Reducing Retirement Savings for a House

Summary

Jill on Money with Jill Schlesinger
Episode: Reducing Retirement Savings for a House
Date: February 25, 2026

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Episode Overview

In this episode, host Jill Schlesinger, CFP®, addresses a common and emotionally charged dilemma: should a financially responsible couple reduce their retirement savings in order to purchase a more expensive home better suited to their family's current needs? Jill takes a listener call from David in New England, walking through his family’s comprehensive financial situation and helping him strategize for a major move, all while balancing present happiness and future security.

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Key Discussion Points & Insights

David’s Financial Snapshot (04:28–08:11)

• Ages & Family: David and his wife are both 41, with children ages 7 and 4. Both adults work full-time.
• Income: Combined income is about $270,000.
• Current Home:
  • Value: $440,000
  • Outstanding mortgage: $200,000 at 3.12%
• Retirement Assets:
  • Current 401(k)s: $340,000 (combined)
  • Rollover IRAs: $360,000 (combined)
  • Roth IRAs: $85,000 (combined)
• Education Savings:
  • 529 plans: $80,000 (combined)
  • Additional brokerage earmarked for education: $120,000 (combined)
• Emergency Savings:
  • High-yield savings: $140,000 (not currently earmarked)
• Other:
  • No other debts
  • No anticipated family financial obligations

The Big Financial Goal: Moving Closer to Town (08:17–09:53)

• Motivation: Seeking a less rural environment for greater community engagement and convenience as their children grow.
• Target Home Price: Up to $1 million ("Let's say a million." - Jill, 08:58)
• Down Payment Sources:
  • Proceeds from current house sale: ~$200,000
  • Upcoming inheritance: ~$200,000 (10:00)
  • Remaining high-yield savings for possible mortgage reduction

New Mortgage Projections & Cash Flow (09:53–12:31)

• Loan Estimate: $600,000 at 6.25% (30-year fixed)
  • Principal & interest: ~$3,700/month
  • Taxes & insurance estimate: ~$1,300/month (total assumed: $5,000/month for all-in payment)
• Current vs. Future Housing Cost:
  • Current: $1,700/month (all-in)
  • New: $5,000/month all-in (12:07)
• Ongoing Savings:
  • Continuation of 529 funding and max retirement contributions; about $1,000/mo surplus currently after savings

Jill’s Strategic Advice (12:31–16:29)

• Affordability Analysis:
  • With inheritance and home sale, move is feasible.
  • May need temporary reduction in retirement contributions but not extreme.
  • "I think you can do this. I don't know if you could have done it without the inheritance, to be honest with you." – Jill (12:31)
• Prioritization:
  • Suggests pulling back on 529 contributions first if needed, then retirement (but senses the couple is more committed to education savings).
  • Emphasizes importance of not sacrificing current quality of life for future savings.
• Emotional Considerations:
  • Validates David's concerns about increasing costs but reassures based on current savings and future earning prospects.
  • Encourages balancing present family happiness with long-term security.

Planning for 'Plan B' and Professional Guidance (16:29–18:23)

• Alternative Moves:
  • "If you're just like, oh, my God, I can't take this, this is too terrible...take some of the joint brokerage money, or you take some of the money from High Yield Savings and you use it to maybe pay down some of the loan and refi and drive your costs down." - Jill (14:48)
• Recommends periodic review:
  • Suggests David may benefit from having an advisor run more precise future-state scenarios if there’s still anxiety.
• Risk Management & Estate Planning:
  • Confirms they have life insurance and a living trust set up ("Yes" - David, 17:04 and 17:09)

Final Thoughts & Broader Themes (18:23–End)

• Real Estate Trends:
  • Acknowledges the high cost of moving up, especially with today's mortgage rates.
• Life Transitions:
  • Encourages listeners that it's normal to feel "locked in" by a great rate, but sometimes life changes (family, location) are worth it.
• Empathy & Empowerment:
  • Jill emphasizes that with solid planning and realistic expectations, it's possible—and sometimes worthwhile—to take a financial leap.

