Retirement Soon, Are We Ready?

Summary

Summary of "Retirement Soon, Are We Ready?"

Podcast: Jill on Money with Jill Schlesinger
Host: Jill Schlesinger, CFP®
Guest Speakers: Bob and Kat from New York City
Release Date: May 28, 2025

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Introduction

In the May 28, 2025 episode of "Jill on Money with Jill Schlesinger," host Jill Schlesinger and co-host Mark engage with listeners' financial questions, focusing this episode on the theme "Retirement Soon, Are We Ready?" The episode features a call from Bob and Kat, a couple nearing retirement, seeking advice on their financial readiness and contemplating major life decisions.

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Listener Profile: Bob and Kat

[02:58] Bob: "Thank you for having me. Jill and Mark, I really appreciate you taking my call."

[03:04] Bob: "I'm closer to retirement now. I'm about a year and a half away. So I want to kind of let you know, show you what I have so far and let's see what you think."

Age and Employment:

• Bob is 51 years old, planning to retire in 1.5 years.
• Kat, his wife, is 48 years old and currently employed full-time, earning approximately $65,000 annually.

[03:25] Bob: "So, as I'm getting older, I'm seeing different things. I lost my mother last year at the end of last year and I'm just want to see, try to see how I can, I guess just enjoy life a little more, you know. That changed my mind a little about things a little bit."

Impact of Personal Events: Bob’s decision to retire early was influenced by the passing of his mother, prompting him to reassess his priorities and seek greater life enjoyment.

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Financial Overview

Pension and Income:

[04:35] Bob: "Yes, I do have a pension."

• Pension Amount: Estimated $9,500 to $10,000 per month starting in 1.5 years.
• Health Insurance: Included with the pension.

Retirement Savings:

[05:22] Bob: "So far we have about 1.7 in a Roth."

[05:44] Bob: "About 900,000. Among our 457 traditional IRA and 401K."

Additional Savings:

• Roth IRA: $1.7 million
• Traditional IRA and 401(k): $900,000
• 529 Plan: $125,000 for children’s education
• Taxable Brokerage Accounts: $600,000
• Cash Reserves: $50,000

[05:27] Jill: "Just in a Roth way to go."

Assets Against Expenses:

[07:52] Bob: "I estimate them around 8,000 a month."

Budgeting: The couple maintains a monthly expenditure of approximately $8,000, highlighting a frugal lifestyle that supports their financial readiness for retirement.

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Real Estate Considerations

Primary Residence:

[06:37] Bob: "No, that's pretty much it. New York City is expensive, so pretty much we can only deal with this right now."

Home Value and Mortgage:

[06:46] Jill: "How much is your primary worth?"

[06:49] Bob: "It's worth like in the mid-800, I think."

[06:53] Jill: "Do you have a mortgage that remains on this house?"

[06:56] Bob: "I actually do have a mortgage. I'm paying it off. By the time I retire it should be all paid off."

Ownership Strategy: Bob plans to maintain ownership of their New York City residence until their youngest child completes high school, ensuring stability for his family.

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Tax Considerations and Relocation

Contemplating Relocation:

[08:28] Bob: "So there's another reason why I'm also trying to get more advice from you guys. I'm thinking about possibly relocating to... Texas or maybe even a Florida."

[09:08] Jill: "If you did not have any tax, let's say all things being equal, tax rates were the same every single state in the Union. Where would you live?"

[10:50] Bob: "I actually was just thinking of the mindset of like a snowbird, maybe I keep, like, we still have the place here and maybe considering either renting or maybe purchasing a new home in another state like Texas and Florida, and then maybe go back and forth and travel and stuff."

[11:13] Jill: "Exactly. So not. So doing that, you'd have to spend more than six months in that place and you have the expense of carrying the second place, which is going to more than eat up any savings you'll have in taxes."

Advice on Relocation: Jill advises against relocating solely for tax benefits due to the high costs associated with maintaining a second residence. She emphasizes the importance of living where one is happiest rather than being driven by tax considerations, especially given Bob and Kat's strong financial position.

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Estate Planning and Life Insurance

Estate Planning Status:

[12:20] Bob: "Yeah, more or less. Just need to update it."

