Income Streams in Retirement

Summary

Podcast Summary: Jill on Money – "Income Streams in Retirement"

Host: Jill Schlesinger
Guest Caller: Stephanie from Austin, TX
Date: September 4, 2025
Duration: Approx. 17 minutes (excluding ads)

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Episode Overview

In this episode, Jill Schlesinger tackles a real-life retirement income question. Stephanie, a recent retiree, calls in seeking advice on managing her retirement income streams and deciding how best to deploy a large cash reserve. Jill breaks down options for generating income in retirement, avoiding over-concentration in annuities, and how to structure an investment portfolio that balances safety with growth potential. The conversation highlights the importance of liquidity, careful risk assessment, and resisting unnecessary financial products.

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Key Discussion Points & Insights

1. Stephanie’s Retirement Income Structure

• Post-retirement status: Stephanie, age 68, retired last summer.
• Income sources: Four income annuities (self-purchased), Social Security.
• Breakdown: Annuities comprise 44% of her total portfolio.
• Monthly income: ~$6,000 (post-tax), with taxes withheld directly.

  "Most of my retirement income comes from four different annuities, plus Social Security." — Stephanie [02:12]

• Supplemental withdrawals: Draws an additional $1,000/month from investments, landing at ~$5,800 sustainable income, with $1,000 pulled from inherited cash.

2. Assets Overview (Stephanie)

• Inherited cash/money market: $567,000 (Fidelity Money Market, interest fluctuating between 3%-5%, now ~4%).
• Retirement accounts:
  • 403(b): $106,000 in S&P 500 index fund (Fidelity 500).
  • IRA: $157,000 in cash (Fidelity), also Roth IRA funded by $35,000 pension rollover – invested in S&P 500 index fund.
• Home: Owns outright, valued at $390,000. No mortgage. Has executed estate planning documents.

3. The Annuitization Question

• Advisor suggestion: Fidelity advisor recommends shifting $100,000 from her cash/money market and $100,000 from her IRA cash into a USAA 3-year protected deferred annuity.
• Jill’s strong reaction:

  “Absolutely not. Absolutely not. No, I disagree with that.” — Jill [07:14]

• Jill points out Stephanie already has adequate annuity income, values flexibility, and doesn’t benefit much from locking up more funds, even at low cost and for a short period.
• Jill highlights the difference between typical annuity sales (commission-based) and the new annuity push from low-cost platforms like Fidelity, but still dislikes the loss of liquidity.

4. Optimal Portfolio Structure for Retirement Withdrawals

• Jill’s take: Move away from additional annuities, focus on market-based portfolio for remaining cash. Use a mix of stocks and bonds for growth and safety.

  “I want a plan where you lay out putting some of this money to work in a portfolio of cheap Fidelity index funds… more of a balanced investor.” — Jill [08:28]

• Risk tolerance: Stephanie is “a little” willing to take risk, but is squeamish about market drops at her age.
• Jill’s prescription:
  • Keep at least $50,000 (preferably up to $100,000 if desired) in cash as an emergency reserve.
  • Deploy excess cash in a split, e.g., 70% bonds/30% stocks, using low-cost funds, not a single target fund. Recommends a custom portfolio, not just a one-stop 60/40 or 70/30 fund.

  “Make them do some work. Build me a bond portfolio for 70% of the money… and just build it like that.” — Jill [10:50]

• Implementation: Dollar-cost average (“get it invested between now and end of the year”). Flex on pace for emotional comfort.

5. Time Horizon & Planning Mindset

• Challenge: Don’t plan short-term (e.g., 3-year lock-ins) when retirements often last decades.
• Jill’s advice: Adopt a 20- to 30-year outlook. Simulate the portfolio for longevity and consistent (but flexible) withdrawals.

  “You have a 30-year horizon ahead of you, I hope… You have a long retirement…” — Jill [13:25]

• Stress test: Ask advisor to run the numbers on a portfolio 70% in bonds/cash, 30% in stocks, and see if the withdrawal plan holds up.

