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[00:00]
A
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[03:47]
B
Good morning. Glad to be here. Looking forward to chatting with you guys today.
[03:52]
A
Absolutely. What's, what's up? What can we help you out with?
[03:55]
B
You know, I've been listening to your show since early Pandemic and I don't think I've missed an episode and enjoy listening when working in the yard in the weekend and, and in fact I think thanks to you looking at getting my own cfp, I did an externship this summer and so looking forward to having a post career opportunity to, to bring in a little money.
[04:20]
A
So that's wonderful. That's so great. I'm always happy to have someone join the fray. So good for you. Congratulations. So, so it sounds like maybe that next career is around the corner. So what's going on today in the current one?
[04:35]
B
Yeah, no, wife and I are full time employed still and have not, you know, been actively thinking about oh, can we retire at 58 or 59. You know, kind of always had the 62, maybe 64 in the back of our minds. But as we look at our finances, I am suspicious that it might be able to be done sooner than we think. And you know, I've kind of run the numbers myself and, but just kind of want to get your, your Take on, you know, hey, are we actually closer than we, we think and with the large amount that we have in pre tax, should we be doing some large conversions back to Roth or better to just, you know, start using it and you know, in two or three years. So that's kind of where we are.
[05:21]
A
Well, that's exciting. So, Derek, how old are you?
[05:24]
B
I am 56 and wife is 54.
[05:27]
A
Okay, and you said you're both full time employees. So are both of you thinking about kind of at least testing whether the next couple of years could be it for you?
[05:37]
B
Yeah. And you know, one of my wife's specific questions is, well, what if one of us were to unexpectedly maybe lose our current jobs and could we, you know, make it by on one income until we both can retire? You know, so that's kind of interesting twist on that question.
[05:57]
A
Yes, right, right. You know, it's so interesting, Derek. I was just talking about this with somebody who's a government employee and I said it's a very, it's a, it's not a bad question to ask yourself because so many jobs feel a little bit tenuous. Like people would think I'm working for the government. I have a very safe job. You might think you work at Blankety Blank Co. And it's a very safe job. Or maybe nothing is safe perhaps. So I like the idea of what happens if. So let's talk about where you guys are. You're in your mid-50s. Do you have children?
[06:27]
B
Old, older children.
[06:29]
A
Old, old children. Our children are 80. Yeah. Well, how old are they?
[06:33]
B
No, I have two 30 and 27. And then my wife has three. 31, 26 and 21.
[06:41]
A
And is everyone basically okay on their own?
[06:44]
B
Our three girls are very well launched. The two boys still figuring it out but not having to support them at the moment.
[06:52]
A
Okay, so let's talk about what is the. What, what does the income look like right now and what does the spending look like?
[06:59]
B
Right now I make about 183,000 base with usually about a 7% bonus a year. Wife is about 150 base with two 10% bonus. Expenses are right around 12,000amonth, which does include generally a couple of trips a year for travel, so.
[07:21]
A
But does not include dealing with any of those with the boys. Right, Correct?
[07:25]
B
Correct. No.
[07:25]
A
Okay, so, okay, got it. I mean, are the bonuses generally paid or not or should we just look.
[07:31]
B
At your base fairly, fairly consistent? You know, the actual percentage might be up or down just a smidge, but no, in general, we, we both get those. Yes.
[07:40]
A
Okay, very good. And so how do you feel like your cash flow's been good?
[07:45]
B
You know, we continue to put money into our retirements, get at least the, you know, what is ma matched. Also, you know, try to save either brokerage or high yield savings accounts or keep those accounts up there. But yeah, no, feel, feel good about cash flow.
[08:06]
A
Yes, that's great. Okay, so let's talk about the money that you have saved. Have you guys both used retirement plans through work?
[08:14]
B
Yeah. So I'll start with total totals and then we can see which ones. We might want to delve into more specifics on total. In Roth, we have just over 500,000 between the two of us. Pre tax is just shy of 1.9 million.
[08:33]
A
Great, that's awesome. Okay, and that's it for the for retirement accounts. What about in brokerage?
[08:39]
B
Yeah, so I have a brokerage account that's about 180,000. Sarah has one, that's about 116,000.
[08:46]
A
So that's a bunch of money you've saved. You own a home.
[08:50]
B
Yes. Probably about 950,000. And just have a measly 196,000 left at 2.5%.
[09:00]
A
So 2.5, brother. Amazing. Okay, and right now you get your health benefits through whose employer?
[09:10]
B
Mine, predominantly. She gets a little bit like a flexible spending account, but no, health care is through me today.
[09:17]
A
Okay, got it. So, I mean, listen, that's one of the nice things about both of you being employees, full time employees, is that if one were to stop, then the other, like if you're getting your CFP and you're just starting out and you don't, like, you want to make sure that you have a place to have, you know, a, at least some coverage till you're 65. Right. And, and that's awesome. Are there any other assets that you have, a second home or anything else that's out there?
[09:43]
B
Okay, do have a small car loan, 15,000 on my wife, but it's 3.69%. So it's like, yeah, I think we're making, you know, about as much in our other account, so. But we could obviously pay that off easily, right? We do. I guess the number I didn't provide do have about 37,000 in NHSA and then 90,000 in cash and high yield savings accounts.
[10:09]
A
Terrific. So when do you think, just looking at these numbers. Okay, so I want to just go through this one more time. So 1.9 million, that is pre tax. 500 grand is Roth brokerage of, let's call it 182, 300,000 between the two of you and some money in a high yield savings. So what, what do you think is the, the number that you want to look at in terms of like, can we hit this number? Forgetting about 62 or 65, what's the number we should be targeting?
[10:41]
B
I, I don't have a ton of my current work. 403B and 401A. So, you know, I don't think we have enough to potentially retire in the next year or so, which means probably 59 and a half, you know, before it can really pull from the retirement accounts. So, yeah, I think three years.
[11:00]
A
Yeah, you want to look at three years. Okay. And, and you guys are, your, you're maxing out your retirement accounts right now.
[11:08]
B
What is matched? So for me, that's a 6% Roth and then a 4, another 4% in a 403B Roth, and then. Okay, she's doing 8% in Roth as well. Obviously those are matched with pre tax dollars, but that.
[11:24]
A
Yep.
[11:25]
B
