Am I Saving Too Much?

Summary

Podcast Summary: "Am I Saving Too Much?"

Podcast Information

• Title: Jill on Money with Jill Schlesinger
• Host/Author: Audacy
• Episode: Am I Saving Too Much?
• Release Date: January 2, 2025

---

Introduction

In the January 2, 2025 episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger delves into the complex topic of retirement savings with a special guest, Will, a military veteran approaching retirement. This episode titled "Am I Saving Too Much?" explores whether Will’s current saving strategy is optimal or if adjustments are necessary as he transitions out of military service.

Guest Introduction: Will's Background

Will joins the show from South Korea, bringing over three decades of military experience. After 31 years in service, he is planning to retire at approximately 34 to 36 years of age, with a substantial pension ranging between $115,000 to $130,000 annually. His primary concern revolves around determining the appropriate level of savings required to maintain his and his family's financial stability post-retirement.

Will's Financial Situation

Current Savings and Investments:

• Thrift Savings Plan (TSP): Initially contributed minimally, Will has recently started maxing out his TSP contributions, totaling $38,000.
• Cash Reserves: Maintains approximately $15,000 in liquid assets.
• Individual Retirement Accounts (IRAs): Holds $16,500 in his Roth IRA and $15,000 in his wife’s Roth IRA.
• Brokerage Account: Invested around $40,000 with Vanguard.
• Real Estate: Owns rental properties, including his wife's apartment abroad, which generates sufficient income to cover their trips.

Family Considerations:

• Married for four years to a 39-year-old spouse who is not in the military or employed.
• Has two older children from a previous marriage and contributes to their 529 plans.
• Plans to move in with his wife’s parents in the States upon retirement, thereby eliminating additional housing costs.

Key Questions: “Am I Saving Too Much?”

Will poses a critical question to Jill: “Could I back off the TSP contribution a little bit?” This question sets the stage for a detailed discussion on balancing current savings with future financial needs.

Jill's Expert Advice

1. Evaluating Pension and TSP Contributions

• Pension Sufficiency: Jill acknowledges that Will's pension will likely cover the bulk of his annual needs ($100,000), suggesting that his reliance on TSP might be adjustable.
• TSP Strategy: She advises that continuing to maximize TSP contributions is beneficial, emphasizing the importance of leveraging the Roth option for tax-free growth.

Notable Quote:
Jill Schlesinger at [04:45]: “I like the idea of continuing to use the Thrift Savings Plan. I mean, I don't think there's any downside that you're using the Roth.”

2. Diversifying Investments

• Brokerage Accounts: Jill recommends increasing contributions to non-retirement accounts like Will’s Vanguard brokerage account to provide liquidity for unforeseen expenses and personal spending, such as travel or hobbies.
• Real Estate Investments: She encourages exploring additional real estate investments to diversify income streams further.

3. Life Insurance and Estate Planning

• Life Insurance: Jill suggests that Will consider a supplementary term life insurance policy to enhance his spouse’s financial security beyond the survivor benefit plan provided by his pension.

Notable Quote:
Jill Schlesinger at [10:03]: “If you were to die within those 10 years, she'd get the 55% survivor benefit, but you also get extra money from the insurance policy.”

• Estate Documents: Emphasizes the importance of updating wills and estate plans to ensure comprehensive financial protection for his family.

4. Future Income Considerations

• Social Security Benefits: Jill points out that once Will begins receiving Social Security, his financial situation will further stabilize, reducing the need for excessive savings.
• Potential Employment Post-Retirement: Acknowledges Will’s intention to pursue part-time work, which can supplement income and reduce dependence on savings.

5. Balancing Savings with Lifestyle Needs

• Jill advises maintaining a healthy balance between saving and allowing for discretionary spending to ensure a fulfilling retirement. She highlights the importance of having a "slush fund" to enjoy life without financial constraints.

Notable Quote:
Jill Schlesinger at [07:28]: “You might want to travel, you might want to buy a car here and there. Like I think it's good to beef up your non-retirement stuff.”

