Is Retirement in Five Years Possible?

Summary

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Podcast Summary: Jill on Money with Jill Schlesinger

Episode: Is Retirement in Five Years Possible?
Date: October 9, 2025
Host: Jill Schlesinger, CFP®
Listener Caller: Jim from Connecticut

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Episode Overview

In this episode, Jill takes a listener call from Jim, a 55-year-old nurse from Connecticut, who, together with his wife, wants to know if early retirement—in five years—is a feasible goal. Jill dives into the specifics of Jim’s financial situation, discusses the implications of his retirement savings and pension choices, and delivers key strategies for optimizing Social Security and income distributions. The episode is packed with actionable advice for anyone contemplating early retirement.

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Key Discussion Points & Insights

1. Current Financial Snapshot

[03:10 – 11:27]

• Ages & Employment:
  Jim (55) and his wife (56) are both nurses, currently working and aiming to retire at age 60.
• Income:
  Combined salary of $315k/year.
• Retirement Contributions:
  • Both are maximizing contributions to their 403(b) plans, including catch-up contributions.
  • Recently began directing new contributions to Roth 403(b)s.
• Retirement Account Balances:
  • Combined Traditional 403(b) balances: $1.9 million.
  • Roth 403(b): $30,000.
  • Roth IRAs (using backdoor method): $300,000.
  • Rollover IRAs from previous jobs: $150,000.
  • Brokerage account: $235,000 (majority in CDs; some individual stocks/mutual funds).
• Savings:
  Checking and savings: $75,000 for a year’s expenses and emergencies.

Notable Moment:
Jill flags a technical issue with backdoor Roth IRAs and rollover IRAs, explaining the “pro rata rule” and suggesting Jim checks whether he can roll over his old IRAs into current 403(b)s before continuing backdoor contributions.

“The old IRAs, they're sitting out there. That should generally prevent you from doing a backdoor Roth because you would be subject to the pro rata rule.” — Jill ([05:43])

2. Living Expenses and Lifestyle

[07:53 – 10:00]

• Current monthly spending: $3,000–$3,500 (low key), possibly $4,500 with increased leisure.
• Jill conservatively pushes the estimate to $5,000/month to “live a little.”

Memorable Quote:

“Wait a minute. I’m gonna give you five grand a month. Come on, live a little.” — Jill ([08:29])

3. Pensions and Homes

[08:29 – 11:27]

• Cash Balance Pension: Each is grandfathered into a “cash account pension plan” (CAP), now stopped but earning interest.
  • Projected value: $250,000 together.
  • Annuity options: $1,200/month (Jim), $900/month (wife); survivor and period-certain options available.
• Real Estate:
  • Connecticut home (plan to sell): ~$425K value.
  • Texas home (currently rented; plan for future residence): ~$450K value.

4. Family Considerations

[11:03 – 11:27]

• Daughter, 28, fully launched and independent.
• Planned $50,000 contribution to her upcoming wedding.

5. Retirement Sustainability Analysis

[11:27 – 14:22]

• Jill models $6,500/month in needed income (including health care costs before Medicare).
• Social Security estimates:
  • Jim: ~$3,400/month at 67.
  • Wife: ~$2,200/month at 62 (but Jill recommends deferring for financial advantage).
• Jill and producer Mark agree that annuitizing pensions makes sense for guaranteed lifetime income.
• Advocates for a “10-year period certain” annuity payout with survivor benefits.

Notable Quotes:

“You’re in very good shape… trying to generate $6,500 a month for the rest of their lives.” — Jill ([13:03])
“I personally would take the $2,000 a month as an annuity. So… they got a good chunk of it.” — Mark ([13:18])

6. Withdrawal and Tax Strategy

[14:22 – 16:00]

• Use early-retirement years (60–70) to strategically withdraw from tax-deferred accounts while in a lower tax bracket.
• Prioritize withdrawals (rather than Roth conversions), especially if relocating to income-tax-free Texas.
• Delay Social Security to age 70 for maximized benefits unless a health situation suggests otherwise.
• If/when Connecticut home is sold, free up additional liquidity for flexible retirement funding.

