Podcast Summary: "Do I Need to Work Longer?" – Jill on Money with Jill Schlesinger

Episode Details:

• Title: Do I Need to Work Longer?
• Host: Jill Schlesinger, CFP®
• Release Date: April 29, 2025
• Platform: Audacy

Introduction

In this episode of Jill on Money, host Jill Schlesinger delves into the intricacies of retirement planning with a focus on whether individuals need to extend their working years to secure a comfortable retirement. The episode features a detailed conversation with Adam, a 55-year-old from Southern California, who recently made a significant career change impacting his retirement strategy.

Caller Introduction: Adam’s Financial Situation

Adam’s Background:

• Age: 55
• Marital Status: Single, no children
• Employment: Recently switched jobs for better work-life balance, resulting in a 30% pay cut.
• Annual Income: $175,000 (post-pay cut)
• Current Contributions:
  • 401(k): Contributing 7.5% with an additional 2.5% match from his employer.
  • Other Accounts: Holds a 403(b), 457 plan, traditional IRAs, and a Roth IRA.
  • Total Retirement Savings: Approximately $635,000 combining all accounts.

Adam’s Goals:

• Retirement Age: Aiming to retire by 60.
• Monthly Expenses: Approximately $8,000.
• Desired Retirement Activities: Extensive travel, including six weeks in Australia and New Zealand, and an African photo safari.

Discussion Points

1. Impact of Career Change on Retirement

Job Transition: Adam decided to switch jobs to achieve a better work-life balance, accepting a 30% reduction in salary. This move significantly altered his retirement savings trajectory, particularly affecting his ability to contribute to multiple retirement accounts simultaneously.

Jill’s Analysis: Jill assesses Adam’s financial standing post-job change, highlighting that despite the pay cut, Adam remains in a strong financial position due to his existing pension plans and overall savings. She notes, “Adam, how old are you?” [03:29] to gauge his retirement readiness.

2. Pension Plans and Social Security

Pension Benefits: Adam has three previous positions that offer pension plans, totaling an expected annual benefit of $81,000 starting at age 60. These pensions increase annually, reaching approximately $94,000 by age 62, and continue to grow by $7,000 to $8,000 each subsequent year.

Social Security: Additionally, Adam is entitled to Social Security benefits, projecting a monthly payment of $43,800 [05:57] (note: the timestamp in the transcript suggests a misstatement, likely meaning $4,380).

Key Insight: Jill emphasizes the importance of these steady income streams in ensuring Adam’s retirement is financially secure, reducing the necessity to extend his working years.

3. Retirement Savings and Withdrawals

Current Savings: Adam’s retirement accounts, including his 403(b) and Roth IRA, amount to approximately $635,000. Jill suggests leveraging these savings to supplement his pension and Social Security.

Withdrawal Strategy: She recommends a balanced withdrawal plan, advising Adam to:

• Claim Pensions: Start receiving pension benefits at 60 or delay for increased amounts.
• Optimize Social Security: Receive benefits at full retirement age.
• Utilize Retirement Accounts: Withdraw funds strategically from his retirement savings to cover any additional expenses, estimating a withdrawal rate that keeps him within a favorable tax bracket.

Notable Quote: Jill states, “You can pull down to just make up the difference” [07:00] regarding Adam’s ability to manage his monthly expenses comfortably.

4. Financial Health and Lifestyle Considerations

Expense Management: Despite not owning a home and paying $2,650 in rent, Jill reassures Adam that his financial foundations are solid. She points out, “But if you are happy and you can work five years, you're fine” [08:38], highlighting the balance between financial security and personal happiness.

Future Planning: Jill advises Adam to ensure all estate documents are in order and to appoint a healthcare proxy, emphasizing the importance of comprehensive retirement planning beyond finances.

Travel Aspirations: Adam expresses a desire to travel extensively post-retirement, planning activities like a six-week trip to Australia and New Zealand and an African photo safari. Jill encourages him to utilize his retirement funds to enjoy these experiences, reinforcing the notion that personal fulfillment is a key component of retirement planning.

Insights and Conclusions

Balancing Work and Retirement: Jill underscores that extending one's career solely for financial gain may not always be necessary, especially when substantial pension benefits and savings are in place. She highlights the importance of evaluating personal happiness and work-life balance alongside financial readiness.

Strategic Financial Planning: The episode illustrates how leveraging multiple income streams—pensions, Social Security, and retirement savings—can create a robust financial foundation, potentially allowing individuals like Adam to retire earlier without compromising their lifestyle aspirations.

Encouragement for Listeners: Jill encourages listeners to assess their own financial situations critically, considering factors such as pension benefits, savings, and personal expenses. She invites those contemplating a similar career shift or retirement decision to reach out for personalized financial guidance.

Final Advice: “Try to do something nice for someone else today. Change your work, change your wealth, change your life” [09:27]. This closing thought inspires listeners to take actionable steps towards improving both their financial health and personal well-being.

Notable Quotes with Timestamps

• Jill Schlesinger [07:00]: “You can pull down to just make up the difference.”

• Adam [03:03]: “But with a pay cut, I'm no longer able to fund both a 457 and a 403. And I'm wondering, how many years did I add to my work life before I can retire?”

• Jill Schlesinger [07:27]: “At 60, you'd have 81,000… At 62, it's worth about 94.6 annually.”

• Jill Schlesinger [09:27]: “Try to do something nice for someone else today. Change your work, change your wealth, change your life.”

Conclusion

In "Do I Need to Work Longer?", Jill Schlesinger provides a comprehensive analysis of retirement readiness through Adam’s financial scenario. The conversation highlights the significance of understanding and optimizing pension plans, Social Security benefits, and retirement savings. Jill emphasizes that with strategic financial planning, individuals can achieve their retirement goals without necessarily extending their working years, provided they have robust income streams and manage expenses effectively. The episode serves as an insightful guide for listeners contemplating similar financial decisions, offering actionable advice to balance financial security with personal fulfillment.