Podcast Summary: Jill on Money with Jill Schlesinger

Episode: Evaluating Pension Options
Date: August 25, 2025
Host: Jill Schlesinger, CFP®
Guest Caller: Heather from Colorado

Episode Overview

In this episode, Jill Schlesinger answers a listener call from Heather in Colorado, who—along with her husband—is approaching early retirement with the enviable dilemma of choosing between several pension payout options. The conversation walks step-by-step through evaluating those options, taking into account their financial position, life expectancy, health, and other crucial factors. Jill provides pragmatic, jargon-free advice to help Heather make a sound choice, with broader insights applicable to anyone navigating pension decisions.

Key Discussion Points and Insights

1. Setting the Scene: Heather's Situation

• Heather (48) & husband (49) are both public sector workers (teacher & local government) planning to retire in 1.5 years.
  • Jill marvels at their youth:
    • "You're so young." (03:13)

2. Pension Option Details

Heather's Teacher Pension:

• Options:
  • 50% survivor benefit: $4,600/month (03:27)
  • 100% survivor benefit: $4,469/month (04:23)
  • Single life: $4,768/month (04:04)
  • Small difference between 50% and 100% survivor options.
  • COLA is minimal (“a weak one at best,” 0.5-2%). (04:51)

Husband's Local Government Pension:

• Options:
  • 50% joint & survivor: $5,187.87/month (05:18)
  • 50% joint & survivor with 2.5% annual COLA: $3,840/month (05:25)
  • Jill notes the significant drop for the COLA option:
    • "Ooh, okay, I see. That's a big difference." (05:31)

3. Broader Financial Picture

• Savings: $800,000 in retirement accounts (60% Roth, 40% pre-tax) (05:58, 06:06)
• Non-retirement assets: $15,000 brokerage, $30,000 emergency fund (06:16, 06:21)
• College fund: $80,000 for daughter plus extra brokerage left by Heather's mom (06:26, 06:39)
• No mortgage, house valued at $385,000 (06:58)
• Social Security: Husband eligible for $2,279/month at 67, Heather is not eligible (07:16, 07:23)

4. Retirement Spending Needs

• Target spending: $8,000/month, intentionally on the higher side due to “living it up” before their daughter leaves for college (07:46–08:19)
  • Not currently spending more even at this high-water mark.
  • Jill notes this is below their current household income ($195K/yr).

5. Health & Longevity Considerations

• Heather: moderate health, parents died in their 70s.
• Jill weighs this into her pension recommendations:
  • “Just because you said you don’t have great…I mean, you might be healthy, but you don’t have great family history.” (14:24)

6. Pension Election Strategy

• Jill’s advice: Skip the COLA option for husband (cut in payout is too steep for just a 2.5% inflation hedge).
  • “I am less inclined to do the cola on your husband's pension. It's such a huge haircut for that. Do you agree with that?” (09:00)
• Optimize survivorship:
  • Heather should take 100% joint & survivor option (“not that big of a reduction to give him a little bit more”) (14:00–14:24)
  • Husband should take 50% joint & survivor without COLA, as the monthly cut for a COLA isn’t worth it, especially with other assets as a buffer.

7. Bridging the Retirement Funding Gap

• Pensions (Heather + husband) total: $9,656/month (before Social Security, taxes) (09:56)
• Spending need: $8,000/month (top end)
• Jill calculates a possible shortfall before Social Security kicks in, especially after accounting for taxes (09:56–10:56)
  • Advises using the 457 account (which allows early withdrawal) to make up any difference until Social Security begins (11:15–13:18)
  • Suggests they stop contributing to retirement accounts for the next 1.5 years, and let those funds accumulate in liquid accounts (10:58–11:11)
• Potential part-time work: Even just $1,000/month in side income would shore up any gaps easily (10:15–10:35)

8. Estate Planning and Family Considerations

• Heather’s estate documents are complete. Will redo them when daughter turns 18 (13:33)
• Discussion about how and when the daughter should access inherited funds. Heather feels confident her daughter will manage responsibly (13:47–14:00)

Notable Quotes & Memorable Moments

• On the COLA trade-off:

  • Jill: "For 2, 2.5%. It's hard for me to justify that, especially since they have so much money saved." (09:03)

• On risk and health:

  • Jill: "I think the only reason I’m saying...for your benefit, that your pension benefit, you do the joint and 100%, it's not that big of a reduction to give him a little bit more of that income..." (14:00)

• On early retirement readiness:

  • Jill: "You guys are in great shape. I'm going to just guess that.” (07:03)

• On enjoying life:

  • Heather: "We're trying to do all the things before the kid goes to college." (08:12)
  • Jill humorously: "That's when you can retire early, babe." (06:47)

• Heather’s confidence:

  • "You know, I know all parents think their kids are amazing, but I definitely think that I can talk to her, talk her through..." (13:47)

Timestamps for Important Segments

• [02:36] — Heather introduces her question about pension options.
• [03:13–04:23] — Heather's pension choices explained.
• [04:51–05:31] — Husband's pension and COLA options discussed.
• [05:58–06:39] — Walkthrough of retirement and non-retirement assets.
• [07:46–08:19] — Household spending and lifestyle context.
• [09:00–09:03] — Jill and Mark debate the COLA trade-off.
• [10:06–10:35] — Health insurance and possibility of continued income addressed.
• [11:15–13:18] — 457 account access and retirement funding plan.
• [13:33–14:00] — Estate documents and plans for their daughter.
• [14:00–14:24] — Rationale for choosing a higher survivor benefit.
• [14:52] — Episode wrap-up.

Summary Conclusion

Jill guides Heather to select pension options that balance adequate survivor benefits with maximum monthly income—skipping costly COLAs given their strong savings and overall financial position. The show underscores the importance of weighing health, liquidity, and both partners’ potential to generate income in early retirement. Jill’s tone is as always direct, practical, and reassuring—a model for tackling major pension decisions.