B (3:36)

Oh, hi, Jill. Hi, Mark. Yeah. Again, thank you so much for having me on and trying to help me out.

A (3:41)

Of course. So tell us what brings you to us. What's going on?

B (3:45)

Well, I need a financial gut check because I would like to retire in two years when I turn 62. But, and I've been a very good saver over the years. But between now and retirement, I want to help my two grown sons financially. And also I have, I need to renovate my house. So that's going to be a little costly. And I'm just wondering with these additional costs right before retirement, will my retirement still be good for 30 years? I do have longevity in my family. You know, we live until the 90s, so I am concerned about whether or not it will hold up over 30 years.

A (4:24)

Steve, are you married, single, partnered?

B (4:27)

I am married, Married for over 30 years.

A (4:32)

And are you both working and planning on retiring? Like, what's the game plan with work life for both of you?

B (4:38)

She's sort of semi retired. She's working part time, but she'll retire with me. And so we're going to go out at the same time.

A (4:46)

It's funny when you say go out, it's like, yeah, I'm like, I may use a different term, but yes, retire at the same time. So how much are you guys earning right now? What do you earn, Steve?

B (4:57)

Our household income is about 250 and I do have a pension of about 4800 per month.

A (5:05)

Wow. And that'll start us in two years, right?

B (5:08)

No, actually I'm collecting that now.

A (5:10)

Oh, so wait a minute. 250. Does that include 4800amonth or it's 250. And then on top of that, there's 4800amonth.

B (5:18)

The pension is on top of the 250.

A (5:20)

Oh, wow. That's amazing. That. Is that from a previous. Is it. Were you in, like, law enforcement or military? Like, where'd that come from?

B (5:28)

Oh, I worked a federal job for many, many years. I retired several years ago. Wow. Got bored. Decided to be a contractor. So that's what I'm doing.

A (5:37)

Amazing. Holy smokes. Okay, so when you look at your spending, this is a big part of it, Right. So forget about the two grown sons for right this minute, but what are your expenses right now?

B (5:52)

My expenses right now is about maybe 9,000 per month after tax.

A (5:57)

Okay.

B (5:58)

We would like to increase it to 11,000amonth to include some travel costs in

A (6:03)

that, but not kids. So the 11,000 would be fun, but not the helping the kids, Correct?

B (6:09)

Yes. My kids are all grown up. I'm helping grown kids financially.

A (6:15)

Okay, you might be if we give you permission. Yeah. First of all. So let's now talk about. So the pension is incredible. That's great. And you'll also both be entitled to Social Security, right?

B (6:28)

Correct. And at the full retirement age, a combined Social Security payment will be roughly $6200 a month.

A (6:35)

Okay, so that's. At your 67. Is she about the same age?

B (6:39)

She's a year older than me, but

A (6:42)

roughly the same age. All right, so 6,200amonth in addition to you will. And again, you're 67. So in seven years. So that's great because there we have 11,000 of pre tax. I know. Income because you pay tax on. Do you pay tax on your pension? I should have asked that.

B (7:00)

Yeah, I do. It's $4,800 before it's taxed and roughly under 4,000 after taxes.

A (7:07)

All right, great. This is already incredible because we know that we have this time horizon, these Next. Well, not seven years, but it'll be five years after you turn 62, where you'll need to live on some other. Other money that you've saved. But once you hit 67, I mean 6200, plus your $4800 pension, to have 11 grand pre tax to come in. That's amazing. Let us now explore how much money you have set aside in retirement. So give us a rundown of what you've saved.

B (7:42)

Okay. I have about 2.45 million in a pre tax 401. No, Roth, I have about $450,000 in a mutual funds. Most of it is S&P.500 and there's some in money market, so the total of 450 there. And I have 35,000 in cash for emergencies. And I do own my home and that's worth about maybe $700,000.

A (8:08)

With no mortgage. No mortgage. And you want to stay where you are?

B (8:11)

Yeah, I'm stuck. Yeah. My wife doesn't want to move.

A (8:16)

All right, you know, I get that. So that's a ton of money, which is incredible. Obviously you know that you're kind of going to be staring down that big, big retirement distribution forced on you. So is your game plan two years, you've got your money, plenty of money. Do you have, you know, are you putting money, are you putting money right now into that pre tax 401 for the next two years?

