Jill on Money with Jill Schlesinger

Episode: "Debt Pay Off Questions"

Date: October 28, 2025
Host: Jill Schlesinger, CFP®
Listener Guest: Scott from Delaware

Overview

In this episode, Jill Schlesinger takes a listener call from Scott, a 66-year-old retiree from Delaware. Together, they dig into his retirement finances, debt situation, and strategies for optimizing withdrawals from retirement accounts—especially with an eye on eliminating certain debts. Jill offers straightforward, jargon-free advice, focusing on actionable steps and real-life decision-making.

Key Discussion Points & Insights

1. Setting the Scene: Technical Glitches and Document Safety

• Jill and producer Mark discuss a recent Amazon Web Services outage and how it impacted their workflow (01:38–02:33).
• Jill uses this as a reminder for listeners:

  "There are certain documents you should have dupes of both in the cloud, electronic and physical. … Estate documents, both digital and hard copies, wills, durable powers of attorney, healthcare, proxies, trusts, and I think all of your insurance documents…"
  [02:49]

• Key takeaway: Always have both digital and physical copies of critical financial/legal documents.

2. Scott's Situation: Retirement Snapshot

• Scott's Profile:

  • 66, retired for four years, wife 61, working part-time ($38,000 last year, will become $30,000 next year) (04:45–05:55).
  • No pensions; relying on retirement savings and wife's part-time work.
  • "You retired four years ago. Are you happy retired?"
    Scott: "Oh, yeah."
    Jill: "Love it."
    [05:02–05:08]

• Assets

  • Scott's 401(k): $1.85 million (06:09)
  • Roth IRA: $213,000
  • HSA: $68,000
  • Wife's IRA: $112,000 (pre-tax) + another small IRA at $47,000
  • Regular savings: $10,000
  • Home: Worth $570,000
    • Mortgage: $355,000 (at 2.85%)
    • Home equity line of credit (HELOC): $12,000 balance (at 7.75%)

• Liabilities

  • Student Loans (Parent PLUS, refinanced): $85,000 at 3.81%
  • Two car loans:
    • $20,000 at 5.24% (2 years left)
    • $26,000 at 3.99% (3.5 years left)

• No other real estate or significant assets.

3. Primary Questions & Concerns

• Should Scott take withdrawals from retirement accounts to pay down debt now, especially higher-interest debt?
• Is it worth accelerating debt repayment, and if so, which loans should be prioritized?
• How should Scott time Social Security for both himself and his wife?
• Does the current spending pattern ($11,000/month) threaten long-term financial security?

4. Jill's Financial Assessment & Recommendations

A. Debt Repayment Priorities

• Home Equity Line of Credit:
  "I want to pay off the home equity line of credit. That I want that one done." [11:45]
• First Car Loan:
  "I'm also kind of thinking about the first car loan, our five and a quarter percent loan. All I need is to get 32 grand out of to do that. So I got to take 50 to clear the 32, right? I got to pay some tax. Right?" [12:13–12:26]
  • Focus on these two debts first due to relatively higher interest rates and manageable balances.
• Student Loans & Second Car Loan:
  Lower interest rates; not urgent for payoff acceleration.

B. Withdrawal Strategy

• Pull from 401(k) to both cover expenses and pay down selected debts, targeting to stay within the 22% tax bracket.
  • "We take out 200 ... make sure you stay in the 22% bracket. … you pay down the home equity line of credit. The second thing … set aside to pay taxes. … We probably can pay that [the car loan] off also." [12:27–13:15]
• Perhaps split larger withdrawals over two years to manage tax impact:
  • "Let's say you took out 200 this year, you took out 200 next year." [13:17]
• Jill emphasizes: the 401(k) is there as a bridge to fill the income gap until Social Security begins.

C. Spending & Cash Flow

• $11,000/month is sustainable now but monitor after debts are paid.
• "I want those expenses to be down at like $10,000 a month in today's dollars once we clean up your balance sheet." [17:10]
• Any inheritance (potentially $150,000–300,000, but not imminent) should not be relied on. [10:22–10:47]
• In poor investment years, cut discretionary spending (vacations, etc.)
  • Jill: "I do think, Scott, it would be better for you guys to be like, okay, instead of two nice vacations a year, we're doing one this year. ... it's going to make you feel a little bit less secure." [16:53–17:09]

D. Social Security Timing

• Scott's benefits:
  • At 67 (full retirement age): $3,451/month
  • At 70: $4,325/month
  • Currently in good health; Jill encourages waiting till 70 if possible. [09:06–09:20]
• Wife's benefits (at her ages 67 and 70): $1,942 and $2,432/month respectively.

E. Use of HSA

• Scott has $35,000+ in saved medical receipts. Jill advises a targeted use:

  "If you have 12 grand of receipts and you say submit it and you get 12 grand out tax free, pay off your home equity line of credit. Boom, done. No more than that though." [19:14–19:13]

• Otherwise, preserve the HSA for future healthcare expenses in older age.

Notable Quotes & Memorable Moments

• On Debt Mentality:
  "Are these loans keeping you up at night?"
  Scott: "No, actually not at all."
  Jill: "You feel good?"
  Scott: "Yes. You know you can afford this, right?"
  [10:05–10:10]
• On Spending Down Savings:
  Jill: "What this will require, Scott, is you being able to tolerate spending down the money in the 401k. Is that going to freak you out?"
  Scott: "No, I don't think so."
  [13:36–13:44]
• On Retirement Spending Patterns:
  "I sort of subscribe to the go go years, no go years, slow go kind of thing..."
  Jill: "...65 to 75 go go, 75 to 85 slow go, 85 plus is no go. However, I don't know how healthy you're going to be...So I'd like you to be go go-ish. How about that? Does that seem reasonable?"
  Scott: "Yes."
  [20:19–20:51]
• Jill’s Classic, No-Nonsense Tone:
  "If you're such an active trader that you cannot, like, deal with three hours of being incapable of executing a trade, go open another account someplace. Really, it's not that hard." [02:33]

Important Timestamps

• [02:49] – Jill’s public service: Keep digital and hard copies of estate and insurance documents
• [04:45]–[06:31] – Scott shares his financial profile
• [09:06–09:47] – Discussion of Social Security benefit options
• [10:05–10:10] – Are debts causing anxiety?
• [12:13–13:44] – Withdrawal and debt payoff strategy; tax bracket implications
• [17:10] – Recommendation to lower expenses post-debt payoff
• [19:13–19:25] – Using HSA receipts to pay off small debt

Conclusion

Jill reassures Scott that his plan—a controlled draw-down of retirement assets to clear the highest-interest debts, stay within a reasonable tax bracket, and bridge to Social Security—is sound. The bulk of the episode centers on making strategic, phased withdrawals and being vigilant about spending. Jill recognizes the value of the “go-go years” in retirement, but emphasizes flexibility and caution, especially in rough market years.

Anyone in a similar situation—approaching or in retirement with diverse debts—will find actionable steps and clear reasoning in Jill’s advice. The show stands out for its empathy, humor, and real-world application.

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