Notable Quotes:

“From age 60 to age 70, you’re going to pull money out of these traditional accounts… You should be thinking about taking $100,000 a year out of anything that has not yet been taxed from ages 60 to 70.” — Jill ([14:22])
“If you think about it, you could take even more out… and stay in the 22% tax bracket. You’ll be in good shape.” — Jill ([16:00])

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Key Takeaways & Actionable Advice

• Backdoor Roths: Check if rollovers can go into active 403(b)s to avoid the pro rata rule; stop backdoors if not possible.
• Expense Planning: Be realistic (and generous) in estimating retirement spending for comfort and flexibility.
• Annuities: Annuitize pensions using survivor or period-certain features, not straight life, to protect both spouses and beneficiaries.
• Withdrawal Timing: Use low-tax years pre-Social Security (ages 60–70) to draw heavily from tax-deferred retirement accounts, especially if living in a state with no income tax like Texas.
• Social Security: Delay claiming until 70 for larger survivor benefit and increased overall lifetime payout.
• Relocation: Strategic state residency (moving from Connecticut to Texas) further optimizes post-retirement finances.
• Stay Flexible: Plans can (and should) change if significant health or family situations arise.

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Timestamps for Important Segments

• Listener Financial Picture & Goals: [03:04 – 06:11]
• Backdoor Roth & Pro Rata Rule Discussion: [05:43 – 07:38]
• Brokerage + Homeownership Details: [07:38 – 11:27]
• Social Security & Annuities Analysis: [11:27 – 14:22]
• Withdrawal & Tax Strategies: [14:22 – 16:00]
• Final Advice on Relocation and Flexibility: [16:00 – 18:19]

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Most Memorable Quote

“This looks like a good plan to me… When you think about it, you are in the 24% bracket now. You’ll probably go down to 22 and you’re not gonna have to pay state income tax. This looks like a good plan to me, so I hope that that helps.”
— Jill Schlesinger ([16:00])

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Overall Tone & Approach

Jill’s style is empathetic, direct, and empowering. She demystifies complex financial rules, nudges listeners to be realistic, and encourages strategic thinking about taxes and retirement. Mark’s supportive commentary adds a layer of confirmation and practical insight.

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For those considering early retirement: Even with strong savings, your withdrawal strategy, tax planning, and benefit timing can hugely impact your security and peace of mind. As Jill’s advice shows, personal finance is about customizing the rules to your life’s real contours.

Transcript

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[C]

Welcome to the Jill on Money Show. It's Thursday, October 9th and we are here listening to what is on your mind about your own lives and how the issues that arise impact your finances. And I like to lead with your lives, your real lives and the money is kind of the way we get you where you need to go and you don't need to have a lot of money to come on the program. You don't need to have a little bit of money. We talk to anyone who writes in, has a question and has maybe weighing two different options or trying to get a sense of how they are doing. Then all you need to do if you're one of those folks is go to our website jillonmoney.com click the contact us button. It's in the upper right hand corner. Write us a note if you would like to join us on the air live. Just check the box and Mark will do everything else. Hey, don't forget to sign up for the free weekly newsletter. Comes out every Friday. Mark does such a great job with that newsletter. And when you sign up for the free weekly newsletter you also get my blog which you know I I do tend to write every week or so and, you know, whatever's on my mind. And we would be delighted if you subscribe to that free weekly newsletter as well as the blog. Okay. Today we are going to talk to Jim, who joins us from Connecticut. Hello, Jim. What can we do for you?

[D]

Good morning, Jill and Mark. Thank you very much for listening to me.

[C]

Of course.

[D]

I am 55. My wife is 56, happily married. I would like your advice regarding retirement planning. To retire at the age of 60. That will leave me with five years and my wife four years. Funny. Once my wife knew that you're gonna take my call and she said, can I retire at 57 or 58?

[C]

Oh, there, now you. I see we're moving the goalpost once she found out. Okay, well, let's talk about where things stand. And maybe we can work backwards and determine if five years, you know, works. And if it really works, well, then maybe we can back it up and say maybe it's two or three years. So let's see. So you're, you're 55, your wife is 56. You're both working. How much do you guys earn right now?

[D]

315K a year.

[C]

Okay, that's great. Amazing. Are you both putting money into retirement plans?

[D]

We are currently putting in max to both our 403s. We're in healthcare, we're both nurses.

[C]

Okay, so you're maxing out your 403s with the catch up contribution, right?

[D]

Correct.

[C]

Okay, and are those 403bs the traditional or Roth versions?

[D]

They just offered the Roth, I believe, the other year, and we just joined this year.

[C]

Okay.

[D]

And my question is, should we just do full Roth half or are we, do we need a tax deduction?

[C]

All right, well, let's, let's see. Okay, so we'll talk about that in a second. How much money have you saved in those traditional 403bs combined for both of.

[D]

Us is 1.9 million.

[C]

Wow. Amazing. And so the Roths probably don't have as much. How much is in the Roth 403?

[D]

About $30,000.

[C]

Okay. Do you have other retirement assets, meaning another Roth account or an old IRA account or anything else?

[D]

Yes, we have both. For Roth IRAs, pure Roth IRAs. We have about $300,000.

[C]

Okay.

