Federal Employee Recently DOGE'd

Summary

Podcast Summary: Jill on Money with Jill Schlesinger Episode: Federal Employee Recently DOGE'd
Release Date: March 28, 2025

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Introduction

In this episode of Jill on Money, host Jill Schlesinger, CFP®, engages with James, a federal employee nearing retirement. James seeks reassurance and validation of his comprehensive retirement plan. The conversation delves into the intricacies of federal retirement benefits, personal financial planning, and the emotional aspects of transitioning into retirement.

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Guest Introduction and Retirement Background

[03:05] Jill welcomes James from Georgia, expressing appreciation for his participation.

[03:15] James introduces himself as a soon-to-be former federal employee, approaching retirement at the age of 58 with over 30 years of service. He opted for a deferred resignation, ensuring he receives his regular pay until September, after which he will retire.

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Retirement Benefits and Income Streams

The discussion begins with a detailed breakdown of James' retirement income:

• Pension:
  [04:14] James expects an annual pension of approximately $31,000.

• FERS Supplement:
  [04:21] An additional $13,000 annually until age 62.

• Spousal Income:
  [04:50] His wife earns $65,000 annually and plans to continue working for another year.

[05:09] James elaborates on his Thrift Savings Plan (TSP), currently holding $645,000, predominantly in traditional accounts with a $43,000 Roth component.

Additional Assets:

• Rollover IRA: $62,000
• Inherited IRA: $6,600, requiring minimum annual distributions due to pre-new rule conditions.

Spouse's Retirement Accounts:

• 401(k): $124,000 (including $24,000 in Roth)
• Rollover IRA: $140,000

[07:07] They also maintain a brokerage account with $25,000 in a money market fund and a T-bill ladder, alongside $96,000 in separate cash savings, including $21,000 in CDs.

Property:

• Home Value: Estimated at $400,000 with an outstanding mortgage of $71,000 at 3.675% interest.

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Family Considerations and College Planning

[08:01] James mentions having two children: a 26-year-old daughter planning to move out and a 16-year-old son.

[09:05] He details a 529 plan with approximately $60,000 earmarked for his son's college education. Additionally, he anticipates utilizing state scholarship programs to cover most tuition costs.

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Retirement Lifestyle and Future Plans

[10:11] James discusses his Social Security plans:

• Personal SS: Planning to take at age 70, expecting $45,000 annually.
• Spousal SS: Starting at age 62, expecting $15,000 annually.

[11:16] Jill analyzes the overall financial picture, highlighting the sufficiency of pensions, supplements, and Social Security to cover current and future expenses.

[12:01] James reveals plans to relocate to Portugal by the end of 2026. He intends to rent rather than buy property, anticipating reduced living costs due to a more modest lifestyle for himself and his wife.

[13:04] He plans to utilize his TSP funds to cover any additional expenses, projecting that living costs will decrease given their frugality.

[13:42] Upon selling their home, James expects to have an additional $300,000 in the brokerage account, further solidifying their financial stability.

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Emotional and Psychological Aspects of Retirement

[13:46] James admits struggling with the emotional acceptance of retiring, feeling overwhelmed despite having a solid financial plan.

[14:37] Jill encourages James by referencing a Charlie and the Chocolate Factory quote, urging him to embrace his accomplishments and the reality of his secure retirement plan.

[15:09] They discuss potential contingencies, such as his daughter remaining at home longer, but James remains optimistic about her independence and financial readiness.

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Final Advice and Reassurances

[16:00] Jill emphasizes the importance of comprehensive planning, including healthcare considerations and estate planning to ensure all bases are covered should unforeseen circumstances arise.

[17:32] James expresses relief and gratitude, feeling more confident after Jill's reassurances and advice.

[17:42] Jill concludes by encouraging listeners in similar situations to reach out for personalized financial guidance, reinforcing the value of thorough planning and professional support.

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Key Takeaways

• Comprehensive Planning: James' multifaceted retirement strategy, including pensions, TSP, IRAs, and savings, demonstrates the importance of diversifying income streams.
• Emotional Preparedness: Transitioning into retirement involves not just financial readiness but also emotional acceptance and confidence in one's plans.
• Future-Proofing: Considering potential future scenarios, such as relocation and family changes, is crucial for maintaining financial stability.
• Professional Guidance: Engaging with financial advisors can provide valuable validation and peace of mind during significant life transitions.