And I get an additional 6% from an employer once a year as well.
[11:31]
A
Okay.
[11:32]
B
Which is nice.
[11:33]
A
And so for you, the extra cash flow, because obviously you're making a lot more than you need from the 12 grand a month. You say that's what you're popping into your brokerage account right now.
[11:45]
B
Yep. Correct.
[11:47]
A
How much do you think? So if you put. Let's just say the contribution for three more years would be about 10% for you and let's just call it 10% for your wife, just for fun. Okay. For three more years. And then what's, what do you suspect is going into that brokerage account on an either a monthly or annual basis? Because that's where your excess is going.
[12:03]
B
Yeah. You know, we've been trying to do about 1,000amonth into the brokerage.
[12:08]
A
Okay.
[12:09]
B
So yeah, I think that's a good number to use.
[12:11]
A
Okay. So when we look at your saving, Right. For you, it's like 18 grand for three more years. Right. Because you're meaning between you and your employer, 15 for your wife.
[12:23]
B
Ish.
[12:24]
A
Let's call it about that. And then 12 grand. So, you know, this is pretty awesome because in this scenario, at least for, you know, for the next three years, we do have you saving quite a bit of money. So $45,000 a year, right?
[12:40]
B
Yeah.
[12:40]
A
So that's great. And then the money will continue to grow in what that you have invested. So, Mark, if in three years Derek says, I'm going to be a cfp, I'm out of here in Three years and his wife is going to be a workhorse. Maybe till her, maybe she'll, you know, do it, but like she's still only 57 at that point. So maybe we have his wife work for. Is this fair to say, Derek? Like if she works for two more years after that, is that, does that seem okay?
[13:11]
B
Like she would love to. I think I, I think she's afraid that, you know, the Hammer might not be able to keep her job that long. But.
[13:19]
A
Okay, so, so if we, we would say so. But even at three more years, we'll save that 45 grand a year for three more years. And then, Mark, they've got all this money that is saved up, which, you know, in a few years will be even more money. So that's kind of nice. Do you think that, Derek, that in three years if we say that, yeah, you could probably do this, but, but you would both want to do something at that time. Not, not necessarily high earning in the same way, but you would, do you think that you could both do something to make some money? You say maybe a cfp, but something else even.
[13:55]
B
I, my other thing talking about Mariners is possibly being an usher at home games during the year, which would. I love that thousand dollars. So, you know, no, I can't do nothing. So I think I will be doing something. I asked her if, you know, has she thought about what she might do and she's like, you know, I really haven't, you know, because her, her mom, when she retired, just fully retired, so.
[14:18]
A
Right.
[14:19]
B
She hasn't thought about it. But I, I doubt she can't do nothing.
[14:22]
A
But yeah, who knows? I mean, especially because you're young and you know you'll want to do something. Mark, how do you think Derek and his wife are looking for the next, you know, in a three year time horizon? How do you, how do you think they're looking? Looking better than the Mariners. I mean, I'm sure Derek knows this. In three years they're going to have probably, you know, around three and a half million dollars. So yeah, I mean they're going to.
[14:44]
B
Have the chance to, to, to definitely.
[14:46]
A
Make a, something else because you're going to have, you don't have pensions, but you will be able to have this nest egg. And especially because you have that brokerage account that's kind of nice that you'll have this three year Runway and you'll be able to maybe do something else. And even if you didn't make a ton of money, but if you made like 20 grand a year, or 30 grand a year doing something and then you'll end up claiming Social Security. I mean, there's an interesting opportunity which you'll, you know, as you're think about the cfp, you'll see this opportunity right in front of your face. And that is from age 60 to 70, you might want it, forget about converting your pre tax money, but you might want to just pull money out over those 10 years and live on it until you have Social Security to claim, which will then kind of pad the numbers. And you know, I just don't think that, I think you're on the right track. I don't think it's like, oh, a slam dunk, you can never work again. But I think that if you're going to explore something, I think you have a good enough baseline to be able to do that. And of course better if one of you keeps working till 65, because that health care is like a real expense. But you know, it shouldn't prevent you from doing something else. If you were both, by the way, if you both were like, you know, let's say combined, you were doing something and you're like, we made together 80 grand a year. That's a huge help. It's a huge help. And so you could be as long as like again, healthcare, one thing, cash flow, one thing. And then pulling money out of that pre tax account, starting to pay taxes at a lower tax rate, that's pretty darn good. So it seems to me you're in very good shape to make this happen. It's very scary to imagine that the rug kind of gets pulled out from under you. If that's something that you start to feel more and more anxious about. Like, do you feel like you're more secure in your job than your wife?
[16:42]
B
Most of the time I am in health care. So, you know, things are, are a little tight in healthcare right now too, so. But in general, yeah, it's like creating.
[16:51]
A
It'S creating all the jobs and the companies aren't doing as well. I don't quite get that. But okay, you know, I think you're in, I think you're in a really good position here. I mean, I get it, you're in the 24% tax bracket, but soon you won't be. Soon you'll be probably in 22, maybe even 12, depending on what happens for both of you. And then I think just pulling some of the money out of the retirement account, not converting it, but just living on it, I think is going to be fine until you really know what's going on? Look, if, if all of a sudden you're a CFP and you're like, this is working out great and I'm going to do this for another 15 years, you'll run the numbers yourself because you'll be a CFP and you'll be able to say like, what makes sense for me. Right. But I think you're in a really, it's, it's a really cool, it's a really cool idea to be able to plan ahead for a what if scenario that I think is really great. So I really, I think you've put yourselves in great. I don't think converting because I don't want to, I don't want to use up your brokerage accounts converting. I think that you're going to probably again, at least in the first few years, it, maybe I changed my mind. Maybe I would say, oh no, no, you have so much money, the money has grown so much and by so much that we should do it. But honestly, if you took 80 grand a year out of your pre tax account and stayed in that 22 or even 24% bracket, I think that's what you want to do. You want to like pull the money out, live on it because you won't have income or you may not again if your wife is still working. Okay. And it's like this is the, this is the not known, the unknown. If she's still working, she's making 150 grand a year and you're like, okay, this looks pretty solid. Maybe I would say, like, well, okay, you're paying for all of your expenses basically with not everything, but close. Right. With her base and bonus. Maybe I would say, yeah, convert 100 or 150 grand a year because you can afford that and we can use up some of the liquidity from the brokerage account. But I think that because it's an unknown, if you were both out of work, then I think you're in the position where you just have to pull out 150 grand a year, pay the tax that's due on it at 22% bracket. You don't pay state income tax because you're Washington state and live on that, you know. So I think that's, I think that that's what. It sort of depends what the situation is.
