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- [00:01]
Fidelity Representative
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- [00:32]
American Express Representative
When you're with Amex Business Platinum, you have the card that helps businesses dream bigger, get a flexible spending limit that adapts with your business, and earn 1.5 times Membership Rewards points on select business purchases so you can stock up on what you need to take your business further and get rewarded for growing bigger. That's the powerful backing of American Express. Not all purchases will be approved. Terms apply. Learn more@americanexpress.com AmExBusiness Foreign.
- [01:04]
Jill Schlesinger
Welcome to the Jill on Money Show. It's Wednesday, June 11th and we are here trying to help you make better, somewhat less bad financial decisions. Now if you've got a question, something's going on in your life. You need a little bit of guidance. Maybe you need a little coaching. Just give us a Holler. Go to jillonmoney.com, click the contact Us button, write us a note and and if you'd like to join us on the air, check the box. Mark will do everything else if you're shy. If you think this is just going to live as an email, just know that number one, we're pretty built up in email so it might be a little bit before we get to you. But also give us a lot of detail. That way we don't have to have that moment where I then say oh can you please send us more information? Anything that you think could be helpful to us, let us know. And while you are on the website, don't forget sign up for the free weekly newsletter. It comes out every single Friday. It's so great. Got this new platform Mark. Has anyone noticed? Did anyone say what the heck, how am I subscribed to Substack?
- [02:05]
Mark
No. We've had a lot of people say though, nice to see you on Substack.
- [02:10]
Jill Schlesinger
Oh hey, we're on Substack Mark. Why is that important?
- [02:14]
Mark
Stay tuned.
- [02:16]
Jill Schlesinger
There could be things. Mark is cooking up lots of post retirement off ramp ideas for Jill Schlesinger. You know. By the way Mark, this morning we're recording this last week. This morning I was just listening to Marc Maron's announcement that he will be ending his podcast after 16 years. So as I was listening to that and walking the dogs. I was thinking about how we could end after a certain period of time. So he's like, oh, I've been doing this for 16 years. And then I was like, wait a minute. We started the radio show in 2011, right? Is that right, Mark?
- [02:50]
Mark
Yeah, January 2011.
- [02:52]
Jill Schlesinger
Okay. So wouldn't January of 2026 be perfect? 15 years. No. You're not going to let me do that anyway. Mark's not going to let me do radio show.
- [03:00]
Mark
Yeah, the radio show can go bye bye.
- [03:02]
Jill Schlesinger
Oh, well, let's see. We don't know yet, but we are very busy trying to create content that is interesting to you and we always want to focus on you and so forget. Far be it for me to think about my own retirement even though I'm getting old and tired, but Mark won't let me retire. Mark said it is time. How many years do I have to give you?
- [03:26]
Mark
You're not tired of this. You're tired of.
- [03:27]
Jill Schlesinger
That's so true. That is so true. I am not. That is absolutely right. I am not tired of this because this is the best part of my week. And I think also maybe what if I just were. If I were just doing this and anything related to Jill on money, I think I'd be a much happier person, don't you think?
- [03:45]
Mark
Well, that may happen very soon.
