online, and I think it was Redfin or something for like 2. 38. The value of it to 38. But Redfin had mine valued at about 100,000. And I don't know how that could be the case when my lot is bigger than the one across the street and the university wants all of them. So that's. That's a lot that I have that I. You know.

A (9:44)

So you have the rental property and this lot, and those are the two big pieces of real estate in addition to your primary residence. Right?

D (9:51)

Exactly.

A (9:53)

Right. Now, that rental property that you own, how much rent is it generating after you pay for your mortgage?

D (10:00)

It's pretty much breaking even right now between the mortgage and I really probably need to take the rent up a little bit, raise the rent. But my tenant has another year left on her lease, so I'll definitely consider that afterwards. But it's not. I'm not going to raise it by much.

A (10:20)

Right.

D (10:21)

And it's a very small.

A (10:22)

It's not going to. It's not going to all of a sudden start cash flowing. $1,500 a month.

D (10:27)

No.

A (10:28)

Yeah. Okay.

D (10:29)

And the other good thing about that property is it's where the beaches are, and it's like 9, 10 minutes from two beaches and then 45 minutes from three more beaches.

A (10:41)

All right, I see a lot of possibilities. So just forgetting about the retirement thing for a second, because obviously your pension income, plus your husband's Social Security and eventually your own Social Security, which I.

D (10:57)

Can tell you how much that will be.

A (10:58)

How much is Yours. What's your Social Security estimate?

D (11:02)

Mine is going to be at 70 is when I would take it, and that will be $60,000.

A (11:11)

Let's be smart about this. $60,000 of Social Security. And even, like, for the time that you're waiting till 70, your husband's 29. Your $65,000 in pension together is pre tax. I understand, but you have plenty of money, so all of your needs will be taken care of. So the. If you never said anything to me about the real estate, let's just answer that question first, which is in. You're in great shape. But now let's talk about what you actually would like to do. You have a $550,000 home. What is your new home quest looking like? What would you like to be to be buying?

D (11:50)

Probably about 700,000.

A (11:52)

That is a house that will cost you more to keep up. Right. Because you would have to, you know, it's bigger, there's more taxes, just like. So in that scenario of a new home, you would essentially need to also increase the spending that you'll be doing, don't you think?

D (12:11)

Exactly.

A (12:13)

So if we went from $6,500 a month to maybe, I don't know, $8,000 a month, does that seem like reasonable to cover everything for a new home?

D (12:24)

Well, I did a little bit of a calculation, and it looks like the new home would cost me like another maybe 1,400amonth.

A (12:35)

Okay. All right. Well, so that's kind of good because I just said 8,000amonth and that, you know, you said 6,500. So I think 8,000 is the right number for us to use. I agree. Okay, great. So how would we pay for this new home? Number one, you'd sell your current home, right?

D (12:53)

Exactly.

A (12:54)

Okay. Would you consider selling the rental property and the vacant lot? Would you sell everything, get all that money together, put that down and have your new house, like, have a dream house? What do you think about that?

D (13:08)

That is something I have thought about, and I think I was just really hoping to try to keep the rental property just in case if I decide to want to use it as a vacation home again myself.

A (13:22)

Oh, okay. I got it. Well, it makes it harder, right, because you have equity in your current home, Right. You have, let's say, couple hundred thousand dollars from your. I mean, because you have cost of selling and everything. So let's say equity in current home is $200,000.

D (13:44)

Can I add one more quick thing?

A (13:46)

Yes.

D (13:47)

I got my broker's license. Real estate broker's license. Although I'm an attorney, I got my real estate broker's license just for the sake of saying in case I decide to. When I decide to sell or if I want to use it at some point. So I do have that. So I don't know if I'll have as much. But this, that's probably not going to make that.

A (14:09)

Let's just use a very low estimate. The 200,000, you clear 200,000, you wanted to pay tax on it. You have, right? You have not. That's not going to be a problem. But the rental property, you'd probably have to pay. What did you buy it for? What was the cost of the rental property?

D (14:28)

The rental property, I bought it for 260.

A (14:32)

Okay. No problem. Don't worry. That's all I want. I always wanted to get a sense of, like, what it was and. So you'll have another couple hundred thousand if we sold it. I'm just saying if we sold it, you'd have another 200,000 from that. And the vacant lot, if you were to sell that to the university, let's say worst case scenario, you get 100 because you said it doesn't sound like. It sounds like also like 200, but let's say it's 100. Let's just for the sake of it. Which gives you $500,000 in equity that you could put down to buy the new home. Okay. If you did all this, and then you would end up with a $200,000 mortgage at a much higher rate, but you know, you'd have it. I'm just, I'm playing with this right now. Mark. What's a $200,000 mortgage at six and a quarter percent? What's that look like on a monthly basis? That is about. Let's just call it 1,300. Okay. When you said $1,400 a month for the new house, were you including a mortgage payment or were you just saying cost of. Of the whole house and the taxes and everything?

D (15:34)

That would be mortgage interest and taxes. And I based it on. And any HOA. I kind of put a HOA in there, and I based it on a 5% rate.