[19:17]
B
Yeah. You know, one thing I wanted to ask, and I don't know if I've heard you talk a lot about this and that is at what point do we include what we might inherit from our parents?
[19:29]
A
So how Much is it? And I hope it's a lot.
[19:34]
B
In my case, I'm pretty confident and know exactly what my, my mom's will says, so I'll get what's it say? Grand from her.
[19:42]
A
Okay.
[19:42]
B
My parents, sorry, my wife's parents is probably mostly going to be tied up in their house, which is probably going to be somewhere in that 3 to 500 range as well.
[19:53]
A
Okay, well, I mean, that's nice. It's nice to have. It's not life changing money.
[19:59]
B
No, correct.
[20:00]
A
I mean, and how old is everyone in good health right now?
[20:04]
B
My mom is almost 85, so I'm guessing she'll live another 10ish years. Sarah's dad is maybe the one that might go first, but that's a little bit of a guess too. But they're a little younger, in their late 70s, so.
[20:19]
A
But, but, but her mother has to live somewhere, so. Right.
[20:22]
B
Yes.
[20:23]
A
So I mean it's a nice thing to have in the back of your mind that like, you know, when you're 70 years old, you guys might inherit a few bucks, which is great. If your mom needed care, maybe she would burn through that 300. So I wouldn't necessarily count on it. But you know what, it's, it's, it's nice to have. It's, I wouldn't like if you told me it was 3 million that I might change, you know, could you add a zero?
[20:47]
B
That's a different story. Yes.
[20:48]
A
Right, right. So I don't think this is, I think this would be like a cushion and maybe would be nice because both of you might say at that time, maybe it's, I mean this is the kind of thing where you look at planning and you might say, okay, let's just pretend it's 10 years from now and the 300 you thought you were going to get is really a half a million. And your wife's mom passed away, so it's a half, it's a million dollars between the two of you. Maybe at that time you have so much money that you're like, okay, we're going to disclaim meaning we don't want that money and we'll just skip us and it goes back to, goes down to our kids or something like you may have more choices at that point. But for today I, I don't think, I don't think I would count on it right this second.
[21:27]
B
Just keep it in the back pocket as maybe, you know, a few extra trips or.
[21:32]
A
Yes, exactly, exactly. But I think that you're in good shape. Have you done your estate planning? Of documents that are up to date?
[21:39]
B
I have selected an attorney, and we are going to get them signed by the end of the month. Yes, I have. Progressing. So I know, I know I will get it.
[21:49]
A
Who wants to do that? It's like, oh, it's the summer. Let's do an estate planning. That's no fun, but. So I think that's good.
[21:56]
B
Previous marriages. So none of our kids are blood related. And so we've, you know, it's not complicated, but we. It's got to be done so we know exactly who's getting.
[22:05]
A
Yes, exactly. It's like, it's not complicated, but it actually has to. It actually has to. You must do it. So I get that. I think you're in really good shape. I wish you all the best. I hope that both of you keep your jobs for as long as you want them, you know, and then if you have questions about the cfp, you'll have to talk to Mark because he'll be happy to. He's. He'll hold your hand during the process. Okay.
[22:27]
B
Love it.
[22:27]
A
All right, great. Hey, if anybody out there is in their 50s, in their 40s, in their 30s, and listening to this and feeling like, yeah, I don't know, maybe my job isn't as secure as I thought, I want to make sure I'm set up to be able to manage whatever comes to me. You know, I think about this all the time when we talk about, like, when do you think you'd like to retire? And our favorite economist, Teresa Gillard Ducci, always likes to say, like, sometimes you don't have a choice about your retirement date. I think this is a good time for people to really start to say, what can I do to control some of the unknowns? And that is just about testing where you are, trying to figure out if you're making the best decisions for you today. And if you need some help doing that, Mark and I would love to assist you. Just go to jillonmoney.com, click the contact us button, write us a note, and if you'd like to join us live, check the box. Mark will do everything else. Yes, we are backed up. I know sometimes people are like, oh, Mark, have you forgotten about me? He hasn't forgotten about anybody, but we are backed up. Patience. Don't forget that you can actually sign up for our free weekly newsletter right on the front door of our website. And that will also get you our blog. So kind of fun. You get a little bit of an extra Jill and Mark every single week. If you would not mind, subscribe to us on the Odyssey app or wherever you find your favorite podcast and put your hands metaphorically on someone's back. Someone might need a little virtual hug from you. Change your work, Change your wealth, Change your life. Thank you for listening. We'll talk to you tomorrow. Need contract help for those workload peaks and backlog projects? You're not alone. Robert half found that 67% of companies surveyed said they will increase their use of contract talent. That's why their recruiters leverage their experience and use award winning AI to quickly find the skilled candidates you want. Learn about their specialized talent in finance, accounting, technology, marketing, legal and administrative support at Robert Half. They Know Talent. Visit roberthal.com talent today 3 judges, 1 bench, 0 room for nonsense. I'm Judge Dan Mentzer. Joining me are Judge Rachel Juarez and Judge Yodit Towelde. And on Hot Bench, we don't just hear cases, we debate. What she's asking for is for the payments that she made on his car. But there's still payments to be made. Correct and we delivered justice.
[24:57]
B
That is the verdict of the court.
[24:58]
A
Follow and listen to the Hot Bench podcast on the free Odyssey app or wherever you get your podcasts.