- [03:46]
Jill Schlesinger
It may not be my choice either. Gotta be ready. Okay, let's do some emails today. Mark, We. I know we've got a bunch. So this first question is from Sarah, whose subject is buy that dream retirement home. Okay, so Sarah's dream retirement home is priced under about $600,000. It's an hour away from where she currently lives. So she goes on to write, I have enough money to make a minimal second home down payment, about 10% down. This would mean in the short term I would be taking on a 30 year mortgage. Huh. So she's 52. She says 30 year mortgage puts her at 82. I'm not, I don't have a face on that. And she said I would refi if the interest rates dropped in the next five years. I own my own home, which we are keeping for now. When the current home eventually sells, I would essentially get about $400,000 net out of the proceeds. I would have that money to put towards the new retirement mortgage, which would mean I would have it paid off way before I turn 82. I don't really care if you have a mortgage at 80, as long as it's a low interest rate. That I don't have any issue with. Sarah says I'm on track to have three and a half million dollars of my own money in pre tax accounts by age 65. I'm a high income earner, no Roth. I'm not going to claim Social Security until I'm 70. About five grand a month, maybe four grand if Social Security gets cut. My husband has his own retirement accounts. About two and a half million dollars by his age 65. I don't see him ever retiring. Okay, I plan to retire at age 65, take on a low stress part time job to keep a little income flowing for extra just for good measure. My question should I roll the dice and buy this house? It's located in an extremely desirable real estate market by the coast in New England that is not being affected by the current environment. So the market should not go south there. It has doubled in price in the last five years which by the way, median home price is up 45% in the last five years. Okay, Sarah goes on, if worse came to worse, I can always sell it or downgrade. I'm not going to lose the money and I also am considering renting it periodically for the next few years. Blah blah blah. With this purchase and a recent increase in salary, I should be able to cover bills in both locations without compromising when I'm putting away for retirement. Monthly expense is $6,500. My thought is you only live once like the kids say, right Sarah? Yolo. Anyway, she says I think I'm in a strong enough position to take the leap. I've always have dreamed of living in this town. I worry that if I wait to stash more money away for another five years, housing prices could go up by another 25, 30, 50% which would put it even further out of reach. I hope this is enough detail. This is perfect detail. Look forward to your thoughts and marks as well. Okay, so Sarah, go ahead and buy your house. Calm down. I'm not worried about it. Seems like you have plenty of money. Your monthly expenses are pretty reasonable and I don't, I don't think housing prices are going to go up by 25 to 30 or 50% in the next five years. I really don't. However, you want to get the house, get the house. You got a lot of money. You seem to break up the money between you and your husband. But if you have 6 million bucks between the two of you, I think you're going to be fine. Mark, any issue with Sarah buying her quote unquote dream home?
- [07:12]
Mark
No she answered it for me when she said she's still going to be able to cover all her bills in both locations without compromising what she's putting away for retirement. For me, that's the big thing. If you can pull this off and not sacrifice any of your retirement savings, then you can do it.
- [07:25]
Jill Schlesinger
Do it right. And also if you're also saying like, if something were to go south, I would make an adjustment, great. That seems fine to me. Okay, let's move on. This is a nice thing. That from a question from a frugal Gen Z. Oh, wait a second, Mark. Did you happen to know the actual Gen Z definition? Because I had to look it up. Okay, I'm glad you asked because I have it for you. You ready? The Gen Z is defined. Born 1997 to 2010. 1997 to 2010. Okay, so that's your Gen Z year. Here's our question. Anonymous is 24 years old. A college graduation. I rent a one bedroom apartment. I drive a 15 year old car that needs to be replaced within the next two years. Maybe sooner. Full time job paying $50,000 and also a new part time job that pays $18 an hour. 1300 bucks a month. It took me nearly a year to find an entry level job in my degree field. All right, monthly expense is two grand. No debt. $17,000 in unused 529 funds. Undecided about grad school. Hmm. I contribute 10% to a traditional 401k. I have $69,000 in a regular savings account. I purchased $5,000 in I bonds when the rate was 9.62% and $10,000 in a Roth. The reason I started Investing at age 19 is because my mom became an avid listener of Jill on money during the pandemic. It was hard to escape her. Her Your unsolicited advice. My know it all younger brother recommended investing Roth funds in scd. Let's look at that. That looks like a Schwab thing. Yeah, it's a Schwab Schwab US dividend equity etf. Okay, got it. Was this good advice? It wasn't bad. It's not the worst. It's cheap. It's fine. Whatever. It's fine. It's not. So was this good advice? Sure. You know, any index fund is fine. This is fine. It's okay. Setting up a high yield interest savings account sounds intimidating. And my tax preparer said if I earn more interest, it will still it will have to be declared. Oh, well, your tax preparer is a moron. But let's get back to that in a second. I'm frugal but unsure how to invest and diversify. Any financial or career advice would be greatly appreciated. Let me start with number one. Number one, stop putting money in a pre tax 401k. Do not use a traditional 401k. If you have the option, put please put the money into a Roth. Okay. Stop using a traditional if you have the option. If you don't have the option, just put whatever you can up to the to that wherever you get a match and then put the rest in your Roth. Okay? That's number one. The unused funds in the 529 plan. I guess we'll hang on to that until you decide about grad school. Don't be in such a hurry to go to grad school. I don't think it's a great idea. If you have a job and we are going to see the economy slow down. If we were to go into a recession, don't go hide out in grad school. Keep working as long as you can stay working. And by the way, good for you. You have a full time job. I get it. It took a long time to find that job. Keep that job. And if that part time job is distracting you from your full time job, then stop doing it. You have to try to keep your hands in this job and make sure that you're doing everything you can to advance yourself. That's your career advice. The I bonds Mark, should she sell her I bonds? They're not paying 9.62% anymore so that she probably bought them in 2021. They may not be fully matured but you know, despite what your tax preparer says, paying higher interest, you even if you pay tax on the interest that you earn in a high yield savings account as opposed to that regular savings account, so what? You're still ending up with more money. That's insane advice. So two things which is definitely look to a high yield savings account. I guess we should keep the money in savings right now until you determine whether you need a car or not and like how much that car is going to cost. Maybe consider selling those I bonds. I think Mark's going to say yes. Is that right Mark?
