Podcast Summary: Jill on Money with Jill Schlesinger
Episode: Can I Throw in the Towel?
Release Date: February 11, 2025

Introduction

In the episode titled "Can I Throw in the Towel?", host Jill Schlesinger delves into the complexities of retirement planning, addressing common concerns and questions from listeners. The episode emphasizes making informed financial decisions to ensure a secure and stress-free retirement. Jill, alongside her co-host Mark, provides clear, jargon-free advice, making intricate financial topics accessible to all.

Listener Questions and Discussions

1. IRA Withdrawals vs. Roth IRA Conversions

Listener: Chad
Timestamp: [02:30]

Chad, a devoted listener, inquires about Jill's recommendation for retirees to withdraw funds from traditional IRAs and place the unused money in a taxable brokerage account. He questions why Jill doesn't suggest converting these funds to a Roth IRA, considering the long-term tax advantages.

Jill's Response:

• Pros and Cons of Roth Conversions:
  Jill acknowledges that converting to a Roth IRA is advantageous due to its long-term tax benefits. However, she points out that it requires having the funds to pay the conversion taxes upfront, which might be an unnecessary complication for some retirees.

  "The Roth is by far the best, but for some people, we want them to just beef up their ability to access money. They don't want to burn through money that's available."
  — Jill Schlesinger [04:15]

• Practicality Over Efficiency:
  Jill emphasizes the importance of choosing the path of least resistance for certain individuals, suggesting that not everyone needs to maximize their Roth savings if their financial situation doesn't necessitate it.

2. 401(k) vs. Roth 401(k) and Federal Tax Refunds

Listener: Lisa
Timestamp: [05:00]

Lisa, aged 58, seeks advice on whether to allocate more funds to her traditional 401(k) or her Roth 401(k). She expresses frustration over receiving consistent federal tax refunds despite making substantial contributions to her retirement accounts.

Jill's Response:

• Tax Benefits Overview:
  Jill breaks down the differences between traditional and Roth 401(k) contributions, highlighting the immediate tax deductions of traditional 401(k)s versus the tax-free withdrawals from Roth 401(k)s in retirement.

  "With a traditional 401k, you get a tax deduction today and reduce your taxable income. With a Roth, there's no tax deduction now, but you don't pay taxes on withdrawals in the future."
  — Jill Schlesinger [06:00]

• Recommendation:
  Jill leans towards maximizing Roth contributions for Lisa, considering her income and tax situation. She suggests adjusting withholding to accommodate the lack of immediate tax deductions, ensuring she doesn't overpay the federal government.

  "I like the Roth. You're in a good position to use all Roth because it aligns with your income and tax situation."
  — Jill Schlesinger [07:37]

3. Overconcentration in Company Stock and Retirement Timing

Listener: Gene
Timestamp: [07:50]

Gene shares his concern about having half of his brokerage account invested in his company's stock. With impending restricted stock units (RSUs) and stock options vesting, he contemplates whether to sell some of the stock to mitigate risk and considers shifting investments to municipal bonds. Gene, approaching retirement at 55, fears overexposure to a single asset.

Jill and Mark's Response:

• Risk of Concentration:
  Jill underscores the dangers of having a significant portion of one's portfolio tied to a single company. She advises diversifying investments to reduce potential risks.

  "Having a huge slug of any single asset puts you at risk. If you want to retire this year, consider selling some of that stock to lower your capital gains tax rate."
  — Jill Schlesinger [09:30]

• Strategic Selling and Diversification:
  Jill recommends selling portions of the company stock, especially if retiring soon, to take advantage of lower capital gains rates post-retirement. She also suggests alternative uses for the excess funds, such as funding a donor-advised fund for charitable contributions, if applicable.

  "Maybe use some of that money to fund a donor-advised fund if you are charitable."
  — Jill Schlesinger [10:00]

4. Retirement Readiness and Financial Planning

Listener: Nanette
Timestamp: [10:34]

Nanette, a 65-year-old single woman with nearly 44 years of employment, seeks a second opinion on her financial readiness for retirement. She outlines her substantial savings, pensions, annuities, and current income, questioning whether she should adjust her IRA withdrawals and consider Roth conversions.

Jill's Response:

• Financial Overview:
  Jill reviews Nanette's financials, noting her robust pension plans, significant retirement savings in both traditional and Roth accounts, and additional assets in brokerage and savings accounts.

• Affordability of Retirement:
  Emphasizing that retirement is primarily about managing expenses, Jill reassures Nanette that her projected income exceeds her estimated cost of living.

  "If you're only spending $65,000 a year and have $75,000 coming in, you're good. You're ready."
  — Jill Schlesinger [12:00]

• Roth Conversions and Withdrawals:
  Jill concurs that Roth conversions are a viable strategy for Nanette, given her available cash reserves. She underscores the importance of aligning withdrawals with her spending needs to maintain financial stability.

  "You might consider converting some of your traditional IRA funds, but it’s not necessary if you already have enough income to cover your expenses."
  — Jill Schlesinger [13:00]

• Guaranteed Income Encouragement:
  Highlighting the significance of Nanette's guaranteed income streams, Jill encourages her to feel confident in her retirement plans.

  "You're in a good position with your guaranteed income. Give yourself permission to enjoy retirement."
  — Jill Schlesinger [13:49]

Notable Interactions

• Dynamic Between Jill and Mark:
  Throughout the episode, Jill and her co-host Mark engage in light-hearted banter, discussing topics like blog updates and financial terminologies, which adds a relatable and personable touch to the show.

  Mark: "I don't know about you guys but it has been very chaotic for me in the early going here of 2025..." [01:07]
  Jill: "I will learn something new every day from you guys." [05:45]

Key Takeaways

1. Diversification is Crucial:
   Avoid overconcentration in a single asset, especially company stock, to mitigate risk and ensure financial stability in retirement.

2. Understand Tax Implications:
   Weigh the benefits of traditional IRA withdrawals versus Roth IRA conversions based on individual financial situations and tax implications.

3. Align Retirement Income with Expenses:
   Ensure that projected income streams comfortably cover estimated living expenses, allowing for a secure and enjoyable retirement.

4. Seek Professional Advice:
   Engaging with financial advisors or trusted financial resources can provide clarity and confidence in making retirement-related decisions.

Conclusion

In "Can I Throw in the Towel?", Jill Schlesinger effectively addresses listeners' retirement concerns, offering practical advice and reassurance. The episode underscores the importance of strategic financial planning, diversification, and understanding the nuances of retirement accounts to achieve a comfortable and worry-free retirement.

Notable Quotes:

"The Roth is by far the best, but for some people, we want them to just beef up their ability to access money."
— Jill Schlesinger [04:15]

"Having a huge slug of any single asset puts you at risk."
— Jill Schlesinger [09:30]

"If you're only spending $65,000 a year and have $75,000 coming in, you're good. You're ready."
— Jill Schlesinger [12:00]

"You're in a good position with your guaranteed income. Give yourself permission to enjoy retirement."
— Jill Schlesinger [13:49]

For more insights and personalized financial advice, visit jillonmoney.com and consider joining the discussion by submitting your questions.