Summary5 min read

Podcast Summary

Podcast: Jill on Money with Jill Schlesinger
Episode: Do We Have Enough To Retire at My Age 59.5?
Date: September 8, 2025
Host: Jill Schlesinger, CFP®
Guest: Derek from Seattle

Episode Overview

In this episode, Jill Schlesinger answers a listener’s questions about early retirement planning. Derek, a long-time listener from Seattle, joins the show to discuss whether he and his wife can afford to retire in a few years, well before their previously planned retirement ages. Topics include assessing financial readiness, navigating possible job loss, managing retirement accounts, Roth conversions, future inheritances, and the importance of estate planning. Jill provides practical, jargon-free advice and strategic insight, making this episode essential listening for anyone considering an early retirement or feeling uncertain about job security later in life.

Key Discussion Points & Insights

1. Listener Background and Motivation

Derek (56) and his wife (54) are both fully employed and had always thought retirement would be around age 62-64.
Recent review of their finances suggests they might be able to retire earlier—potentially at 59.5, when they can access retirement funds without penalty.
Motivations: Derek is considering a post-career in financial planning and wants to understand their flexibility, including scenarios where one might lose their job unexpectedly.

2. Family and Dependency Snapshot

Five adult children from previous relationships, most financially independent.
No dependents influencing the retirement expense calculations.
- Quote [06:44]:
  “Our three girls are very well launched. The two boys still figuring it out but not having to support them at the moment.” — Derek

3. Financial Picture and Assets

(08:13–09:10)

Income:
- Derek: $183,000 base + ~7% bonus
- Wife: $150,000 base + ~10% bonus
Expenses: $12,000/month (includes annual travel)
Retirement Savings:
- Roth: $500,000 combined
- Pre-tax: ~$1.9 million combined
Brokerage Accounts:
- Derek: $180,000
- Wife: $116,000
Home: Estimated value $950,000, with $196,000 left on the mortgage at 2.5%
Other: $37,000 HSA, $90,000 in high-yield savings, minor car loan
Healthcare: Currently through Derek’s employer; wife has minor FSA only

4. Retirement Savings Strategy and Timeline

(11:00–14:44)

Both are maximizing retirement contributions (mix of Roth and pre-tax, leveraging employer matches).
Saving about $1,000/month in brokerage account.
Projecting continued savings and investment growth for another 3 years, potentially reaching $3.5 million in investable assets.
Flexibility: Considering partial retirement or lower-earning “encore” work such as part-time CFP practice or being a stadium usher.
- Quote [13:55]:
  “I can’t do nothing. So, I think I will be doing something.” — Derek
- Jill’s Take [14:45]:
  “Even if you didn’t make a ton of money, but if you made like $20k a year, or $30k a year doing something...that’s a huge help.” — Jill

5. Risk and Contingency Planning

(05:37, 10:40–16:42)

Exploring “what if” scenarios:
- What if one loses employment before planned retirement?
- Considering impact on cash flow, healthcare coverage, when to start drawing from retirement accounts.
Jill emphasizes the importance of flexibility, multiple income/logistical plans, and not assuming jobs are 100% safe.
- Quote [07:57]:
  “So many jobs feel a little bit tenuous…Maybe nothing is safe. So I like the idea of what happens if.” — Jill

6. Withdrawal Strategies & Roth Conversion Debate

(16:42–19:17)

