Peace of Mind With Allocations Heading Into Retirement

Summary

Podcast Summary: Peace of Mind With Allocations Heading Into Retirement

Podcast: Jill on Money with Jill Schlesinger
Host: Jill Schlesinger, CFP®
Episode Date: September 25, 2025

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Overview

This episode centers on how to approach asset allocation and investment strategy leading into retirement, especially when pensions and other reliable income streams are present. Jill takes a listener call from Mary in Ohio, who, along with her husband, is nearing retirement and wants to understand how, when, and whether to adjust their investments for the years ahead. The conversation is a blend of practical advice, reassurance, and big-picture strategy—ideal for anyone nearing retirement or managing a pension and significant savings.

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Key Discussion Points & Insights

1. Mary’s Retirement Situation and Goals

• Timeline: Mary is one year from retirement (age 55), her husband is three years away (age 58).
• Income: Both have pensions; Mary’s is $73,000/year (no COLA), husband’s is $52,000/year (2% COLA).
• Expenses: The couple spends about $70,000/year, including travel.
• Social Security: Only her husband is eligible—projected at ~$900/month at 62, higher if delayed.

Quote:

“I'm sitting here. Wait, what? Holy. So this is more than enough.” — Jill (05:11)

2. Their Savings and Allocations

• Roth IRAs: ~$300,000, mostly in target date funds (2030, 2035, 2040).
• 457 Plans (Roth): ~$240,000, all in large cap stock index.
• Traditional & Rollover IRAs: $35,000 and $19,000.
• Brokerage Account: $74,000 in VTSX (Vanguard Total Stock Market Index).
• Cash Reserves: $20,000 in high-yield savings, $65,000 in laddered CDs, $45,000 in I Bonds.
• Home Ownership: House worth $330,000, recently paid off.

Quote:

“We have laddered these target dates. I don't know if that's a thing, but I started doing that.” — Mary (07:13)
“You got plenty of cash on hand. That's great.” — Jill (08:01)

3. Current Investment Approach

• DIY Management: Mary handles all investments, having moved on from an advisor 25 years ago.
• Comfort with Risk: Mary feels comfortable with her current risk level, especially given guaranteed pension income.

4. Jill’s Core Guidance for Retirement Allocations

• Emphasizing Flexibility: No rush for drastic changes; focus on comfort and simplicity.
• Transition Out of Target Date Funds: Suggests considering direct investments in low-cost index funds (US stocks, international stocks, and bonds) rather than target date funds for more control and lower fees.

Quote:

“If you wanted to look at 10 years from now and say that's really when I think I'm going to need most of some of this money...I would just be owning a large cap stock index like the S&P 500...I'd own a bond index, I'd own an international index, and I don't think I would own a target date.” — Jill (10:23)

• Suggested Allocation:
  • Now: ~70% stocks / 30% bonds
  • In 5 years: Move to 65/35
  • As retirement nears: Possibly 60/40 (“just to smooth out the variations”)
• Handling Existing Accounts:
  • Liquidate pre-tax IRA balances after retirement but before Social Security to “dribble them out” at lower tax brackets.
  • No urgent change to brokerage account; continue adding to it or consider new CDs as rates allow.
• Decision Timing: No urgent or wholesale changes necessary; adjustments can be gradual.

Quote:

“There is no urgency here at all. You're in great shape.” — Jill (16:56)

5. Emotional Side of Retirement & Investing

• Financial Decisions are Emotional: Jill underscores that financial choices are rarely just math—they’re influenced by feelings and comfort.
• Communicating with Spouses: Jill checks in to ensure Mary’s husband knows enough to take over if needed.