- [11:38]
Mark
I would.
- [11:39]
Jill Schlesinger
I have, yeah. I already also redeemed mine and, and again it's going to create a tax liability. And if you want to just the Schwab US Dividend Equity fund is absolutely fine. You can also choose just a plain old index fund. If you want to add one more fund, maybe you want to add an International fund, like put some small amount and maybe you'll be like 90% in this US fund and 10% into an international fund and don't worry about it. Sounds like you're in good shape. Anonymous. I'd be happy to be in your shoes and just keep that job. Okay. All right. Question from Karen. What are your thoughts on reverse mortgages worth doing for a retired couple? Karen, the deal with reverse mortgages, which is where you're tapping your equity and creating a stream of income from the equity in your house, has to do with how old you are and also what are your options. So they can be very good products, but they have to be looked at by someone other than you. They are very complicated products. And so if you are thinking about a reverse mortgage, I would absolutely engage the services of a fiduciary planner to review those numbers, make sure that that's the right thing for you. Okay. This is from Maureen. She's a federal employee. She was forced into early retirement at age 58. She says, I love your show. I'm a regular Listener. I have 21 years in the federal government. Three weeks ago, I took the early retirement option with the $25,000 payout. Now, remember, gang, we've heard a lot about these people. These are people who have stayed on, who are staying on the payroll probably for a little bit and get this extra $25,000. That is pretty good incentive. She did it because she was scared of getting let go anyway. So she just said she secured her pension and health care for her family. And she says, I want to continue working but realize the market is tight. Ageism is real. No kidding. You got that right, Maureen. She said, I just updated my LinkedIn page. I'm working on my resume. I've got two networking meetings scheduled this week. That's great. But here's the real question. I'm 58 years old. Do I have enough to live on without continuing to work? She's married. She's got a kid in college. They have a 529 plan that's going to cover the university costs. Great. So her pension and healthcare after tax is $20,000 a year, plus another $11,500, which is that supplement it's based on if you make less than $23,000. And then she's got some annual leave payout. She's got about $1.3 million in her thrift savings plan, plus another 200,000 in a traditional IRA. So $1.5 million in traditional retirement assets. 230 in a Roth got another $780,000 in a rollover IRA. An inherited IRA for a little bit. A brokerage and investment account. They have a home that's worth $1.2 million, and there's only 100 grand left. There's a rental unit tenant that pays about three quarters of their mortgage each month. Incredible. Okay. Husband makes 150 grand a year and doesn't plan to retire. And he loves working. I love that kind of spouse. I wish my spouse were like that. Not exactly. I guess he has another account that's floating around 700 grand. No, Social Security expenses are six grand a month. It's funny. It's funny. There's a second couple. My monthly expenses are 6. My husband's are 10. They don't have a shared bank account. You think it's a second marriage, Mark? I don't know. That's fascinating. This is the second question today where it's like, separate. Okay. She's got longevity. Parents are still alive in their 90s, Mark. Does she need to find a new job?
- [15:26]
Mark
Does she, based on her expenses? No, I think she's okay.