Jill generally advises against large Roth conversions in Derek’s case, preferring regular, reasonable withdrawals from pre-tax accounts after retirement.
Emphasizes taking Social Security later and “filling up” lower tax brackets with planned withdrawals rather than conversions.
- Quote [18:14]: “If you took $80k a year out of your pre-tax account and stayed in that 22 or even 24% bracket, I think that’s what you want to do. You want to like pull the money out, live on it.” — Jill

7. Future Inheritance — How Much to Factor In?

(19:17–21:26)

Potential inheritances (likely $300k–$500k each from respective parents) are recognized but not included in core planning.
Jill’s approach: Don’t rely on inheritance for retirement security; treat as a “back pocket” cushion or for discretionary spending.
- Quote [20:46]:
  “It’s nice to have. It’s not life-changing money.” — Jill
- Jill to Derek [21:31]:
  “Just keep it in the back pocket as maybe, you know, a few extra trips or…”

8. Importance of Estate Planning

(21:26–22:04)

Derek and his wife, both from previous marriages, are finalizing estate documents to ensure clarity for their blended family.
Jill underscores the necessity, especially in blended families, of up-to-date legal planning.
- Quote [22:04]:
  “It’s not complicated, but it actually has to…you must do it.” — Jill

9. Jill’s Final Assessment

(22:04–22:27)

Derek and his wife are in “really good shape” for an early retirement, provided they remain flexible and prudent.
Jill reiterates the value of advance scenario planning and regular financial “check-ups,” especially as job security can be unpredictable.
Encourages listeners to periodically test their own financial plans for robustness against life’s unknowns.
- Quote [22:27]:
  “Sometimes you don’t have a choice about your retirement date…What can I do to control some of the unknowns?” — Jill

Notable Quotes & Memorable Moments

“Our three girls are very well launched. The two boys still figuring it out but not having to support them at the moment.”
— Derek [06:44]
“So many jobs feel a little bit tenuous…Maybe nothing is safe. So I like the idea of what happens if.”
— Jill [07:57]
“If you took $80k a year out of your pre-tax account and stayed in that 22 or even 24% bracket, I think that’s what you want to do.”
— Jill [18:14]
“It’s not complicated, but it actually has to…you must do it.”
— Jill, about estate planning [22:04]
“Sometimes you don’t have a choice about your retirement date…What can I do to control some of the unknowns?”
— Jill [22:27]

Important Timestamps

03:47: Derek introduces himself and background
06:27–06:51: Discussion of children and family responsibilities
08:13–09:43: Financial overview (income, assets, expenses, home)
10:40–12:39: Breakdown of savings strategy, contributions, and future growth
13:55: Discussion about part-time “retirement jobs” and activities
16:42–18:14: Roth conversion concerns, withdrawal strategy, and taxes
19:17–21:26: Potential inheritances and how/when to include them in planning
21:26–22:04: Estate planning for blended families
22:27: Jill’s wrap-up on controlling risk and staying prepared

Final Takeaways

Derek and his wife stand on solid financial ground to retire in approximately three years, assuming continued prudent savings and realistic expectations for supplemental income.
Flexibility, planning for contingencies, and not overestimating inheritance potential are keys to their strategy.
Estate planning is a must—especially for blended families—to avoid complications later.
Jill encourages all listeners to periodically “test” their financial plan, avoid complacency about job security, and remain ready for the unexpected.

For more tailored advice from Jill Schlesinger or to ask your own question, visit jillonmoney.com and use the Contact Us button.