Quote:

“Can we just make sure he under, like if you, God forbid, drop dead tomorrow, that he would understand what to do?” — Jill (13:59)

6. Advice for Younger Listeners

Mary offers encouragement to young teachers (or anyone starting out):

Quote:

“Do whatever you can. Start with $25 a month and start investing. That's what I did. And I'm just shocked at how much we have and how lucky we are.” — Mary (16:51)

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Notable Quotes & Memorable Moments

• On the Power of Forced Savings:

  “The fact that you're forced to put that money away is really different...when we force you to do it, you see, it pays off in the end.” — Jill (03:38)

• On Not Needing Major Changes:

  “If you like your target date funds, then fine...I'm not sure you're going to make a big mistake either way.” — Jill (11:33)

• On Risk Comfort:

  “You do have risk on the table, but you’ve weathered a lot of storms. So how do you feel about it?” — Jill (13:29)

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Timestamps for Key Segments

• [02:31] Mary introduces her retirement scenario
• [04:27] Age, pension, and health benefits information
• [06:16] Deep dive into savings and investment account balances
• [07:38] Home ownership, emergency fund, and cash reserves
• [09:09] Income, health, and Social Security eligibility discussion
• [10:23] Jill’s detailed advice on allocations and managing target date funds
• [13:29] Discussion on risk tolerance and involvement of Mary’s husband
• [14:30] Practical steps for reallocating away from target date funds
• [16:51] Mary’s advice to young teachers and summary affirmations

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Tone and Closing

Jill’s conversation is consistently reassuring, practical, and friendly. She balances sounding protective of Mary’s interests (“I don’t want to complicate your life”) with empowering her to take as much or as little action as feels comfortable. The episode ends with positive encouragement for all near-retirees: think ahead about allocations, but don’t feel pressure to overhaul everything—especially if unique advantages like pensions are on your side.

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For more insightful listener questions and evidence-based financial advice, visit jillonmoney.com.

Transcript

[A]

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[B]

Hi Jill and Mark. Thanks for having me on the show. I've been a listener for five years and I love all the advice that you give.

[A]

Oh thank you so much. We really appreciate that. What is the advice that you are seeking for yourself today?

[B]

Well, I am about one year away from retirement and my husband is three years away from retirement and I want to know if we should start making adjustments to our allocations. We have three more years to save, and we've been pretty good about saving, but the bonus is that we both are entitled to pension, so we're not going to be needing this money for at least 10 years after we retire.

[A]

You both have pensions?

[B]

Yes.

[A]

Oh, gosh. That is. That does take the pressure off, doesn't it?

[B]

It does.

[A]

Did you consider this when you first entered this job where you had a pension? Did you think, ah, this is going to make my life easier, or is it just now you're realizing, I always knew it.

[B]

I'm an educator, so I loved my profession and I knew I was going to stick with it. So that was one of the bonuses. It was hard at the beginning because they take a large percentage out for your pension.

[A]

Right.

[B]

But now I'm very grateful.

[A]

You know, it's funny, I always think about educators especially, you know, and teachers, not necessarily college professors, but where you. You hear that, that when you're a young teacher and you have your friends who are, like, in the private sector and those people are making more money and they're saving money in their retirement. Maybe, maybe not. But the fact that you're forced to put that money away is really different. It's different than saying, oh, we'd like you to put money into your 401k. And yet I feel like it's such a perfect model. Like, when we force you to do it, you see, it pays off in the end. So, Mary, tell us a little bit about what you have accumulated, and then maybe we can make a determination. About what. Whether anything needs to get done. So you said you're one year from retirement, your husband's three years from retirement. How old are you guys?

[B]

I'm 55 and my husband is 58.

[A]

Okay. And because you're educators, does that mean you have health care as well?

[B]

Yes.

[A]

Okay, great. So in one year, what will your pension be?

[B]

My pension will be 73,000 every year.

[A]

Wow. And in three years, what will your husband's be?

[B]

52,000.

[A]

And is that the amount of money you guys can live on? Do you think you'll need more than that? How does that jibe with your general spending?

[B]

I've been tracking our spending for the last three years, and we are at about 70,000, including travel.