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Notable Quotes & Memorable Moments

• On financial readiness:

  "You've already saved a lot of money in retirement...I’m not touching that joint brokerage. I’m pretending it’s not yours. I’m pretending that’s part of the kid’s money."
  – Jill (12:31)

• On balancing now vs. future:

  "My main fear is depriving these years of childhood for my kids in order to save for the future. And, you know, you want to be saving for the future, but you also want to right now."
  – David (14:10)

• On emotional transitions:

  "The hardest part was, you know, just getting used to the fact that we weren't like flush every month. So you'll feel that way for a few years, but it won't be forever."
  – Jill (14:48)

• On back-up plans and flexibility:

  "Your little secret bailout option...drive your costs down...That’s going to happen sometime in the next five years or 10 years. You’ll have an opportunity to do that."
  – Jill (14:48)

• On facing change:

  "Maybe it shouldn't be so scary after all."
  – Jill (End)

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Important Timestamps for Key Segments

• 04:28 — David introduces his family's situation and goals
• 05:06–07:12 — Full asset & savings breakdown
• 08:17 — The desire and motivation for moving
• 09:55 — Introduction of inheritance as a financial factor
• 10:40–12:31 — New mortgage payment math & practical cash flow
• 12:31 — Jill’s actionable plan: possible savings reduction and priorities
• 14:10 — David shares emotional concerns
• 14:48–16:29 — Jill’s advice on emotional transition, plan B, and practical tips
• 17:04 & 17:09 — Confirmation of life insurance and estate planning
• 18:23 — Suggestions for professional financial planning input

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Summary Takeaway

Jill guides David and his wife through a thoughtful, numbers-based, and emotionally aware decision process. Her message balances pragmatism—creating a temporary reduction strategy in retirement savings—with an understanding that major life moves are about more than just numbers. She provides reassurance, concrete action steps, and validates both the couple’s cautiousness and aspirations. The episode is highly relatable for anyone weighing present family priorities against future savings goals, especially in today’s high-cost, high-rate real estate market.

Transcript

[A]

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[B]

Clock.

[A]

Okay, so 3pm Eastern time is the sign up for Jill on Money Live Again for the webinar. You can be live during that webinar. Ask Ed questions yourself. I just, Mark and I just kind of facilitate and 3 o' clock tomorrow, you must sign up. It's going to be great. Okay. Today we are talking to David who joins us from New England. Hello, David. What's going, how can we help you out?

[B]

Hey, doing pretty well. I am calling in because, you know, my, my wife and I have done I think a pretty admiral admirable job with our finances, saving for long term retirement, kids, education, all that. But we have a more immediate big financial goal and I'm hoping you can help me figure out how to get there with it.

[A]

Excellent. So how Old are you, David?

[B]

I'm 41.

[A]

And your wife?

[B]

She's 41 as well.

[A]

Okay. Kids, how old?

[B]

Seven and four.

[A]

Okay, great. And you guys both working full time?

[B]

Yes.

[A]

How much do you guys earn combined?

[B]

About 270,000.

[A]

Okay, great. And do you own your home?

[B]

We do.

[A]

Okay. How much is the house worth?

[B]

It's about 440.

[A]

Is there a mortgage that's outstanding?

[B]

Yes, we owe about $200,000 on it.

[A]

Okay. And what's the interest rate?

[B]

3.12%.

[A]

Okay, great. Are you guys both putting money into retirement plans?

[B]

Yes.

[A]

Are you trying to max out? I know you got kids, so it's often a little bit tough during these years, but are you maxing out?

[B]

We are, yeah. We've been maxing out for about the last five to 10 years.

[A]

Great. How much do you have in retirement plans right now?

[B]

Our 401ks with our current employers right now are about $340,000 combined.

[A]

And these are all traditional assets, right? Yes. Okay. What else do you have?

[B]

We each have a rollover IRA, so those combined are about 360,000.

[A]

Wow. Got a lot of money. Okay. And traditional. These are rollovers that are traditional, right?

[B]

Yeah.

[A]

Okay. Any Roth assets?

[B]

Yeah, and then we've started Roths in the last five years or so, so combined we're up to about $85,000 in Roth IRAs.

[A]

Okay, fantastic. And that's it for the retirement assets?

[B]

Yes.

[A]

Are either of you entitled to a pension?

[B]

No.

[A]

Okay, Non retirement assets. So let's start with the kids. Do you have 529 accounts?