Action Steps for Will

1. Assess and Possibly Adjust TSP Contributions: While continuing to contribute to the TSP, evaluate if slight reductions are feasible without compromising long-term goals.
2. Increase Non-Retirement Savings: Boost investments in brokerage accounts to enhance liquidity and flexibility.
3. Enhance Life Insurance Coverage: Explore additional term life insurance to provide extra financial security for his spouse.
4. Update Estate Documents: Complete and update wills and other estate planning documents promptly.
5. Diversify Investment Portfolio: Consider further investments in real estate or other asset classes to ensure diversified income streams.

Conclusion: Jill's Closing Remarks

Jill concludes the episode by reaffirming Will’s strong financial position and encouraging him to implement the discussed strategies to optimize his savings without overextending. She invites listeners to engage with the show by submitting questions, joining live broadcasts, and subscribing to the weekly newsletter for ongoing financial insights.

Notable Quote:
Jill Schlesinger at [09:53]: “I think you're in great shape. I think that just being focused on saying let me give myself a little bit of a slush fund from, let's call it 55 to age 70.”

---

Final Thoughts

This episode offers valuable insights for military personnel and others approaching retirement, emphasizing the balance between saving diligently and allowing for a rewarding post-retirement lifestyle. Jill Schlesinger’s expert guidance provides actionable steps to ensure financial security without unnecessary over-saving, making it a must-listen for anyone questioning their retirement strategy.

---

Additional Resources:

• Visit jillonmoney.com for more financial advice.
• Subscribe to the free weekly newsletter for the latest financial tips and strategies.
• Join the conversation by calling in with your financial questions or by participating in live shows.

Transcript

[Jill Schlesinger]

Hi, this is Jill Schlesinger. Being a business owner means you're always on adapting, innovating and making big moves. To take your vision to the next level. You need solutions that match your pace, offering flexibility, rewards and tools to help you keep going strong. That's where the American Express Business Platinum Card comes in, a partner for navigating today's business world. You can have a flexible spending limit that adapts with your business, plus the ability to earn one and a half times membership rewards points on select purchases so you earn rewards that can take your business further. See how the American Express Business Platinum Card gives business owners like you the tools and rewards to do more of what they love. Not all purchases will be approved. Terms and points cap apply. Learn [e-mail] AmExBusiness Where'd you get those shoes?

[Unknown Speaker]

Easy. They're from DSW, because DSW has the exact right shoes for whatever you're into right now. You know, like the sneakers that make office hours feel like happy hour, the boot boots that turn grocery aisles into runways, and all the styles that show off the many sides of you, from daydreamer to multitasker and everything in between because you do it all in really great shoes. Find a shoe for every you at your DSW store or dsw.com welcome to.

[Jill Schlesinger]

The Jill on Money Show. It's Thursday, January 2nd. I don't know if a lot of people are working today. I am. We are. And I know that's kind of a drag to come back after a nice break. I took, you know, almost a week and a half off. God, it was amazing. And we're here still answering financial questions. Whether it's 2024 or 2025, we're here for you. So if you've got something going on, if you are really wondering how to start the year off on a positive note, go to our website, jillonmoney.com, click that contact Us button and complete the form. If you want to come on the air live with us, check the box. Mark. We'll do everything else.

All right, let's get this show started.

We're starting with a bang, I'll tell you. We are going to talk to Will, who is speaking to us from South Korea.

[Will]

I've been in the military for 31 years now. Really got a late start in investing as far as like the thrift savings program that the military offers. Really just in the last few years that I've gotten into that. So I'm kind of maxing it out because I can and it's available to me. But with 31 years in and looking to retire at around the 34 or 36 year mark, my pension's going to be relatively high. 115 to $130,000 a year. And I'm just wondering how much is too much. Could I back off the TSP contribution a little bit?

[Jill Schlesinger]

Interesting. This is interesting. So a couple of questions, will. Number one, are you single, partnered, married couple?

[Will]

I'm married, just remarried about four years ago.

[Jill Schlesinger]

And how old is your spouse?

[Will]

She is. She's 39.

[Jill Schlesinger]

You see, that mark is very. This is why my friends who are 50 can't find guys, you know, because he's marrying a 39 year old. Mm. Okay. That's a different program. Is she also in the military?