[A]

What?

[B]

Yeah, we. I'm.

[A]

I'm sitting here. Wait, what? Holy. So this is more than enough.

[B]

It is, it is. And I've run some projections, like when inflation will catch up to, you know, what it would be. So I feel comfortable with our 10 year mark of saying that we won't have to touch our investments till then.

[A]

Well, but in 10 years you'll have Social Security as well. So what will those payments look like?

[B]

Well, I'm not entitled to Social Security, so this is it for me. And my, my pension is fixed. I don't get a cost of living increase.

[A]

Oh, I see. Okay. But his is what?

[B]

His, he is entitled to about $900 at 62, but I don't know at full retirement age what that amount is.

[A]

All right.

[B]

And then his pension is entitled to a 2% cost of living increase every year.

[A]

Okay, but fixed at 2%. All right. Well, as you said, this is a good amount of money. Gets you through a bunch of years. You'll have more than you need, but then you also have savings. So tell me a little bit about saving.

[B]

So we've been investing heavily in Roth. So most of our funds are in Roth accounts. So we have Roth IRAs in target date accounts totaling about $300,000.

[A]

Okay, that's great.

[B]

We have 457 plans that we've been investing in, and those are mostly Roth as well. About 240,000 in the 457 plans. Those are in large cap stock index.

[A]

All stock, though.

[B]

All stock.

[A]

Okay.

[B]

And then I have a pre tax IRA that was a rollover from when I worked in College. About 35,000 is all in large cap. We have another rollover IRA from my husband that's about 19,000 and that's in a target date. And we have laddered these target dates. I don't know if that's a thing, but I started doing that. So summer in 2013, 2030. Some are in 2035 and some are in 2040.

[A]

Okay.

[B]

And then we have a joint brokerage account, about 74,000 in VTS. X.

[A]

Okay. So also stock. Okay.

[B]

Yes.

[A]

Tell us a little bit about the other stuff. Like you own a home. Do you have an emergency reserve fund? All that boring stuff that I love.

[B]

Yeah. We do own our home. It's worth about 330,000 and we just paid it off a couple years ago.

[A]

Congratulations.

[B]

Thank you. I keep about $20,000 in a high yield savings account as our emergency fund.

[A]

Yep.

[B]

We have about 65,000 in laddered CDs and about 45,000 in I bonds.

[A]

You got plenty of cash on hand. That's great. Okay, perfect. And you're managing all this money yourself? Nobody is, you know, kind of horning in on you, saying, we want you to buy this insurance product or anything like that. It's all you.

[B]

It is. For the last 25 years, it's been me. I did start out with a financial Advisor in my 20s and I'm grateful for that experience. It was a friend who was just starting out and he got us going in UPMA accounts for our kids and helped us roll over our old 401ks and started life insurance. But then I kind of turned that off 25 years ago and I went into Vanguard and did it all myself.

[A]

Great. Okay, great. The kids are grown, everyone's good. Right. You don't need. You're not supporting anyone else, right?

[B]

Correct.

[A]

I don't want to complicate your life. That's number one. So number one, please hear this in the spirit in which it is meant to give you just like general guidance. I love that you've got the money that's in the emergency reserve and the bonds and all that. I think that that's perfect. Okay. What are you earning right now?

[B]

This year I'm going to earn 112,000.