- [15:30]
Jill Schlesinger
I think she's okay also. And you know, a lot of people who have asked this question, which is that you get this FERS supplement when you get the buyout from the government, but you have to make less than $23,000. You know, if you got a job and that was a good job and you wanted a job, great. But if you. Then you. You still have 31, $32,000 a year that's coming in for a bit. So anyway, it's pretty good, and you've got plenty of money, and so I think you're fine. I think you should try to find a job because it sounds like you'd probably like to work, but that has nothing to do with whether you need to work. What strategies do you recommend to pay myself monthly? Should I consider a CD ladder or a high Yield Savings account? Do you recommend a Roth conversion when our tax bracket goes down to 22%? Well, I mean, it looks to me like I don't know again, how you and your husband want to divvy this up. But, like, between the two of you, you can cover your expenses. If you find it easier to have money that is just almost like every year you have, like, the money you need, you can set it up as a CD ladder. You can do that for a few years, but then you should start tapping the traditional IRA and the Thrift Savings Plan as you. Just to try to whittle it Down. I don't think you should necessarily. I'm not sure you're going to need to convert into a Roth, but I do think it would be nice for you to start pulling money out of the traditional accounts as you guys see a lower tax bracket. But I wouldn't necessarily do a whole conversion, would you, Mark?
- [17:02]
Mark
I don't think so. And I'm not exactly clear as to how they manage their assets because if you're combining everything, yeah, they have money in his brokerage account to pay, pay for it. But if you're just looking at hers, she doesn't have a lot of money to pay for it on her own. So I'm not sure.
- [17:15]
Jill Schlesinger
Yeah, so, I mean, we need a little bit more information, but I think you're fine. And I'm intrigued to hear more about how you guys manage your money. It's fascinating to us, but let us know. And you're good. Listen, for, for folks who are thinking about managing cash flow, there's no, there's no like rule. This is about what works for you. So one of the difficult things is when you end up retiring, you've lost that consistency where money hits your account every two weeks. Right. And if that really wigs you out, what you can do is you can set up a system so that money can flow into your bank account and then maybe you can just like play a game with yourself. Like, hey, every month or every quarter, money comes out of one account, goes into another, oh, I'm paying myself. It's up to you. But normally, what, you know, I would always say to folks is, you know how we say if you invest all of your money at once in the beginning of the year, you're probably going to be better off. Like, mathematically, I sort of feel that way for cash flow. Like, if you take the money you need for the next year in December, you're probably, it probably works very well for you. But if you can't manage that and it just too much for you to get it in one fell swoop, no biggie, not a big deal at all. Do what works for you. There isn't a one size fits all, okay? And that's really the point of this whole show. You hear us talk to people all the time. Everybody's situation is different. That's why we encourage you to get in touch with us. Go to jillonmoney.com, click the contact us button, write us a note, and if you want to come on the air, check the box. Mark will do everything else. And why don't you just book me our website because you never know when you might need a little advice. Just do that. Jillonmoney.com 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. Okay, so don't forget to try to lift someone up. Change your work, change your wealth, change your life. Thank you for listening. We'll talk to you tomorrow. Buying a home in California can certainly feel intimidating. We hear from listeners all the time throughout the state, and they want to know, where can they even start? Many of them find that turning to a Realtor changed everything. Realtors can help buyers understand what they can afford. They can explain all of the steps that are involved in purchasing a home, and they can walk you through every detail, from making an offer to closing the deal. Working with a Realtor can help you feel less alone or unsure about the process. And that peace of mind that is the power of having a Realtor by your side. Whether you're ready to move or just starting to dream, don't go it alone. Don't let what you don't know stop you from starting your next chapter. Find your realtor@championsofhome.com that's championsofhome.com I'm CBS.
- [20:26]
Major Garrett
News chief Washington correspondent Major Garrett, and you're invited to the takeout. No reservations required. Every weeknight, our podcast serves up a balanced menu of politics, policy and pop culture the day's happenings with curiosity, informality and humor. Serious discussion, but we don't take ourselves too seriously. Follow and listen to the takeout with me, Major Garrett, on the free Odyssey app or wherever you get your podcasts.