B (8:46)

I am taking a company matching, so that's roughly about. I get 12,000 matching and I contribute about 10% of my current income. And so I'm doing okay in that area for sure.

A (9:00)

Yeah, I'll say. So let's say that two years from now you are done. And then what you would do is you and your wife would want to pull money out of that pre tax account to start getting money out of there. Right. We need to get, you know, like I'm sort of thinking let's just look at tax rates right now. The 22% tax bracket, which is, you know, you're probably in somewhere between 22 and 24. Like you pop into 24 because of that pension income. So let's say that you'd say to me, hey, I want to pull out as much money as I can at the 22 or the 24% bracket, which you should do for those years between 62 and 67. You know, if it's 22, you're going to be able to pull out like one hundred and fifty grand a year, maybe a little less. If it's 24%, you can get up to like 350 coming out and paying tax on it. It's going to be up to you. Do whatever you want. You are in great shape. So if you were saying you want a financial gut check, you're in great shape. How much money are we talking about in? In help to the grown kids?

B (10:13)

Yeah, one son. I have one son remaining to get married and I promised to pay for his wedding. So that's at least $50,000 just for that. And my other son, I would like to help him buy a house and I would like to.

A (10:26)

Does he want a house or is that what you want?

B (10:30)

Good question. I Think it's both. It's what he wants and what I want for him also. So it's kind of combined.

A (10:37)

And do you want to make it even, Steven? Do you say to yourself, well, you know what? I'm going to pay for this wedding. That'll be 50, and then I want to give the other guy 50, or do you want to say, like, I want to give them each a hundred? Like, what. What. What are you thinking about right now?

B (10:50)

Well, 50 for the one son getting married and 150,000 at least for the other son who needs a house.

A (10:55)

Wait a minute. What do you think? You like him better. But wait a minute. Why do you like this other son so much? Three times as much as you like that first. First one. The guy's getting married. Come on.

B (11:06)

The other son who's getting married has already bought a house on his own, so he doesn't need help on that area.

A (11:13)

So are you sure that son number two wants this house? I really. I'm asking that, like, not facetiously, because, you know, you could easily just say, hey, you know what? I'm paying for one wedding, and, you know, I'm happy to have. You know, I would like to give you the 50 you're not getting. Is he not married, or is he getting married? Like, what's his story?

B (11:33)

Oh, he's. He's married, but he has been house hunting with his wife, and he's complaining about the high cost of houses in the area. And he told me it's going to be a struggle for him to get a down payment together. And that's when I thought, okay, I think I can help you here. Since he was. And I've been house hunting with him, too, to see what's out there.

A (11:54)

Let me ask you something. Is your wife on board with this? I want to make sure that there's going to be marital bliss at the end of this.

B (12:00)

Great question. The answer is, she's totally fine with it.

A (12:03)

Okay. Mark, how do you feel about getting more money out of this retirement account than we had anticipated?

B (12:09)

Does the other son know about the discrepancy? Is that going to cause an issue down the road?

A (12:13)

Oh, good question.

B (12:14)

He doesn't know yet, but he will eventually.

A (12:17)

Do you want to make good on this? Like, you know, maybe. Are there any grandchildren yet?

B (12:23)

Not yet. No grandkids.

A (12:25)

I mean, so there's a couple of ways to do this. Obviously, the wedding is coming up, so you got to get the money anyway, right?

B (12:31)

Mm.

A (12:32)

Okay, so the first question is, because you're still working right now and you are like I'm not sure, like you could just pull the money out of the mutual funds, right?

B (12:44)

Yes.

A (12:45)

Okay, so whatever you have to sell some off, you'll get some capital gains but you'll figure it in. So there's the 50 there. I think that I'm okay if you say look my other kid, I want to help him. We're going to get that down payment. You're going to probably end up kind of depleting a lot of not the whole thing but you're going to deplete a good chunk of this account because you're going to have to pay some taxes as well. So you deplete it. Maybe instead of having 450 at the end of all the gifting and all this, you'll have 200 grand in there. But then when you retire I think that's when we probably have to start taking some more money out of that pre tax account. I don't want to do that. I certainly don't want to take pre tax money out now while you still have all this income. But I think that you'll replenish, you'll just have more money in there. You'll live on that money. I think you can well afford to do this. Mark, are you feeling okay about this? The help. I think that Mark's biggest concern is that we don't create a schism between the boys drama because of the disparity. So I guess there's the other thing is you could say to the younger one we're going to give you 50 for your wedding. There's going to be another 100 grand coming, you know, but not this minute. But it there but we're going to make this right because you're, we're helping your brother with a down payment. How's that sound?

