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
- Assess and Possibly Adjust TSP Contributions: While continuing to contribute to the TSP, evaluate if slight reductions are feasible without compromising long-term goals.
- Increase Non-Retirement Savings: Boost investments in brokerage accounts to enhance liquidity and flexibility.
- Enhance Life Insurance Coverage: Explore additional term life insurance to provide extra financial security for his spouse.
- Update Estate Documents: Complete and update wills and other estate planning documents promptly.
- 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.