Do We Have Enough for Retirement?

Summary

Episode Summary: "Do We Have Enough for Retirement?"

Podcast Information:

• Title: Jill on Money with Jill Schlesinger
• Host/Author: Audacy
• Description: Host Jill Schlesinger, CFP®, discusses challenging and controversial financial and investing topics in an accessible manner. Each week, Jill engages with listener calls and interviews guests to uncover valuable insights and provide actionable advice to help listeners manage their money effectively.
• Episode: Do We Have Enough for Retirement?
• Release Date: April 28, 2025

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Introduction

In the episode titled "Do We Have Enough for Retirement?", Jill Schlesinger welcomes listeners to discuss the financial intricacies of retirement planning. The focal point of the episode is a conversation with Tim from Minnesota, who seeks reassurance about his financial readiness for retirement.

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Guest Introduction: Tim’s Retirement Situation

Timestamp: 02:46

Tim introduces himself as a 63-year-old who retired two years ago after a 39-year career. Although retired, he is not yet collecting Social Security benefits. Tim has accumulated savings in a 401(k), a Roth IRA, and owns rental properties. He expresses uncertainty about whether his savings are sufficient for a secure retirement and seeks Jill's expert reassurance.

Notable Quote:

Tim (02:46): "I want to retire. And while I am retired, but not collecting anything yet, I've worked 39 years. I've saved some money in a 401k and put a little bit into a Roth diversified with some property. And I guess I'm just struggling on if this is enough. I think it is, but at the same time, I need more reassurance. Does that make sense?"

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Assessing Tim’s Financial Portfolio

Timestamp: 03:19 - 08:13

Jill begins by delving into Tim’s financial details:

• Severance Package: Tim received a lump-sum severance package two years ago, equivalent to one year’s salary plus vacation pay.

  Jill (03:56): "How much was that lump sum?"

  Tim (04:01): "It was like, almost. I've got a... with my vacation pay, a year salary."

• Retirement Accounts:

  • 401(k): Combined total of $900,000, primarily Tim’s.
  • Roth IRA: $110,000.

• Rental Properties:

  • Two Properties: Generating a total of $2,200 monthly, with net income approximated at $1,100 after expenses.
  • Property Values: One valued at $200,000 and the other at $300,000, purchased in 2008 and 2012 respectively.

  Notable Quote:

  Tim (05:07): "Yes. So here's the other thing. We have two rental properties that we have right now, and they get about $1,100 a month each."

• Primary Residence: Valued at $500,000, fully paid off with no mortgage.

• Cash Reserves: Approximately $44,000 in checking and $9,000 in a savings vacation fund.

• Spousal Income: Tim’s wife, also 63, has just started collecting Social Security benefits amounting to approximately $1,676 per month.

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Jill’s Financial Analysis and Advice

Timestamp: 08:13 - 14:06

Jill meticulously evaluates Tim's financial standing:

1. Income Streams:

   • Tim’s Pension: Expected to provide $2,400 monthly once activated.
   • Social Security: Tim has yet to claim his benefits.
   • Rental Income: Approximately $1,100 monthly net.
   • Wife’s Social Security: $1,676 monthly.

2. Monthly Expenses: Estimated at $4,000, which Jill confirms is comfortably covered by Tim’s income sources.

   Notable Quote:

   Jill (10:18): "You're good. You should not. I don't think you should look back. I don't see any problem with this."

3. Recommendations:

   • Selling Rental Properties: Jill advises selling the less valuable rental property to free up liquidity for home improvements.

     Jill (10:37): "So we do need to sell one of these properties. I think if you sell that $200,000 property, even if, all told, you paid 50 grand in taxes, there's your 150 grand to do the work that you want to do on your house."

   • Social Security Strategy: Suggests delaying Tim’s Social Security benefits until age 67 to maximize the payout, while managing withdrawals from his 401(k) to cover expenses in the interim.

     Jill (10:37): "Maybe pull out enough just to start getting that money out and getting it taxed. You're fine."

   • Estate Planning: Encourages Tim to finalize estate documents to ensure his financial legacy is in order.

     Jill (13:23): "Can you just tell you one thing? Do not let them sell you some weird, like, you need a trust or you need this."

4. Health Care Considerations: Jill briefly touches on potential increased healthcare costs once Tim qualifies for Medicare, advising planning for supplemental insurance.

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Final Assurance and Takeaways

Timestamp: 14:06 - 15:06

Jill wraps up the conversation by reinforcing that Tim and his wife are financially secure. She emphasizes the importance of having multiple income streams and strategic planning.