Life Insurance:

[12:26] Bob: "I do have. We do have two term life. One should end by the time I leave my job... I have a second one that's going to be until, like myself, I'll be like 71 years old."

[12:55] Jill: "Do you have life insurance that's floating around, anything like that?"

Considerations:

• Term Life Insurance: Two policies; one expiring upon retirement, another lasting until age 71.
• Survivor Benefits: Bob has considered whether to opt for a joint and survivor pension benefit, which would reduce his monthly pension but ensure Kat receives payments if he passes away.

[13:32] Jill: "Why don't you find out what the haircut would be to take a joint and survivor because if it's not too much, it might be worth it for you just because you guys are so young and she's so young."

[13:44] Bob: "So the number to that, I believe it should be around 7,500. If I decide to take the joint."

Mark's Input:

[13:50] Mark: "I would certainly... give it real consideration."

Conclusion on Insurance: Jill and Mark suggest that opting for survivor benefits could be beneficial for Bob and Kat, considering their youth and the security it would provide to Kat in the event of Bob's untimely passing.

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Final Recommendations

Holistic Financial Health:

Jill emphasizes the importance of comprehensive financial planning beyond immediate retirement readiness. She advises Bob to:

1. Evaluate Survivor Pension Options: Determine the feasibility and benefits of a joint and survivor pension to secure Kat's financial future.
2. Assess Life Insurance Needs: Review the costs and benefits of maintaining life insurance policies, especially in light of their substantial retirement savings.
3. Avoid Relocating for Taxes Alone: Focus on personal and family happiness rather than tax incentives when considering relocation.

[15:31] Jill: "Because the one term life insurance expires... but you're so young, Bob, that the one term life insurance expires."

[15:30] Bob: "Okay."

Jill advises Bob and Kat to prioritize their quality of life and personal preferences over purely financial incentives, given their robust financial situation.

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Conclusion

The episode "Retirement Soon, Are We Ready?" offers a comprehensive look into early retirement planning through the lens of Bob and Kat's financial journey. Jill and Mark provide tailored advice, emphasizing the importance of survivor benefits, careful assessment of life insurance needs, and ensuring that life decisions, such as relocation, align with personal happiness rather than solely financial gains. The discussion underscores the value of holistic financial planning in achieving a secure and fulfilling retirement.

Notable Quotes:

• Jill Schlesinger [05:27]: "Just in a Roth way to go."
• Bob [09:23]: "Well, you. You and Mark will understand is the tax rate. Everything is very high."
• Jill Schlesinger [13:32]: "Why don't you find out what the haircut would be to take a joint and survivor because if it's not too much, it might be worth it for you..."

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Additional Resources

For listeners seeking personalized financial advice or wishing to join the conversation, Jill encourages reaching out via jillonmoney.com, where they can submit questions or participate in live discussions. The website also offers a wealth of resources, including blogs, podcasts, and video content to support various stages of the financial journey.

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This summary aims to encapsulate the key discussions and advice provided in the episode, offering valuable insights for anyone contemplating retirement decisions.

Transcript

[Jill Schlesinger]

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[Mark]

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[Jill Schlesinger]

It's Wednesday, May 28th and we are here answering your financial questions. Now these can be wide ranging. You know, you hear a lot of people come on and they talk about retirement. But I'm also happy to have you come on and talk about something earlier in your financial journey. Maybe you're trying to buy your first home. Maybe you're trying to determine whether renting is actually a better idea for you than buying. Maybe you're thinking about changing careers. Maybe you are looking at two different job offers. Whatever is going on that you think could use an extra set of ears and eyes on the situation. What? Well, Mark and I are here for you. We're both certified financial planners and we love talking to you. So if you have a question, go to jillonmoney.com, click the contact us button and write us a note. That's the email we get. Now if you'd like to join us live, just check the box. Mark will do everything else. Now you might as well go ahead and just bookmark jillonmoney.com because there you will see we've got content that is refreshed all the time. Blogs, other shows, we've got a radio show, we've got another podcast. There are videos, there are links to books, all that good stuff right on the front door. Of our website, so you might want to check it out and of course, keep that bookmarked. Today we are joined by Bob and Kat. They are from New York and we just want to thank you. We're not even going to say what part of New York because the part of New York that you say you're from feels like very knowable to those in the know. So I'm not even going to say. I'm just going to say you're from New York City. So welcome to the program, you two. Thanks for joining us.