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Transcript87 lines

[00:00]
A
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[03:47]
B
Good morning. Glad to be here. Looking forward to chatting with you guys today.
[03:52]
A
Absolutely. What's, what's up? What can we help you out with?
[03:55]
B
You know, I've been listening to your show since early Pandemic and I don't think I've missed an episode and enjoy listening when working in the yard in the weekend and, and in fact I think thanks to you looking at getting my own cfp, I did an externship this summer and so looking forward to having a post career opportunity to, to bring in a little money.
[04:20]
A
So that's wonderful. That's so great. I'm always happy to have someone join the fray. So good for you. Congratulations. So, so it sounds like maybe that next career is around the corner. So what's going on today in the current one?
[04:35]
B
Yeah, no, wife and I are full time employed still and have not, you know, been actively thinking about oh, can we retire at 58 or 59. You know, kind of always had the 62, maybe 64 in the back of our minds. But as we look at our finances, I am suspicious that it might be able to be done sooner than we think. And you know, I've kind of run the numbers myself and, but just kind of want to get your, your Take on, you know, hey, are we actually closer than we, we think and with the large amount that we have in pre tax, should we be doing some large conversions back to Roth or better to just, you know, start using it and you know, in two or three years. So that's kind of where we are.
[05:21]
A
Well, that's exciting. So, Derek, how old are you?
[05:24]
B
I am 56 and wife is 54.
[05:27]
A
Okay, and you said you're both full time employees. So are both of you thinking about kind of at least testing whether the next couple of years could be it for you?
[05:37]
B
Yeah. And you know, one of my wife's specific questions is, well, what if one of us were to unexpectedly maybe lose our current jobs and could we, you know, make it by on one income until we both can retire? You know, so that's kind of interesting twist on that question.
[05:57]
A
Yes, right, right. You know, it's so interesting, Derek. I was just talking about this with somebody who's a government employee and I said it's a very, it's a, it's not a bad question to ask yourself because so many jobs feel a little bit tenuous. Like people would think I'm working for the government. I have a very safe job. You might think you work at Blankety Blank Co. And it's a very safe job. Or maybe nothing is safe perhaps. So I like the idea of what happens if. So let's talk about where you guys are. You're in your mid-50s. Do you have children?
[06:27]
B
Old, older children.
[06:29]
A
Old, old children. Our children are 80. Yeah. Well, how old are they?
[06:33]
B
No, I have two 30 and 27. And then my wife has three. 31, 26 and 21.
[06:41]
A
And is everyone basically okay on their own?
[06:44]
B
Our three girls are very well launched. The two boys still figuring it out but not having to support them at the moment.
[06:52]
A
Okay, so let's talk about what is the. What, what does the income look like right now and what does the spending look like?
[06:59]
B
Right now I make about 183,000 base with usually about a 7% bonus a year. Wife is about 150 base with two 10% bonus. Expenses are right around 12,000amonth, which does include generally a couple of trips a year for travel, so.
[07:21]
A
But does not include dealing with any of those with the boys. Right, Correct?
[07:25]
B
Correct. No.
[07:25]
A
Okay, so, okay, got it. I mean, are the bonuses generally paid or not or should we just look.
[07:31]
B
At your base fairly, fairly consistent? You know, the actual percentage might be up or down just a smidge, but no, in general, we, we both get those. Yes.
[07:40]
A
Okay, very good. And so how do you feel like your cash flow's been good?
[07:45]
B
You know, we continue to put money into our retirements, get at least the, you know, what is ma matched. Also, you know, try to save either brokerage or high yield savings accounts or keep those accounts up there. But yeah, no, feel, feel good about cash flow.
[08:06]
A
Yes, that's great. Okay, so let's talk about the money that you have saved. Have you guys both used retirement plans through work?
[08:14]
B
Yeah. So I'll start with total totals and then we can see which ones. We might want to delve into more specifics on total. In Roth, we have just over 500,000 between the two of us. Pre tax is just shy of 1.9 million.
[08:33]
A
Great, that's awesome. Okay, and that's it for the for retirement accounts. What about in brokerage?
[08:39]
B
Yeah, so I have a brokerage account that's about 180,000. Sarah has one, that's about 116,000.
[08:46]
A
So that's a bunch of money you've saved. You own a home.
[08:50]
B
Yes. Probably about 950,000. And just have a measly 196,000 left at 2.5%.
[09:00]
A
So 2.5, brother. Amazing. Okay, and right now you get your health benefits through whose employer?
[09:10]
B
Mine, predominantly. She gets a little bit like a flexible spending account, but no, health care is through me today.
[09:17]
A
Okay, got it. So, I mean, listen, that's one of the nice things about both of you being employees, full time employees, is that if one were to stop, then the other, like if you're getting your CFP and you're just starting out and you don't, like, you want to make sure that you have a place to have, you know, a, at least some coverage till you're 65. Right. And, and that's awesome. Are there any other assets that you have, a second home or anything else that's out there?
[09:43]
B
Okay, do have a small car loan, 15,000 on my wife, but it's 3.69%. So it's like, yeah, I think we're making, you know, about as much in our other account, so. But we could obviously pay that off easily, right? We do. I guess the number I didn't provide do have about 37,000 in NHSA and then 90,000 in cash and high yield savings accounts.
[10:09]
A
Terrific. So when do you think, just looking at these numbers. Okay, so I want to just go through this one more time. So 1.9 million, that is pre tax. 500 grand is Roth brokerage of, let's call it 182, 300,000 between the two of you and some money in a high yield savings. So what, what do you think is the, the number that you want to look at in terms of like, can we hit this number? Forgetting about 62 or 65, what's the number we should be targeting?
[10:41]
B
I, I don't have a ton of my current work. 403B and 401A. So, you know, I don't think we have enough to potentially retire in the next year or so, which means probably 59 and a half, you know, before it can really pull from the retirement accounts. So, yeah, I think three years.
[11:00]
A
Yeah, you want to look at three years. Okay. And, and you guys are, your, you're maxing out your retirement accounts right now.
[11:08]
B
What is matched? So for me, that's a 6% Roth and then a 4, another 4% in a 403B Roth, and then. Okay, she's doing 8% in Roth as well. Obviously those are matched with pre tax dollars, but that.
[11:24]
A
Yep.
[11:25]
B
