Podcast Summary: "Feels Like We're Playing Catch Up" Jill on Money with Jill Schlesinger Release Date: March 18, 2025
Introduction
In the episode titled "Feels Like We're Playing Catch Up," hosted by Jill Schlesinger and Mark T. McGowan of Audacy, the hosts engage with Patrick from New Jersey, who seeks guidance on improving his family's financial situation. The discussion delves into Patrick's comprehensive financial strategy, exploring retirement planning, investment allocations, savings for education, and overall cash flow management. The episode offers valuable insights for listeners who feel they are behind in their financial planning and seeks to provide actionable advice to help them gain control over their finances.
Caller Profile: Patrick from New Jersey
Timestamp: [01:38]
Patrick introduces himself as a 50-year-old professional transitioning from a government position to the private sector. Alongside his wife, aged 48, they have three children aged 14, 11, and nine. Both Patrick and his wife are planning for retirement, feeling the pressure of having started their savings journey later than desired.
Financial Overview
Income and Employment Transition
Timestamp: [02:35–04:37]
Patrick shares that he currently earns a base salary of $270,000 annually, supplemented by a stable bonus averaging $50,000 and Restricted Stock Units (RSUs) valued between $30,000 and $50,000, vesting over three years. His wife, who is still employed with the Department of Education, earns $180,000 annually. They are both transitioning out of government roles, with Patrick moving to the private sector and his wife planning to do the same voluntarily.
Pension Details
Timestamp: [05:21–06:10]
Patrick details their pension benefits, estimating a combined monthly pension of $6,000 ($3,000 each) starting at age 57. Mark underscores the significance of this pension, equating it to a $2 million savings milestone.
Mark T. McGowan: "I'll tell you something. I don't care how late a start you got. That's huge." [05:36]
Retirement Plans and Savings
401(k) and Employer Contributions
Timestamp: [06:28–07:36]
Patrick contributes 8% pre-tax to his 401(k), with his employer offering a 100% match on the first 4% and a 50% match on the next 4%, effectively adding 6% to his retirement savings. His current 401(k) balance stands at approximately $247,000, with an additional 10% allocated to a Roth 401(k). Additionally, his employer provides a defined contribution pension, contributing another 6% of his income.
Thrift Savings Plan (TSP)
Timestamp: [07:52–08:44]
Patrick's wife contributes 12% of her salary to the TSP, with the federal government matching up to 6%. Her TSP balance includes $118,000 in traditional pre-tax contributions and $15,000 in Roth contributions.
Health Savings Account (HSA) and Brokerage
Timestamp: [08:58–09:25]
They maintain a brokerage account with $20,000, contributing $250 monthly, and an HSA, contributing the maximum of $700 monthly to reach an annual limit of $8,500.
Patrick: "So we have enough to cover everything each month." [14:51]
Education Savings: 529 Plans
Timestamp: [09:30–10:03]
Patrick discusses their commitment to funding their children's education through 529 plans, currently holding $245,000 across all three children. They contribute approximately $3,800 monthly, aiming to fully cover public university expenses, estimated between $30,000 and $40,000 per year.
Investments and Cash Reserves
High-Yield Savings and Real Estate
Timestamp: [10:18–10:43]
Following the sale of a second home, Patrick and his wife have allocated $135,000 to a high-yield savings account, with $75,000 designated as an emergency fund. Their primary residence is valued at approximately $1.1 million, with an outstanding mortgage of $700,000 at a current interest rate between 5% and 6.6%.
Jill Schlesinger: "Carefully consider the investment objectives, risks, charges, and expenses before investing." [00:00–01:21]
Mortgage and Real Estate Considerations
Timestamp: [10:46–11:16]
Patrick expresses concern over their mortgage's high-interest rate, reflecting on historical rates and the challenges of current market conditions. Mark humorously relates to the high rates, acknowledging the relative improvement from the 1980s.
Mark T. McGowan: "It's better than, you know, the 15% that we saw in the 80s, right?" [11:28]
Cash Flow and Budgeting
Monthly Expenditures
Timestamp: [13:01–15:35]
Patrick reports their monthly expenditures, including a $16,000 spend which encompasses the mortgage and living expenses. They also allocate funds towards vacations and dining out. Despite high spending, their well-structured savings and investment contributions ensure financial stability.
Patrick: "We are putting money into the 529. So right now for all three kids, we have 245,000." [09:30]
Retirement Projections and Social Security
Timestamp: [16:13–18:34]
Mark assesses Patrick's retirement readiness, calculating that with ongoing contributions and pensions, they could amass approximately $3 million by age 62. Additionally, Patrick anticipates Social Security benefits of $4,440 monthly for himself at age 70 and $3,700 monthly for his wife at age 67, further bolstering their retirement income.
Mark T. McGowan: "Three, because he's, he's been around me too long because I would be like." [17:55–18:02]
Investment Strategy and RSUs
Timestamp: [12:03–20:38]
Patrick plans to take the stock upon RSU vesting instead of selling immediately, intending to reinvest dividends and potentially diversify in the future. Mark advises a disciplined approach to selling RSUs to maximize benefits and minimize risks associated with holding too much company stock.
Mark T. McGowan: "I want to sell it out. [...] adopting a more conservative approach, which would be taking those RSU's when they come up and available, sell it out." [20:38]
Advice and Insights from the Hosts
Timestamp: [15:35–21:18]
Mark and Jill commend Patrick and his wife on their robust financial planning, emphasizing the importance of pensions, diversified investments, and disciplined saving. They encourage listeners to adopt similar strategies, regardless of their starting point, and highlight the significance of strategic financial planning in achieving long-term stability and retirement goals.
Mark T. McGowan: "We got 12 years. So 62. How about 62? Does that strike you as a decent age?" [16:13]
Conclusion
Patrick's financial strategy exemplifies a well-rounded approach to retirement planning, combining pensions, employer-sponsored retirement plans, personal investments, and dedicated savings for education. The hosts reinforce the effectiveness of his methods, providing reassurance and additional strategies to optimize his and his family's financial future. This episode serves as an encouraging guide for listeners who feel behind in their financial journey, illustrating that with disciplined planning and strategic investments, achieving financial security is attainable.
Notable Quotes
- Mark T. McGowan: "I don't care how late a start you got. That's huge." [05:36]
- Patrick: "We have enough to cover everything each month." [14:51]
- Mark T. McGowan: "I want to sell it out. [...] adopting a more conservative approach, which would be taking those RSU's when they come up and available, sell it out." [20:38]
Final Thoughts
"Feels Like We're Playing Catch Up" offers a comprehensive look into a family's financial planning, addressing common concerns and providing actionable advice. Whether you're transitioning careers, managing high-interest debts, or striving to save for your children's education, this episode underscores the importance of proactive financial management and strategic investment.