[A]

So it's not as if your tax bracket's going down anytime soon, you know. Right. Okay. Are you guys both in good health? Yes. Okay, so couple of big picture things first. So I love that you have a little emergency reserve. Great. Keep that. Don't be messing around with that. I love that you have this fixed pension payment that will be coming in. I love that. Fantastic. You know, your husband's 58. He's going to work till he's whatever, 61. I would not be in a hurry to take his Social Security. I would love it if you guys could have a higher benefit that will then be indexed for inflation. So I think that would be a good thing. Would we essentially just, you know, forego that Social Security for till his full retirement age? It'll end up being, I don't know what it is, 1200 or something like that a month. That'll be nice to have. So as you said, you don't need this money anytime soon. That is all socked away. So what probably should happen is that in those years when your husband has retired, not taking Social Security, you're retired. That's when you should probably get the pre tax money out of the account and just pay the tax that's due at the time. You don't have to convert it or anything. You can just pull it out. Okay. And add that to your brokerage account. So that would be the 35,000. That's all stocks. The target date fund of 19,000, whatever is. But just think about this, that like my window of opportunity to get money out of pre tax accounts should occur at husband's. I was about to say graduation, husband's retirement until he claims Social Security. Okay, dribble it out, get it out. Fine. Okay, now to your question. I think you have enough money that you don't need to be in target date funds. I know they're cheap, they're kind of easy. That's why I said I want to complicate things. But essentially, if you wanted to look at 10 years from now and say that's really when I think I'm going to need most of some of this money, at least in the Roths, I would just be owning a large cap stock index like the s and P500 or an extended market index. I'd own a bond index, I'd own an international index, and I don't think I would own a target date. On the other hand, it's not going to hurt you. Mark, is the target date fund at Vanguard cheap? It has to be. I mean, I don't know if it's as cheap as the actual index funds, but isn't the target date fund pretty cheap at Vanguard? Yeah, I mean, it's not crazy expensive. But are you going to save money using individual index funds? Yes. Yeah. And so again, I don't want to be silly about this. I just think that it makes sense to me instead of looking at target dates to just say, I know what my Target is in 10 years, I may need some of this money. Maybe I should be more of a balanced investor. Meaning that I should have, let's say, let's say for now you'd want to have about 70% stocks, 30% bonds. Okay. Because your growth still, because you don't need any of the money anytime soon. And then maybe in five years you go 65, 35, and then, you know, maybe get to 65, 40ish only so that you smooth out the variations in the, the, the actual movement of these assets. If you're like, I just like my target date funds, then fine. It's just that, you know, obviously these years are going to come up and the money's going to be available. And it doesn't exactly thread the needle of what I think you want to be doing at this point, which is just managing your, managing your money as what is what percentage in stocks versus bonds versus cash versus international or any other asset. But I'm not sure you're going to make a big mistake either way. If you're getting extra money at this point and you say, what do I do with it? I would put it in the brokerage account. Or I might even say I could buy some extra laddered CDs if. If you said I had a little extra money right now and something was coming due, well, maybe I'd buy another, you know, a five year CD with a chunk of money. Just to know I've locked in that rate. You know, interest rates are going to go down. So as those laddered CDs come due, you're not going to earn as much. But on the other hand, you're in great shape. There's nothing bad that can happen. So in my mind, it's just setting yourself up 10 years out, you know, where. How do I look at my allocation? It seems like you're fine with risk. Are you? Okay? Because you do have risk on the table, but you've weathered a lot of storms. So how do you feel about it?

[B]

I do feel comfortable with risk now that I see where we're at. You know, years ago the target date seemed safe. That's why I went with it and I didn't want to have to worry about it.

[A]

Yeah. And now if you're a little bit more involved, I can get that. Is your husband have any interest in this or he's just like, mary, you do a great job. You're my person.

[B]

Yeah, that's his stance.

[A]

So can we just make sure he under, like if you, God forbid, drop dead tomorrow, that he would understand what to do? Like, what would he do? Would he have to hire someone to help him out?

[B]

No, no. We talk about it all the time. He just understands. Like, I do all the research and make the moves and, you know, we talk it through. If I were to change over, take some of these funds and move them into the allocations that you mentioned, what amounts would I move? That, you know, there's 300,000 in target date funds. How would I do that?