[Bob]

Thank you for having me. Jill and Mark, I really appreciate you taking my call.

[Jill Schlesinger]

So what's going on?

[Bob]

Not much. So I'm closer to in retirement now. I'm like about a year and a half away. So I want to kind of let you know, show you what I have so far and let's see what you think.

[Jill Schlesinger]

Okay. How old are you?

[Bob]

I'm 51 years old.

[Jill Schlesinger]

What do you mean you're one and a half years away?

[Bob]

Yeah.

[Jill Schlesinger]

So young.

[Bob]

It's been, it's been a long time coming. I'm looking forward to this, you know. So as I'm getting older, I'm seeing different things. I lost my mother last year at the end of last year and I'm just want to see, try to see how I can, I guess just enjoy life a little more, you know. That changed my mind a little about things a little bit.

[Jill Schlesinger]

Sure. I understand. A lot of those milestones occur and it makes you rethink what you're doing. Absolutely. So, Bob, you are 51. How old are you? Kat? Is Kat speaking or are you speaking for Kat?

[Bob]

I'm speaking for her. She's at work, unfortunately.

[Jill Schlesinger]

Okay, and how old is she?

[Bob]

She's 48.

[Jill Schlesinger]

Is she working full time?

[Bob]

She is.

[Jill Schlesinger]

Will she also retire in a year and a half?

[Bob]

So at the moment, because my youngest one is still in high school, we're thinking at least she'll stay working until she goes into college.

[Jill Schlesinger]

Okay, got it. And so how much does Kat earn right now?

[Bob]

She makes around 65k a year.

[Jill Schlesinger]

I presume just because of your age and the way that you've like, I'm psyched and ready that you are entitled to a pension. Is that correct?

[Bob]

Yes, I do have a pension.

[Jill Schlesinger]

So tell me about the pension. Will that be so in a year and a half, will you be able to get that pension?

[Bob]

That's correct.

[Jill Schlesinger]

And how much will that be?

[Bob]

I estimate around 9,500 to $10,000 a month.

[Jill Schlesinger]

Does that include that 9,500 to 10,000. Will you also be covered with health insurance?

[Bob]

Yes, I will have my health insurance, yes.

[Jill Schlesinger]

Okay, so that 9,500 to 10,000amonth, is that net of the health insurance or should I make sure that we're adding that in? When it comes to your expenses, that will be net. Okay, so, all right, so you've got that income. You will have your wife's income for another few years. In addition to the pension, Bob, what else have you guys saved?

[Bob]

So so far we have about 1.7 in a Roth.

[Jill Schlesinger]

Just in a Roth way to go. Mark's laughing. Do you hear him snickering in the background? I knew that. That's. I, I'm just laughing right now. Okay, so 1.7 million in a Roth. Mark is chuckling because he's like, he, look at this guy, he's making he so much money saved. What else do you have, Bob?

[Bob]

About 900,000. Among our 457 traditional IRA and 401K.

[Jill Schlesinger]

What else do you have? Is that it for the retirement accounts?

[Bob]

That's also. I have about 125 and a 529 plan. That's not retirement though.

[Jill Schlesinger]

How many kids do you have?

[Bob]

We have three. 18, 16 and a 15.

[Jill Schlesinger]

Is there any other money that you have saved in addition to that 529? Because even if you go to a really good public school, you're going to go. You can't pay for three educations with 125,000. So what other money have you saved?

[Bob]

Right now we have about 600 in taxable brokerage and maybe about 50,000 in cash.

[Jill Schlesinger]

And do you have any other properties besides your primary residence?

[Bob]

No, that's pretty much it. New York City is expensive, so pretty much we can only deal with this right now.

[Jill Schlesinger]

How much is your primary worth?

[Bob]

It's worth like in the mid-800, I think.

[Jill Schlesinger]

Do you have a mortgage that remains on this house?

[Bob]

I actually do have a mortgage. I'm paying it off. By the time I retire it should be all paid off.

