Podcast Summary: "Nervous About Retirement"
Jill on Money with Jill Schlesinger
Host: Jill Schlesinger, CFP®
Release Date: December 26, 2024

Introduction

In this episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger delves into the intricate concerns surrounding retirement planning. The episode centers around a listener call from Casey, who expresses anxiety about her husband's impending retirement. Jill navigates through Casey's financial landscape, offering expert advice and actionable strategies to alleviate her worries.

Listener Call: Casey's Retirement Concerns

a. Financial Overview

Casey, a 55-year-old part-time worker, reaches out from Idaho to discuss her husband's retirement at age 61. She is concerned about ensuring their financial stability post-retirement.

• Income Details:

  • Husband's Income: Currently earning $69,000 annually.
  • Casey's Income: Brings home about $30,000 from part-time work.

  [02:34]
  Casey: "I bring home about $30,000."

Jill confirms their combined income and probes deeper into their cash flow and preparedness.

b. Income Streams in Retirement

Casey's husband is set to receive a pension, and both partners will be entitled to Social Security benefits.

• Pension Details:

  • Gross Pension: $2,316 monthly.
  • Net Pension (after taxes): Approximately $1,900 monthly.

  [03:09]
  Casey: "His GROSS will be $2,316. I figured with taxes out, he'll be bringing home about $1,900."

• Social Security Benefits:

  • Husband: $2,250 at full retirement age (67).
  • Casey: $1,459 at full retirement age.

  [04:29]
  Casey: "His at 67 is $2,250. Mine is $1,459."

Both plan to continue working part-time, with Casey intending to work for six more years to bolster their savings.

c. Savings and Investments

Casey outlines their savings strategy, showcasing a diverse portfolio aimed at securing their financial future.

• Retirement Accounts:

  • Roth IRAs: $138,000 combined.
  • 401(k): Husband has $42,000, planning to convert to Roth.
  • Thrift Savings Plan (TSP): Casey has $16,000, contributing 15% to Roth and 3% to traditional for employer matching.

  [06:25]
  Casey: "So currently we have $138,000 in Roth."

• Other Savings:

  • Brokerage Account: $3,000, with ongoing contributions of $750/month.
  • Certificates of Deposit (CDs): $42,000.
  • Cash and Bank Accounts: $40,000.

  [06:49]
  Casey: "We have $42,000 in CDs and about $40,000 in cash and bank accounts."

Jill encourages Casey to maintain these savings streams to support their retirement plans.

d. Real Estate Holdings

The couple owns their primary residence and another property currently on the market.

• Primary Home: Valued at $850,000 with no remaining mortgage.

  [07:03]
  Casey: "The one that we're in, our place here, is about $850,000."

• Second Home: Selling for a net of approximately $140,000, with $80,000 allocated to their brokerage account for home improvements.

  [07:25]
  Casey: "We're selling currently. And we should net about $140,000."

Jill notes the significance of their real estate assets in their overall financial strategy.

e. Short-Term Concerns and Risks

Casey's primary anxiety revolves around the next six years and the potential risks associated with unforeseen events, such as the premature passing of her husband.

• Health Care Considerations:

  • Husband is covered under Casey’s health insurance until she retires at 62, after which she can cover both under her federal government employment benefits.

  [03:31]
  Casey: "Yes, I work federal government. So at 62, when I retire, I will be able to keep both of us on our insurance."

• Risk of Insufficient Income:

  • Casey worries about the stability of income streams post-retirement, emphasizing the unpredictability despite having a pension.

  [05:45]
  Casey: "Well, because it's not going to be a. I don't know. I just feel like it's not steady income. Even though it's a pension, it's not the same."

f. Risk Management: Life Insurance Discussion

Jill introduces the idea of securing life insurance as a hedge against the financial risks of losing a primary income earner.

• Life Insurance Proposal:

  • A 10-year term life insurance policy for Casey’s husband, covering $250,000, estimated at approximately $360/month.