[A]

You would just sell the target date and buy the underlying. You see, the way the target date funds work at a place like Vanguard is essentially that they are buying the index underneath the. That I would be saying is like instead of them buying it, you just buy it directly. So you can reallocate at any time. You're not going to have any. There's not going to be a tax hit. Most of this money is in Roth accounts or the 457account. I wouldn't do it necessarily in the brokerage account. I would just leave that alone. And as you start adding money to the brokerage account. I might add some in a bond fund like that. Just very easy. But if you don't want to do it all at once, you can maybe decide to do, you know, some of it this year, and you can do a little bit at a time knowing that you want to get to the allocation. I mean, look, if you. If we pull up the Vanguard Target Date Fund, 2030, chances are the allocation is a little bit wimpier than you would like because you like Risk, and you don't really need the money in 2030. So the point of the target date is to not just actually invest to that date, but through that date. So maybe you look at the allocation of the actual target date funds that you own and say, well, why don't I just replicate that myself? And if you don't want to, you don't have to. You really don't. And if you get to the 2030 and you're like, now we're talking, it's five years from now, Maybe I'll just shove it all into the 2035. You can do that, too. You really can. It does not require you to make a wholesale decision one way or the other. I just want you to be aware of the risk and also the comfort level you have. So I don't think you have to do anything huge right now, for sure. But I do think that it is good for you to look at these accounts and say, you know, is this really the allocation that I want? You now know kind of where you are constitutionally when it comes to risk.

[B]

Okay, great.

[A]

Does that make sense?

[B]

It does, yes.

[A]

Okay, thank you. And you have all of your estate documents, right? We do. Thank goodness. Okay, so what advice are you going to offer to a new young teacher who's listening to us right now?

[B]

Oh, do whatever. You can start with $25 a month and start investing. That's what I did. And I'm just shocked at how much we have and how lucky we are.

[A]

Amazing. Well, listen, we wish you the very best. If you need any help with this allocation or you feel like, oh, this is overwhelming, I don't want to do it. Don't. Again, there is no urgency here at all. You're in great shape. So you've done a great job. Your husband's done a great job. Now, if you are a year, two years, three years from a retirement date, it doesn't mean that you have to make big, huge changes. What it means is that thinking about it today gives you a great advantage. And most of us are not like Mary and her husband. Most of us don't actually have pensions. And so you may want to do some reallocation ahead of those dates to try to give yourself an off ramp. So you know, okay, I can take advantage of markets being high now and I. And again, you don't have to do anything. It's just that it's in preparation for these milestones. Some work may be necessary. So if you need some help, give us a Holler. Go to jillonmoney.com, click the contact Us button, write us a note and join us on the show. It's so much more fun. And while you are on the website, you can check out our other podcasts. It's called Money Watch. We've got a radio show. We've got resources all [e-mail] you can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Please, if you would not mind, leave us a rating and review wherever you listen and of course lift someone up. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow. Hey gang, here's the thing about wine. Some of the best bottles are not sitting on a store shelf. They're being crafted at small, independent wineries. But those wines can be so hard to find Sometimes I wish I had a personal sommelier to guide me to find the best wines I normally wouldn't be able to access. Where's that handcrafted Pinot that I've been craving? Well, Psalmsation's expert team seeks out incredible wines from top independent producers. These are bottles that you will not find in stores and on shelves. They aren't mass produced wines. They're handcrafted with care, using pure ingredients and meticulous winemaking. Whether you want a single bottle, a guided tasting experience, or an entire wine club membership, Psalmsation makes it easy to elevate your wine experience. Shop their [e-mail] jillonmoney that's psalmsation.com jillonmoney hi, I'm Nancy Cartwright. You may know me better as the voice of Bart Simpson on Simpsons Declassified. We're diving into the mysteries that keep the Simpsons forever young. Have you ever wondered how the Simpsons regularly predicts future events? Who better to ask than the show's creators, performers and writers? The celebrity guests? Be sure to follow and listen to Simpsons Declassified wherever you get your podcasts.