Podcast Summary: Jill on Money with Jill Schlesinger
Episode: How Risky Can I Be With a Career Reset?
Release Date: April 11, 2025

Introduction

In the April 11th episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger, CFP®, explores the financial intricacies of undertaking a career reset. The episode features a detailed discussion with Greg, a 52-year-old listener from Northern California, who is contemplating a significant career change. Joined by co-host Mark Teo, the conversation delves into Greg's financial landscape, the risks associated with changing careers, and actionable strategies to manage such a transition effectively.

Caller Background: Greg's Situation

Greg reaches out to the show seeking advice on assessing the financial risks tied to his potential career reset. At 52, Greg and his 47-year-old wife find themselves in a stable financial position, despite Greg currently not working. Their household income primarily stems from Greg's wife's full-time job, supplemented by funds from an inherited IRA that Greg began drawing from five years ago.

Mark Teo [03:24]: "Excellent. I love these questions so much. I am one of the queens of resetting my career."

Greg provides a comprehensive overview of their finances, highlighting their income sources, assets, liabilities, and future financial projections.

Financial Situation: Income, Assets, and Liabilities

Income Sources:

• Wife's Salary: $150,000 annually.
• Inherited IRA: Approximately $1.2 million, currently being drawn down to support their cash flow.

Monthly Household Expenses:

• Total Expenses: $18,000 per month, which includes mortgage payments on two rental properties.
• Essential Expenses (excluding rentals): $12,000 per month.

Assets:

• Primary Residence: Valued at approximately $1.4 million with an outstanding mortgage of $1 million.
• Rental Properties:
  • Property 1: Valued at $900,000 with a $310,000 mortgage.
  • Property 2: Valued at $1.8 million with a $500,000 mortgage.
• Savings and Investments:
  • 529 Plan for child’s education: $67,000 with ongoing contributions of $500 monthly.
  • Brokerage Accounts: $75,000 (split between two accounts).
  • Retirement Accounts: About $1 million.

Liabilities:

• Mortgages: Total outstanding mortgages amount to $1.81 million across all properties.

Greg emphasizes that the rental properties are cash-flow positive, providing additional financial stability.

Greg [04:01]: "Well, I'm currently not working right now, so we're probably getting about 150 a year."

Career Reset Considerations: Exploring Options and Financial Impact

Greg is exploring several career paths, including:

1. Continuing in His Current Career: Potential earnings of $250,000 to $300,000 annually.
2. Starting a New Business Opportunity: May require an initial investment of $75,000 to $150,000.
3. Pursuing Writing: A lucrative yet income-variable option.
4. Returning to School for Certification: Involves costs ranging from $25,000 to $50,000.

Mark Teo assists Greg in assessing these options by analyzing his current financial stability and future projections.

Mark Teo [16:43]: "I think it can be done. If you said I want to do writing or I want to spend 25 grand getting certification and additional schooling, like that kind of thing, I think the new business opportunity I would be much more careful about..."

Advice and Insights: Managing the Financial Risk of Career Change

Mark Teo provides a strategic breakdown of Greg’s financial situation, emphasizing that Greg and his wife are well-positioned to undertake a career transition without jeopardizing their financial security. Key points include:

1. Sufficient Financial Cushion: The combined income from Greg’s wife and the inherited IRA covers their necessary expenses for the next five years, with the inherited IRA set to be fully drawn within ten years.

   Mark Teo [14:40]: "The inherited IRA gets you through the next five years. That means it goes. That gets you to 57."

2. Asset Leverage: Selling the $1.8 million rental property could provide an additional $1 million post-tax, offering further financial flexibility for Greg’s new endeavors.

3. Future Retirement Security: With approximately $1 million in retirement accounts and an anticipated pension for his wife of $18,000 monthly upon her retirement at 65, their long-term financial outlook remains strong.

4. Investment in New Ventures: For business opportunities requiring capital investment, Mark advises cautious allocation, suggesting that smaller initial investments ($75,000 to $150,000) are manageable within their financial framework.

   Mark Teo [16:50]: "...make sure you got all your estate documents, your insurance is in place, all that stuff. But I think you're ready to make a leap."

5. Emotional Readiness: Beyond the numbers, Mark highlights the importance of emotional preparedness for a career change, encouraging Greg to seek affirmation and support from trusted advisors.

   Mark Teo [17:47]: "I think the friction here is probably more about you and your wife feeling comfortable doing it. And again, you can run the numbers in a... someone who is a fee only planner."

Conclusion and Key Takeaways

The episode concludes with Mark Teo reinforcing the feasibility of Greg’s career reset, given his solid financial foundation. The discussion underscores the importance of detailed financial planning, leveraging existing assets, and considering both immediate and long-term financial impacts when contemplating a significant career change.

Key Takeaways:

• Comprehensive Financial Assessment: Understanding all income sources, assets, and liabilities is crucial before making a career transition.

• Strategic Asset Management: Utilizing assets like rental properties and inherited funds can provide the necessary financial buffer during career changes.

• Future Planning: Ensuring that retirement savings and pensions are on track can offer peace of mind and stability.

• Emotional Readiness: Financial feasibility is just one part of the equation; emotional preparedness and support are equally important.

• Professional Guidance: Engaging with a fee-only financial planner can help model different scenarios and provide tailored advice.

Mark Teo [17:54]: "It's possible to do. So the only other thing is, you know, kids, still young, make sure you got all your estate documents, your insurance is in place, all that stuff. But I think you're ready to make a leap."

Notable Quotes

• Mark Teo [03:24]: "I am one of the queens of resetting my career... deal with the financial parts of it so then we can deal with the emotional parts after."

• Greg [16:43]: "I'm looking at a bunch of different things. And then of course, there's the old standby, which is, you know, going back to what I was doing."

• Mark Teo [17:54]: "It can totally be done. Do you manage your own money right now or do you have a broker or a financial advisor or financial kind."

Final Thoughts

This episode serves as a valuable resource for anyone considering a career shift, particularly those in similar financial situations as Greg. By breaking down the complexities of personal finance and providing actionable advice, Jill Schlesinger and Mark Teo empower listeners to make informed decisions about their financial futures.

For More Information:

Listeners are encouraged to visit jillonmoney.com for additional resources, to submit their own questions, and to explore the subscription service Jill on Money Live for exclusive content and webinars.