Notable Quote:

Jill (15:06): "I feel very happy. I feel like a dream has been granted."

She encourages listeners to reach out with their financial questions and highlights the availability of resources on the podcast’s website.

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Conclusion

In this episode, Jill Schlesinger provides a comprehensive analysis of a listener’s retirement readiness, illustrating key aspects of retirement planning such as income diversification, asset management, and strategic timing for Social Security benefits. Tim’s case exemplifies how proactive financial planning and expert advice can instill confidence in one’s retirement strategy.

Key Takeaways:

• Diversification of Income: Combining pensions, Social Security, rental income, and retirement accounts enhances financial stability.
• Strategic Social Security Claiming: Delaying benefits can result in higher monthly payouts.
• Asset Liquidity: Selling non-essential assets can provide necessary funds for major expenditures.
• Estate Planning: Ensuring legal documents are in place is crucial for legacy management.
• Expert Guidance: Consulting financial advisors can provide personalized strategies and reassurance.

For listeners contemplating their retirement readiness, this episode underscores the importance of a well-rounded financial plan and seeking professional advice to navigate the complexities of retirement.

Transcript

[Jill Schlesinger]

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[Mark]

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[Jill Schlesinger]

Welcome to the Jill on Money show. It's Monday, April 28th and we are here talking to you about whatever is going on in your financial life. Now that can mean so many different things. It could mean trying to kind of calm your nerves down after all the ups and downs in the recent past in the last couple months. It could also mean making sure that you're on track to do the things you want to do. Maybe that's send your kids to college, maybe that's retirement. But it also may be a decision about buying a home or maybe taking a different job or whatever. Whatever's going on. Get in touch with us. Go to jillonmoney.com, click the contact Us button, write us a note and then at the bottom of the form, if you'd like to join us live, check the box because Mark will then follow up with you and get you on the air. While you're on the website, don't forget, bookmark it because we change around our content all the time. The blog, the video section, resources, our other audio programs, Everything [e-mail] okay, let's get started. We are talking to Tim who joins us from Minnesota. Hi, Tim.

[Tim]

Hi.

[Jill Schlesinger]

What's going on, man?

[Tim]

Well, I want to retire. And while I am retired, but not collecting anything yet, I've worked 39 years. I've saved some money in a 401k and put a little bit into a Roth diversified with some property. And I guess I'm just struggling on if this is enough. I think it is, but at the same time, I need more reassurance. Does that make sense? And especially what's going on right now.

[Jill Schlesinger]

Tim, I got reassurance up my sleeve right here. Don't you worry. So how old are you?

[Tim]

I'll be 63 in May.

[Jill Schlesinger]

Okay. But you said you're retired. Are you still doing something part time? What are you doing?

[Tim]

No, I took a buyout from work, which in our yearly reviews or twice a year, I told them 40 years would be almost enough here.

[Jill Schlesinger]

Yes.

[Tim]

And they. They put me on the list for a layoff, which was great. And I got a really nice severance package, and I get to keep my health care with my wife.

[Jill Schlesinger]

Oh, great. Okay. So that buyout you're still getting paid out, is that.

[Tim]

No, no, it was a lump sum. It was one lump sum.

[Jill Schlesinger]

So how much was that lump sum?

[Tim]

It was like, almost. I've got a. With my vacation pay, a year salary.

[Jill Schlesinger]

Wow. And when did this all happen?

[Tim]

Two years ago. I've been out for two years, so.

[Jill Schlesinger]

Oh, wow. But you have not claimed Social Security. Do you receive any pension benefit?

[Tim]

Not yet. And I just. That's why I really. I have not.

[Jill Schlesinger]

And you mentioned a wife. How old is she?

[Tim]

She's 63. She just. Yeah, she's 63.

[Jill Schlesinger]

Is she working as well or she retired.

[Tim]

She's retired. She's collect. She just started collecting.

[Jill Schlesinger]

What is she collecting? Pension or Social Security or both?

[Tim]

She only gets Social Security.

[Jill Schlesinger]

And how much is her Social Security.

[Tim]

Check is like 1676.

[Jill Schlesinger]

Got it. Okay. Now let's talk about the money you guys have socked away. So you said you have a 401k. How much money is in there?

[Tim]

We've got 900,000 in a 401. Majority of it's mine, and that's combined. Okay. Then we've got like 110,000 in a Roth.

[Jill Schlesinger]

And you mentioned property of rental property.

