Do We Have Enough for Me to Retire?

Summary

Podcast Summary: "Do We Have Enough for Me to Retire?"

Podcast Information:

• Title: Jill on Money with Jill Schlesinger
• Host/Author: Audacy
• Episode: Do We Have Enough for Me to Retire?
• Release Date: May 13, 2025

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Introduction

In this episode of Jill on Money, host Jill Schlesinger, CFP®, delves into the complexities of early retirement through the lens of a listener's question. Joined by co-host Mark T. McGowan, they explore the feasibility of retiring before the traditional age, addressing financial planning, asset management, and the emotional aspects of such a significant life decision.

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Listener's Question: Teresa's Early Retirement Plan

Teresa from Northern California reaches out seeking reassurance about her financial plan to retire early. Inspired by her father's ability to retire at 49½, she aims to retire within the next two years at the age of 58, while her husband plans to continue his business until 65.

• Teresa's Financial Snapshot:
  • Age: 58
  • Spouse's Age: 60
  • Retirement Timeline: Within the next two years
  • Retirement Accounts:
    • Husband: ~$860,000 in IRAs
    • Teresa: ~$1,000,000 in IRAs
    • Taxable Accounts: ~$1,000,000
    • Home: Valued at ~$1,400,000 with a mortgage
    • Bank Assets: ~$100,000
    • Other: Inherited TIAA Annuity (details unspecified)
  • Annual Spending: ~$180,000 combined ($15,000/month)
  • Current Incomes:
    • Teresa: $150,000 (consulting)
    • Husband: Similar amount from his business

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Financial Analysis and Strategy Discussion

Mark conducts a thorough analysis of Teresa's financials to determine the viability of her early retirement plan.

1. Income vs. Expenses:

   • Post-Retirement Income:
     • Teresa ceases her consulting income.
     • Husband continues his business, projecting reduced income (~$100,000/year).
     • Combined Social Security (starting at 70): ~$9,000/month ($4,500 each).
   • Adjustment Strategy:
     • Utilize IRA withdrawals to bridge the income gap.
     • Withdrawal Plan:
       • Approx. $80,000/year from the husband's IRA.
       • Gradual drawdown of Teresa's IRA and taxable accounts as needed.

2. Tax Considerations:

   • Mark explains that withdrawals would be taxed at an estimated 22-24% bracket, aligning with their current tax situation.
   • Emphasizes the importance of not altering their tax bracket significantly.

3. Asset Utilization:

   • Primary Strategy:
     • Draw from retirement accounts first to cover expenses.
     • Allow brokerage accounts to grow, potentially reaching $2 million over time.
   • Secondary Considerations:
     • Adjust spending if necessary to reduce the reliance on withdrawals.
     • Address the husband's concerns about depleting retirement assets.

4. Health Insurance:

   • Confirmed that their current expenses include health insurance, eliminating the immediate need for additional funds in this category.

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Emotional and Behavioral Considerations

Teresa is concerned about her husband's reluctance to deplete their retirement accounts. Mark and Teresa discuss strategies to gain his support:

• Professional Validation:

  • Hiring a fee-only financial planner to provide an objective assessment.
  • Suggestion to involve their daughter, a CFP®, to present the plan professionally.

• Communication Strategies:

  • Emphasizing the benefits of early retirement while addressing potential fears.
  • Utilizing family members' expertise to bolster confidence in the plan.

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Conclusion and Actionable Insights

Mark and Jill conclude that Teresa's early retirement plan is feasible given her robust savings and manageable expenses. The key takeaways include:

• Comprehensive Financial Planning:

  • Detailed analysis of income sources, expenses, and asset utilization is crucial.

• Professional Guidance:

  • Engaging a financial planner can provide the necessary reassurance and detailed projections to support retirement decisions.

• Flexibility and Adaptation:

  • Being prepared to adjust spending or withdrawal strategies based on evolving circumstances ensures long-term financial stability.

Notable Quotes:

• Mark T. McGowan [05:37]: "Let's run through some of the numbers to see if we can get you out of there by the end of the year."
• Teresa [08:04]: "We spend about 15,000."
• Mark T. McGowan [12:16]: "You could go talk to a fee-only financial planner and have them run these numbers for you and show him, from a professional what that would look like."
• Teresa [15:47]: "We have."

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Additional Resources

Listeners are encouraged to engage with the show by submitting their financial questions through jillonmoney.com and to explore the Jill on Money Live subscription for exclusive webinars and content.

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This episode serves as a valuable resource for individuals contemplating early retirement, offering both financial strategies and insights into navigating personal and familial challenges associated with such a significant life change.