[Will]

No, she's not.

[Jill Schlesinger]

Okay. And does she work?

[Will]

She's not, no.

[Jill Schlesinger]

And is she with you there or is she in the States?

[Will]

No, she's regularly here with me. She's on vacation with her son right now, but yes, she's normally here.

[Jill Schlesinger]

Okay, so when we're looking at retirement planning, are we planning for you and her together? Is that. Or do you keep your money separate Us together. Okay, great. How much do you think you guys need to live on?

[Will]

Probably in that 100,000 a year. Really?

[Jill Schlesinger]

So really your pension would mostly cover. It would cover your needs are. Yeah.

[Will]

The bigger concern is that, well, I'll have the pension. Yeah. I really need to pay into the survivor benefit plan, which only I believe is like 55% of what my pension is. That would go to her with my demise. Right. So I don't know if that would be enough then to.

[Jill Schlesinger]

Right. How much money do you have right now in the thrift savings plan?

[Will]

Right now the balance is 38,000. Because when I first started, I was just dripping into it for several years, like very small amount just to get in a habit of putting something in there while I paid off other debt. And it was just the last two years where I maxed, maxed it out, but it was still under the traditional plan because before you weren't able to do a Roth. So I just last two months, switch it to. To a Roth, I'll max it out.

[Jill Schlesinger]

Do you have some cash on hand?

[Will]

Not a ton. I keep about 15,000. It's, you know, the pay's steady, it's pretty secure. And knowing that I'm going to get my paycheck every two weeks, so.

[Jill Schlesinger]

Sure. And any other kind of investments, a brokerage account, you know, some other things that you rental Property or anything like.

[Will]

Well, so on the retirement side there's a Thrift Savings Plan and then I've got, I have an ira, a Roth and my wife does as well with balances, I mean just the last few years we put in there. So I've got like 16,5 in mine, 15,000 in hers. Non retirement accounts. I have a Vanguard account that's got about 40,000 in it. Rental properties. My wife owns an apartment. She's from a foreign country. She owns an apartment there that really just, it's enough rent to pay our. Enough income to pay for our trips there.

[Jill Schlesinger]

Okay. So I'm not going to really include it. And what about you? What about your living situation? I mean you're paid for your, you're living in Korea, but do you own any property in the U.S. not anymore.

[Will]

I sold a house in South Carolina before I left there at the peak of the market. That worked out very well. And once we retire we're looking to move in with, with her parents actually back in the States.

[Jill Schlesinger]

What kind of you. You must be a very special kind of man. Well, move in with her parents.

[Will]

At least she told me that was the plan and they were in agreement with it. So we'll have a good time. There's not going to be, you know, an extra house payment. Although I would like to do some investing in real estate to put out rentals things.

[Jill Schlesinger]

But this is interesting. Will you be entitled to Social Security?

[Will]

Yes.

[Jill Schlesinger]

Do you really need, I mean, I don't mind you using the Thrift Savings Plan. So let's just talk about this. If you retire in two years, when you have 33 years in, like, what do you hope for? Do you want it to be then, do you want it to be in 5 years?

[Will]

5 years would be probably the best case. This is going to be my last assignment, doing a two year extension. I'm a year in right now. I'll do another year and then I'll do a two year extension. So at least that's going to take me to 34 years in. But if the army will keep me another two, I'll stay another two.

[Jill Schlesinger]

Why wouldn't they want you? You sound very nice and competent. So at that point, here's the thing. And obviously the pension keeps getting better and better. So you know, you have the pension that will mostly float you. I like the idea of continuing to use the Thrift Savings Plan. I mean, I don't think there's any downside that you're using the Roth. Now is great. Is your cash flow Pretty able to absorb that and more in terms of.

[Will]

Saving it, it's pretty much break even because I mean the couple other things I do, I've got two older children from my earlier marriage. The oldest, he's got a, a son now. So I contribute to a 529 for my grandson and for my stepson as well where I, you know, I do like $100 on their birthday per year of age. So it's. For the stepson it's getting a lot more, you know, for the grandson it's, it's going to grow as he grows, doing those and contributing to the maxing out the Roth IRAs as well. So the extra money each month ends up really folding back into those. So it break even through the year.