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Notable Quotes

• Jill Schlesinger [03:09]: “If you have a question you want us to answer on the show… don’t forget to check out all of the content that lives there.”
• James [03:15]: “Our plan is to retire at the end of September… sometimes I have a hard time telling myself that everything is going to be okay.”
• Jill Schlesinger [14:37]: “Can't you just accept that you've done a great job, that you were in this strange situation where… this thing has happened?”
• James [17:42]: “I'm glad to have another set of eyes on it.”
• Jill Schlesinger [17:42]: “Support your wife while she's toiling away and get yourself set. I think the plan is moving on. It's really awesome.”

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Conclusion

This episode underscores the complexities of transitioning from a stable federal career into retirement. James' comprehensive approach, paired with Jill's expert guidance, highlights the importance of meticulous financial planning and emotional readiness. Listeners are encouraged to assess their own retirement strategies and seek professional advice to navigate their unique financial landscapes confidently.

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Transcript

[Jill Schlesinger]

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[Jill Schlesinger]

Welcome to the Jill on Money show. It's Friday, March 28, and we are here answering your financial questions. If you have one, or if something's going on in your life. Some change, some change of direction. Whether it's your change of direction, someone else's life happens, give us a Holler. 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 while you're on the website, don't forget to check out all of the content that lives there. By the way, if you're a subscriber to Jill on MONEY Live. You will see that Mark is putting up more and more videos behind the paywall. So you can check that out. And now if you have fear of missing out or a little FOMO, all it would take is, is $45 for the next 12 months. And you can join us for four quarterly live webinars, bonus audio and video content and that whole back catalog. 45 bucks for the next 12 months. Go to jillonmoney.com and you'll see the link for Jill on Money Live. Okay. Right now let's talk to James. He joins us from Georgia. Hi, James, how are you?

[James]

Thanks, Jill and Mark, thank you for having me on. I'm a big fan.

[Jill Schlesinger]

Oh, you're very sweet. What can we do for you? What's going on?

[James]

Well, I am a soon to be former federal employee and I just want another set of eyes to ensure that we are doing okay. Our plan is to retire at the end of September. And sometimes I look at the numbers and I know everything adds up, but I have a hard time telling myself that, that everything is going to be okay.

[Jill Schlesinger]

Okay. All right. That seems that you're not alone. So you took the deal for the early retirement?

[James]

I took. Well, I'm actually eligible for the full retirement. I have over 30 years of service.

[Jill Schlesinger]

Oh, okay.

[James]

58 years old. What I took was the, they called it the deferred resignation.

[Jill Schlesinger]

Okay.

[James]

So I will get paid, just my regular pay through the end of September and then at that point I'll retire.

[Jill Schlesinger]

And what will your pension be when you retire?

[James]

My pension should be right around 31k a year.

[Jill Schlesinger]

Great. Amazing.

[James]

On top of that, until I'm 62, I'll collect a little over 13k a year in the first, what's called the FERS supplement.

[Jill Schlesinger]

Okay. So you get four years of 13 grand a year, basically?

[James]

Yes, ma'am.

[Jill Schlesinger]

Okay, Got it. And you said a we. Is there a married person with you?

[James]

There certainly is.

[Jill Schlesinger]

Okay. And tell me about the. Does your spouse work right now?

[James]

Yes, she does.

[Jill Schlesinger]

Okay. How much does she earn?

[James]

She makes about 65,000 a year.

[Jill Schlesinger]

And is she going to retire with you at the end of September or. She's going to keep going.

[James]

She's going to keep going probably for another year.

[Jill Schlesinger]

Okay. In addition to your pension, do you have a deferred comp. Do you have something that's in the Thrift savings Plan?

[James]

I do.

[Jill Schlesinger]

Okay. What's in there?

[James]

So in the Thrift savings Plan, I have right now about 645,000.

[Jill Schlesinger]

And is that all traditional?

[James]

Almost all of it. There's 43,000 is in the Roth.

[Jill Schlesinger]

Okay. Any other old retirement funds that are floating around for you? I'll get to your wife in a second.

[James]

Sure. Yeah, there are. There are some other. Some other funds floating around out there.

[Jill Schlesinger]

What you got?