6. Stephanie’s Goals & Family

• No need to leave large inheritances; kids and grandkids are financially secure.
• Primary goal: Not running out of money, maintaining flexibility.

  “I'm not running out of money.” — Stephanie [15:40] “It's very hard for you to run out of money.” — Jill [15:42]

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Notable Quotes & Memorable Moments

• [07:14] Jill on annuities:
  “Absolutely not. Absolutely not. No, I disagree with that. …Why do we have to do that? I like you having access. You're young…”

• [08:28] Jill on investment structure:
  “I want a plan where you lay out putting some of this money to work, some of this half million dollars to work in a portfolio of cheap Fidelity index funds…I don't want to be more than 50% in stocks, by the way, like more of a balanced investor.”

• [13:25] Jill on longevity:
  “You have a 30-year horizon ahead of you, I hope… so you have to be willing to kind of take a little bit of a swing in terms of just putting some of the money to work and putting it at risk.”

• [15:42] Jill’s reassurance:
  “It's very hard for you to run out of money. ...I'd like to avoid tying up more of your money.”

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Timestamps for Important Segments

• [02:05] Stephanie’s retirement income sources and structure
• [03:42] Stephanie breaks down her investment holdings
• [06:46] Fidelity advisor’s annuity product proposal
• [07:14] Jill’s strong opposition to new annuity investment
• [08:28] Jill suggests a balanced portfolio approach
• [10:07] Asset allocation discussion: stocks vs. bonds
• [12:30] Emergency cash reserve discussion
• [13:25] Long-term (20–30 year) planning mindset
• [15:16] Homeownership and estate matters
• [15:40] Stephanie’s financial security confirmed

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Takeaways & Actionable Advice

• Don’t over-annuitize: If you already have sufficient guaranteed income, keep large sums liquid and flexible.
• Balance risk and safety: Use a mix of stocks and high-quality bonds; maintain at least two years’ worth of living expenses in cash or ultra-safe investments.
• Demand personalized plans: Push advisors for customized solutions, not one-size-fits-all products.
• Think long-term: Structure portfolios and withdrawal plans for multiple decades, not just 3-5 years.
• Stay engaged: Regularly evaluate your plan, communicate your risk tolerance honestly, and avoid hasty, product-driven moves.

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Summary:
Jill guides Stephanie—and listeners—toward a retirement income approach that prizes flexibility, low-cost diversification, and a healthy skepticism of unnecessary annuities. The episode delivers practical, jargon-free advice, emphasizing the importance of long-term planning and maintaining control over one’s assets in retirement.

Transcript

[Jill]

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[Stephanie]

In Carvana was so easy. I was able to finance it through them.

[Jill]

I just. Whoa, wait, you mean finance?

[Stephanie]

Yeah, finance. Got pre qualified for a Carvana auto loan, entered my terms and shot from thousands of great car options all within my budget.

[Jill]

That's cool. But financing through Carvana was so easy.

[Stephanie]

Financed, done. And I get to pick up my car from their Carvana vending machine tomorrow. Financed, right?

[Jill]

That's what they said. You can spend time trying to pronounce.

[Stephanie]

Financing or you can actually finance and buy your car.

[Jill]

Today on Carvana financing. Subject to credit approval, additional terms and conditions may apply. Welcome to the Jill on Money show. It's Thursday, September 4th and we are here trying to help guide you along your financial journey. To do that, we ask that you do a little bit of work. Just go to our website, jillonmoney.com, click that contact us button, write us a note and if you want to join us live, check the box. Mark will do everything else we While you're on the website, don't forget to check out our subscription service. It's called Jill on Money Live. This is where you have access to quarterly live webinars for the next 12 months, the back catalog of those webinars, as well as bonus audio and video content. It's a lot of fun. These webinars have been terrific. People really get involved and ask these questions live to whoever our guest is. To be a member of Jill on Money Live, you'll have to fork over 45 bucks for the next 12 months. So not such a bad deal. Oh, okay. Right now let's go talk to Stephanie who joins us from Austin, Texas. Hello, Stephanie. How are you?

