Loading summary
Transcript109 lines
- [00:01]
A
Ringcentral will completely transform the way you work. It gives you built in AI across all your business conversations. Your phone System has an AI receptionist that answers calls 24. 7. Your video meetings have AI that takes notes instantly. Even your contact center has AI so you can help customers faster. It all comes together in one reliable platform for effortless AI communications. See for yourself@ringcentral.com RingCentral Voice of your Business 2026 is calling and it's your year to launch that business you've been dreaming about. We all have ideas, talents or projects we keep putting off. But the magic happens the moment you take action. Don't let another month slip by. January is short and the fastest way to turn your vision into reality is to start your business with Shopify. With Shopify you get everything you need to sell online and in person. Millions of entrepreneurs have already taken the leap.
- [00:57]
B
Shop.
- [00:57]
A
Shopify gives you all the tools to build your dream store. Hundreds of beautiful templates you can customize AI powered tools to write product descriptions and headlines. Even edit your photos in minutes. Marketing is built in too. Reach your customers with email and social campaigns wherever they scroll. And as you grow, Shopify grows with you, letting you handle more orders and expand into new markets all from one dashboard in 2026. Stop waiting and start selling with Shopify. Sign up for your $1 per month tr start selling today at shopify.com jillonmoney go to shopify.com jillonmoney that's shopify.com jillonmoney hear your first this new year with Shopify by your side. Welcome to the Jill on Money Show. It's Tuesday, January 20th and we are here trying to help you make better sometimes less bad financial decisions. We we do that by asking you to do a little bit of work. Go to our website jillonmoney.com, click the contact us button which is in the upper right hand corner. No matter where you navigate on the site and when you do that a form will pop up. Write us a note, give us some details. If you're shy and you don't think you want to come on the program with us, but we really do love it when you join us live. That is so much richer of an experience for everybody and and it allows us to ask follow up questions. You know we're so nosy. If you want to join us on the air live, just check the box mark. We'll do everything else. Don't forget to sign up for the free weekly newsletter while you are on that website because that will also entitle you to our blog. So a bunch of free stuff that lives on the website. Go check it out. Okay. Today we are going to talk to Dan, who's on the line from California. Hi, Dan, how are you? Good.
- [02:50]
B
How are you? Jill and Mark?
- [02:52]
A
We are great. What can we do for you, sir?
- [02:56]
B
We are in a little bit of a dilemma this time of our life, and we wanted to talk to you about some key decisions that we're contemplating to take. And one of the key things that we are considering right now is stopping work early. We actually have a tentative date of middle a year this year, 2026. And we have been, you know, saving and investing last five to six years diligently. And we've been tracking our expenses for the last three, four years as well. And we think we believe we have enough saved. And in addition to that, you know, some things have deteriorated at work, which makes it a little bit challenging, you know, to have the motivation that I used to have and, you know, all of those. And we also have, you know, one of us have, you know, a chronic health condition. So we thought, you know, is, you know, working a few more years and, you know, you know, saving a little bit more money worth the, you know, the active years that we have right now.
- [04:11]
A
Yeah.
- [04:11]
B
Than, you know, taking the, you know, the time off and enjoying a little bit of life at this time when we're traveling and all that. So that's really the key thing that we wanted to talk to you about.
- [04:22]
A
Okay. Dilemma. Can we stop working early, basically? Right. How old are you, Dan?
- [04:28]
B
I'm 53 and my wife here is 51.
- [04:32]
A
Okay. Oh, so you're very. So this is very early and we're talking about mid this year, right? You said mid 20, 26.
- [04:38]
B
Yes.
- [04:39]
A
All right. Do you guys have kids?
- [04:42]
B
They're grown up and out of the house.
- [04:45]
A
How many are there? Kids? Three. Three kids. All right, great. Congratulations. Thank you. So are you and your wife both working full time?
- [04:53]
B
I am. My wife has stopped working a year and a half ago.
- [04:57]
A
So how much do you earn right now, Dan?