[James]

I have 62, 000 and a rollover IRA.

[Jill Schlesinger]

Okay.

[James]

Of course, that's traditional. At 62, I'll actually start collecting another small pension from when I used to work for a municipality. That's going to be about 6,300 a year.

[Jill Schlesinger]

Coffee money.

[James]

Yeah, that's right.

[Jill Schlesinger]

Okay, good.

[James]

And also I have a very small. I have 66 grand. I'm sorry, not grand. I have 6,600 in a inherited IRA that predates the new rules.

[Jill Schlesinger]

Oh, so you gotta stretch. You gotta stretch ira. Got it.

[James]

Take the minimum out every year.

[Jill Schlesinger]

Okay, good. And what about your wife? What's her retirement plan look like?

[James]

She has about 124,000 in 401k. Okay. 24k of that is in Roth. And she also has a rollover, and it's about 140,000.

[Jill Schlesinger]

Oh, okay. Big number there. Will you have health care for life at this point until you get Medicare?

[James]

That's correct. And even I don't even have to take Medicare if I don't want to.

[Jill Schlesinger]

You can stay on the plan?

[James]

Yeah, I can stay on the plan plan. But yes, I'll still have, you know, my health insurance, dental, vision.

[Jill Schlesinger]

Great.

[James]

I still had to pay for them.

[Jill Schlesinger]

I mean, yeah, but still. That's good. Do you have a brokerage account? Do you guys have other money that you have invested?

[James]

We do. We have a brokerage account with a little over 25,000 in it.

[Jill Schlesinger]

Okay.

[James]

And that's all in. Right now? It's all in a money market fund and in a T bill ladder.

[Jill Schlesinger]

Is that. Is that kind of what you keep as your cash savings or do you have other stuff that's floating around, like CDs or savings accounts also?

[James]

No, no, we have a separate cash savings. We have total about 96,000.

[Jill Schlesinger]

Okay, great.

[James]

And that. And about 21 of that's actually in CDs.

[Jill Schlesinger]

Okay, great. You guys own your home?

[James]

Yes, ma'am.

[Jill Schlesinger]

I love the ma'am. How much would you guess it's worth?

[James]

It's about 400,000.

[Jill Schlesinger]

Is there a mortgage that's outstanding?

[James]

Yes, we owe 71, 000 on it at 3.675%, I believe.

[Jill Schlesinger]

Okay, great. Do you guys have kids?

[James]

Oh, yes.

[Jill Schlesinger]

Oh, yes.

Why?

A slew of them.

8 12.

How many?

[James]

It feels like it sometimes, but no, it's only two.

[Jill Schlesinger]

How old are they?

[James]

My oldest is 26 years old.

[Jill Schlesinger]

Okay.

[James]

And my youngest, the Second one is 16 years old.

[Jill Schlesinger]

Okay. So we got a ways to go. 26 is launched on, on their own.

[James]

Oh, well, she was, she's kind of like one of those SpaceX rockets. You know, they launch it and it comes back.

[Jill Schlesinger]

Okay, well that's a boomerang kid coming right back to home and living with you right now.

[James]

She is. Hopefully that'll be over with by the end of this year.

[Jill Schlesinger]

Okay.

[James]

Just got herself into a bad, some bad stuff and that's all right.

[Jill Schlesinger]

We'll get her out back home.

[James]

And she's very diligent, paying off her debts so she should be ready to be relaunched by the end of the year.

[Jill Schlesinger]

Great. 16 year old high school. Do you guys, are you planning on helping that kid go to college or is that kid not college bound? What's, what's your, your reckoning on that?

[James]

Oh no, I think she's definitely college bound. It's going to be an in state school course and we have 63,000. I'm sorry, not quite 63. It's. We have 6,000 60,000 in a 529 for her. Huh.

[Jill Schlesinger]

Okay.

[James]

And also in the state that we live in.

[Jill Schlesinger]

Yeah.

[James]

We have a very good scholarship program and she will be eligible for that too. So that will pay just about all of her tuition.

[Jill Schlesinger]

Great. Phenomenal. I love it. Okay, Mark, make a note that you should move to Georgia. Some of those state plans are really great. So what is it that you, when you look at your situation objectively, you know how much you spend right now about just an approximation on a monthly basis. Do you have that number?

[James]

Oh, between $5,500 and $6,000 a month.

