Podcast Summary: "Can I Reduce My Savings Rate?"

Podcast Information:

• Title: Jill on Money with Jill Schlesinger
• Host/Author: Audacy
• Episode: Can I Reduce My Savings Rate?
• Release Date: February 18, 2025

Introduction

In this episode of "Jill on Money," host Jill Schlesinger delves into the topic of savings rates, addressing whether individuals can afford to reduce their current savings momentum without jeopardizing their financial future. The discussion is enriched by listener questions and expert insights from co-hosts Mark and Brandon, offering practical guidance for those contemplating adjustments to their savings strategies.

Listener Questions and Expert Responses

1. Adding a Spouse to the Deed

• Listener: Kenneth
• Timestamp: [05:00]

Kenneth's Situation:
Kenneth and his wife, recently married, reside in a home solely owned by his wife. Kenneth has taken over the house payment and wishes to add his name to the deed in the most straightforward and cost-effective manner.

Mark & Brandon’s Advice:
Brandon explains that adding a spouse to a deed is relatively simple and can be accomplished through a lawyer by declaring joint ownership with rights of survivorship. However, if the property has a mortgage, adding a name directly to the mortgage without refinancing is challenging. They suggest leaving the mortgage terms unchanged and focusing on legal steps to share the property's ownership.

Notable Quote:

"Adding somebody to the mortgage during your lifetime can be a bit tricky, so the simplest route is to add them to the deed and leave the mortgage as is." — Brandon [05:15]

2. Reducing Savings Rate for Financial Balance

• Listener: Brandon
• Timestamp: [06:10]

Brandon's Situation:
At 37, Brandon is a freelancer in the TV and film industry with a net monthly income of approximately $7,000 and expenses around $4,000. Despite maintaining a high savings rate of 40-50%, he feels the pressure of "playing catch up" financially, having increased his net worth from negative $44,000 to positive $40,000 since January 2022. Brandon is contemplating reducing his savings rate to alleviate financial stress and begin enjoying more of his income.

Mark & Brandon’s Advice:
Mark and Brandon commend Brandon for his financial progress and suggest that since he has built a substantial emergency fund and fully funds his Roth IRA, he can consider easing his savings rate. They recommend lowering it to around 30%, which would still allow for substantial savings while reducing personal financial strain.

Notable Quote:

"You're doing great. You're 37. You've swung into the plus category. You're doing great." — Mark [07:00]
"Why not back it off a little bit, like to 30%, and see how that feels?" — Brandon [08:20]

3. Managing Retirement Contributions for Higher Education Expenses

• Listener: K
• Timestamp: [10:15]

K's Situation:
K, nearing 56, along with her 60-year-old husband, owns a $2.8 million home outright with no debt. Together, they have a combined income of nearly $600,000. K is a diligent saver with significant investments, including multiple 401(k)s, a traditional IRA, and a substantial brokerage account. They are now faced with a $60,000 tuition bill for their child, prompting K to consider reducing her 401(k) contributions to allocate funds for education expenses.

Mark & Brandon’s Advice:
Mark emphasizes the importance of spousal communication in financial decisions. Brandon advises evaluating the asset allocation, particularly the high concentration in individual tech stocks, and suggests rebalancing the portfolio if necessary. They recommend maintaining retirement contributions if possible and exploring other funding options for tuition, such as selling specific assets to minimize tax impacts.

Notable Quote:

"The number one thing you should do is have a conversation with your husband and start sharing information." — Mark [10:40]
"You could sell some of those stocks, pay the tax that's due, and fund the tuition without drastically altering your savings rate." — Brandon [11:00]

4. Navigating Student Loan Payment Issues

• Listener: Lynn
• Timestamp: [13:00]

Lynn's Situation:
Lynn's daughter is nearing the final payments required for forgiveness under the Public Service Loan Forgiveness (PSLF) program. However, recent automatic and manual payment attempts have been rejected, causing concern about maintaining eligibility.

Mark & Brandon’s Advice:
Brandon advises Lynn to meticulously document all payment attempts by taking screenshots and printing records from the loan dashboard. He encourages being proactive in communicating with loan servicers, certifying employment, and ensuring all required payments are accounted for to safeguard the forgiveness process.

Notable Quote:

"Screenshot everything and get aggressive with your documentation. This is not the time to be passive." — Brandon [13:20]

Key Insights and Conclusions

1. Flexibility in Savings:
   High savings rates are commendable but can lead to undue stress. It’s crucial to assess personal financial goals and adjust savings rates to maintain a healthy balance between saving and enjoying life.

2. Communication in Financial Planning:
   Couples should maintain open dialogues about their financial situations and decisions to ensure mutual understanding and support, especially when facing significant financial obligations.

3. Strategic Asset Management:
   Diversifying investments and periodically rebalancing portfolios can mitigate risks associated with high concentrations in specific sectors or stocks.

4. Proactive Financial Management:
   Diligently managing debt obligations, such as student loans, and meticulously documenting all financial transactions are essential steps in securing financial benefits like loan forgiveness.

5. Long-Term Planning:
   Building substantial emergency funds and fully funding retirement accounts provide a safety net, allowing for more flexibility in adjusting savings rates without compromising future financial security.

Final Thoughts:
The episode underscores the importance of personalized financial strategies that consider both current lifestyle and future aspirations. By evaluating and adjusting savings rates thoughtfully, individuals can achieve a balance between financial security and personal fulfillment.

Notable General Quotes:

• "You don't have to make yourself crazy. Take a deep breath." — Mark [09:33]
• "Change your work, change your wealth, change your life." — Brandon [14:21]

For more personalized advice or to join the conversation, visit jillonmoney.com and subscribe to "Jill on Money" on your favorite podcast platform.