- [05:00]
B
So my base is around 210. And there's bonus, typically runs, you know, 60, 70 a year, and I also get rscus, which typically amount to, you know, around 50 to 55k a year.
- [05:15]
A
Mm, that's a lot.
- [05:16]
B
Yeah.
- [05:17]
A
Okay. You're living fine on that amount of money on your base, Right. You can. You can basically float your lifestyle on your base and everything else is gravy.
- [05:27]
B
Actually, we. We live a lot less than you know, what we make you. Typically, we've tracked our expenses. I mean, this is high cost of living. Yes, of course, you know, California, the major expense for us is actually rent. We don't own here. Mm. And we've tracked for about four years now. And the maximum, you know, total annual expense for us is really about 60k, which is.
- [05:54]
A
Whoa, that's. That's great. And that includes renting. So you don't own any real estate, essentially.
- [06:00]
B
Actually, even travel. That we do, you know, travel quite a bit, and we spend quite a bit of money for travel, and that includes travel as well.
- [06:09]
A
Okay, this is great. So, I mean, obviously, if you're looking at $60,000 a year, the numbers are a lot more achievable. Right. You didn't say $600,000 that we're spending. Let's talk a little bit about what you guys have saved. Tell me about retirement accounts.
- [06:26]
B
So I'm telling you cumulative numbers here, especially for our retirement. So total retirement savings so far, which is, you know, accessible after we turn 59 and a half, is about 1.2 million.
- [06:43]
A
And is that pre tax? Meaning is it a traditional. Or is there Roth part of that?
- [06:47]
B
So about 912 of it is pre tax. Okay, 290k is Roth.
- [06:56]
A
Okay, got it. So that's for both of you. Will either or both of you be entitled to a pension?
- [07:04]
B
Great point. So actually, from my previous job, I have a pension benefit that I can access after I turn 55. I also have a pension benefit at my current job, which I should be able to access, you know, after I stop working. Whenever.
- [07:24]
A
Oh, like immediately.
- [07:26]
B
Yes, I think I can. I can access it. I can access it immediately, I believe. Yes. Okay.
- [07:32]
A
How much will that be?
- [07:34]
B
What I plan to do, actually, is take lump sum and invest that lump sum in the market.
- [07:41]
A
Okay. But what I'm thinking, what is the lump sum amount of the current one?
- [07:46]
B
The lump sum amount of the current one, when I stop working at, you know, media this year.
- [07:53]
A
Yep.
- [07:53]
B
Would be around 101k.
- [07:56]
A
Okay. And you do happen to know the. The amount, if it were monthly, I can't imagine it's a lot. It's because it's 101 is a lump sum. But how much is the monthly?
- [08:06]
B
The monthly that I would be able to access if I were to take it right after I stop would be around 564. Single life annuity.
- [08:18]
A
Okay, no problem. The old pension at age 55, do you have the same choice? A lump sum versus a monthly.
- [08:26]
B
Yes. What's the lump sum, lump sum would be about 67k and monthly single life annuity would be about 388.
- [08:35]
A
Ideally you say to yourself, I'll take whatever the lump sum is, I'll roll it into that pre tax total which you know will bring you up above a million bucks of pre tax retirement. And that's available to you. Then what else beyond retirement have you guys saved? Because obviously you're so young. So you know, 51, 53 or 52, 54 maybe by the end of this year. What are you going to live on?
- [09:02]
B
So we've actually started a taxable brokerage a few years ago for that purpose to serve as a bridge account and we have about 774k in that account.
- [09:16]
A
Oh my God. You started a few years ago. Geez. Amazing.
- [09:21]
B
20, 21. I mean we really piled on, you know, all of the.
- [09:25]
A
Yes. The bonus and the RSUs and everything.
- [09:28]
B
Yeah.
- [09:29]
A
Do you still have any RSUs to exercise that are vested? So.
- [09:35]
B
Yes. So RSU vested with some crypto. We have actually 40k which is already vested. RSUs that would vest upon my stopping would be around 55k.