[B]

We have 529s for them. About 80,000 combined.

[A]

Okay. And are you making contributions on an ongoing basis or is it sort of ad hoc?

[B]

We are. Yeah. We sort of contribute up to the limit that the state matches on.

[A]

Okay. Oh, that's great. You have a state match. That's amazing. What about non retirement assets for you guys, like a joint account?

[B]

Well, so the one other thing with the education is that we also have a couple of brokerages with education that we're sort of tabbing as education money right now. So those are like 120,000 combined.

[A]

But that is really for the kids. You don't consider it, like, it would not be supplemental for you or if you want to make a big change, you wouldn't want to tap that or you.

[B]

Yeah, yeah, we really don't want to tap that.

[A]

Okay, I gotcha. Okay. I got all that. What about saving, checking, boring stuff.

[B]

Yeah. Then we have money in a high yield savings account, that's about $140,000.

[A]

Is that earmarked for anything?

[B]

Not currently. I mean, we kind of keep it as our safety net as of right now. But that's not to say that we're not open to going through it, going

[A]

to Paris, having it.

[B]

Okay, well, maybe not that.

[A]

All right, maybe not that. Okay. Any other debt besides the mortgage?

[B]

No.

[A]

Okay. Any other assets that we have not accounted for?

[B]

Just going down the list here, but I think that's it. Yeah.

[A]

What about your families? Do you have parents who you might have to take care of?

[B]

Possibly, but I don't think financially we're planning for that, no.

[A]

Okay, fair enough. All right, so what's the big change? We got to figure out how to finance for you guys.

[B]

So the big change is we're looking to move. We live in a very rural area and we'd like to just move closer to town as our kids are entering school. We just like more community, easier access to neighbors and everything.

[A]

How much will that cost to find? If you said to me, I know because you've been there for a while, what is the amount of money you would have to spend on a home to make this work? Like, just give us the high end so we have that high end would

[B]

be, I would say, let's say 950.

[A]

Let's just say a million. All right, let's say.

[B]

Let's say a million.

[A]

Let's say a million. Okay, so let's say a million. So if you were to do this, you'd sell the house? We're not talking about renting your house. I know you're going to give up your beautiful 3% mortgage. We'll get over it. So let's say that you clear 200, you have to, you know, fees, blah, blah, blah. And you could put $200,000 down from the sale of your house. Right? Would you want. This is like, I'm gonna ask this as a question, not like it's a financial question, but emotionally. Would you wanna use some of the money that you have saved in that high Yield savings account to make it a somewhat smaller mortgage, or could you swallow the $800,000 mortgage?

[B]

I think we'd wanna put some of it down.

[A]

Okay. I mean, I know you have the brokerage account, even though you said it's for the kids, but, like, it is there. If you. Something hit the fan, you could keep your same jobs, Right? Like, there would be. Would you get new jobs because of this move?

[B]

No, we would keep the same jobs.

[A]

Okay.

[B]

So, Jill, I Forgot one important piece. It's not my accounting yet.

[A]

I hope it's a lot of money that we can use for this house.

[B]

It is actually. So we had a family member die recently, which was unfortunate. But we are expecting to receive a gift of about $200,000.

[A]

There's ding, ding, ding, ding, ding. Okay, I have my answer now. Okay, so now we have 200,000 from the proceeds. Sorry for your loss. Thanks for the money. 200,000 from inheritance. Did you like how I did that, Mark? Very. I'm such. I hope it's someone close. I'm so sorry, I was very glib. Okay, so it's $600,000 mortgage, right?

[B]

Right.

[A]

Mark, can you run a $600,000 mortgage at do 6.25% just for the he to use a 30 year fixed for you? David, I know you can get it cheaper. I know that you could drive it down. But let's look at like the where we are right now. Okay?

[B]

Okay.

[A]

Okay. $600,000. Six and a quarter percent. What is my principal and interest, Mark? 3,700. Okay. David, if you did move into town, would this mean higher taxes? I would presume also it would, yeah.

[B]

I'm not exactly sure how much though.

[A]

What do you pay in taxes?

[B]

Right now I don't have that off the top of my head. If I had to guess, it would be around 500amonth.