And I get an additional 6% from an employer once a year as well.
[11:31]
A
Okay.
[11:32]
B
Which is nice.
[11:33]
A
And so for you, the extra cash flow, because obviously you're making a lot more than you need from the 12 grand a month. You say that's what you're popping into your brokerage account right now.
[11:45]
B
Yep. Correct.
[11:47]
A
How much do you think? So if you put. Let's just say the contribution for three more years would be about 10% for you and let's just call it 10% for your wife, just for fun. Okay. For three more years. And then what's, what do you suspect is going into that brokerage account on an either a monthly or annual basis? Because that's where your excess is going.
[12:03]
B
Yeah. You know, we've been trying to do about 1,000amonth into the brokerage.
[12:08]
A
Okay.
[12:09]
B
So yeah, I think that's a good number to use.
[12:11]
A
Okay. So when we look at your saving, Right. For you, it's like 18 grand for three more years. Right. Because you're meaning between you and your employer, 15 for your wife.
[12:23]
B
Ish.
[12:24]
A
Let's call it about that. And then 12 grand. So, you know, this is pretty awesome because in this scenario, at least for, you know, for the next three years, we do have you saving quite a bit of money. So $45,000 a year, right?
[12:40]
B
Yeah.
[12:40]
A
So that's great. And then the money will continue to grow in what that you have invested. So, Mark, if in three years Derek says, I'm going to be a cfp, I'm out of here in Three years and his wife is going to be a workhorse. Maybe till her, maybe she'll, you know, do it, but like she's still only 57 at that point. So maybe we have his wife work for. Is this fair to say, Derek? Like if she works for two more years after that, is that, does that seem okay?
[13:11]
B
Like she would love to. I think I, I think she's afraid that, you know, the Hammer might not be able to keep her job that long. But.
[13:19]
A
Okay, so, so if we, we would say so. But even at three more years, we'll save that 45 grand a year for three more years. And then, Mark, they've got all this money that is saved up, which, you know, in a few years will be even more money. So that's kind of nice. Do you think that, Derek, that in three years if we say that, yeah, you could probably do this, but, but you would both want to do something at that time. Not, not necessarily high earning in the same way, but you would, do you think that you could both do something to make some money? You say maybe a cfp, but something else even.
[13:55]
B
I, my other thing talking about Mariners is possibly being an usher at home games during the year, which would. I love that thousand dollars. So, you know, no, I can't do nothing. So I think I will be doing something. I asked her if, you know, has she thought about what she might do and she's like, you know, I really haven't, you know, because her, her mom, when she retired, just fully retired, so.
[14:18]
A
Right.
[14:19]
B
She hasn't thought about it. But I, I doubt she can't do nothing.
[14:22]
A
But yeah, who knows? I mean, especially because you're young and you know you'll want to do something. Mark, how do you think Derek and his wife are looking for the next, you know, in a three year time horizon? How do you, how do you think they're looking? Looking better than the Mariners. I mean, I'm sure Derek knows this. In three years they're going to have probably, you know, around three and a half million dollars. So yeah, I mean they're going to.
[14:44]
B
Have the chance to, to, to definitely.
[14:46]
A
Make a, something else because you're going to have, you don't have pensions, but you will be able to have this nest egg. And especially because you have that brokerage account that's kind of nice that you'll have this three year Runway and you'll be able to maybe do something else. And even if you didn't make a ton of money, but if you made like 20 grand a year, or 30 grand a year doing something and then you'll end up claiming Social Security. I mean, there's an interesting opportunity which you'll, you know, as you're think about the cfp, you'll see this opportunity right in front of your face. And that is from age 60 to 70, you might want it, forget about converting your pre tax money, but you might want to just pull money out over those 10 years and live on it until you have Social Security to claim, which will then kind of pad the numbers. And you know, I just don't think that, I think you're on the right track. I don't think it's like, oh, a slam dunk, you can never work again. But I think that if you're going to explore something, I think you have a good enough baseline to be able to do that. And of course better if one of you keeps working till 65, because that health care is like a real expense. But you know, it shouldn't prevent you from doing something else. If you were both, by the way, if you both were like, you know, let's say combined, you were doing something and you're like, we made together 80 grand a year. That's a huge help. It's a huge help. And so you could be as long as like again, healthcare, one thing, cash flow, one thing. And then pulling money out of that pre tax account, starting to pay taxes at a lower tax rate, that's pretty darn good. So it seems to me you're in very good shape to make this happen. It's very scary to imagine that the rug kind of gets pulled out from under you. If that's something that you start to feel more and more anxious about. Like, do you feel like you're more secure in your job than your wife?
[16:42]
B
Most of the time I am in health care. So, you know, things are, are a little tight in healthcare right now too, so. But in general, yeah, it's like creating.
[16:51]
A
It'S creating all the jobs and the companies aren't doing as well. I don't quite get that. But okay, you know, I think you're in, I think you're in a really good position here. I mean, I get it, you're in the 24% tax bracket, but soon you won't be. Soon you'll be probably in 22, maybe even 12, depending on what happens for both of you. And then I think just pulling some of the money out of the retirement account, not converting it, but just living on it, I think is going to be fine until you really know what's going on? Look, if, if all of a sudden you're a CFP and you're like, this is working out great and I'm going to do this for another 15 years, you'll run the numbers yourself because you'll be a CFP and you'll be able to say like, what makes sense for me. Right. But I think you're in a really, it's, it's a really cool, it's a really cool idea to be able to plan ahead for a what if scenario that I think is really great. So I really, I think you've put yourselves in great. I don't think converting because I don't want to, I don't want to use up your brokerage accounts converting. I think that you're going to probably again, at least in the first few years, it, maybe I changed my mind. Maybe I would say, oh no, no, you have so much money, the money has grown so much and by so much that we should do it. But honestly, if you took 80 grand a year out of your pre tax account and stayed in that 22 or even 24% bracket, I think that's what you want to do. You want to like pull the money out, live on it because you won't have income or you may not again if your wife is still working. Okay. And it's like this is the, this is the not known, the unknown. If she's still working, she's making 150 grand a year and you're like, okay, this looks pretty solid. Maybe I would say, like, well, okay, you're paying for all of your expenses basically with not everything, but close. Right. With her base and bonus. Maybe I would say, yeah, convert 100 or 150 grand a year because you can afford that and we can use up some of the liquidity from the brokerage account. But I think that because it's an unknown, if you were both out of work, then I think you're in the position where you just have to pull out 150 grand a year, pay the tax that's due on it at 22% bracket. You don't pay state income tax because you're Washington state and live on that, you know. So I think that's, I think that that's what. It sort of depends what the situation is.