[Jill Schlesinger]

Oh my gosh. Okay, so I'm not even going to include that. And you want to stay in this place because you have kids, so you're going to stay there.

[Bob]

Yeah, yeah. For the time being, I was just.

[Jill Schlesinger]

Going to say so certainly until the 15 year old is through and you know what's happening next, right?

[Bob]

Yes, that's, that's kind of plan.

[Jill Schlesinger]

So Bob, how much money were you making? You have a big pension amount, but how much. What's your salary right now for the Next year and a half, I would.

[Bob]

Estimate around two and a quarter to 25 a year.

[Jill Schlesinger]

Okay. Your wife, as you said, makes 65,000. And when you gave me the numbers, the Roth and the Traditional and all the retirement accounts, that was including hers as well, right?

[Bob]

I bundle it together.

[Jill Schlesinger]

Okay. What do you. It's so hard for me to ask this question because you have three kids that you're still supporting, but what do you estimate your spending to be on a monthly basis?

[Bob]

I estimate them around 8,000amonth.

[Jill Schlesinger]

That's it?

[Bob]

Yeah. Yeah, We. We are pretty frugal, I guess.

[Jill Schlesinger]

I guess so. Okay. So obviously, if. If you're going to have. Let's just even bring it down. Like, if you're going to have a pension of 9,500 and your wife's going to keep working. 9,500amonth, your wife's going to keep working, making this 65. And your expenses are only $8,000 a month, you're fine. So that really is amazing.

[Bob]

Okay.

[Jill Schlesinger]

So you know that, right? Like, you feel like that's all good. Right?

[Bob]

So there's another reason why I'm also trying to get more advice from you guys. I'm thinking about possibly relocating to.

[Jill Schlesinger]

We don't want you to leave. We want you to stay in New York. You're not allowed. You're not allowed to leave.

[Bob]

Well, you. You and Mar will understand is the tax rate. Everything is very high. And I'm concerned about the 900,000 of, I guess for the. For the traditional before tax money, what I'm going to do with it. So this is why I'm considering something like a Texas or maybe even a Florida. This guy, he wants to. He's willing to move.

[Jill Schlesinger]

I mean, can I ask you a dumb question? You ready?

[Bob]

Sure.

[Jill Schlesinger]

If you did not have any tax, let's say all things being equal, tax rates were the same every single state in the Union. Where would you live?

[Bob]

I guess because I have more family here, I was considered staying.

[Jill Schlesinger]

All right, let me just say this. I don't think that. I never give advice to move to a different state to save on taxes to someone who has plenty of money, which you have plenty of money. Okay? So if you choose to do that and you choose to move for tax purposes, that is not something I ever even contemplate. You're in this amazing situation where you can live anywhere and you'll be very happy and you can take your money out. And if you feel like, oh, my God, this is terrible, I'm paying too much in taxes. It drives me crazy every single year. Then go ahead, move to Texas or Florida or move to New Hampshire or move to Washington state. Move to one of those places where there's no state income tax. It will be a better financial decision. It is, as my mother would say to you, a very long way from Midtown, which makes the decision a difficult one. So, I mean, listen, if you are telling me I hate my job so much, I can't stand being in the cold climate and all I want to do is move away and all of my family lives in Florida, then that's something different.

[Bob]

Right.

[Jill Schlesinger]

But you have plenty of money to be able to do whatever you want. So from my perspective, the beauty of having that money is not having to make a decision about where to live based on taxes. Have you ever lived anywhere else but New York?

[Bob]

No.

[Jill Schlesinger]

Okay. So this would be quite a move. So if you are really considering this.

[Bob]

I actually was just thinking of the mindset of like a snowbird, maybe I keep, like, we still have the place here and maybe considering either renting or maybe purchasing a new home in another state like Texas and Florida, and then maybe go back and forth and travel and stuff.

[Jill Schlesinger]

Okay, well, you have to be there for six. You have to be there. Carrying another residence is going to offset.

[Bob]

Anything you save in tax.

[Jill Schlesinger]

Exactly. So not. So doing that, you'd have to spend more than six months in that place and you have the expense of carrying the second place, which is going to more than eat up any savings you'll have in taxes.

[Bob]

Got it.

