Job Change With No 401(k)

Summary

Jill on Money with Jill Schlesinger – Episode: "Job Change With No 401(k)"
Release Date: July 24, 2025
Host: Jill Schlesinger, CFP®
Guest: Mark T. McGowan

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Introduction: Navigating Job Changes and Retirement Planning

In this episode of Jill on Money, host Jill Schlesinger delves into the complexities of managing retirement funds, particularly focusing on scenarios where individuals change jobs and find themselves without access to a 401(k) plan. Jill emphasizes the importance of strategic financial planning to ensure a secure retirement despite such transitions.

The Role of AI in Financial Advisory

Early in the episode, Jill shares her thoughts on artificial intelligence (AI) in the financial sector. Reflecting on a New York Times article, she highlights the unique human element in financial advising that AI cannot replicate.

Jill Schlesinger [04:30]: "Biography is a form built on the vagaries of human experience. Artificial intelligence offers a form of knowledge stripped of experience."

Jill contrasts AI's ability to process language and predict trends with the nuanced understanding humans possess regarding motives and experiences. She concludes that this human touch is crucial in financial advisory roles, assuring listeners that professionals like herself and Mark remain indispensable.

Listener Questions and Expert Advice

1. David’s Retirement Dilemma [06:15]

Question: David, age 65, is contemplating whether to take a lump sum from his pension or opt for a monthly benefit. He has $640,000 in his 401(k), a lump-sum pension option of $423,000, and a preferred monthly pension of $1,500 with a 50% survivor benefit. Additionally, he has $275,000 in cash savings.

Advice: Jill advises David to assess whether he can comfortably live on the combined income of the monthly pension and Social Security benefits, which would total approximately $4,500 monthly.

Jill Schlesinger [09:20]: "Can you live on 4,500 bucks a month? That's a big question. If you can, then maybe take the monthly pension to give her some peace of mind."

She suggests that if David and his wife can sustain their lifestyle on this income without depleting their savings, opting for the monthly pension may be the more secure choice.

2. Kathy’s Missing 401(k) After Job Change [10:45]

Question: Kathy recently changed jobs and discovered her new employer doesn't offer a 401(k). With four years until retirement, she's unsure how to handle her previous 401(k).

Advice: Jill outlines three primary options for Kathy:

1. Leave the 401(k) with the Previous Employer: If the plan allows, especially if it's robust with reputable funds like Vanguard or Fidelity.
2. Roll Over to a New 401(k): Not applicable in Kathy’s case since her new employer doesn’t offer one.
3. Roll Over into an IRA: Transferring to an IRA through providers like Fidelity, Schwab, or Vanguard is recommended for better control and potentially lower fees.

Jill Schlesinger [12:10]: "When you have an old retirement plan, leave it where it is, move it into a new plan, which you can't do, or roll it into an IRA rollover account."

She encourages Kathy to consider an IRA rollover, especially given her proximity to retirement, to maintain and potentially grow her retirement savings effectively.

3. Georgianne’s Universal Life Insurance Policy [14:00]

Question: Georgianne, age 69, holds a universal life insurance policy with a $50,000 coverage and a current surrender value of $7,125. She contemplates whether to surrender the policy and invest the cash.

Advice: Jill advises Georgianne to evaluate her overall financial situation and dependencies.

Jill Schlesinger [15:00]: "If you have other assets and nobody really needs this money, then invest it elsewhere. But if you rely on this policy, reconsider."

She suggests that if Georgianne has sufficient assets and no dependents relying on the policy, surrendering it and reallocating the funds could be beneficial. However, she stresses the importance of understanding the broader financial context before making a decision.

4. John’s Third Marriage and Social Security Strategy [16:15]

Question: John and his wife, both in their sixties, are discussing the optimal time to apply for Social Security benefits. With substantial retirement funds, they aim to maximize their monthly income.

Advice: Jill recommends delaying Social Security benefits to increase monthly payouts, especially since both are in good health.

Jill Schlesinger [17:00]: "When you're in good health and don't need the money immediately, waiting until full retirement age or even age 70 can maximize your benefits."

She emphasizes that delaying benefits can provide a larger monthly income, which is advantageous for long-term financial stability.

5. Jeff’s Brokerage Account vs. Roth 401(k) [18:30]

Question: Jeff, aged 58, and his wife, 60, plan to retire in two years. With solid retirement savings and a modest mortgage, Jeff is considering whether to bolster his brokerage account instead of contributing further to his traditional 401(k).

