On Track for Retirement in 12 Years?

Summary

Episode Summary: "On Track for Retirement in 12 Years?"

In the June 18, 2025 episode of "Jill on Money with Jill Schlesinger", host Jill Schlesinger, CFP®, and co-host Mark Tularcio engage in a comprehensive discussion about retirement planning, focusing on real-life scenarios and actionable financial advice. This episode centers around a call from Max, a 45-year-old teacher from New York, who seeks guidance on whether he and his wife are on track to retire within the next 12 years.

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Listener Call: Max's Retirement Planning

Max’s Current Financial Snapshot:

• Age: Both Max and his wife are 45 years old.
• Professions: Both are educators within the New York State pension system (Tier Four).
• Pensions:
  • Max: Anticipates a $113,000 annual pension.
  • Wife: Expects a $70,000 annual pension.
  • Combined Income: They can comfortably live on $200,000 per year, covering essential expenses and healthcare needs (04:09–05:49).

Savings and Investments:

• Max’s 403B: $175,000 (traditional, now also contributing to Roth).
• Wife’s Retirement Savings: $270,000 in a Roth account.
• Education Savings: $102,000 in a 529 plan for their children.
• Regular Savings: Approximately $30,000.
• Real Estate:
  • Home Value: $725,000–$750,000.
  • Mortgage: $30,000 remaining, set to be paid off within the next year (06:34–07:22).

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Detailed Discussion and Financial Advice

1. Evaluating Pension Benefits:

• Mark’s Insight: Mark emphasizes the strength of the New York State Tier Four pension plan, highlighting its role in securing a substantial retirement income (04:55–05:42).
• Max’s Confirmation: Max confirms their position in the pension system and projects entering retirement around age 57 with stable benefits (05:42–06:17).

2. Retirement Savings Strategy:

• Max’s Contributions: Max has been maximizing his 403B contributions, currently contributing $23,500 annually (08:44–09:00).
• Wife’s Approach: Although his wife has a substantial Roth account, she hasn't been as proactive with her 403B contributions (08:51–09:26).
• Mark’s Recommendation:
  • Continue maximizing retirement account contributions.
  • Shift towards more Roth contributions to mitigate future tax liabilities (14:54–15:04).
  • Potentially increase 529 plan contributions from $300 to $600 monthly once the mortgage is paid off (07:03–09:32).

3. Education Savings for Children:

• Current Savings: $102,000 in a 529 plan, with plans to increase contributions (07:03–09:32).
• Future Projections:
  • If children attend SUNY schools, existing savings should suffice.
  • Considering inflations and additional education costs, augmenting the 529 fund is advisable (09:42–10:30).

4. Managing Mortgage and Real Estate:

• Mortgage Status: Nearly paid off, with only $30,000 remaining, expected within a year (07:06–07:14).
• Real Estate Stability: Intends to remain in the same home to stay close to family, enhancing community and support systems (12:01–13:33).

5. Tax Considerations:

• Pension and Taxes: Recognizing that pension income will be taxed, Mark advises increasing Roth 403B contributions to balance taxable income during retirement (14:54–15:04).

6. Estate Planning:

• Current Status: Max and his wife have a will prepared through the school district but have yet to finalize it (13:13–13:55).
• Mark’s Prompt: Emphasizes the importance of completing estate planning documents to secure their legacy and provide for dependents (13:13–13:55).

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Key Insights and Takeaways

1. Robust Pension Plans: Being part of a strong pension system like New York’s Tier Four for teachers provides a significant safety net for retirement.
2. Aggressive Retirement Savings: Maximizing contributions to retirement accounts, especially Roth options, can optimize tax benefits and secure future financial stability.
3. Strategic Education Savings: Proactively managing 529 plans ensures funds are sufficient for children’s higher education, reducing future financial strain.
4. Debt Management: Accelerating mortgage payments frees up additional funds for investments and savings, enhancing overall financial health.
5. Comprehensive Estate Planning: Maintaining up-to-date estate documents is crucial for personal security and family protection.