[D]

We've been doing the back door for the past four or five years because we could not qualify anymore.

[C]

Yep.

[D]

And we have rollover RRAs from previous jobs combined, 150,000.

[C]

Wait a minute. I don't want to raise a red flag, but can I just raise a small red flag? Those old IRAs, they're sitting out there. That should generally prevent you from doing a backdoor Roth, because you would be subject to the pro rata rule. So I want you to think about this. The old rollovers, can you roll them into your current traditional 403bs?

[D]

I haven't asked that question.

[C]

Okay, so I want you to ask that question, and I do not want you to do a backdoor Roth anymore until we find that out, because there is a rule. It's a very annoying rule. It feels like it shouldn't exist. But when you do a backdoor Roth, what are we doing? We are putting a post tax, like we're putting an after tax dollar into a non deductible IRA account. Right. And then immediately converting it to a Roth. So that's how a backdoor Roth works. However, if you have old IRAs out there, the government says, well, you can't just do the backdoor Roth with no consequence. You would be subject to the pro rata rule, which would not allow you convert the entire 7 or $8,000 that you're putting into that non deductible IRA and then to the Roth. I don't think you need to, like, kill yourself right now. But what I do think you should do is double check to see whether or not the 403 plan will accept your old rollovers. And if they say they don't, then stop doing the backdoor Roth. Just stop. Okay. All right, let's move on. It's not a terrible thing. Nothing. You know, no one's going to chase you down and, like, put you in jail for this. Okay. What about other assets? Do you have a brokerage account or anything else out there that we should know about?

[D]

Yes, we have a brokerage account. Combined amount is 235,000.

[C]

Correct.

[D]

Currently mostly in CDs, about 30, 35% in individual stocks and a few mutual funds.

[C]

Okay, and you're managing this yourself?

[D]

Yes.

[C]

Okay, great. What else? Are you guys able to isolate how much money you're spending right now? Because you're saving a lot of money. Do you know what the spending amount is right now?

[D]

Yes. Living expenses would be, you know, we're low maintenance people. About three to 3,500amonth. What I put I would say 4,500 with, you know, eating out and a little bit of.

[C]

I'm gonna get. Wait a minute. I'm gonna give you five grand a month. Come on, live a little. All right. Are you guys entitled to pensions because you're a healthcare worker?

[D]

Some.

[C]

Some of those places do have pensions.

[D]

Yes. Both of us are grandfathered into a cash account, pension plan or cap. As of the other year, they stopped contributing. But it's earning interest. And the value of that would BE I believe 250,000. And if we choose an annuity. Annuity, it would be about 1,200 for me and 900 for her. But our question also with that portion of investment is do we cash out at the age of 60 or roll it over to an RRA and have that problem? There might be a problem. Or just choose the annuity option.

[C]

Okay. All right, I got you. Very good. Okay, so we've got all the money. What about. All right, so I got the potential cash balance. We got all the retirement assets. You got brokerage. We know you only spend about five grand a month. Do you have savings besides your CDs in the brokerage account?

[D]

Yes, we have a credit union and our checking with above 75,000. And then that should cover one year of expenses and surprise expenses.

[C]

Okay. Now what about your actual home? How much would you say that's worth? And do you think if you're going to retire in five or fewer years, would you stay in that home?

[D]

No, our home in Connecticut, it's about 450 in Zillow, but maybe 425 range. Okay. We do have a home in Texas.

[C]

Oh, how much is that house worth?

[D]

It's about the same, about 400 to 450 range. It's currently being rented house, rented out. And the reason is that my wife has family in Texas and she would love to be closer with, you know, with her family also, which I don't mind. We could live partly there and move back in Connecticut.

[C]

Yeah.

[D]

We do have our daughter in the east coast. So how old is your daughter? She is 28.

[C]

Oh, so she's a grown. And she launched. Do you still support her?

[D]

Fully launch, fully independent, making out on her own. Very well. And she's getting married in two years.

[C]

Oh, that's so nice. Mazel tov. That's great. Are you paying for this wedding? Do we have to set some money aside for the wedding?

[D]

Yes, we are planning to contribute about 50,000.

[C]

Okay. You got off easy, man. Just so I got this down. So you hope for five years from now. Right. We know that in five years when you are 60, you will have the option to annuitize these two pensions or take the cash out. We also know you've saved a boatload of money. We also know that you don't spend a lot of Money. So we have to cover you for health care and either the Affordable Care act for say five years. And so that would mean an extra thousand, $1,200 a month. Let's say $1,200 a month. Even if you want to. Like if. Let's puff it up a little bit. Let's Even just say 6,500amonth is what you would need. Okay. At your full retirement age, do you happen to know what the amount is that you would get for Social Security?