Advice: Jill discusses the merits of Roth contributions versus brokerage investments.

Jill Schlesinger [20:00]: "I don’t think you should start withdrawing at 60 unless you're in bad health."

She advises maintaining contributions to the Roth 401(k) for tax-advantaged growth, while also building the brokerage account to provide flexibility during retirement. Jill highlights the importance of not depleting retirement funds prematurely and leveraging diverse income streams.

Conclusion: Strategic Financial Planning is Essential

Jill wraps up the episode by reiterating the importance of personalized financial strategies, especially during job transitions and approaching retirement. She encourages listeners to utilize the resources available on the Jill on Money website and consider reaching out for tailored advice.

Jill Schlesinger [22:45]: "Whatever's on your mind is important to us. Just go to our website, jillonmoney.com, click the contact us button, and reach out."

Final Thoughts

This episode underscores the significance of proactive financial management when facing job changes without a 401(k). Through real listener questions, Jill Schlesinger provides actionable insights and underscores the value of individualized financial planning to achieve retirement goals.

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Resources Mentioned:

• Website: jillonmoney.com
• IRA Providers: Fidelity, Schwab, Vanguard
• Podcast Subscription: Jill on Money Live – Access to live webinars and bonus content

Join the Conversation: Listeners are encouraged to submit their financial questions via the website for future episodes and to engage with the Jill on Money community for ongoing support and information.

Transcript

[Jill Schlesinger]

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[Mark T. McGowan]

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[Jill Schlesinger]