- [09:51]
A
You, let's just say you gave your notice right now, they're fine. You give your notice, you're a good person, you say I work for the six and then those all the RSU, the total would be 95,000 available. Right, okay, perfect.
- [10:04]
B
Yeah.
- [10:04]
A
What else?
- [10:06]
B
We have a cash account. We, we intend to keep at least two years of expenses in a high yield savings account. And we have about 144k in that account.
- [10:18]
A
Okay, great.
- [10:20]
B
HSA as well, which is a total of about 35k.
- [10:24]
A
Oh, which brings me to an interesting point. You're so young. What are we going to do for health insurance if you retire?
- [10:31]
B
That's exactly one of the key questions that I wanted to talk to you too.
- [10:38]
A
So you could elect Cobra for 18 months. Obviously that's as far as COBRA will take you. Is there any other way that you can access healthcare through old employer for either you, your wife or through your current employer?
- [10:55]
B
Not where I would be stopping. You know, I wouldn't have enough, enough service to, to do that. So what, what we intend to do is really get on COBRA and California does another 18 month extension. So, so.
- [11:11]
A
Oh, I didn't know that. That's so interesting.
- [11:13]
B
Beyond COBRA, beyond the federal COBRA.
- [11:16]
A
Wow.
- [11:16]
B
Another 18 month California state extension that we could tap into. So we intend to stay on COBRA.
- [11:23]
A
For like, you know, 30, the first three years basically. Yep.
- [11:27]
B
And then potentially go to the exchange to the exchange or get a part time job or something. That's what we're.
- [11:35]
A
Dan, when you look at the. That COBRA amount and you were, we were talking about expenses, should we increase your expenses based on the fact that, you know, I don't know how much that will cost you, but like when to go on. COBRA is fairly expensive way to purchase health insurance. So should we add your expenses? Should we kind of move those expenses to instead of 60? More like 80.
- [12:00]
B
We actually, in a lot of modeling that I've done includes, you know, anywhere between 25 to 30k of oral health care care coverage in addition to that 60K.
- [12:11]
A
So it's part of the 60K?
- [12:14]
B
Yeah. Wow. Yeah, our expenses, we think, you know, comfortably would. Would be okay in that to 100k a year. You must have some cheap rent.
- [12:26]
A
My God.
- [12:27]
B
Yeah, it's really not cheap. We just, we, we. We live a modest, A modest life.
- [12:32]
A
Okay. All right. So you have all this and the kids are taking care of. Do you have. Since you're young, I'll just say. Do you have parents you need to worry about?
- [12:40]
B
Our parents live overseas, you know, other than helping them here and there. A few, A few, you know, hundred dollars, but nothing big.
- [12:48]
A
So you rent, but. So do you own any real estate or not?
- [12:52]
B
We do, actually. Oh, we have a paid off house in Florida. We intended, you know, to use that maybe down the line. We initially we thought we could use it as a retirement house, but things didn't work out as we thought. You know, it costed us a lot more than we thought we want to spend. So it's underwater at this point.
- [13:15]
A
So how much is it worth, do you figure?
- [13:17]
B
350, I think currently and underwater in.
- [13:21]
A
That you owe more than 350?
- [13:23]
B
We do, yeah. We spent more than 350. Essentially. We don't have any mortgages already.
- [13:29]
A
Oh, we've paid it off.
- [13:30]
B
Yeah.
- [13:31]
A
So you own this house at. So you're not underwater. That was a very. That that term means something different to both of us. I just want to say. Why? Because when I hear underwater, I thought you were going to tell me that you had a $380,000 mortgage, but there's no mortgage. So I don't care if you lost money on this thing. It doesn't matter. To me, that's water under the bridge. It really is. But it's worth 350. How much rent are you receiving?
- [13:57]
B
We're getting, you know, property management, everything covered. We're getting Nate about 1900amonth.
- [14:05]
A
Oh, that's not as bad as I thought it was going to be. And you intend to keep this, or is this an asset to sell for your retirement?
- [14:14]
B
At this point, our intent is to liquidate it probably in anywhere between three to five years.
