Roth vs. Traditional

Summary

Jill on Money with Jill Schlesinger

Episode: Roth vs. Traditional
Date: May 1, 2026
Host: Jill Schlesinger (with Mark Talercio, Executive Producer)
Guest/Caller: K from California

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Episode Overview

In this episode, Jill takes a listener call from "K from California," who seeks clarity on whether to prioritize Roth or Traditional (pre-tax) retirement contributions, given her salary, expected pension, and evolving career. The discussion unpacks the nuances of the Roth vs. Traditional debate, demonstrating, through K's circumstances, that optimal retirement savings strategies are highly individualized. Jill and Mark provide actionable feedback and underscore the unique impact of a significant pension on long-term planning.

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Key Discussion Points & Insights

1. Setting the Stage: Listener's Situation

• K's Profile:

  • Age: 50
  • Single, no children, one dog
  • Lives in California (high state tax)
  • Earnings: ~$225k/year; possible future raises or new job could increase income further
  • Homeowner: House valued at ~$520k, mortgage balance $166k at 2.75% rate
  • Substantial state pension (potentially over $150k/year in retirement)
  • Retirement Accounts: Maxing out 403(b) (Traditional), contributing importantly to 457 (now Roth)
  • Savings: $70k high-yield savings, $16k brokerage
  • No Roth IRAs or previous employer retirement plans
  • Up-to-date estate documents

• K's Primary Question:
  She’s always heard about the benefits of Roth accounts but contributes to a pre-tax account to lower her AGI. She wants to know whether to keep doing this—especially with a pension and expected career growth.

  “I hear you all talk about Roth all the time… I'm still making contributions in my pre-tax account to help bring down my AGI.”
  (K from California, 04:07)

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2. Roth vs. Traditional: Custom Solutions, Not Absolutes

• Jill’s Principle:
  The 'right' answer is situational:

  “There are always different ways to get where you want to go… It does not matter in your case…”
  (Jill, 12:00, 11:12)

• Tax Bracket Considerations:
  K uses pre-tax contributions to stay in a favorable tax bracket, but future promotions could push her higher. State taxes are a concern in California, but K may someday move to Washington state (no state income tax), which would make pretax even more appealing upon retirement.

• The Pension Game-Changer:
  Jill emphasizes that a robust pension like K’s fundamentally changes retirement calculations.

  “That pension is totally the game changer. It is amazing... it's as if you have saved millions of dollars throughout your last 23 years working.”
  (Jill, 15:48, 17:32)

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3. Contribution Allocations: Roth, Traditional, or Taxable?

• Current Approach:

  • 403(b) maxed pre-tax, 457 contributions now shifted to Roth
  • Modest brokerage account started

• Mark on Flexibility:

  “There’s no wrong move... The pension changes everything.”
  (Mark, 11:27, 13:20)

• Jill's Guidance:

  • Stick with what’s comfortable—there’s no urgent need to optimize further unless K’s situation changes
  • If income rises, some extra could go into a brokerage/taxable account for liquidity
  • No compelling need to convert aggressively to Roth given projected pension and spending

• If Liquidity Needs Change:

  • K could reduce retirement plan contributions and build taxable savings
  • Not necessary unless specific goals arise (e.g., moving, buying another property)

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4. Inheritance and Legacy

• K has siblings and a parent (who is also financially secure); possible future consideration for nieces/nephews

• Mark's note:

  “If it's really important for, you know, nieces and nephews to get some sort of inheritance... the Roth is the best thing to inherit.”
  (Mark, 16:18)

• Jill (pragmatic response):

  “Big deal. Then let them pay the tax on it.”
  (Jill, 16:27)

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5. Notable Quotes & Memorable Moments

Jill & Mark’s “No Wrong Move” Philosophy

“It's one of those things where people say to me, oh, all Roth, all the time. Yes, except in some cases, and yours is a case where it just does not matter.”
(Jill, 15:57)

On the yet-unmatched pension

“This may be the best one we've had yet.”
(Mark, 08:21)

The value of the pension

“You have a pension that has a present value in the millions. It is, it's as if you have saved millions of dollars throughout your last 23 years working.”
(Jill, 17:32)

A moment of pension envy

Jill: “Mark, how's your pension looking? What's the expected income? Is it still zero a month?”
Mark: “No, I think it's like 168 a month, to be honest.”
(18:39–18:41)

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6. Actionable Takeaways

• Roth vs. Traditional is not one-size-fits-all—large pensions tip the scales and lessen the impact of tax deferral choices
• K has immense flexibility and should feel validated in prioritizing both her comfort and lifestyle now, instead of worrying about theoretical future tax scenarios
• If future circumstances change (income, job, real estate), revisit the plan, but no drastic shifts needed for now
• Consider brokerage account for extra liquidity, but not essential in this pension-rich scenario
• Keep estate planning documents current, which K has already done
• For listeners, “Roth all the time” is a common refrain, but personal situation—especially with significant guaranteed retirement income—demands a nuanced approach

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Timestamps for Key Segments

• K’s background, income, and housing: 04:04–07:41
• Pension details and implications: 08:14–10:46
• Spending and savings summary: 11:03–11:12
• Roth vs. Traditional analysis for K: 11:12–17:32
• Legacy and inheritance discussion: 16:18–16:39
• If/when to revisit the plan: 17:02–17:32
• Jill’s core Roth/Traditional message recap: 18:47–19:35
• Pension envy banter: 18:39–18:47

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Tone

Jill’s hallmark style shines through: direct, encouraging, and practical, with moments of warmth and levity.