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Notable Quotes with Attribution and Timestamps

• Jill Schlesinger:
  "Sometimes we make the financial part work, but you've got to make the psychological part work."
  (01:53)

• Mark Tularcio:
  "You have great benefits, and at the very least, the 200, it'll be taxed. You're going to have great health care. Not a problem."
  (06:17)

• Mark Tularcio:
  "You're in great shape. I think your 12-year plan is a great one."
  (14:43)

• Mark Tularcio:
  "If you over save for 14-year-old, like... that can pop into a Roth IRA for the kid, for the beneficiaries. You're in great shape."
  (10:51)

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Conclusion

Max’s retirement planning showcases a well-rounded approach, leveraging strong pension benefits, disciplined savings, and strategic investments. Jill and Mark’s advice underscores the importance of maximizing retirement contributions, managing debt, planning for education expenses, and preparing for tax implications. Listeners are encouraged to evaluate their financial positions, adopt similar disciplined strategies, and seek personalized advice to ensure a secure and fulfilling retirement.

For more personalized financial guidance, listeners are invited to visit jillonmoney.com and utilize the "Contact Us" feature to join future discussions or seek tailored advice.

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Stay Connected:

• Subscribe: Find "Jill on Money" on your preferred podcast platform or the Odyssey app.
• Engage: Leave a rating and review to support the show.
• Learn More: Explore additional content and resources on jillonmoney.com.

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“Change your work, change your wealth, change your life.” – Jill Schlesinger

Transcript

[Jill Schlesinger]

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[Mark Tularcio]

Welcome to the Jill on Money Show. It's Wednesday, June 18th and we are here trying to help you make better, perhaps more considered financial decisions. And that can mean something different from for each of you. You know, for some of you, we're getting a lot of calls about retirement or we're getting calls about I want to have better balance in my life. That seems to be a huge theme lately. I don't know. We got a lot of that during COVID Then it went away. Now, once again, Mark, you notice that we're seeing a bit of an uptick in the number of people who are saying like maybe it's that they have to go back to work five days a week. Maybe it's there's different demands by their bosses. Maybe it's fear of a recession this year, who knows? But we definitely are fielding more questions from people young and old, mid career, late career about finding more balance in their lives. And I know that that is very hard. We have A lot of type A listeners out there, I get it. But if you need some assistance or you need the permission structure to figure out a way to help your financial life, maybe give you some signals about how to find better balance, you know, sometimes we make the financial part work, but you've got to make the psychological part work. So if we can do our part, we're going to rely on you to do your part. So if you need some help, whatever is going on, maybe it's a big purchase, maybe you're ready to plunge into the housing market because 7% mortgage rates, that's about where we're going to be. And, and you just say you're gonna do it and you can afford it. If you need help, get in touch with us. Go to our website, jillonmoney.com, click the contact us button, write us that note. And if you would like to join us on the air, just check the box. Mark will do everything else while you are on the website.

[Jill Schlesinger]

Please do sign up for the free.

[Mark Tularcio]

Weekly newsletter which comes out every single Friday. And check out all the other content that lives there. You might as well buy the book the Great Money Reset. Things are happening. We want you to be able to change your work, change your wealth, change your life. 10 Bold Steps to Turn Chaos into Opportunity. I mean, you could buy my first book also, the dumb things Smart People do with Their money. Whatever it is, it's on our website. That's where all of our stuff lives. Today we are joined by Max, who's on the line with us from New York. Hello, Max, how are you?

[Max]

So I am 45 years old. My wife will be 45 shortly as well. We are both teachers and we kind of just want to know if we're on par to retire at like 55 or 57.

[Mark Tularcio]

I said you're from New York and since, since I'm familiar with the New York State pension plan for teachers. Are you in that plan?

[Max]

Yes.

[Mark Tularcio]

Oh, fabulous. You're probably too young. You're in like tier three or four, is that right?

[Max]

Tier four.