[Jill Schlesinger]

Would it make you feel a little bit, I mean you said you're 50, right? Yes. Would it? I would think you could do one of two things. I don't think you need to do Roth IRAs. I mean you can just use the TSP just because it's easy and you know, it's a good plan. That's not a problem. I'm not sure I would do the Roth IRAs. I would mind. I mean, because you're young. I think you should be putting more money into the Vanguard account because you are going to have a period of time where you're going to want to access money. I know you're going to probably have more than you need. But let's say that, you know, you're 55, 53, 55, whatever it's going to be before you get to a period where, I mean, I think you'd want to spend some more money. You might have, you might want to travel some, you might want to buy a car here and there. Like I think it's good to beef up your non retirement stuff. You're probably not going to need to touch a lot of this money. You know, you're. Because of your, it's quite a unique situation. Right. You have a great pension. But we do want to beef things up, you know, because as you say, your wife's younger, you know, you want to get back to the States and you're going to do your thing. You're not going to have a big housing cost, you're going to have some fun. Do you think that you would work when you return to the States?

[Will]

I probably will. In some capacity of a little something, right? Yeah, just some side money to cover the hobbies.

[Jill Schlesinger]

Yeah, I, I don't think that, I think that you're, you're in really good shape. I think that just being focused on saying let me give myself a little bit of a slush fund from, let's call it 55 to age 70. Because that those 15 years, you're going to be fine with your current accounts, I mean with your current income. But you know, when you, once you get Social Security, I mean you' be, you're going to be amazing shape. I think you're in great shape. You got your wills done.

[Will]

Well, I knew that question was going to come and I was trying to think of a snappy answer. My answer is I need to update mine and we need to do one together. You know that we get all our planning together.

[Jill Schlesinger]

Well, I know you always have to have a will in the military.

[Will]

It's as easy as going to our legal office and sitting down with someone to do it. And we just need to go do that. We will, very, very soon.

[Jill Schlesinger]

Thank you. Please do that. Do you have life insurance through the military?

[Will]

Yes. So just a term policy, like 400,000 coverage on me and then I believe it's 100,000 for my wife.

[Jill Schlesinger]

I mean there's something to be said maybe depending on like when you retire and what your situation is. If you feel like the survivor benefit for your wife isn't quite enough, you may want to get. This sounds crazy but like a 10 year term policy that would protect her if you were to die within 10 years after you leave the military. You know what I mean by that? So if you were to die within those 10 years, she'd get the 55% survivor benefit, but you also get extra money from the insurance policy, right?

[Will]

Yeah, I hadn't thought about doing that.

[Jill Schlesinger]

Let's look into that sense that that might be worth doing. I think you're in great shape, will.

[Will]

I appreciate it very much.

[Jill Schlesinger]

Let's beef that non retirement money up and get those estate documents taken care of and maybe look into a life insurance.

[Will]

All right, excellent.

[Jill Schlesinger]

Are you in the military? Do you have someone in the military in your family? Mark and I love talking to people in the military. We're very familiar with the benefits. Maybe you're a job transitioner. We'd love to hear from you. Just go to our website, jillonmoney.com, click the contact us button and of course let us know if you'd like to come on the air live. While you're on the website. Don't forget to sign up for the free weekly newsletter comes out every Friday. Mark does such a great job with that. I really love that. Every single Friday. There is something in that inbox. Maybe it's something you have not read about throughout the week, you can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Please leave us a rating and review wherever you listen. And of course, please lift someone up. Change your work, Change your wealth, Change your life. Thank you for listening and we'll talk to you tomorrow.

[Will]

Foreign.

[Unknown Speaker]

The new year is here, and it's the perfect time to kickstart your meditation practice. The Morning Meditation for Women podcast has short, daily guided meditations that will help you start your day with intention and focus and make it so easy to get you into the habit. Imagine feeling so much more calm and confident in 2025. Follow and listen to Morning Meditation for Women on the free Odyssey app or wherever you get your podcasts.