[Jill Schlesinger]

Let's say $6,000. And then if you looked at your retirement, your Social Security, full retirement age retirement for, for each of you, say 67, what is that amount?

[James]

I'd have to pull that back up. I plan on taking mine at 70.

[Jill Schlesinger]

Okay, so give me your 70 number.

[James]

Okay, well, 70, I'm at about 45,000 a year and she, and she's going to start hers at 62 because I've just, I've made significantly more money than she has over the years and it just worked out best this way. But she's going to start taking it at 62. That's going to be about $15,000.

[Jill Schlesinger]

So now you're looking at this. You have your $30,000 in your pension. You'll get another 13 grand coming from that supplement, your wife is going to earn 65. So we know that obviously for this year and next year, you're fine. And then from there to supplement where you are, where you'll be 50, I guess you'll be either 59 or 60, I don't know. When you're turning these ages, then is your plan to tap the money or that. Well, I would suggest the money that you have that has not yet been taxed, I'd start taking it out and living on that until you're age 70. Social Security, is that what you were thinking of?

[James]

Not exactly.

[Jill Schlesinger]

Tell me what your thought is.

[James]

Well, something we haven't discussed with you, we should be factored in here, is that at the end of next year, at the end of 2026, we plan on moving away.

[Jill Schlesinger]

Oh, goodbye. That was the son I only met you so, like, a few minutes ago. Where are we going?

[James]

Probably? Well, we're definitely going to Europe, probably Portugal.

[Jill Schlesinger]

Okay, so. But wait a minute. What about this kid? Kid's going to be in college. Like kids on her own.

[James]

Adios.

[Jill Schlesinger]

Bye. Are you going to get. Wait, don't you have to have, like, a residency requirement for the scholarship?

[James]

Only she does. I don't.

[Jill Schlesinger]

So you're just really gonna bail on this kid? Come on.

[James]

Yeah. No. If we move away.

[Jill Schlesinger]

Yeah.

[James]

As long as my daughter's still going to that state school here in Georgia.

[Jill Schlesinger]

Yeah.

[James]

She's covered. Even if she were to go out of state.

[Jill Schlesinger]

Yeah.

[James]

They would pay up to that same amount, you know, that they would pay here in the. In the. In. In Georgia, wherever she goes. So.

[Jill Schlesinger]

Okay, wait. So the game plan is in a couple years, sell the house, use that money, move to Portugal?

[James]

Pretty much, yes.

[Jill Schlesinger]

Can you. Have you researched this?

[James]

Oh, yeah, yeah. We've been working on this for about five years now.

[Jill Schlesinger]

Okay, so what's it going to cost you to buy a place in Portugal? Can't you just rent?

[James]

Not going to buy. We're going to rent it.

[Jill Schlesinger]

Okay, you're going to rent, so you're going to have this extra money. So you paint the picture for me. What is it that. I mean, obviously you've got a bunch of money, but what are you going to live on that you're still going to need more money, aren't you? Aren't you going to need to pull money out of your accounts to spend that, you know, that six grand a month? Or do you think your. Your actual cost of living will go down in Portugal?

[James]

I think it's going to Go down a bit because it's just going to be my wife and I and we're very frugal people. My daughter here, the one that's going to be going to college, you know, with the savings that we've already saved up for her, you know, she should be. That should be able to float her.

[Jill Schlesinger]

Okay.

[James]

Along with her scholarship. So, yeah, we do see it coming down. But any funds that we do need, I just planned on taking it out of my tsp.

[Jill Schlesinger]

Good. Okay. As long as you do that. I mean, I would pull those. I would definitely pull those. And then you'll end up have. I mean, if you sell the house, you'll have another 300 grand in the brokerage account, right?

[James]

That's correct, yes.

[Jill Schlesinger]

Okay, what's the problem? What can't you see?

[James]

Well, to be honest with you, I just. Sometimes I just have a hard time accepting that this is all coming true. That I can actually.

[Jill Schlesinger]

Oh, my God, this reminds me of the quote at the end of Charlie and the Chocolate Factory. You know, Willy Wonka says to Charlie, he says, you know what happened to the boy? Got everything he wanted. And Charlie says, know what? And Willy Wonka says, he lived happily ever after. Can't you just accept that you've done a great job, that, that you've put your time in, that you were in this strange situation where obviously you probably would have just kept working for. Till you were 62 years old, I presume, and get your daughter to college. But this thing has happened. It has maybe put the clock up a little bit on the move. You've done your homework, Mark. Is there a hole in this plan?