[Mark Tularcio]

Tier four. Got it. Okay, both of you. So how much money do you guys each make?

[Max]

So I am at 145 and my wife is at 110.

[Mark Tularcio]

Amazing. Do you guys have kids?

[Max]

Yes, we have a 14 year old and a 10 year old.

[Mark Tularcio]

How long have you guys been in the system? The New York State system?

[Max]

So I am 23 years and my wife is 20 years because she taught in Jersey for a couple years first.

[Mark Tularcio]

Listen, we're not going to hold it against her. So at age 55. Intense. In 10 short years, what will each of your pension benefits look like, approximately?

[Max]

So if I go at 50. Well, here's the thing. So I want to go at 55. She tells me I can't because she can't go till 57. So I'm assuming I'm going to go at 57.

[Mark Tularcio]

Okay. But let me. Okay, you can Give me the 257. I'm sorry I laughed about that. She told me. No. What's the $57amount?

[Max]

So with the full, like, hundred percent benefit, like, you know, if I, you know, die or whatever, I'm 113, and she is 70.

[Mark Tularcio]

Oh, my gosh. Okay. Can you guys live on 200 grand a year?

[Max]

Yeah.

[Mark Tularcio]

So that's not a problem.

[Max]

Yes.

[Mark Tularcio]

It's amazing.

[Max]

So here's my thing.

[Mark Tularcio]

So tell me.

[Max]

I have fantastic parents who do a lot for us. They like to treat us to things. They like to take care of the boys. So I kind of want to be able to do those same things. So I guess I say, you know, 200, but, you know, vacation every other year for, like, the kids and grandkids. Just kind of want to make sure, you know, we could do all that. Like, when you retire, you know, obviously less comes out of your check.

[Mark Tularcio]

Right.

[Max]

I get.

[Mark Tularcio]

I mean, you have great benefits. Let's stop for a second. You have amazing benefits, and at the very least, the 200, it'll be taxed. You're going to have great health care. Not a problem. But that'll pay your basic bills. So let's go into what other money you have saved. You guys both have four or three B's?

[Max]

We do. My wife didn't really do a lot of hers because she had a Roth that she was doing. Okay, so she has 270 and a Roth.

[Mark Tularcio]

Okay.

[Max]

I have 175 in my 403B.

[Mark Tularcio]

Huh. That's traditional. Your 175?

[Max]

Yes. My district did start doing a Roth, which I am now doing. So I'm now doing a Roth.

[Mark Tularcio]

Okay, good.

[Max]

We have a 529 with 102. Then we're at, like, 30,000 regular savings.

[Mark Tularcio]

Okay, that's great. This is awesome. How about the house?

[Max]

Our house, which should be done by November, December. We have, like, 30 left on it. It's worth about 725, 750.

[Mark Tularcio]

Is this. This is a house you're going to stay in? I mean, because your kids are in a district, right? Like, we're not moving around, right?

[Max]

No, I'm not allowed to.

[Mark Tularcio]

Okay. I like that about. I like, I like the rules that are in place. So by the end of the year or something, like we're early next year, when you say the house is going to be paid off at that point, what will the expenses be? Just the general expenses that include all the fun stuff that you like to do. About nine, nine a month. Okay. And when you look forward and you say, okay, look, it's 10 or 12 years, you're going to keep socking money away. When you say, you know, I want to do some fun things, what do you think in today's dollars, what would that look like for you? Like, would that be like, you want to do? I want to take like my kids and their, whoever they're dating, we're going to go on a big vacation. Is that 20 grand a year in today's dollars? Is that 50 grand a year in today's dollars? What do you think are the extra fun things that you want to feel like you can do? Maybe not every single year, but, you know, every so often. What do you think the amount is?

[Max]

Probably 20.

[Mark Tularcio]

Okay, 20. You are right now. You're living this life. You make a lot of money. Right. I get it. You live in a high cost of living area. I understand that. What is the amount that you're putting away in your, like, for your, the two of you, what amount are you putting away on a monthly or annual basis into these retirement accounts?

