Podcast Summary: Planning for Our Financial Future
Jill on Money with Jill Schlesinger
Release Date: January 7, 2025

Introduction

In the episode titled "Planning for Our Financial Future," host Jill Schlesinger, CFP®, engages with Kay, a 41-year-old listener, to delve into comprehensive financial planning tailored for middle-aged families. The conversation emphasizes strategic saving, retirement planning, debt management, and preparing for future educational expenses for children.

Guest Introduction: Meet Kay

Jill welcomes Kay to the show, highlighting her distinctive southern accent and setting the stage for an insightful discussion.
Jill Schlesinger [00:00]: "Welcome to the Jill on Money Show. It's Tuesday, January 7th and we are here answering questions from you, our wonderful listening audience."

Kay [03:27]: "Hey there. Thanks for having me."

Financial Situation Overview

Income and Employment

Kay and her husband, both aged 41, present a balanced financial household with diverse income streams.
Kay [03:45]: "My husband and I are both 41. He is the primary breadwinner and he's self-employed as a photographer... his average income has been about $115,000 a year."
Kay [04:11]: "I work for a small nonprofit and I'm only making about $45,000 a year, but it's a great work situation for me."

Their employment statuses highlight a dual-income household with one partner in a higher-earning self-employed role and the other in a steady nonprofit position.

Health Insurance

They maintain a high-deductible health insurance plan, managing costs out-of-pocket while keeping premiums affordable.
Kay [04:24]: "We have a pretty high deductible health insurance plan that we just pay for out of pocket, but the monthly premium's not bad."

Family and Housing

Kay and her husband are raising two children, aged 9 and 11, in a public school system.
Kay [04:36]: "Yes, we have two children and they are 9 and 11... they're in public school."

They recently purchased a home at a favorable price during a market downturn, resulting in minimal remaining mortgage debt.
Kay [05:49]: "We bought our house for a great price... we only have about $4,000 left on our mortgage."
Jill Schlesinger [06:22]: "And you only have $4,000 left on the mortgage?"

Retirement Planning

Husband's SEP IRA

Recognizing the importance of retirement savings, Kay and her husband established an SEP IRA five years ago, accumulating approximately $210,000.
Kay [04:57]: "We started an SEP IRA... now we have about $210,000 in that."

Kay's 401(k)

While Kay doesn't have a current retirement plan through her nonprofit, she maintains two old 401(k) accounts totaling around $40,000. Kay [05:25]: "I have a couple of old 401ks from when I had other jobs and there's about $40,000 in there."

Mortgage and Home Ownership

Kay proudly shares their near mortgage-free status, having paid down their house significantly.
Kay [05:38]: "We have been paying down on it and so we only have about $4,000 left on our mortgage."
Jill Schlesinger [06:32]: "I remember when my father paid off my parents mortgage... you're going to stay in this house Even though it's 100 years old, right?"

The strategic mortgage reduction has provided them with financial flexibility, freeing up approximately $500 monthly once fully paid.

Emergency Fund

Maintaining financial security, Kay and her husband have an impressive emergency reserve fund of around $80,000.
Kay [07:11]: "We have about $80,000 in our emergency reserve fund."

This substantial safety net is particularly prudent given the husband's self-employed status, ensuring stability in uncertain times.

Education Savings for Children

Despite their strong financial foundations, Kay acknowledges the need for guidance on saving for their children's education.
Kay [07:11]: "We haven't done anything yet... should we start college funds or just help them out when the time comes?"

Jill recommends proactive measures to secure their children's educational futures.

Life Insurance and Estate Planning

Kay and her husband currently hold life insurance policies but recognize the necessity to increase coverage and establish essential estate planning documents.
Jill Schlesinger [11:32]: "Get term life insurance... you just have to get it done."
Kay [11:59]: "We have to do that. We have not done that."

Jill emphasizes the importance of wills, power of attorney, and healthcare proxies, advising Kay to seek professional assistance or utilize online resources to complete these critical documents.

Jill's Recommendations

Roth IRA Contribution

Jill suggests Kay initiate a Roth IRA to complement their existing SEP IRA, enhancing their retirement savings strategy.
Jill Schlesinger [09:27]: "Why don't we start a Roth IRA for you? To me, it's kind of a no brainer..."

529 Plan for Education Savings

To prepare for their children's education expenses, Jill advises exploring 529 plans, especially if their state offers tax deductions.
Jill Schlesinger [09:43]: "Look, Mark, do you agree with the Roth IRA before the 529 plan? Mark: Yeah, 100%."

Maximizing Retirement Contributions

Jill encourages both Kay and her husband to maximize their retirement contributions by utilizing Roth IRAs and considering additional brokerage accounts for non-retirement investments.
Jill Schlesinger [14:38]: "You would just open up a separate brokerage account at Vanguard and throw some index funds in there and go to sleep at night."

Life Insurance Adjustment

Jill underscores the necessity of updating life insurance policies to reflect current needs, suggesting term policies with durations aligned to their children’s growth.
Jill Schlesinger [11:44]: "Get term life insurance. You don't have to get it for that long... get like 15-year term policies and be done."

Conclusion: Key Takeaways

Kay's financial journey demonstrates the effectiveness of proactive planning and disciplined saving. By addressing retirement accounts, reducing mortgage debt, and establishing a robust emergency fund, Kay and her husband are well-positioned for future financial stability. Jill's expert advice further guides them to optimize their savings strategies, enhance life insurance coverage, and initiate education savings plans, ensuring a comprehensive approach to managing their financial future.

Notable Quotes:

• Kay [03:34]: "I'm trying to plan ahead for the future, but I'm trying to do so in an even more forward-thinking way."
• Jill Schlesinger [09:27]: "Why don't we start a Roth IRA for you? To me, it's kind of a no brainer..."
• Jill Schlesinger [11:32]: "Get term life insurance... you just have to get it done."
• Kay [13:39]: "If we really just went hard at saving and investing... our lives would look a lot different maybe 10 years down the road."

Final Thoughts

This episode of Jill on Money serves as an invaluable resource for listeners navigating similar financial landscapes. Kay's story, coupled with Jill's actionable advice, offers a blueprint for effective financial planning, emphasizing the importance of retirement savings, debt management, and preparing for future educational costs.

For more insights and personalized financial guidance, visit jillonmoney.com.