[Stephanie]

Hello, Jill.

[Jill]

What's going on? How can we help you?

[Stephanie]

Well, I am 68 years old. I retired last summer.

[Jill]

Oh, congratulations.

[Stephanie]

Thank you. Most of my retirement income comes from four different annuities, plus Social Security.

[Jill]

Hold on a second. Four different annuities? Were they workplace annuities or did you buy these annuities?

[Stephanie]

I bought these annuities. They're income annuities.

[Jill]

Okay, income. And so they're all paying out right now already?

[Stephanie]

They are. And that's about 44% of my total portfolio.

[Jill]

Okay, how much money are you living on? If you look at the annuities plus the Social Security, how much is coming in?

[Stephanie]

Almost $6,000.

[Jill]

$6,000 a month? And that's pre tax or is that.

[Stephanie]

No, no, that's post tax. I'm having 20% tax withheld.

[Jill]

Great.

[Stephanie]

On all of the annuities and 22% withheld for Social Security.

[Jill]

Okay, so how's your cash flow with $6,000 a month? Is it good? Is that enough for you?

[Stephanie]

It's actually no, it's 5,800. And so I'm having an additional thousand come from my other investments.

[Jill]

Okay, so you have 5,800 of this consistent income. And is there any. I know the Social Security keeps going on, but for the four annuities, are they paying out for life? For a period of time. Okay, for life. Got it.

[Stephanie]

Yes.

[Jill]

So the thousand dollars comes from your portfolio. Tell us where from that portfolio. Like in other words, is that a retirement account, a non retirement account?

[Stephanie]

Well, I have some money that I inherited, and this is about six years ago. And that is in a, an index fund. Initially it was making 3%, and then when interest went up, it, it was making five and a quarter. Now it's at four and some. And so I have just started taking this thousand from that amount.

[Jill]

What's the amount that's left in there? What's in there right now?

[Stephanie]

567,000.

[Jill]

Holy moly. Okay, so that's all you're telling me that's in an interest bearing account, not in investments.

[Stephanie]

Right.

[Jill]

Okay, got it. So $567,000 and it's a. Is it a taxable account or is it a retirement account? What kind of.

[Stephanie]

No, I only pay taxes on that because it's inheritance money. I don't pay taxes on that. I pay taxes on the capital gains, but I don't.

[Jill]

Okay, I want to ask. I want to ask this again because I want to make sure I understand this. It's invested in. When you say capital gains.

[Stephanie]

It's a Fidelity index fund.

[Jill]

Oh, it's in a Fidelity index fund. So it's not. When you said 3% or 5% or whatever, I'm confused. Where are we getting that number from? I think it's inside a Fidelity money market fund. Oh, it's a Fidelity Money market. Okay. Yes, got it. Okay.

[Stephanie]

I have, from my work, my 403B, I have invested in a Fidelity 500 index fund. 106,000.

[Jill]

But that's all in that one fund. All in the s and P500 index. Yes. Okay, got it.

[Stephanie]

Yes. And then I have another 157 also in cash, and it's in a Fidelity fund.

[Jill]

Okay.

[Stephanie]

You know, money market is IRA and. No, it's all of those. Those two things are IRA money.

[Jill]

Okay, got it.

[Stephanie]

And then my pension, I transfer. I had. I had started after listening to one of your programs while I was still working. I started contributing to a Roth ira and then when I retired my pension, which was about 35,000, I transferred to that fund also. And it's also in a fidelity 500 in the same fidelity 500 index fund.

[Jill]

Okay. What's the problem? This is all good stuff. What's up then? What's your question?

[Stephanie]

Well, my question is I have a lot of cash on the sidelines.

[Jill]

Yeah, because you're a win. I love that about you.

[Stephanie]

Is. And it's not making me anything. So what should I do with this 567 Plus?