[Tim]

Yes. So here's the other thing. We have two. Two rental properties that we have right now, and they get about $1,100 a month each.

[Jill Schlesinger]

So $2,200 a month in terms of. Is that a net or is that like the total Amount you take in.

[Tim]

That'S the total amount. So you got to subtract, of course, the insurance and the taxes.

[Jill Schlesinger]

What do you clear? What do you figure you clear on a monthly basis between the two of them instead of not 2200, but what is it? How much?

[Tim]

I'd say 1100. I'd say half just to be safe because there's no. I don't own anything on them.

[Jill Schlesinger]

Okay, what are they worth? What are these two different properties?

[Tim]

The one is worth 200 and the other one's worth 300,000. 200 and 3,000.

[Jill Schlesinger]

Do you like managing them? Do you think about selling them? What's, what's your thought process?

[Tim]

Yeah, you know, I am right now thinking about selling the more inexpensive, expensive one right now. Just, just to have a little bit more money reserve. Yep. Yeah.

[Jill Schlesinger]

Okay. How long have you owned that?

[Tim]

I've owned the more expensive one since 2007. Eight. Right around 2008. And the other one, the 2012.

[Jill Schlesinger]

What did you pay for the $200,000 one?

[Tim]

Oh, I don't it. Well, of course, the downturn, it was after that coming out, I paid 30, 34,000.

[Jill Schlesinger]

Get out of here. Yeah, it's really appreciated.

[Tim]

Yeah. And I've did a lot of, A lot of work myself on it.

[Jill Schlesinger]

Oh, good.

[Tim]

But really it's, it's like, it's a little tiny home, but it's really in a good location in the cities of Minneapolis. So it's a nice spot.

[Jill Schlesinger]

So if you were to sell that, we'd have to pay some taxes. I get that. But that's, but you're right, you'd be a little bit more liquid. So you've got the 900 in the combined 401ks, 110 Roths property, you know, valued at a half a million dollars, which is netting you $1,100 a month. Your wife has claimed her Social Security. 1,670 bucks a month you haven't claimed yet. How about money in the bank?

[Tim]

Money in the bank. We have like 44,000 in the checkbook and then we got like about 9,000 in like a savings we vacation type fund that we don't use that much, but.

[Jill Schlesinger]

Okay. The primary home, the. Your, you know, where you live. How much is that worth?

[Tim]

This place here is, I'd say at least 500,000 tax assessed value.

[Jill Schlesinger]

And do you have a mortgage still?

[Tim]

No, I. Everything that I have is just paid for.

[Jill Schlesinger]

Okay. And you want to stay where you are, Tim, do you feel like. Well, you know, we're young and we're happy where we are. Do you think like, we're selling this and heading south or what's your game plan?

[Tim]

The plan here is I still have a little bit of property across the street from where I'm at. I'm on like a 10 acre parcel and I love it. I'm close to the city. I want to, I want to live it out here. So I don't really want to move, but I want to do some more work to this house and I want to free up some liquidity to work on the house, so I want to stay.

[Jill Schlesinger]

Okay, great. All right, you ready for the big question? How much do you and your wife spend on a monthly basis?

[Tim]

And that varies, but I'd say, geez, easily probably 4,000, maybe a month.

[Jill Schlesinger]

Okay, that makes sense. Okay, so what you're telling me, so right now, while you have not worked, have you blown through the lump sum that you got that one year of salary?

[Tim]

Not really. Yes, but I still have, you know, I bought some equipment.

[Jill Schlesinger]

Okay.

[Tim]

But yeah, that's where I'm getting kind of to a point where I. Yeah, and with what's going on, that's where I did get a hold of Social Security online and I wanted to send me. I filled out their application and then I sent for my pension.

[Jill Schlesinger]

So tell me about what is the pension and what is the Social Security benefit that you've gotten? I mean, that you, you're entitled to.

[Tim]

What.

[Jill Schlesinger]

When would the pension kick in?

[Tim]

I'd like them to start it. I told them on June or July 1st. Oh, this year I have to fill the paperwork out, send it in, but that does it, you know, how much.

[Jill Schlesinger]

Would that be, you think?

[Tim]

Last time we went through this, it was like $2,400 a month for my pension.

[Jill Schlesinger]

So you got the pension, which you would add to your wife's Social Security, plus the net amount from your rental property and the healthcare. You're okay until you get to Medicare, is that right?

[Tim]

Yeah, it's 330amonth for my wife and I for.

[Jill Schlesinger]

Oh my God.

[Tim]

That's what pushed me into this too, because it was such a good benefit.