Transcript

[Jill Schlesinger]

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[Mark T. McGowan]

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[Jill Schlesinger]

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[Mark T. McGowan]

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[Jill Schlesinger]

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[Mark T. McGowan]

The Jill on Money Show. It's Tuesday, May 13th and we are here answering your financial questions. If you have one, just go to our website jillonmoney.com click the contact us button, write us a note. And if you want to come on the air live, which Mark and I love so much, we actually much prefer you come on the air than send us emails even though you know we read emails. It's not a problem. But I love hearing from you. I like hearing what you're saying, what you're not saying. We can ask great follow up questions and if you would like to have that wonderful experience, you can change your name. It's okay if you, you just have to go. And when you log on and you do jillonmoney.com and you hit the contact us button and you fill out your note, just check the box Mark does everything else while you're on the website, don't forget we have a live subscription service. It happens to be called Jill on Money Live. For $45 for the next 12 months, you will have access to quarterly live webinars. Really cool guests. Lot of fun. In fact, our next live webinar is coming up just next month, a few weeks. Mike Quincy will be joining us. He is the car expert from the Consumer Reports, and he is fantastic. That will occur on Thursday, June 5, 7 Eastern Time. And it's so much fun. And we can ask Mike all these sorts of questions like what's going on with the car market? Should you trade your car in? Should you get new one? Should you lease, should you buy, should you buy the car off the lease? So many problems in the auto market. So join us for that again. In addition to that webinar, you'll get three more. You'll get all the back catalog of our webinars and bonus audio and video content only if you join us for Jill on Money live. Okay, now with the business done, let's talk about your business. We are talking to Teresa, who joins us from Northern California. Hello, Teresa. How are you? What can we do for you?

[Teresa]

Hello and good morning. Thank you for taking my question. I appreciate it.

[Mark T. McGowan]

Of course.

[Teresa]

So like I said in my email, I basically want some kind of reassurance on the financial plan that we put together that I've put together. As far as retiring early, I would like to retire early. I'm sort of inspired by my dad who was able to retire 49 and a half.

[Mark T. McGowan]

Wow.

[Teresa]

With a small pension. And he's been very frugal and all of that. But you know, in foresight, because he's in his 80s now and taking care of my mom who has dementia, it was great that he had that time to really have a nice retirement. Yes.

[Mark T. McGowan]

That's an interesting way to think about that. You know, I'm always saying, I mean, you listen to the show, so I'm like, what are you going to do if you're retired? But there is something to be said for retiring while you're young and healthy and you can afford it and you can enjoy it before anything changes. Right, Exactly. To give you reassurance, I need some factoids. How old are you, Theresa?

[Teresa]

I am 58.

[Mark T. McGowan]

Okay. And are we talking retirement like the end of this year or like in two days?

[Teresa]

Within the next two years.

[Mark T. McGowan]

But if you wanted to do it, like if you could do it at the end of this year, you would like to. Yes, sure.

[Teresa]

Yes.

[Mark T. McGowan]

Let's say the end of this year. Yes, let's say that okay, Are you married, single, partnered?

[Teresa]

I am married.

[Mark T. McGowan]

How old is your spouse?

[Teresa]

He will be 60 this year.

[Mark T. McGowan]

Will he be retiring with you?

[Teresa]

No, he operates his own business. He's very happy doing that and he wants to retire or keep his business going as long as he can and. Or retire at 65.

[Mark T. McGowan]

All right, fantastic. All right, so let's run through some of the numbers to see if we can get you out of there by the end of the year. So, Theresa, do you have any pension benefit that you would be entitled to?

[Teresa]

No pensions.

[Mark T. McGowan]

Okay, let's then talk about the money you've saved. What do you got?

[Teresa]

Okay, for my husband, he has about 860,000 in IRAs. I have a little over a million in IRAs. We have in taxable accounts a little over a million.

[Mark T. McGowan]

And then joint accounts that you guys own?

[Teresa]

Yes, joint accounts.

[Mark T. McGowan]

Okay. I'm just doing 861 million. One million. Keep going.

[Teresa]

Then we own our own home, which is valued about 1,400,000.

[Mark T. McGowan]

Yowza. Is there a mortgage outstanding on it? No, this is Northern California. This is a big one.

[Teresa]

Yes.

[Mark T. McGowan]

Will you be staying there?

[Teresa]

Until our kids are sort of settled. We have two 20 year olds. The younger one has graduated and is launching her career and she probably will leave the state at some point, so we will try to figure out where she goes within the next 10 years or so.

[Mark T. McGowan]

And what about the other? You said you had 2:20?

[Teresa]

Yes. So the older one is working his way through grad school.

[Mark T. McGowan]

Oh, okay. Yeah. So do you support him?

[Teresa]

No.

[Mark T. McGowan]

Oh, that's good. So they're kind of launched in that.

[Teresa]

They're launched. They're.

[Mark T. McGowan]

They're young, but they're launched. Okay, what about money in the bank? We just didn't go through that. You said brokerage. We stopped short of that. What about bank assets?