[Jill Schlesinger]

Right. Now again, you want to go rent there. You want to go see what it's like, Go live the, you know, oh, let me go see. Let's just say it's a couple of years from now and you're like, you know what, let's go rent a place in Florida for three months. Just see what it's like. Do not make any big decisions based. You don't need to make the decision to move to a different state to avoid taxes because you're in such good shape already. You are in such good shape, you don't have to be consumed with how to make. Maximize your tax situation. You should live where you want to live. And if that, if you want to move to Florida, you want to move to Texas, Great. But if you really want to stay in New York, you can absolutely afford to stay in New York.

[Bob]

Okay.

[Jill Schlesinger]

All right.

[Bob]

I'm sure I'll be. My wife will love to hear all this.

[Jill Schlesinger]

Yes, I'm on the wife's side this time. Do you have all of your estate planning done, Bob?

[Bob]

Yeah, more or less. Just need to update it.

[Jill Schlesinger]

Do you have life insurance that's floating around, anything like that?

[Bob]

I do have. We do have two term life. One should end by the time I leave my job. So that will. That. That covers both of us. That will end. So that's actually the other question. Do you think I should consider transitioning over from that term life to something else? But then I tell you, I do have a second one that's going to be until, like myself, I'll be like 71 years old.

[Jill Schlesinger]

No, you don't need anything else. No, just let those. Yeah, you got plenty of money now and you have your income now in your pension option. In this 9,500 or 10 grand a month that you're going to be receiving if you were to drop dead tomorrow, does your wife get some fraction of that or is that a joint and full survivor benefit?

[Bob]

So, no, that's the. I guess that's to maximize it so she doesn't get anything unless I take up less option. And I haven't thought about the other option. I was just thinking either through insurance or through whatever financial saving we have that should cover for her.

[Jill Schlesinger]

Why don't you find out what the. But you should find out what the haircut would be to take a joint and survivor because if it's not too much, it might be worth it for you just because you guys are so young and she's so young.

[Bob]

So the number to that, I believe it should be around 7,500. If I decide to take the joint.

[Jill Schlesinger]

Survive option, I might be interested in that. I might. I really might be. Mark, what do you think? Like, if it's 75 or 8 grand instead of 9,500 or 10 grand, I think it might actually make sense just because they're so young. What do you think? Yeah, I would certainly. I mean, if that's 100% survivorship, I would certainly give it real consideration. So why don't you do this? Why don't you find out what the actual numbers are and then get back in touch with us. Just shoot us an email and we can help you out with that. Okay. Because I think that might. It's certainly something to consider. So everyone listening to this, if you have a pension option, one of the things that's important is like, what would happen the day after if I dropped dead? Because what happens to the money? And so if you don't choose a survivor option, then the money just goes away. And it means that as Bob Said, you know, you'd have life insurance to cover you. But again, you're so young, Bob, that the one term life insurance expires. What's the other term life insurance amount that stays in place for another 20 years? Do you know what that amount is?

[Bob]

That should be about a million dollars each.

[Jill Schlesinger]

Do me a favor, go find out what the numbers are and let us know because the hair, I mean the million dollars is great. We should find out like what is the cost of the life insurance. So I need to know the cost of the life insurance on you, not on her, but on you is the most important thing. And what that, what the different pension options are. And we can do a quick, at least a back of the envelope calculation to say, you know, maybe it's worth considering taking the smaller pension amount and then you never have to worry about the life insurance coverage. Okay.

[Bob]

Okay.

[Jill Schlesinger]

All right. So check that out. Get back to us and and wish you the best of luck. Enjoy your time traveling. Go check out Florida, Texas. If you are considering whether or not you should move away to save taxes, I'm usually going to say no, but maybe, maybe for you it makes sense. Get in touch with us. Go to jillonmoney.com, click the contact us button. Write us a note. Let us know if you want to come on the air by checking the box. Mark will do everything else. Hey, don't forget to sign up for the free weekly newsletter which comes out every single Friday. You can subscribe to us on the Odyssey app or wherever you find your favorite podcasts. Please leave us a rating and review wherever you listen. And of course, do something nice for someone else today. Change your work, change your wealth, change your life. Thanks for listening. We'll talk to you tomorrow.

[Kat]

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[Jill Schlesinger]

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