[Jill]

Let me tell you what you shouldn't do. Do not put it in another. In another annuity. Okay?

[Stephanie]

No, no, I. I won't do that.

[Jill]

Are you doing this all on your own or do you have some. Do you have an advisor who helps you?

[Stephanie]

I. I have. I've had advisors. I have one now at Fidelity, which I have started to consult. And he has suggested that I pull 100 from that 567 and another hundred from the 157 and put it in a USAA three year protected defer annuity at final quarter.

[Jill]

Absolutely not. Absolutely not. No, I disagree with that. So the reason why. No, I mean, first of all, Fidelity advisors I know are really getting into the whole annuity thing. And I wish that someone from Fidelity would come on the air with us so I can talk a little bit more about this. Now, this is not your normal, like, advisor who's basically an insurance agent getting you to put all your money in an annuity contract because of a big fat commission. Because they don't get commissions and these are low cost. However, I don't like the idea of you tying up your money because you already have these four different annuities. Why do we have to do that? I like you having access. You're young, you're not married or you are married.

[Stephanie]

No, I'm not.

[Jill]

You're not married, you have kids.

[Stephanie]

I have two kids and six grandchildren.

[Jill]

Oh, my gosh. So, like, I think having access to your money is actually very important. And you have plenty of money. You're not going to run out of money. You're doing great. I think just if you could maybe say to your advisor, look, I get it. I get that you want me to invest in an annuity because it's consistent income. But I really want a plan where you lay out putting some of this money to work, some of this half million dollars to work in a portfolio of cheap Fidelity index funds. And I want it to be a little bit less risky than just all stocks. I want there to be some bonds, I want there to be some stocks. I don't want to be more than 50% in stocks, by the way, like more of a balanced investor. And have them put together a plan for you, for all of your money. And just to look at it and have a game plan for how you are going to pull out this thousand dollars a month from the portfolio and, and have it grow in a consistent way over a long period of time. It doesn't have to be consistent every year. You are willing to take some risk, is that right?

[Stephanie]

A little, yes.

[Jill]

Well, then say that. But I don't think you should tie up this money. I don't like the idea.

[Stephanie]

Not even for three years.

[Jill]

Well, then what happens is it's stuck in an annuity environment. And so I just don't see why we want to have an annuity. If he wants to, like, say, I want to put a bond ladder together. Like if they say to you, hey, you could say, what is the alternative? Could I put together like half of the money that goes into some bonds, 1 year, 3 year, 5 year, 10 year? I want them to be a little bit more expansive. It can't be. This is not the best idea. It's not the only idea. So I want them to do a little work. Hey, can you compare this with what it would be like to have half of my money in bonds and half in stocks and how you'd get me there over time And I just don't want you to have another annuity.

[Stephanie]

I had, he had suggested they have a Fidelity fund that is 60% stocks and 40%. No, it was 60 bonds and 40.

[Jill]

Yeah, what's wrong with that?

[Stephanie]

Well, I was squeamish because I'm thinking if the market goes south, I have no time to recoup.

[Jill]

Yeah, but you don't need all of your half a million dollars tomorrow. All we need to do is make sure that you have 50 grand. That's really safe, always. Right. It's pulling $1,000 from the portfolio. $1,000, that's it. So I'm even giving you like three, you know, I'm saying, oh, maybe it's more. Keep 50 grand. That's really safe. Put it in something really boring. Put it in, keep that in the money market. And then the rest I would be interested in sort of a 60, 40. And if it's true, then say 70, 30. Do 70 bonds. 30. And don't do it in one fund. Make them do some work. Build me a bond portfolio for 70% of the money. You know, say you have $567,000, right? Let's take $67,000 and set that aside. That's your safety net of the half a million that remains. 70% in bonds, 30% in stocks in low cost, not in one fund. I want there to be like a low cost bond fund, a low cost index fund maybe, and just build it like that. And if you're squeamish about doing it all at once, you can say, you know, for between now and the end of the year, I want this half a million dollars invested and do it. And if you're. But if you're just absolutely, oh, my God, I can't take any risk, then leave it where it is because you can't have it both ways. You can't say, I want to be more efficient with the money and then take no risk.