A (15:45)

Okay. Okay. I mean, you have almost $1 million in your retirement account. I would hesitate to pull the money. Like, I wouldn't say, oh, take all this money out of your retirement account to buy the new home in cash, because it would be a massive tax hit. Maybe you take some out, but I wouldn't do, like, everything. I think the question is, can you do this? You can certainly buy a new home. I think a clean way of doing it is selling your house, selling the rental property, and selling the vacant lot. If you want the ability to keep the rental property for yourself, that's fine. But I wouldn't buy a new house necessarily during this next 10 years when you retire. Let's say you retire in two years and you've built up your high yield savings account and you've got your million dollars in your retirement account. That retirement account is there to fund a lot of different things, like the change in your spending, the higher spending amount that you'll need, and accounting for inflation. And I think you're fine. I'm not sure whether you were thinking you should pull a few hundred thousand dollars out of your retirement account to use to buy the new home. Were you thinking of doing that?

D (17:00)

No, I wasn't thinking of doing that. I was thinking actually of paying off the rental and using that money, you know, to help with the mortgage payment.

A (17:11)

But that doesn't make any sense. You're paying off a note that is costing you 2.99% to help pay for a note that's 6 or 5. It doesn't make any sense mathematically. If you decided you don't want to sell the rental property. One other idea is that when you retire, okay, when you retire in two years, over the next, the few years like before you're claiming Social Security, you could start to slowly take some money out of the thrift savings plan and pile, you know, compile a chunk of money that you would use to buy a new home. Doing it all at once would be kind of ghastly because you would have to pay big taxes on it.

D (17:54)

Exactly.

A (17:55)

But if you could do it and keep yourself in the 24% bracket, you know, if you have your pension of 65 and then your husband's Social Security of 30, you're in the 22. If you would take out, you know, 50 or $80,000 a year from your retirement account for a few years, not a lot, but like two or three years, pay the tax that's due on that and use that to help you buy the new home, that would be it. But I wouldn't, like, empty out the account. Mark, what portion of the thrift savings could Lee tap to help her buy this new home?

E (18:29)

I'd hate to tap it at all.

A (18:31)

But I know I don't want to, but I'm trying to give her options. Yeah, I mean, I'm with you. I wouldn't go, you know, I don't.

B (18:37)

Know, I certainly wouldn't go past a couple hundred thousand.

A (18:39)

Me neither. I would say that that 200 would be it. Okay. You came on with us, Lee, to kind of talk about retirement. We then moved into a housing question. Are you miserable in your house? Because your current home seems like a great deal and you've got a lot of money saved and you can do a lot of things by keeping this home. Do you hate this house or not?

D (18:59)

I don't hate it. It's just that I want first floor living as far as my bedroom and the house is kind of big for me. It's not the layout that I would want.

A (19:11)

Okay, well, I think that it's, it's. I think that the game plan would be that in two years when you are. And by the way, I would, I would just put money away into your retirement account. Like you don't have to go crazy. I really do want to make sure you build up that high yield savings account. I would not pay off a 2.99% loan. I would not pay off my 4% loan. Don't make any extra payments on anything. Okay. If you're thinking about doing this house in advance, that when you are done working and making your 195 grand a year and you're relying on your pension and your Social Security, could you take out, you know, 50, 60 grand a year for a few years, build up your cash position, and then potentially buy the new home? I think that's the way that we would suggest you think about doing it. Not emptying out your thrift savings plan. Do not do that. It works better if you just say, I'm selling my rental property, I'm selling my lot, I'm selling my house. Let's clean this up. These properties aren't working so well for you. But if you want to maintain the option of using your rental property for yourself, then you know, you're going to have to make some different decisions about, you know, the thrift savings plan. So here's what I'm going to suggest. We're going to send you on your merry way with a lot of information. I think over the next couple of years you should do your research on buying the new home. You have your license now. Really look at this. Start squirreling away money that you need to make this new home a reality. You may or may not choose to do it. And there's nothing wrong with doing it or not doing it. Get back in touch with us when you have a little more information because, look, I just don't like keeping rental properties that don't work so well. And if you're telling me, oh, I want to keep it for myself, like, could you rent your own? Could you rent something by the beach for yourself and get a good deal and grab your $200,000 of equity, maybe. I don't know. It seems like you have money available to make this thing work, and we are somehow not able to capitalize on it until you make a decision about what means more to you. Having the flexibility of having the rental property to yourself, having a floor plan that better matches you and your life. I mean, you're young, so you have time before you make these transitions. But it's good to plan for it now. So I think that that's kind of it. Don't forget to do your estate planning because you have, you know, a lot of money, a lot of assets. I don't know who's getting all this moolah, but make sure you have all of your accounts listed and keep us posted. You have a lot of information. Mark. We've. We've sent Lee away with a lot of numbers and maybe not even the way she wanted it to go down, but I think that those are the options. So if you are like Lee and you're contemplating retirement, you're thinking about real estate, you're trying to figure out the best way forward to make your plan of action work. Get in touch with us. Go to jillonmoney.com that's jillonmoney.com. click the contact us button. Write us a note if you want to come on the air, check the box. Mark will do everything else. You can subscribe to us on the Odysee app or wherever you find your favorite podcast, and, of course, try to lift someone up. Change your work, change your wealth, change your life. Thanks for listening. We'll talk to you tomorrow. Foreign.

E (22:27)

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F (22:57)

It's Draymond Green. I'm back for my 14th NBA season and my podcast, the Draymond Green show, is back to this season. I'm breaking down games, reacting to the biggest NBA stories and sitting down with teammates, rivals and culture shapers. And trust me, I'm not holding back on the court or on the mic. Two new episodes every week. New segments, big conversations, real basketball talk for the real hoop heads. Listen to and follow the Draymond Green show wherever you get your podcast.

E (23:23)

We're back.

F (23:24)

We're better. Let's get it.