- [14:21]
A
Okay, but you don't. I want to just say one thing, even though I know this is going to fall on deaf ears, because I hear it in your voice already. I don't care if you sell it for a loss. It doesn't matter. It really doesn't. If you can sell this and, you know, I don't know, what did you buy it for?
- [14:38]
B
So it was actually a construction project that we, you know, we bought the land and, you know, a builder, a general contractor, which didn't work out as well, so we had to switch another one. So that's why it spent, you know. You know, we spent a lot more than we thought we would. So it costed us about 425 at this point.
- [15:02]
A
Oh, big deal. All right, so whatever. I mean, so you can claim a. The good news about selling a rental property and claiming a loss is that then all that rental income and that depreciation, hopefully it's not going to be a big tax issue for you when you sell it. So that is, that's good. So we don't need that right now because you do have this money. And when you look ahead, what do you think is the fear in this game plan?
- [15:31]
B
The fear basically is if I leave, I mean, obviously, you know, I think I'm at my peak earning time. The concern is if I want to go back to that, to my current job in, you know, after three years, you know, take some time travel, do whatever we want to do, you know, and if I want to go back to. It's almost certain.
- [15:57]
A
I would say. I would say, yeah, I would say that is not. I mean, if that's your game plan, you shouldn't do it, right? Like, oh, I'm going to wait for three. But do you think. But if you could do this, like, okay, let's just, let's play this out. You're done in the middle of 2026. Right. And so we got six months from now. I presume you're just putting your retirement contribution up to the match at this point and you're putting everything else in. Okay, so you retire and we'll talk a little bit about the allocation in a second. But between the vested RSU is the unvested RSU and your brokerage account, you'll have about almost $900,000.
- [16:39]
B
Yeah.
- [16:39]
A
This will be the money you live on for the next. Let's see, you said you were 53, so we've got to do this for six years. Right. Seems to me that, you know, unless you have a massive tax liability embedded in this brokerage account, it would seem to me that that's a pretty good game plan. Right. I mean, it seems like this should work. Right. You're not even going to necessarily spend down the whole brokerage account over that period of time. Let's just say that 60 grand a year you have to take, let's say you had to pay some taxes. So you know, you take 80 grand a year out of your brokerage account, you pay some taxes, you build up, make sure you have your high yield savings account where you want it to be. And we account for inflation and I think you're good. And then at that moment, you know, when you're 59 and a half, you haven't spent down the whole brokerage account. We have access to your retirement account where you would definitely pull the pre tax money out first to live on. Right. Of that nine or a million that it, whatever it ends up being, that would come out over the course of time. I think this works. Mark, do you think this works? I think this looks like a plan that can actually work, which is very odd for someone in their 50, in their early 50s. Well, it all comes down to the spending. I mean, if the spending stays where he says it is, then yeah, it works. They just have to be comfortable spending down what they have. Yeah. Are you comfortable with that notion of like you've saved it up, can you spend it?
- [18:09]
B
Yeah. I mean, the thing is, like I said, both Jill and Mark, I actually run all, you know, money money money simulations in our expense. This is really our max expense. We live a very modest life. The only variable is we're renting now and we would like to settle here in California simply because we like it.
- [18:35]
A
Yeah. What's not to like?
- [18:37]
B
You know, the house, you know, buying house is a little bit, you're not.
- [18:40]
A
Going to buy a house that I think you're going to keep renting. So your, your variable is rents go up dramatically, but it's not going to go up so much faster than inflation over time. I mean, you're still young. So you said, here's my dilemma. Can I stop working early?
- [18:56]
B
Yes.