B (14:03)

Or you, or you make it right

A (14:06)

way down the line in your estate documents. Yeah, but you know, true. But it sounds to me like you wanted them to have the money while they're young and they need it. Which I'm all for. I'm totally all for that. I, I, what I don't want there to be is like some strange weird thing that happens that causes any problems down the line. That to me is the what we want to avoid.

B (14:29)

No, you're right because I, I've been thinking about that same dilemma and something I have to face. I just don't know how to do it yet. But I'll make it up to the other boy.

A (14:38)

Yeah, exactly. And you say like if we'll make it up to you. You know, I don't know if they're planning on having kids. Either we'll do it within the form of 529 plans or we'll do it, gift you money. But you know, as soon as I retire, we'll have a game plan ready. And that's what you do. Good.

B (14:53)

Sounds like a plan.

A (14:54)

I can't believe I'm giving. I'm giving you all of this. This today being Jill Schlesinger, the dream maker.

B (15:01)

Oh. One of the big costs is I do want to spend about $80,000 on a home renovation. And so that will come out of the mutual fund.

A (15:10)

Yes. So you're going to deplete the mutual fund, which by the way, so when you retire, maybe it's going to be that, you know, you'll take 150 grand out every year for the five years between 62 and 67. Get it out, pay it at the 22% bracket, rebuild the mutual fund, the post tax money, you know, so you're going to live on some, but you're also going to just take it out to reduce your burden in the future because you are going to have a big rmd. I mean a big one. Right. Because you have two and a half now and you're young. So I think that getting that money out, depending on where tax brackets are, et cetera, will be very beneficial to you down the line.

B (15:52)

Okay.

A (15:52)

Do you have your estate documents done? Since we were just talking about estate documents like making.

B (15:56)

I had my will done last year, but I plan to do a trust when I retire in a couple years.

A (16:02)

All right. You probably don't need a trust, but okay, you could. A lot of your money is going to pass by contract, meaning that a lot of that money is in retirement assets. So go talk to somebody. It's worth having a conversation for. Sure.

B (16:17)

Yeah. I just want to make it easy for my kids to inherit the property and the money.

A (16:21)

Man. Steve is a good dad. We have another listener whose kids need help. Can you help them too?

B (16:29)

Path on that.

A (16:30)

It's like Mark, we're going to have some sort of socialist approach to our listening audience. We have people with means. They will spread it out across the audience. Hey, Steve, good luck to you. Thanks for getting in touch with us. If you are like Steve again trying to juggle the kids, your own needs. Need a little bit of a gut check. We're here for you. Come join us. It will be so much fun if you would go to jillonmoney.com, click the contact Us button. Write us a note if you'd like to join us on the air live, just check the box mark. We'll do everything else you can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Podcasts don't forget you gotta do something nice for someone else today. It's going to make that person feel better. It's going to make you feel better. Change your work. Change your wealth. Change your life. Thank you for listening. We'll talk to you tomorrow.

C (17:27)

Today's episode is sponsored by NerdWallet's Smart Money podcast. Ever Google a money question and end up 12 tabs deep with 12 different answers? This podcast is your shortcut back to clarity. NerdWallet's Smart Money podcast breaks down financial decisions with a team of trusted journalists. They explain the why behind decisions like investing, home buying and choosing credit cards. With clear research backed insights. No jargon, no misinformation. Make your next financial move with confidence. Follow NerdWallet's Smart Money podcast on your favorite podcast app. Hi, my name is Lloyd Lockridge and I'm the host of a new podcast from Odyssey called Family Lore. In this podcast, I'm going to have people on to tell unusual and sometimes far fetched stories about their families.

A (18:09)

I've heard my whole life that she indented the margarita and then we're going

C (18:12)

to investigate those stories and find out how much of it is true.

B (18:15)

He gets a patent one month before the Wright Brothers. Oh my God.

C (18:19)

Please follow and listen to Family Lore, an Odyssey Podcast available now on Apple Podcasts, Spotify or wherever you get your shows.