[Stephanie]

Well, but I wasn't going to put all the half million into that fund. I was thinking about 100, say from the 567 and the 100 from the 157 for three years at 5.

[Jill]

Well, you know what? I put my opinion out there. It sounds like you want to do that. My opinion is I don't love that plan. Okay.

[Stephanie]

Okay, fair enough. How much should I set aside just to have as cash reserves? You said 57.

[Jill]

Well, this is what I would say. If you know that you can take for your emergency reserve fund in retirement two years of your total living expenses. Okay, so you have $5,800 a month coming in, right? $5,800 a month. And if you say, well, you know, I really need, you're saying taking 1,000 from the port, let's say it's $2,000 a month that you want to have set aside always, no matter what, some money coming in to protect you. $2,000 a month times two years. You should have at least $50,000. That is your emergency reserve fund. That is sacrosanct. Nothing can touch that. You should never go below that. And if you just feel better with more than that. And you want to keep 100 grand, fine. That's totally fine. But if you're asking me about should you have a half a million dollars that's sitting in cash, you know, it's not ideal.

[Stephanie]

No, it's not.

[Jill]

Right. And so to get it moving is not a three year game plan. You have a 30 year horizon ahead of you, I hope, you know, or 20 years, 25, 30 years. You have a long retirement, so you have to be willing to kind of take a little bit of a swing in terms of just putting some of the money to work and putting it at risk. It doesn't have to be everything. But no, I don't think that putting money away for three years is like actually a game plan, because then we're going to have a conversation three years from now that is going to be somewhat like this, but not exactly. And so why not put together a game plan that's a 20 year plan where you can say, all right, what I'm going to do is have the advisor run an analysis. If I were 70% in cash and bonds and 30% in stocks, knowing what you know about me, run this portfolio through the grinder and show me that I'll be okay. And if they can do that and you're only putting 30% of the money at risk, would that be something you would be willing to try?

[Stephanie]

Sure.

[Jill]

Let's have them prove that to you. You know, again, you don't have tons and tons and tons of liquid assets. You have got a good income. You've got assets that have, you know, you've got this 567,157 in cash. Then you've got 100 and change from pension and 403. All this is great, but I would not be interested in tying up my money for any length of time. And even if it's just a couple hundred thousand, I don't see the long term benefit for you. And I want the advisor to do the work that needs to get done. Now, do you have a will? Do you have a power of attorney? Do you have all that good stuff you do? And you own your home?

[Stephanie]

I do own my home.

[Jill]

How much is it worth?

[Stephanie]

390.

[Jill]

Okay, 390 is good. What about a mortgage? No, no, no, no, no. She says now your kids are okay. You have grandkids and kids. Is that something that's important to you to make sure they're taken care of?

[Stephanie]

They're doing better than I am.

[Jill]

Okay, listen, I just want you to know that all this is good news. You're in good shape. You really are.

[Stephanie]

I'm not running out of money.

[Jill]

No, it's very hard for you to run out of money. You really would. And honestly, if there was a little bit more money that was out there, that's liquid, I might say, oh yeah, put some money in the annuity. You already have money that's tied up in annuities. I'd like to avoid tying up more of your money. If you've got a financial question, if there's an issue that is either bothering you or you're considering a change, anything like that, get in touch with us. Don't do this alone. We are happy to help carry the burden with you or give you lots of options to consider about where you'd like to go next. It only takes one big action on your part. Going to our website, jillonmoney.com, clicking that contact Us button and writing us a note. Of course, if you'd like to join us live, just check the box. Mark will do everything else. Don't forget while you're on the website to sign up for the free weekly newsletter comes out every Friday, so free it'll be out tomorrow. Check that out. You can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Lift someone up. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

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[Jill]

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