[Jill Schlesinger]

Okay, so the pension starts and then do you have an idea about the Social Security benefit? I'm just wondering if you took it now versus you waited till your full retirement age. If you waited till 67, do you know what the difference in the amount would be?

[Tim]

It would be the same as my pension right now. And then it would probably be like 3100 or even if you waited okay, yeah, like 3000 if I waited till 67, I think.

[Jill Schlesinger]

Okay, I got you. So you got plenty of money. You're good. I don't want you to freak out at all. You're totally good. Okay.

[Tim]

Yeah.

[Jill Schlesinger]

Make sure that sinks in. Let's just wait a second. Okay, so you have plenty of money.

[Tim]

Let's.

[Jill Schlesinger]

So let's talk about doing the work on your house. How much money do you think you need to do the work on your house?

[Tim]

I want to spend it probably at least $150,000.

[Jill Schlesinger]

Okay. So we do need to sell one of these properties. I think if you sell that $200,000 property, even if, all told, you paid 50 grand in taxes, there's your 150 grand to do the work that you want to do on your house. So I think that's the right idea. I like that idea. Okay. I'm on top of that. You may want to work with an accountant just to make sure you're not getting. You're making sure that you handle the sale of this asset the right way. Okay, next. I like the idea of getting the pension. I don't know if you should claim Social Security right now. I really don't. And here's what I'm thinking. You've got $900,000 that has not been taxed yet. Right. It's in that 401. Maybe instead of claiming Social Security, you wait until you're 67, so just for a few more years, you take some money out of your 401k every year, you pay the tax that's on it, and you then claim Social Security at 67. At that time, it would be your Social Security, her Social Security, your pension, and, you know, not as much money in net income from the rental property, but a few hundred. But you'll be fine, completely fine. So you know what saves you. I'll tell you what, you don't say you don't spend a lot of money, $4,000 a month, you're golden, dude. Your social, her social, I mean, really, your pension, her Social Security and a little rental income. Pull a little money out of that 401k every year until age 67 and maybe pull out enough just to start getting that money out and getting it taxed. You're fine. Everything is good. You should not. I don't think you should look back. I don't see any problem with this. I mean, I guess the only question is there may be. It may cost you a little bit more of health care once you get to Medicare. Age just because there's some stuff you might to buy, a supplemental policy or whatever, but you're in great shape. Do you guys have adult kids? I didn't even ask you that.

[Tim]

Yes, I have three adult kids and up to seven grandchildren, everyone.

[Jill Schlesinger]

Okay. Are you helping anyone out?

[Tim]

My one daughter, we do, and her husband. And they take the larger rental home, and we still make them pay, and they can save money, and it's kind of a stepping stone to save money to buy their own place because they have three kids. And, you know, not to help them, but we don't want to enable them.

[Jill Schlesinger]

No, no. It's like. It's like it works for everybody. They pay the rent. I'm sure. It's not like you're not killing them on the rent. You're probably a very nice landlord. Walk around and say, mow the lawn.

[Tim]

No, no. I'm too. I'm too easy. I'm too easy.

[Jill Schlesinger]

I think you're in good shape, Tim. Do you guys have your estate documents done? Have you done, like, your will and all that stuff?

[Tim]

You know, I haven't. And that we finally went to one of these free dinner things where you go listen to it, you know, and that's the next thing on the list right now.

[Jill Schlesinger]

Okay, can I just tell you one thing? Do not let them sell you some weird, like, you need a trust or you need this. So the other thing to do is maybe ask some friends, like, hey, do you guys have an estate attorney? Because just want to make sure that nobody tries to encourage you to do something that's actually not in your best interest.

[Tim]

Right, right. I agree.

[Jill Schlesinger]

All right, man, you're good. You're free to go. So I feel very happy. I feel like a dream has been granted. You see, Mark, dream maker, not dream killer. You know, that's the way to start the week, Jill. That's a good way to start the week. Hey, gang, if you're listening and you've got a question about taking an early retirement offer or your federal government. Government worker, and something's been put in your lap, why don't you get in touch with us? Just go to jillonmoney.com, click the contact us button, write us a note, and if you'd like to join us on the air live, check the box. Don't forget to sign up for our free weekly newsletter comes out every single Friday. You can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Please try to lift someone up. Someone is going to need a boost from you. And I know it's going to make that person feel good. It's going to make you feel good. Change your work, Change your wealth. Change your life. Thanks for listening. We'll talk to you tomorrow.

[Mark]

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[Jill Schlesinger]

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