[A]

Okay, so if we said 1,000amonth, it wouldn't, it wouldn't be like, I mean, maybe it's too much, but fine. And then homeowners insurance would be more because it's a bigger home. Right. All right, so let's just pretend that we went from. What's your current payment? I know it's going to be very cheap, right?

[B]

Yeah. It's $1,700 a month.

[A]

All right, so five grand a month is what your new payment would be all in, let's call it. Okay, meaning principal, interest, taxes, homeowner insurance. Okay, five grand a month. Let's think about your cash flow right now. So right now you're maxing out retirement. You're putting money into the 529. Are you also adding money into the joint brokerage?

[B]

No.

[A]

Okay, so the only money that you are doing contributing is the 529 plan and your retirement accounts, Right?

[B]

Right.

[A]

Okay. Now when you do that, is there money left over every month, do you feel or not? Every single month. But is there generally, are you generally cash flow positive?

[B]

We generally are, yeah. I would say on average about $1,000. A month.

[A]

Okay. That's great. I mean, you can do this. I don't know if you could have done it without the inheritance, to be honest with you. It's a big jump for you. Here's the game plan that you could consider. Okay? You do this transaction, you're going to be able to afford five grand a month. The one thing you may have to do is maybe pull back a little bit on your retirement contributions. Not a lot, a little bit. Okay. And the reason I'm saying that is I think this would be temporary. I think that you're young, I think you can afford to do it. And you've already saved a lot of money in retirement. I mean, 6, 700, 800, about 800,000 in retirement. Again, I'm not touching that joint brokerage. I'm pretending it's not yours. I'm pretending that's part of the kid's money. And I think that that is something to consider. I would tell you to pull back on the 529, but I don't think you will. Am I right?

[B]

Right. Yeah, continue with that.

[A]

Okay, so I think you can do it. Are you anxious about it? Did you feel like you could do it?

[B]

I felt like I couldn't do it, but this definitely gives me something to think about and why.

[A]

Why not do it? You can do five.

[B]

I don't know. It's just such a jump over that. 1700, but.

[A]

Yeah, but that 1700 is just principal and interest. Is that also taxes and homeowners?

[B]

That's everything.

[A]

That's everything. Yeah. It's a big jump. But if you really want to do it, why would you? You're so young. Why would you, like. Yeah, I don't know. Why would you not.

[B]

Yeah, I hear you. I hear you. Because, I mean, my main fear is depriving these years of childhood for my kids in order to save for the future. And, you know, you want to be saving for the future, but you also want to right now.

[A]

Exactly. And it doesn't see. I mean, are you in careers? Are you and your wife both in careers where you think you'll be making more money eventually? Like, it doesn't have to be a huge amount? I mean, I'm not saying you're. Oh, I'm an associate at a law firm. I'll become a partner. But do you think that you'll be advancing, both of you a little bit?

[B]

Yeah, but I think that we've. We've. Or maybe 80% of the way there in our careers?

[A]

Well, that's all you need is another, you know, 10% or so to kind of make you. And listen, the actual living in the house, adjusting, the thing that's going to be different for you is just having that sense of, I'm fine every month and I have extra. You're going to feel it. We just talked to a woman who gave us a holler. She was in Colorado and she moved with her wife out to Colorado to be closer to family. They left New York and they kind of like gobbled into a big house and it was. It's a heavy duty mortgage. And she talked about how the transition period, about your age. I think she's right. Mark, isn't she about 40? You know, and it was hard, but she said the hardest part was, you know, just getting used to the fact that we weren't like flush every month. So you'll feel that way for a few years, but it won't be. It won't be forever. And yet you have to weigh that against the fact that you will be able to be in a place where you'll be happier. So I don't see why we would deprive you. Okay, what's your plan B? Okay, can I tell you what your plan B is? You know, if you're just like, oh, my God, I can't take this. This is too terrible. You get a chance to refi, you take some of the joint brokerage money, or you take some of the money from High Yield Savings and you use it to maybe pay down some of the loan and refi and drive your costs down. That's going to happen sometime in the next five years or 10 years. You'll have an opportunity to do that. And so that would be your little secret bailout option. And it's fine. And you do have a lot of money in retirement, so that's not anything I'm worried about. I'm really not. So I don't know. I think you can do it.