[Max]

I just started maxing mine out probably like two years ago.

[Mark Tularcio]

Okay.

[Max]

We don't do a whole lot to her Roth.

[Mark Tularcio]

Okay. So right now you're putting in the maximum, the $23,500 into your retirement account, right?

[Max]

Yes. Yep.

[Mark Tularcio]

Okay. And let's pretend that's all the saving that you do for retirement, that her 270 is stagnant. You don't add any money to it. You're 175. You're adding 23 grand a year and whatever it ends up being. Right. Going forward. Okay. Are you also putting money away, additional money into the 529 right now on a, on an annual basis, or is that kind of. Are you done at this point?

[Max]

No, we do 300amonth, which I wanted to bump up once the mortgage was done, to 600amonth.

[Mark Tularcio]

Okay. Do you think that these kids are SUNY State University of New York kind of kids? Are they kind of like, no, I want to go to Stanford or wherever they're going to go?

[Max]

So funny you asked that. We are having the conversation now with our 15 year old, he gets it, that SUNY makes the most choice. And we've said to him, if you go to suny, you're probably not going to have any college bills. My nephew is a freshman at a very expensive university and I see the struggles that people go through.

[Jill Schlesinger]

Yeah.

[Max]

So, I mean, suny.

[Mark Tularcio]

Okay, good. Mark Tularcio, who is listening in on us, if these two kids are going to go to SUNY schools, and we've got four years for the, for one kid. Right. And then eight years for the other, how much money do you think has to be accumulated in that 529? Because here it is, 100 grand. It's a lot of money. How much more money do you think has to go into that plan?

Well, I think more. I mean, I think, you know, 100 grand is a lot of money if you're talking about one kid. But we got two kids. Yeah, they're, they're fine. They're, they're, they're, they have huge pensions. They already have nearly half a million saved. They're going to continue saving for the next 12, 13 years. So by the time that comes, that account's going to be over a million dollars plus the pen. They're, they're fine. So I think the 529 for me is the focus.

Max. How do you feel about that? Like, if you have, I mean, first of all, I also like, want to reiterate before we go move on that you are in great shape. Whatever you think you should have done or done, that doesn't matter. You have two teachers who are living within their means. You've saved money, you're doing a great job. Like, nothing bad is going on here in terms of like your future and being able to have like, oh, I want to be able to have like that fun vacation and spend the equivalent of 20 grand every couple years on something big. Like, that's awesome. You can do that. You'll be able to do that. That's not going to be a problem for you guys. It really isn't. I agree with Mark. If educate, you know, you're an educator, so I know education is important, but I think that we're going to have to put a little bit more money into the 529 plan. And even if you told me that your wife was putting a lot of money away into retirement, I wouldn't even suggest that. If your cash flow allows, when that mortgage payment is done, what's the actual mortgage payment right now? What is the amount that you're paying?

[Max]

So you're gonna laugh. I don't even remember what my original payment is.

[Mark Tularcio]

Yeah.

[Max]

Because all I know is that I've been paying extra. So we're gonna finish a 30 year in about nine years.

[Mark Tularcio]

Oh, so you have a lot of money. This explains a lot. Okay, so here's what my guess is.

[Max]

I'm that person.

[Mark Tularcio]

Okay?

[Max]

I'm that person who wants it out of there.

[Mark Tularcio]

Okay. So I think once the mortgage payment is done, you said you're gonna go 300amonth up to 600amonth. I have a. I want you to watch the cash flow, but I, My guess is you can put $1,000 a month into the 529. And that's what I would do right now. I mean, when the mortgage is up and then you're fine and then you're done, and then look, if you over save for 14 year old, 14 year olds, like, oh, you know, I'm going to SUNY, blah blah, blah, and it's great. And you can use the money between the two kids. You can, if there's anything left over, you have that 35 grand that you can pop into a Roth IRA for the kid, for the beneficiaries. You're in great shape. This is all good news. And when you retire at Your age is 57, right. At that point, both kids are done with college. Do you think you're going to stay in the area or do I mean, are your parents close by? Is that important to you or do you think you'd go somewhere else?