[D]

I believe it will be about 3,400amonth at 67.

[C]

Yep. And what about at 70?

[D]

I forgot.

[C]

Okay. And what about your wife? Same, similar, 3,400ish.

[D]

She was mostly working part time raising our daughter. So she is less earning less for several years.

[C]

Okay.

[D]

So I believe she will get about 2, 200 at 62, which she plans to take.

[C]

Why? Is she in bad health?

[D]

No, but she, she just wants to. She said, and then if I die early, she will claim me.

[C]

Unless. Unless she is in bad health. I don't think that makes a lot of sense. There's a better. I think there's a different strategy here.

[D]

Okay, enlighten us.

[C]

Okay, so first of all, you're in very good shape. Mark, would you like to weigh in on how good shape Jim and his wife are trying to generate $6,500 a month for the rest of their lives. And we'll inflate that. But how do you think they're doing?

[D]

They're doing well, especially when you consider I personally would take the $2,000 a month as an annuity. So. Yeah, they got a good chunk of it.

[C]

Yeah. So I would too. This is a very different kind of plan than many people might be used to for, from the perspective of Jill and Mark. But I would annuitize those pensions. I don't know if you'll have options about the way that you annuitize. I hope it's not just for your straight life. But honestly, the best way to do the annuity would be to get it for a 10 year period. Certain. And you each have survivor benefits that for the. You'll get the money out over the course of the years between your age 60 and 70. Okay. So I don't know if that what you said to me when you said 1200amonth, 900amonth, was that just for your, your whole lives? And if you drop dead the two days after no one gets it.

[D]

I believe that was for straight annuity. We do have the option with survivorship. I believe it drops down to quite less, like 1000 or 900 and change. Okay.

[C]

What I would do is I would not do a straight life. I would do at least a survivor. But really the better One is a 10 year period certain where someone will get paid for 10 years. And all the money comes out over 10 years. Because my game plan for you guys would be, don't worry about the Roths right now. Don't even sweat it. From age 60 to age 70, you're going to pull money out of these traditional accounts. You don't have to convert even. What you have to do is just take the money out that you need. So we talked about this. That you need $6,500 a month. Right. And if you think about that again for these 10 years, you know, you need this. I'm going to round it like about 80 grand a year. You should take that 80 grand a year, probably a little more because it's taxable. But let's even roll it up. You should be thinking about taking 100 grand a year out of anything that has not yet been taxed from ages 60 to 70. Okay. You know, even if you just did that for 10 years, you would still not be digging in deep. You probably take half of the money out of the 403s. But I don't think you need to be really thinking about conversions as much as having a strategy to get the money out of these accounts in those 10 years. And I would wait to claim Social Security and tell your wife that this is a strategy essentially to make sure that we get the money out of your accounts at a reasonable tax bracket. Hey, extra bonus. You leave Connecticut and you do this as a Texas resident. I don't think. Does Texas have a state income tax?

[D]

No, it does.

[C]

That's. That's when you want to do it. You want to try to get this money out of these accounts. When you are Texas residents and in the lowest possible tax bracket. You know, honestly, if you think about it, you could take even more out. You could take 150 grand a year out over those 10 years and stay in the 22% tax bracket. You'll be in good shape. Again, you say to your wife, the reason why we're not taking it at 62 is we want to wait till 70 to take this Social Security money. Unless, look, if something changed, if you got a bad diagnosis and your life expectancy was much lower than what we think, then sure, you can start getting the money from Social Security at an earlier age. But if you're both in good shape. Generally speaking, I'd wait till I'm 70, I pull all this money out of your 403Bs that have not been taxed yet and call it a day. You can wait to see about the house. I mean, if you sell the Connecticut house, it's even more money available to you. Maybe if I sold the Connecticut house and I had that cash available, maybe then in some years I might consider converting. But get that money out of those 403. It's going to be a great situation for you, Jim, because when you think about it, you are in the 24% bracket now. You'll probably go down to 22 and you're not gonna have to pay state income tax. This looks like a good plan to me, so I hope that that helps and let us know has the annuity numbers come in? We'd be happy to help you out. Hey, if you're thinking about retirement and you're not in as good shipping shape as Jim and his wife, then don't fret. We're happy to help you out. Just go to jillonmoney.com, click the contact us button. Write us a note if you want to come on the show. Check the box. Mark will do everything else. Don't forget to check out all of the content that lives on the website. We've got another podcast. It's called Money Watch. We've got a radio show. There are videos, there are resources, all there. You can subscribe to us on the Odyssey app or wherever you find yourself. Favorite podcast Try to lift someone up. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

[D]

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