[Teresa]

Bank assets? I would say around 100k, give or take.

[Mark T. McGowan]

And no other investments? No Roths? No nothing. Just these two big fat IRAs. The brokerage account, the 100 grand and the bank account and the house. Anything else?

[Teresa]

No Roths. We have some smaller, like college savings account, I think my husband has a TA F tia Kraft Annuity. Inherited? Just some smaller things.

[Mark T. McGowan]

Yeah. How much is in that? The inherited tiaa?

[Teresa]

I really don't know, to be honest.

[Mark T. McGowan]

All right, that's fine. You're allowed. Can you exist on your husband's income for the next five years from his own business?

[Teresa]

I think we could. It is kind of a seasonal business, so it does make him worry.

[Mark T. McGowan]

How much do you spend? What do you think all in.

[Teresa]

We spend about 15,000.

[Mark T. McGowan]

Oh, hello. You've got a nice spending. I like that. Good. Good for you. Is it fair to say that for. If you were to retire at the end of this, how much do you earn right now, Teresa?

[Teresa]

I'm consulting, so about 150,000.

[Mark T. McGowan]

And what's your husband's income about? Be conservative.

[Teresa]

I would say about the same.

[Mark T. McGowan]

And so you guys put money into your retirement accounts, and then you put money in your brokerage account and, like, cash flow is great, but you think that's why that 15 grand a month is interesting to me. Okay. If your husband keeps doing this, let's just say he doesn't do 150 a year for the next five years. Let's say he does 100 just for the heck of it, in which case we would have to pull some money out of your accounts, specifically, probably his account, because he's over the age of 59 and a half. Right. To supplement you now, are you cool with that? Like, you're gonna have to pull some money out. Is that okay? Does that feel okay to you?

[Teresa]

I would probably be okay with it. I think he would probably be more reticent. I think we can also bring down our spending.

[Mark T. McGowan]

That's no fun. That is.

[Teresa]

That's no fun.

[Mark T. McGowan]

Not at fun at all. If I'm going to retire early. Well, I mean, I guess, except that he's going to keep working, but. Okay. Well, one way or the other, you would probably kind of figure it out. So what I would think about doing would be, yeah, you're 58 this year. Also, what do we do for health insurance? Because do we have to. Maybe we can't pull that money, that 15 grand, because don't you need health insurance?

[Teresa]

Yeah, we pay that. That includes our health insurance.

[Mark T. McGowan]

Okay, good. I'm kind of happy to get this money out of your husband's account and, like, start to drain this account and pay the tax that's due and live on it. But I want to make sure you got enough money to live on once you get to claiming Social Security. So are you guys both in good health?

[Teresa]

Yes.

[Mark T. McGowan]

Okay. Would you think about claiming it, like, 67 or 70 or. What was your thought at this point?

[Teresa]

My thought is 70 at this point.

[Mark T. McGowan]

Okay. Let's say that over the next 10 years that we take, you know, 80 grand out of your husband's account every year from his IRA account. So. Right. We're not. You no longer have your 150, but again, we'd pull 80 out. He'd make what he makes, then we'd pay the tax on that. And I know you're in a high tax state, but it would not change your tax bracket per se. You'd probably actually end up being pretty close to where you are. 22, 24%. Right. And you'd take that and you would exhaust that account and live on that. You would basically say this is the money we need to live on for the next 10 years until he claims Social Security. Do you know what his Social Security benefit is?

[Teresa]

I think It'll be approximately 4,500.

[Mark T. McGowan]

And yours will be about the same.

[Teresa]

Yes.

[Mark T. McGowan]

Okay, so we really just got to get you through this 10 year period where. 10, 12 years where we're going to pull money out of that. His account first. Then we'll tap your IRA and maybe we won't even touch the brokerage account. Maybe we'll just keep, we'll spend those dollars down from those two IRA accounts. Use that you. He'll take whatever the money he has to take out of his ira. The inherited IRA you'll spend. Maybe you won't spend as much money. Maybe you will. We don't know. We exhaust some of your retirement assets and so how would you feel if. Let's just say you got to your age 70 and his age 72, he's no longer working his own business like we had him work for five years. But let's say you get to his age 70, 72 and you're 70 and we've spent down. His entire IRA account is done. Your IRA account. Maybe we spend a few hundred thousand. Maybe there's like 700 grand left in your IRA and maybe there's a million something in your brokerage. Cause it's grown. So maybe it's $1.2 million. Okay, now how would you feel about that? Cause what I am suggesting to you is I think you can retire, but you have to give yourself permission to spend down the money you've saved. And I'm worried that what from the description of your husband, he may not love that so much.

[Teresa]

No, he does not love the idea.