[B]

All right.

[A]

I'm not sure you are convinced yet. But again, ideally what I would tell you to do is pull back on your 529 first, then your retirement. But I got the sense when you were like, oh, no, the joint brokerage, that's there. So I think I get. You already have 200 grand saved for the kids and they're only seven and four. So I mean, I would actually prefer you to pull back on education first. But if that's not a possibility just because you guys really, really, really want to fund education, then you can pull back on retirement a Little bit. And then the last thing is I just want to make sure you guys have life insurance. Yes. You have some term life insurance.

[B]

Yes.

[A]

Okay, good. And how about estate documents?

[B]

Yeah, we're all set up with a living trust.

[A]

Are you guys managing your own money in terms of the rollovers that you have? Is that something you do or you have an advisor? Is that what you said you had an advisor?

[B]

We. We don't currently. We have kind of been on autopilot, but we've had, you know, those services in the. In the past when we've had big financial changes in our life. But we've just kind of been, you know, not a lot has changed, but it's probably. Probably time to start thinking about that again.

[A]

Yeah. Or even just to have somebody take a look and make sure that you're okay. Maybe if you don't think that this conversation convinces you, it might be worth it to talk to somebody who can really grind through the numbers and give you a better sense of what would happen if. And they'll look and say, well, you know, all right, let's pretend that you're not putting away all of this money. You're not putting $24,500 a year away into your retirement accounts. Let's say you're doing. Instead of that, you're doing 15 each. Okay. What would it do to your retirement planning? And they'll be able to run those numbers very easily, and maybe if you model it out for yourselves, you'll feel a little bit more comfortable doing it, and maybe that's worth having someone conduct that kind of analysis for you.

[B]

Sure. Yeah.

[A]

Right. All right.

[B]

Okay.

[A]

I'm excited for you to move closer to town. I mean, it's knowing where he lives, man. A million dollar house, knowing where he lives.

[B]

I like to see it.

[A]

I know. Well, you know what? It's just like real estate values are all crazy, basically. And so I could see that, you know, because, again, we know where David lives. But, like, I could see that probably this is one of those pandemic era huge bounces in the market where if he and his wife bought the house, you know, in 2018, it would be not a million dollars. It would be, you know, some, you know, $600,000 house. So so be it. You. You are where you are. So, David, we wish you the best of luck. Get in touch with us if you have any other questions. And we are back very, very. We're very grateful that you kind of put this out there to talk about it. Because, Mark, we hear from people all the time who are really trying to figure out whether they can do this move up. And you know, I get it. That great mortgage rate. It locks you into feeling like I should never leave. But, but you know, your lives are changing and if you can afford the mortgage rate, so be it. It's great. We'll, we'll let you, you know, try to explore this and, you know, maybe it shouldn't be so scary after all. So if you've got a question, get in touch with us. Go to jillonmoney.com, click the contact Us button, write us a note, and if you'd like to come on the air live, check the box. Mark will do everything else. Don't forget to sign up for the free weekly newsletter and check out our sister broadcast. It's called the Money Watch podcast. We drop those episodes on the weekend. You can subscribe to this end Money Watch on the Odyssey app or wherever you find your favorite podcast. Try to put your hands metaphorically or perhaps physically if you have permission to do so, on someone's back. I'm a big hugger. Mark knows that. Mark, you're not as big a hugger as I am, but I'm a big hugger. Change your work. Change your wealth. Change your life. Thank you for listening. We'll talk to you tomorrow. Need contract help for those workload peaks and backlog projects? You're not alone. Robert half found that 67% of companies surveyed said they will increase their use of contract talent. That's why their recruiters leverage their experience and use award winning AI to quickly find the skilled candidates you want. Learn about their specialized talent in finance, accounting, technology, marketing, legal and administrative support at Robert Half. They know talent. Visit roberthalf.com talenttoday Go behind the scenes of one of TV's most watched true crime series with the 48 Hours Postmortem podcast where correspondents and producers take you inside each case. Every Monday, listen to a new episode of 48 Hours and then join me, 48 Hours correspondent Ann Marie Green every Tuesday for a new episode of Postmortem. Follow and listen to 48 Hours on the free Odyssey app or wherever you get your podcasts.