[James]

Well, I mean, it's all good. They don't spend a lot of money. They got money saved. They got the pension, the supplement. What happens if daughter who's still living at home, God forbid, in two years, still hasn't figured it out?

[Jill Schlesinger]

Oh, yeah, well, the relaunch. What happens if we have an abort of the relaunch?

[James]

I think she is going to move out. I mean, she's actually already started looking at apartments to kind of get an idea of how much that's going to cost. You know, she moved from a very rural part of the state back to where we live, which is sort of in the suburbs.

[Jill Schlesinger]

You know, before you go, of course, you. You've got to make sure you've got everything you need to know about whatever health care you would need over there. And also your estate documents have to be really tight, right? Because if something were to happen to you, there we want to make sure these kids are taken care of. Is there any loose end that we're not seeing? I guess the only other thing is that 300 grand from the sale of the house. I guess I'm wondering if your daughter goes to school in state, could she live home or would she always go live on campus?

[James]

If she wants to live home, you know, of course she would have to pick a school that's close to home.

[Jill Schlesinger]

Yeah. Could she do that?

[James]

Yeah, there is one, you know, fairly decent sized university not that far from here. She's just not interested so much in that one. She does want. She actually does want to go. Sounds horrible, but she does want to move out.

[Jill Schlesinger]

You know, that's not horrible. That's like being a. A, you know, growing young adult. The only reason I was asking that was that I was wondering if there was like a little backstop here where for the first year that you go, maybe you keep the house and the kids, the both of them live there and pay you rent.

[James]

Ooh, yeah, but not.

[Jill Schlesinger]

It's not a necessary. You don't need the money one way or the other. I'm just saying if you wanted to have a little bit of a. Like a little escape hatch just in case, and maybe you just do that maybe for the first year before you go and just sell the house, maybe you say, oh, let's just keep the house. Maybe we're not going to like it as much. I don't know. I'm trying to respond to Mark's possible scenario where if something didn't go. If something went wrong and didn't go along, the game plan that you would have a place to return to, that was a very efficient and cheap place to live. Meaning because you have this low interest rate on the mortgage. But, you know, that's maybe something to consider when, you know, a year and a half goes by. You'll have more information at that point at least.

[James]

Yeah. You know, we at least want to get her well into her first semester. And I know that's not very long, but I think if she's going to, you know, want to come back home, let's say, you know, she goes to college, she realizes, hey, this is not for me. Yeah, I don't foresee that happening. But if it were to, hopefully, you know, we'll know while she's still a freshman and then we can work on that.

[Jill Schlesinger]

Okay. All right. That sounds good to me. I feel comfortable with it. Mark, you're being a very buzz killy kind of guy right now. I'M surprised.

[James]

Just covering the bases, that's all.

[Jill Schlesinger]

Covering our bases. We're covering our bases. All right, listen, if you need anything else, get back in touch with us. I think you're good to go, man. James, go find that dream rental. Go make it a reality and have some fun. Support your wife while she's toiling away and get yourself set. I think the plan is moving on. It's really awesome. So I would go do it.

[James]

Well, thank you so much. It does make me feel a lot better.

[Jill Schlesinger]

Excellent.

[James]

And I'm glad to have another set of eyes on it.

[Jill Schlesinger]

All right, well, we're happy to be those eyes and ears. If you need a set of eyes and ears on your situation, you want to talk some things through. Don't we love living vicariously through all these people? I mean, it's just so interesting. Go to our website, jillandmoney.com, click the contact Us button. Let us know if you'd like to come on the air with us live. Very easy. Sign up for the free weekly newsletter comes out every Friday. Mark does a great job with that and it is Friday today, so we'd like to remind you our music is composed by Joel Goodman. Mark Telecio is our executive producer and web king, and we are distributed by Odyssey. And by the way, you can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Also on the Odyssey app, you can subscribe to our weekend show called Money Watch. So check that out. Do something nice for someone else today. Change your work, change your wealth, change your life. Thanks for listening. We'll either talk to you tomorrow on Money Watch or on Monday on this show.

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