[Mark T. McGowan]

So how are we going to get him over the hump?

[Teresa]

Well, I think with, you know, at least having some kind of professional validation that it is possible. You know, like you and Mark saying this isn't a horrible idea.

[Mark T. McGowan]

Okay, let me get Mark, let me bring Mark onto the microphone and then I have another idea for you to consider. So Mark, come on, join us. Mark loves spending other people's money. So Mark, how do you feel About Teresa and her husband just blowing through his ira, eating away at her ira, letting the brokerage grow and, you know, being okay until they start claiming Social Security. How do you feel about the next dozen years for them? Is that okay?

Oh, I feel fine about it, but he obviously doesn't. But, yeah, and also. Also, like you said, the brokerage account. You said the brokerage account is going to grow maybe by a couple hundred thousand dollars. I mean, the brokerage account may very well double to $2 million by the time it could.

I'm just saying, I just to give her a lower number to set her expectations. So, look, I think you can do it. Now, there's another idea I have for you, Theresa, which is you could go talk to a fee only financial planner and have them run these numbers for you and show him, from a professional what that would look like. You could absolutely do this and you'd pay some money, but whatever. Let's just say you paid. Say, hi, honey. We're talking about the next 30 years, hopefully, right? You're feeling reluctant, I'm feeling antsy. Let's go hire somebody. Let's pay him five grand or something to run our retirement numbers, and let's really look at it so we can both feel confident in this process. Do you think he'd spring for that?

[Teresa]

We've actually done that in the past. We did that years ago when our kids were in high school. I think he'd be open to it. I think he'll just be skeptical because, first of all, he always hates paying for any kind of financial advice.

[Mark T. McGowan]

Oh, Lord, here we go.

You just tell him, say, honey, I'm quitting. You do what you want to do.

That's right. That's right. You just go there and. Well, where did. Where are those IRAs held? What firm?

[Teresa]

Baird.

[Mark T. McGowan]

Do you have someone at Baird who can run the numbers for you again? Update your numbers?

[Teresa]

Yes, and actually, my daughter is going to become a cfp, and she has run the numbers for us. But she's just young, obviously, so.

[Mark T. McGowan]

Yeah, but she could have someone. She could be like, I'm becoming a cfp, and I have someone. Like, you can have someone do this. Or what you can do is. Is he like a numbers guy? Because he can run the numbers himself. Have your daughter walk him through the numbers and be like, dad, this is an. You know what I did for an exercise? I ran your retirement numbers and walk through it. Listen, he's going to do what he's going to do. Like, I can't convince him I Think you guys are in really fine shape. Do you hate your job, Teresa?

[Teresa]

I kind of enjoy my dog, but it's very intense a lot of times.

[Mark T. McGowan]

Yeah, I mean, I think that, like, your particular experience of having a father who could retire early and enjoy his wife and his family is informing you. And obviously something happened to your husband that's like informing him and freaking him out. So I understand both of those perspectives. It's just that that's when I think a financial planner can be really helpful, but because that's when you can really say, all right, someone is a professional who does this and can really customize it and look at where we are and, you know, listen, it's just like your husband's going to be the kind of guy who goes to a doctor who's like, I don't believe that's my blood pressure. Like, that's what he's doing. I don't believe that. I'm stepping on the scale. You weigh 220 pounds. No, I don't. Okay, so, like, if he's unreasonable, then you're going to have to make your best decision knowing that your guys are going to be fine.

[Teresa]

Perfect. Well, I do like that advice of the fee only financial planner.

[Mark T. McGowan]

Yeah, I do think that's perfect. It is good and I think it's great your daughter's going into this.

[Jill Schlesinger]

Amazing.

[Mark T. McGowan]

We need more women going into financial planning. So go, Teresa's daughter, go. Have you, have you done your estate planning?

[Teresa]

We have.

[Mark T. McGowan]

Okay, great. Okay, go off, go hire yourself. Go talk to your daughter. Go find. She'll find you a nice fee only planner. And, and let's prove to your husband what he is unwilling to accept, which is, oh my God, things are fine. If you, like Theresa, have a spouse who is a doubting Thomas or Thomasina, then we would love to chat with you. Go to jillonmoney.com, click the contact us button, write us that note. Let us know if you want to come on the air. It's so much more fun. And while you're on the website, you can check out all of our content. We've got another podcast. We've got a blog. We've got resources, We've got videos, all of it right there at jill on money.com you can subscribe to this show and our sister broadcast Money Watch on the Odyssey app. Don't forget that's our weekend show, the Odyssey app. Wherever you find your favorite podcasts as well, leave us a rating and review wherever you listen, please. And of course, put your hands metaphorically on someone's back. Come on, Teresa. We're we're rooting for you. Change your work, change your wealth, change your life. Thank you for listening. We'll talk to you tomorrow.

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