Welcome to the Jill on Money show. It's Thursday, July 24th and we are here trying to help you navigate your financial journey. As I've said, we are like Waze or Google Maps for your money and your life. And so if you'd like some direction, you want to know what the roots are that are possible, just go to our website jillonmoney.com and in the upper right hand corner there is a contact us button. Click that button and if you would like to join us live, check the box and we will do everything else. Mark will do everything else. I do nothing. I just talk to you. Oh Mark, I meant to tell you this is sort of a funny thing because I've been really, you know, trying to figure out how artificial intelligence is going to help me and Mark in our lives and you know, all different things that could, could or could not do. But I was reading this article about AI and I realized this is why our jobs here on this program might survive. This was a really interesting the New York Times did a Sunday Times magazine. Mark, do you get the Physical Times on Sundays or not? No, not anymore. Not anymore. Okay. Well the physical magazine which was so great, it was all on AI I think it was June, mid June. There was an article about, about how biography changes. Like when you're writing about events in history, how it might change with AI. So I wrote down this, this quote because I thought it was like a reason why I think we could continue to exist. Mark. So this is good. So the quote is where biography is a form built on the vagaries of human experience. Artificial intelligence offers a form of knowledge stripped of experience. So in other words, what ChatGPT or Gemini or Claude, what these models, these large language models are doing, is that they are basically kind of taking nuance of language and predicting what comes next. Right. This is the next part of it. Even the boosters of AI readily concede it's poor grasp of character or human motive, which is notoriously coiled, cloudy, contradictory. To understand motive requires some sense of the raw matter of experience, of its quiddity, which is an excellent word of the body's way of knowing and remembering. The bots scrape up those aspects of motive that make it into language, and it's big, blunt language. AI only knows to enter through the front door. It cannot yet observe the true story happening elsewhere, always in a back room somewhere, sometimes between two people just passing their good ideas between each other. So, Mark, I feel like this is the whole saving grace of what we're doing, which is it means that because we actually have experience and we are able to talk to people and understand their motives, that saves us. So I think we're good for another couple years till AI gets to that point. You feel better about that or not? I need more than a couple. All right, well, maybe few. A few. Three to five. I think we're gonna be good for three. Three is good. I can give you three. Anyway, let's do some emails, okay? And if you have some. If you have some insights about AI and how it's impacting you and your job and you wanna share them with us just Again, go to jillandmoney.com and click the Contact Us button. Okay. David writes, who says, I'm contacting you after listening to your radio show on the weekends? It's great stuff. Oh, by the way, we have a radio show. You can find that under the radio link on our website. David says, I have been unsuccessful in getting my W that going to a CPA and a fiduciary is a good idea. But now I'm up against the wall and I'm desperate for some sound advice. Okay, here we go. David writes, I'm 65 and I'd like to retire. I am the sole breadwinner. I have $640,000 in my 401. And if I were to take my pension in a lump sum, I could get about $423,000. If I don't take the lump sum, the monthly benefit would be $1,500, and that would be with a 50% survivor. Social Security should be about three grand a month. We've got 275 grand in cash savings account. Should I take the lump sum and roll it into the 401k and invest it to generate income or should I take the monthly pension amount? My wife prefers the guaranteed pension monthly amount. We did not take risk in our younger years. We're paying for it with very little return in our investment choices. And it seems that the few times I did diversify, it backfired. I ended up on the short end of things. I found myself going back to a safe 2% return. My wife will not qualify for Social Security. So when I take her, she'll get half of mine. That is correct? He asked. Is that correct? Home is paid for. Property taxes are increasing. I worry about the buying power of our dollars. I have no life insurance on myself. The premiums are now expensive. I worry about one medical event wiping us out if I were to retire early. But I don't know how much longer I can keep going. The 4:00am Wake ups are taking their toll after 37 years. Okay, David. She likes the consistency, that $1,500 a month. I guess one thing about taking that monthly benefit would be that they are starting to get the money out of the account. So if they have $4,500 a month, can you. Here's a question that I'm going to put back at you, David. Can you live on 4,500 bucks a month? That's a big question. And if you can, then maybe you take the monthly pension because it will give her some. It'll kind of ease her mind. If you can't and that you're going to have to eat into what you've saved, then we've got a problem. So would you consider giving up the 4am workout but doing something else? Little side hustle, little something, something. I need a little bit more information, but I have to say that the my inclination is maybe to get that monthly benefit just to make her feel better. Then you'll have your Social Security and if you can live on four or five grand a month, then you'd be okay. It wouldn't be great. Be okay. So I need a little bit more information though, for sure. Okay. Kathy says she just changed jobs and she says I don't know what to do with my 401k from my previous employer. My new employer does not offer a 401k and I'm four years away from retiring. I can't believe people don't have 401ks. It's crazy. Okay, Kathy, when you have an old retirement plan, there's three basic options. One would be to keep the old 401k where it is, if that's allowed with the plan. And maybe it's a good plan. Maybe it's got Vanguard funds or Fidelity funds or T. Rowe Price or Charles Schwab. If it's a good plan, maybe keep it there, easy. The second option would be if you did have a 401k, you could roll it over, but you don't. And then the third option would be you could roll it into an IRA rollover account at one of the big, you know, I would say the big houses that offer cheap index funds. Again, when I say that, when people are hearing this, I don't want you to think it's anything too esoteric. I'm talking about Fidelity or Schwab or Vanguard or T. Rowe Price or E Trade. If you can manage the money yourself, you just roll it over because you're just a few years away from retirement. I'm not even so sure you need to do anything else beyond that. But I'd love to hear more about what's going on. But those are your basic options. When you have an old retirement plan, leave it where it is, move it into a new plan, which you can't do. And the third being, move it into an IRA rollover account. Okay, here is from Georgianne, who