  [15:27]
  Jill: "Do a 62 year old guy and get me a half a million dollars. What would that cost on an annual basis?"

• Comparison with Pension Survivor Benefits:

  • Jill discusses the cost-benefit analysis of life insurance versus relying solely on the pension's survivor benefits.

  [19:02]
  Jill: "This is like, actually, like a little bit of like a hedge against your pension bet."

Casey is encouraged to obtain quotes for life insurance to better understand her options and decide the most prudent course of action.

g. Estate Planning Considerations

With a blended family of eight grown children, 23 grandchildren, and one great-grandchild, estate planning is crucial.

• Current Status:

  • Casey has prepared estate documents, though they remain unsigned.

  [15:43]
  Casey: "I have them ready, but they're not signed yet."

• Inheritance Concerns:

  • The complexity of splitting assets among multiple beneficiaries necessitates clear and legally binding estate plans.

  [15:46]
  Jill: "Which means for everyone listening, when you have a complicated second marriage, it is incumbent upon you to actually get this done."

Jill emphasizes the importance of finalizing estate documents to prevent future disputes and ensure that Casey's wishes are honored.

Jill’s Insights and Advice

Throughout the conversation, Jill offers pragmatic advice tailored to Casey's unique financial situation:

1. Evaluate Life Insurance:
   Assessing the cost and benefits of life insurance to mitigate financial risks associated with retirement.

   [19:22]
   Jill: "Let's find out what the differential is. And if it's too much, you might be like, I'm rolling the dice. I don't care. We'll be fine."

2. Maximize Savings Contributions:
   Continuing to contribute to Roth IRAs and other savings accounts to strengthen their financial position.

   [08:28]
   Jill: "Oh, my God, I love you. You're me."

3. Diversify Income Streams:
   Maintaining multiple sources of income, including part-time work and investments, to ensure financial stability.

4. Finalize Estate Planning:
   Completing and signing estate documents to secure her family's financial future and avoid potential conflicts.

   [15:43]
   Jill: "Truly. I mean also, because look... Women live longer."

5. Assess Survivor Benefits:
   Understanding the benefits provided by pensions and whether additional coverage is necessary to safeguard against unforeseen events.

Conclusion and Takeaways

Casey's call concludes on a more reassured note after Jill's comprehensive guidance. The episode underscores the importance of:

• Proactive Financial Planning:
  Addressing potential risks and uncertainties before they impact retirement security.

• Comprehensive Risk Management:
  Utilizing tools like life insurance to protect against significant financial setbacks.

• Clear Estate Planning:
  Ensuring that legal documents are in place to manage and distribute assets according to one's wishes.

Jill encourages listeners to engage with their financial planners, ask the right questions, and take actionable steps to secure their retirement. She invites others to reach out with their financial concerns, emphasizing the show's commitment to helping listeners make informed and confident financial decisions.

Notable Quotes:

• "[03:09] Casey: 'His GROSS will be $2,316. I figured with taxes out, he'll be bringing home about $1,900.'”

• "[05:45] Casey: 'Well, because it's not going to be a. I don't know. I just feel like it's not steady income. Even though it's a pension, it's not the same.'"

• "[15:43] Casey: 'I have them ready, but they're not signed yet.'"

• "[19:22] Jill: 'Let's find out what the differential is. And if it's too much, you might be like, I'm rolling the dice. I don't care. We'll be fine.'"

Final Thoughts

This episode of Jill on Money provides a deep dive into the multifaceted aspects of retirement planning, highlighting the importance of thorough preparation and risk assessment. Casey's journey offers valuable insights for listeners navigating similar financial transitions, emphasizing that with the right strategies and professional guidance, the anxiety surrounding retirement can be effectively managed.

For more personalized financial advice, listeners are encouraged to visit jillonmoney.com, reach out with their questions, and consider joining the conversation on air. Subscribe to the weekly newsletter and follow the podcast on your preferred platform to stay informed and empowered in your financial decisions.