[19:17]
B
Yeah. You know, one thing I wanted to ask, and I don't know if I've heard you talk a lot about this and that is at what point do we include what we might inherit from our parents?
[19:29]
A
So how Much is it? And I hope it's a lot.
[19:34]
B
In my case, I'm pretty confident and know exactly what my, my mom's will says, so I'll get what's it say? Grand from her.
[19:42]
A
Okay.
[19:42]
B
My parents, sorry, my wife's parents is probably mostly going to be tied up in their house, which is probably going to be somewhere in that 3 to 500 range as well.
[19:53]
A
Okay, well, I mean, that's nice. It's nice to have. It's not life changing money.
[19:59]
B
No, correct.
[20:00]
A
I mean, and how old is everyone in good health right now?
[20:04]
B
My mom is almost 85, so I'm guessing she'll live another 10ish years. Sarah's dad is maybe the one that might go first, but that's a little bit of a guess too. But they're a little younger, in their late 70s, so.
[20:19]
A
But, but, but her mother has to live somewhere, so. Right.
[20:22]
B
Yes.
[20:23]
A
So I mean it's a nice thing to have in the back of your mind that like, you know, when you're 70 years old, you guys might inherit a few bucks, which is great. If your mom needed care, maybe she would burn through that 300. So I wouldn't necessarily count on it. But you know what, it's, it's, it's nice to have. It's, I wouldn't like if you told me it was 3 million that I might change, you know, could you add a zero?
[20:47]
B
That's a different story. Yes.
[20:48]
A
Right, right. So I don't think this is, I think this would be like a cushion and maybe would be nice because both of you might say at that time, maybe it's, I mean this is the kind of thing where you look at planning and you might say, okay, let's just pretend it's 10 years from now and the 300 you thought you were going to get is really a half a million. And your wife's mom passed away, so it's a half, it's a million dollars between the two of you. Maybe at that time you have so much money that you're like, okay, we're going to disclaim meaning we don't want that money and we'll just skip us and it goes back to, goes down to our kids or something like you may have more choices at that point. But for today I, I don't think, I don't think I would count on it right this second.
[21:27]
B
Just keep it in the back pocket as maybe, you know, a few extra trips or.
[21:32]
A
Yes, exactly, exactly. But I think that you're in good shape. Have you done your estate planning? Of documents that are up to date?
[21:39]
B
I have selected an attorney, and we are going to get them signed by the end of the month. Yes, I have. Progressing. So I know, I know I will get it.
[21:49]
A
Who wants to do that? It's like, oh, it's the summer. Let's do an estate planning. That's no fun, but. So I think that's good.
[21:56]
B
Previous marriages. So none of our kids are blood related. And so we've, you know, it's not complicated, but we. It's got to be done so we know exactly who's getting.
[22:05]
A
Yes, exactly. It's like, it's not complicated, but it actually has to. It actually has to. You must do it. So I get that. I think you're in really good shape. I wish you all the best. I hope that both of you keep your jobs for as long as you want them, you know, and then if you have questions about the cfp, you'll have to talk to Mark because he'll be happy to. He's. He'll hold your hand during the process. Okay.
[22:27]
B
Love it.
[22:27]
A
All right, great. Hey, if anybody out there is in their 50s, in their 40s, in their 30s, and listening to this and feeling like, yeah, I don't know, maybe my job isn't as secure as I thought, I want to make sure I'm set up to be able to manage whatever comes to me. You know, I think about this all the time when we talk about, like, when do you think you'd like to retire? And our favorite economist, Teresa Gillard Ducci, always likes to say, like, sometimes you don't have a choice about your retirement date. I think this is a good time for people to really start to say, what can I do to control some of the unknowns? And that is just about testing where you are, trying to figure out if you're making the best decisions for you today. And if you need some help doing that, Mark and I would love to assist you. Just go to jillonmoney.com, click the contact us button, write us a note, and if you'd like to join us live, check the box. Mark will do everything else. Yes, we are backed up. I know sometimes people are like, oh, Mark, have you forgotten about me? He hasn't forgotten about anybody, but we are backed up. Patience. Don't forget that you can actually sign up for our free weekly newsletter right on the front door of our website. And that will also get you our blog. So kind of fun. You get a little bit of an extra Jill and Mark every single week. If you would not mind, subscribe to us on the Odyssey app or wherever you find your favorite podcast and put your hands metaphorically on someone's back. Someone might need a little virtual hug from you. Change your work, Change your wealth, Change your life. Thank you for listening. We'll talk to you tomorrow. Need contract help for those workload peaks and backlog projects? You're not alone. Robert half found that 67% of companies surveyed said they will increase their use of contract talent. That's why their recruiters leverage their experience and use award winning AI to quickly find the skilled candidates you want. Learn about their specialized talent in finance, accounting, technology, marketing, legal and administrative support at Robert Half. They Know Talent. Visit roberthal.com talent today 3 judges, 1 bench, 0 room for nonsense. I'm Judge Dan Mentzer. Joining me are Judge Rachel Juarez and Judge Yodit Towelde. And on Hot Bench, we don't just hear cases, we debate. What she's asking for is for the payments that she made on his car. But there's still payments to be made. Correct and we delivered justice.
[24:57]
B
That is the verdict of the court.
[24:58]
A
Follow and listen to the Hot Bench podcast on the free Odyssey app or wherever you get your podcasts.