says, I have a universal life insurance policy. It was taken out when I was 29. I am now 69. God bless you. You had that for 40 years. The surrender value, which means, Just to be clear, gang, it means you've paid into this policy that stays in place for your entire life. That's why it's a form of permanent life insurance. The surrender value is now $7,125. It's a $50,000 policy. And by the time I get to 83, that then the surrender value will go down. That's because you'll be paying premiums for all of that. Question. I'm wondering, should I surrender this? Get the $7,000, invest it elsewhere or keep it. Chances of Me Living past 83 is hopeful. Thank you for your advice. Here's the thing, I guess that it depends on what else you have. If you have other assets and nobody really needs this money, then, you know, I think if you had seven grand and you invested it, could it be 50 grand in 20 years? Maybe not. But maybe you just want the money and maybe it's not worth it. And if you were to live beyond 83, then it really does stops being worth it. So I'M interested in maybe getting out of it. But I'm not willing to say that today until I know what else is going on in your life and who is relying on you for the assets upon your death. Okay, John writes. Hi, Jill and Mark. Third marriage for both of us. How about that? My wife is retiring in two years. She will be 63, I will be 70. If she applies for her Social Security benefit, it would be $2,700. My regular Social Security benefit would go to 1750 up to 700. Due to spousal benefits, I'd be entitled to half of her full retirement age payment of approximately 3,500. With my pension and Social Security payments, our monthly income, ten grand, which would cover our monthly expenses without touching our retirement funds, which are about $1.5 million. Does it make sense to apply at that point? We're both in good health. Okay, everybody, listen up. When you're in good health and you don't need the money, we think you should always wait until your full retirement age, 67, or potentially age 70. If you can wait because it just makes more sense, you get more money, and especially if you're in good health, then you're going to outsmart the model. If you're not in good health, then you take it early. But there's no reason to take it early in this case. There really isn't. And I think that waiting is always preferable. If that's possible. Again, if that's possible. All right. Jeff wants to know, should I focus more on building up my brokerage account? That is the subject. Hello, Jill and Mark. We love your show. Thanks for everything you do. So Jeff says, I have a question regarding my allocation. I am 58. My wife is 60. I'd like to retire in two years at age 60 if possible. Okay. We spend about eight grand a month. Our only debt is the mortgage on the house. $70,000 remains. The rate is 3.375%. Okay. The savings we have traditional 401, 855, Roth 95, rollover IRA 282, Roth IRA 39. There's $32,000 in a brokerage account, $16,000 in savings, plus another $44,000. So $60,000 in savings or high yield savings. Okay. Pension. Oh, my God. He's going to get a pension. And so he's got. In two years, if he wants to withdraw starting at age 60, it's about $2,400 a month. If he wants to wait until withdrawal at age 65, it's $4,000 a month, Social Security 4,000 at age 67, 5,000 at 70, wife claims half of his, they max out their 401K. Should I use some of that money to boost my brokerage account, especially if I were to retire at 60? Yes. Here's what I think. Well, let me do two things. You have a Roth 401K and you have a traditional. I have no problem actually putting money in the Roth. I don't. I would not put more money into the traditional because you definitely are going to have an issue. It seems to me that if you're spending eight grand a month and you're going to get a pension at age 65 of 4,000 and then another 4,000 at age 67, you're in great shape. But you are going to have money that needs to come out of this traditional environment. That 855 in your traditional 401k plus the 280 in the rollover. So I think what I would probably do is this. Again, I don't know all the ins and outs and I like hearing your voice when I have these kinds of conversations. My guesstimate would be that if you feel like you want to pull back and just not put any more money into retirement and build up the brokerage account, that's fine. Otherwise, just put it in the Roth, that's fine. Now, in two years, what happens? You are going to have the ability to pull money out of the pension. But I wouldn't do it. I'd wait. Unless you're in bad health again. But if you wait for those five years from 60 to 65, start pulling money out of that money that hasn't been taxed yet. And then what you can do is you'll live on that money, you'll reduce that burden in the future and then you'll take your Social Security either at 67 or 70. Again, it really depends on your health and you're in great shape. I don't think I have a big preference on using money to go into your Roth versus your brokerage. I don't know if you do, Mark, but I feel fine about where they are. Just know that I don't think again, unless you have bad health, I don't think you should start withdrawing at 60. Do you agree with that, Mark? 100%. In terms of Roth versus brokerage, I mean, we're only talking about two years. It's not going to make a difference really either way. But you know, if you are going to do the brokerage, then at least contribute enough to get the match exactly and otherwise you can do whatever you want. It's not going to be a bad thing either way and you're in great shape. How amazing is that? I like people who are in these positions where it's like, all right, I can start the clock when I want to. It's really good to plan this out. So if you are seeking some guidance about what to do next. And hey, young people, if you're not thinking about retirement, that's okay. Whatever's on your mind actually is important to us. So just go to our website, jillonmoney.com click the contact us button, write us a note and give us a lot of detail. Or if you're going to come on the program, check the box. Mark will do everything else and we'll bring you on the air. It's so much fun. As you know that we also have a subscription service. It's called Jill on Money Live. That's where you have access to quarterly live webinars, the back catalog, bonus audio and video content. It's all for free. 45 bucks for the next 12 months. What a deal. Fantastic. You can subscribe to us on the Odyssey app or wherever you find your favorite podcasts. Try to do something nice for someone else today. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

[Brian]

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[Mark T. McGowan]

Hey there cats and kittens. It's Brian from the commercial break. The mediocre comedy podcast where my best friend Chrissy and I attempt to make sense of the world. We talk about the absurd, the ridiculous and the stuff no one asked for, like Internet weirdos, pickup artists, and why everyone is obsessed with crystals and colonics. It's all gotta stop. The show is free, it's frequent, and it's probably not for everyone. You can go to tcbpodcast.com, [e-mail] thecommercial break, or check out the show wherever you listen to podcasts. We'll see you on the next commercial break. And best to you.