[Max]

So, yeah, super important. So my parents, my sister, my nephews, we're all within a half hour of each other.

[Mark Tularcio]

Oh, nice.

[Max]

So my parents watched both of my kids before school started. Both of my nephews at the same time. So they grew up together. So ideally that's what I'm hoping happens, you know, in my future.

[Mark Tularcio]

You're in great shape. Do you guys have your, your beautiful estate planning documents done?

[Max]

We have our will. We just haven't signed it and sent it back in yet because why?

[Mark Tularcio]

You want to see if you got a better deal somewhere? Just kidding.

[Max]

No, no, we got it. I got it free through my school district. So that's one of the things my district provides.

[Mark Tularcio]

Amazing.

[Max]

We just been dragging our feet.

[Mark Tularcio]

All right, well, look, you're in great shape. I think your F, your, your 12 year plan is a great one. Thank you for being an educator because it's important and for everybody who's listening and all these people who are like, oh my God, these teachers, they make so much money In New York? Well, because in New York, it costs a lot to live, and so they have to pay their teachers more, I bet. Max, where you live in your neighborhood, the kind of folks that you're around, they make a lot more money in their salary or their. Their total compensation, but nothing like that pension. Man, that can really figure into amazing retirement plans, can't they?

[Max]

Yeah, and that's. And I've really been just kind of thinking about it the past couple years, and I'm like, wow, okay. Like, it's. It's going to be good, I hope, you know.

[Mark Tularcio]

Yeah, it's going to be great.

[Max]

Said all this. I feel much better.

[Mark Tularcio]

It's going to be great. So listen, can I ask you one other question? Yeah, sure. Absolutely.

[Max]

Because we're going to have these pensions. Are we going to really kind of pay a lot of taxes when we're older?

[Mark Tularcio]

Yes.

[Max]

Like, should I start doing more Roth 403B?

[Mark Tularcio]

Yeah, absolutely. It should be all Roth.

[Max]

Okay.

[Mark Tularcio]

Yeah, yeah. I mean, it's not going to be three, five.

[Max]

Roth.

[Mark Tularcio]

Yeah, just do it. Just do it. Because you know her, she's got the 270 in the Roth. That's not the problem. But you're. But, yeah, do it all, and then you'll have hope. Maybe by the time you retire, you'll have about the same amount of money in a traditional and a Roth. And that's great. That's perfect. Don't worry about it. All right, Max from New York, good luck. Thank you for getting in touch with us. Hey, if you are looking at your own future and you, you know, by the way, Max is like classic sandwich generation. He's got parents who are alive, he's got kids who are in their teens, you know, young kids, and he's looking at his own future. And this is incredible. It's got. It's just got all of the hallmarks of. You don't realize how powerful these pensions are until you've put the time in and you look at and say, hey, I could be retired and not worry at age 57. That's incredible. Of course, you have to be a teacher, and that's a hard job. So that's why I have no pension. I have an easy job. No one gives me a pension when you have an easy job like mine. And, you know, I have pension envy. So good luck to all of you and thank you who have those pensions and don't take them for granted. So if you are looking ahead and trying to make a financial decision, maybe you're thinking about selling a house. Maybe you're accelerating your mortgage payments. Whatever's happening, give us a Holler. Go to jillonmoney.com, click the contact Us button. Write us a note. If you would like to join us live, check the box. We'll do everything else. I mean, Mark will I don't do anything. If you wouldn't mind, check out all of the content that lives on our website. So much for free stuff. Some stuff that'll cost a few bucks, but nothing that's going to really break the bank. Subscribe to us here. Jill on Money on the Odyssey app or wherever you find your favorite podcasts. And please leave us a rating and review. Wherever you listen, don't forget to do something nice for someone else today. Change your work, Change your wealth, change your life. Thank you for listening. We'll talk to you tomorrow.

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