Podcast Summary: "Retiring in June, Maybe Not a Good Idea?"

Podcast Title: Jill on Money with Jill Schlesinger
Host/Author: Audacy
Episode Title: Retiring in June, Maybe Not a Good Idea?
Release Date: May 12, 2025

Introduction

In this episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger, CFP®, engages in a comprehensive discussion with Annie, a 65-year-old preparing to retire from her part-time state job. The conversation delves into Annie's financial situation, retirement plans, and the considerations she must address to ensure a secure and fulfilling retirement.

Listener Call: Annie's Retirement Plans

Annie's Current Situation
At [02:43], Annie introduces herself as a single individual nearing her 65th birthday, set to retire from a 22-year part-time state position. She shares excitement about retiring to enjoy more leisure time but also expresses concerns about ensuring her financial stability post-retirement.

Retirement Income Sources
Annie outlines her various income streams:

• Pension: Starting at $1,100/month ([03:20]).
• Deferred Compensation Plan: Holding $448,000 ([04:02]).
• 401A Plan: Associated with her state job, containing $103,000 ([04:09]).
• 401 Roth and 401K Pre-Tax Accounts: $47,000 and $82,000 respectively ([04:20]).
• IRA: An older account with $12,000 ([04:31]).
• I Bonds and Savings: $27,000 in I Bonds and $63,000 in a high-yield savings account.
• Certificates of Deposit (CDs): $210,000, laddered to mature over five years ([05:03]).
• Real Estate: Owns a home valued at $650,000, fully paid off ([05:19]).
• Business Income: Receives $4,400/month from her own business ([06:22]).

Health and Social Security Plans
Annie plans to switch to Medicare in June ([06:31]) and has scheduled to collect Social Security benefits from her late husband's account in January 2027, receiving approximately $2,100/month. She intends to switch to her own Social Security benefits at age 70, expecting about $3,000/month ([07:20]).

Spending and Budgeting
Annie estimates her monthly expenses to be:

• Fixed Expenses: $2,700
• Additional Spending and Support to Children: Up to $5,000 in total ([06:52])

Financial Analysis and Advice

Assessing Income vs. Expenses
Mark assesses Annie's financial standing, noting that her pension and Social Security benefits closely align with her estimated expenses, especially when combined with her business income ([07:40]).

Contingency Planning: The Role of Annuities
Annie expresses a desire to purchase annuities to secure an additional $1,700/month ([08:30]). Mark questions the necessity and benefits of annuities, emphasizing potential drawbacks such as reduced liquidity and loss of control over funds ([09:07]).

Alternative Strategies
Mark proposes alternative strategies to achieve Annie's financial goals without heavily relying on annuities:

• Utilizing Retirement Accounts: Suggests taking distributions from her 401A and 401K to generate the needed additional income.
• Laddered CD Maturations: Leveraging her existing CD ladder to provide funds over the next five years.
• Minimal Annuity Use: Recommends limiting annuity purchases to a fraction of her portfolio for peace of mind without compromising liquidity ([10:58]).

Investment Allocation and Inflation Protection
Annie has currently allocated her investments heavily towards bonds and savings, avoiding stocks to mitigate risk ([17:25]). Mark advises maintaining a portion of her portfolio in equities to hedge against inflation and ensure growth, even for risk-averse investors ([17:45]).

Estate Planning
Annie confirms that her estate documents are in order, ensuring that her assets are managed according to her wishes after her passing ([16:40]).

Key Takeaways

1. Balanced Income Streams: Ensuring multiple sources of income, such as pensions, Social Security, and business earnings, can provide financial stability in retirement.
2. Liquidity vs. Security: While annuities offer guaranteed income, they can restrict access to funds. It's crucial to balance secure income with maintaining liquidity for unforeseen expenses.
3. Investment Diversification: Even for risk-averse individuals, maintaining some equity exposure is essential to outpace inflation and preserve purchasing power over time.
4. Strategic Withdrawals: Thoughtful distribution strategies from retirement accounts can help meet income needs without prematurely depleting assets.
5. Professional Guidance: Consulting with a fee-only financial planner can provide personalized strategies tailored to individual retirement goals and circumstances.

Notable Quotes

• Annie on Retirement Excitement:
  "Yep. Figure it's time to have some more fun than just work." ([02:58])

• Mark on Financial Security:
  "You have some good. You got a good chunk of money. That's more than halfway there, let's say." ([07:58])

• Annie on Risk Aversion:
  "But it's just because I'm so risk averse and I would like to know." ([08:44])

• Mark on Investment Allocation:
  "Even if you are really, really risk averse, having 20 or 30% in stocks just to keep up with inflation is important." ([17:45])

• Annie's Financial Confidence:
  "Yeah, but I think I'm not so concerned about the next, you know, few years as I am when I'm 85 and 90." ([12:58])

Conclusion

Annie's case highlights the complexities of retirement planning, emphasizing the need for a diversified income strategy, cautious investment allocation, and contingency planning. Mark's guidance underscores the importance of balancing secure income sources with maintaining access to funds, ensuring that retirees can navigate both expected and unforeseen financial challenges with confidence.

For those contemplating retirement, this episode serves as a valuable blueprint for assessing personal financial situations and making informed decisions to secure a comfortable and stable retirement.