- [18:56]
A
I think that that's not really a dilemma. I think you can because as Mark said, you don't spend a lot of money. I don't think you should Do. I don't think you should enter this as like the game plan and think you're going back to making a couple hundred grand a year. If that happened, great. Because maybe you're like, oh, we traveled for two years, I'm so bored and I get another job, fine. But let's not make that a condition for choosing to do this. I think it's worth saying we're going to have some fun. Life is short. There is a health issue. If for some reason your expenses start ballooning and you know, in today's dollars it's not 60 and you're like, oh, you know, it's three years from now, really, it's closer to 80 then I think that, you know, maybe one of you will have to consider some part time work. But that's not the worst thing in the world either. I think you could do it. And then I didn't even include the sale of your house in Florida. And that will also help down the line. So I think this is doable. A very strange set of conditions and yet you can do it. And as Mark said, it's because you don't spend a lot of money. You really, you guys have lived within your means, saved a lot of money. I will say that for the, Whatever is in that brokerage account has to be locked down. So you cannot be 100% in stocks if you're living off that money. So, so what is the allocation of that brokerage account right now?
- [20:26]
B
It's really in mutual funds basically, in s and P500 mostly.
- [20:32]
A
You're going to have to start scaling the risk back on that. You just have to, because it won't grow as much. But you cannot afford to have a wipeout event. You cannot afford for that brokerage account in six months to go from 800 grand to, to 400 grand. You cannot afford, you can't take that hit. So it has to be a more balanced account.
- [20:55]
B
So my hedge, my hedge against market downturns is really, we will be keeping large amount of cash and accessible saving accounts which we intend to bump up our cash reserves to more than 200k. Okay, so that was our strategy to.
- [21:16]
A
Yeah, but I'm gonna, I, I, I get that. I'm gonna tell you that if you're 55 years old and your account goes from 800 to 400, that cash is not gonna make you feel good. You're gonna be grateful that like, oh, thank God I have the cash. But it's scary when you have no income. So I want you to just at Least contemplate going from 100% stocks to 80% stocks and then maybe 70% stocks. And every time you spending the money from the cash, you have to replenish it. So you have to have a portfolio that you have to be very diligent and be very careful about the risk when you're living off the money. That's all. And so if you're willing to do that, if you want to just say, I'm rolling the dice, I don't care, I'm cool, fine. I've been through this a lot with people. When you don't have income, it's a lot scarier to not to go through one of those horrible events. So that's all I, that's the only issue that I see. And you guys have your estate planning done.
- [22:20]
B
We actually, you know, we've been listening to you and I know this, I know you would be asking this. So we actually have a schedule, the meeting with a state attorney.
- [22:30]
A
Fantastic.
- [22:31]
B
Thursday. So great.
- [22:33]
A
Great. All right, good. Dan from California, we wish you the best of luck. Stay in touch with us. Let us know. But I think you're going to be good. And if anyone is listening and saying like, oh my God, they're 50 years old. How do they have that much money? They don't spend a lot. And when you don't spend and you do save, wow, that's incredible. So congratulations. And if you are seeking some sort of off ramp for your 50s or even if you're in your 30s or 40s and you're like, I, I just, I don't know if I can do what I'm doing and maybe I should make a shift. Get in touch with us. Go to Jill on money dot com, click the contact us button, write us a note. And if you'd like to join us live, just check the box. Mark. We'll do everything else. Don't forget to sign up for the free weekly newsletter and remember that you can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Don't forget, do something nice for someone else else today. Change your work, change your wealth, change your life. Thank you for listening. We'll talk to you tomorrow. This year, give a gift that goes far beyond the moment. An Invest529 account. Whether it's a child, grandchild or someone just starting out, you're helping them save for education that can open doors for a lifetime. Invest 529 is a tax advantaged way to save for college, trade school, or even apprenticeship programs. It's flexible, easy to start, and you can contribute any amount, big or small. And because the money can grow tax free, it's a gift that really builds value over time. So instead of giving something that gets used up or set aside, give the gift that can change a Life. Start an Invest 529 account today. Go to invest529.com to get started. Hey, this is Richard Deitch, the host of the Sports Media Podcast. If you're interested in what's happening with all the places where you consume sports, the Sports Media podcast has you covered.
- [24:36]
B
I've been turning down interviews all week. Koda Kapi reached out. Oprah, George Stephanopoulos. So I said no. I was booked on the Deitch podcast before the Taylor Swift phenomenon. I must live up to my responsibility.
- [24:52]
A
Listen wherever you get your podcasts.