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Summary Statement

This episode illustrates how personal context, particularly a significant pension, can override the standard Roth-vs-Traditional debate. Jill and Mark reassure K—and similar listeners—that in rare cases, “there’s no wrong move,” and that financial peace of mind matters as much as perfect optimization.

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For more episodes or to ask your own question, visit jillonmoney.com.

Transcript

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[Jill]

Welcome to the Jill on Money Show. It's Friday, May 1st and we are here trying to help you navigate your financial journey. Sometimes I've said that Mark and I are like ways for your financial life. You're in one place you want to get to the next place you want to know what are the different routes to get there. Let me talk to Jill and Mark. They're certified financial planners. They're not selling stuff except for their subscription service and maybe a book here and there. But we'll do that for you. We Will give you the different routes. Sometimes in your life you say, I don't care if it takes me longer to get there, I want the prettier route. Other times you're like, oh, no, I want to get there as quickly as possible. And it could be all highway, super highway. In fact, whatever's going on for you, Mark and I would love to lay out the options. There are always different ways to get where you want to go. Oh, by the way, you know what we don't talk about? What? What got you like where you were five years ago. It does not matter. You are where you are right now. We're getting you where you want to go next. No reason to go back and start, you know, saying, oh, I should have done this or should have done that. Doesn't matter. Wherever you are now is important and where you'd like to go. Our job is to help you figure out what's available and how you can get there. You like the sound of that? Go to our website, jillonmoney.com. click the Contact Us button. Write us a note if you'd like to come on the air live. Check the box. Mark will do everything else. And don't forget, while you're on the website, subscribe to our free weekly newsletter. It comes out today, Friday. It will also entitle you to our blog, which I usually pop out there. I don't know, like by Monday. Ish. Although, Mark, I don't know if I'm going to hold to that schedule. Maybe I'll do Tuesdays in the future. We'll see. And you could check out my book, the great Money, Reset Resources videos. Lots of stuff there. Right on the jillonmoney.com website. Today we are joined by K from California. So I feel like it should be like a K from California with a K. But no, it's just K from California. Hi, Kay, how are you?

[K from California (Caller)]

I'm good. How are you, Jill?

[Jill]

Good. What's happening?

[K from California (Caller)]

Well, I'm calling because I hear you all talk about Roth all the time and that everybody is all in on Roth and I am still making contributions in my pre tax account to help bring down my AGI. When I do taxes every year, I'm kind of on the cusp and that's brought me into that lower tax bracket. And I think that because I have a pension when I retire, I'm going to be in a lower tax bracket for a few years anyway than I am when I'm working. And so I want to make sure I understand what I should be doing now. But also as future promotions and salary increases I think will come my way, I will bump into a higher tax bracket. I can't, you know, we, we.

[Jill]

I mean, look, would it be so bad that you're going to. Come on now. All right, so K, tell us a little bit about yourself. First of all, how old are you? Kay?

[K from California (Caller)]

I'm 50.

[Sponsor/Ad Narrator]

Are you married?

[Jill]

Single? Partnered?

[K from California (Caller)]

Single.

[Jill]

Okay. Kids? No kids.

[K from California (Caller)]

No kids.

[Jill]

Pets?

[K from California (Caller)]

One very cute dog.

[Jill]

See, see how I was, I had the pause was of course she had a pet. I knew it. Okay, how much are you earning right now?

[K from California (Caller)]

About 225.

[Jill]

Okay. You live in a high tax state. So I know that that's part of the issue. When you live in a place like California or New York, it is very much that, like, oh boy, 225. I'm bumping into the 32% bracket. Maybe I'd like to pull that back. It'll save me some money. But as you said, you know, you have a long, you have hopefully a nice long work life ahead of you and, and you might even be making more money. So right now are you contributing the maximum into retirement plans?

[K from California (Caller)]

I'm contributing the regular max, but I'm not doing any catch up. But I do have a 403B that I'm maxing and then I'm putting some into a 457.

[Jill]

Oh, so wait, wait, wait. So okay, so you're putting 24,500 into which one? Into the 403B.

[K from California (Caller)]

403B which is traditional.

[Jill]

Okay. And what's with the 457? What are you putting in there?

[K from California (Caller)]

About 1150amonth. So.

[Jill]

Okay. And you are also going to be entitled to a pension. So that's amazing. But let's do the balances. What's, how much have you saved in the 403B?

[K from California (Caller)]

It's at 287 right now. But that, you know, it fluctuates. I'm pretty aggressive in there.

[Jill]

Okay.

[K from California (Caller)]

And the 457, 40,000 traditional and just 17,000 Roth. So I just started that in the last.

[Jill]

So you're a little nod towards the Roth just a little bit.

[K from California (Caller)]

So now it's all Roth, but originally it was, it was all pre tax and that was the option.

[Jill]

Okay, so 1150amonth is going into the Roth 457. The now new limit for 2026, 24,500. That's going into a traditional 403, right?

[K from California (Caller)]

Yes.

[Jill]

What about other retirement assets? Any Roth IRAs or old retirement plans floating Around?

[K from California (Caller)]

Nope, that's it.

[Jill]

Okay.

[K from California (Caller)]

Brokerage account, a small one that I recently started. About $16,000.

[Jill]

Okay. And cash money market CDs, high yield savings. What's the safe money look like?

[K from California (Caller)]

About $70,000 in high yield savings.

[Jill]

Fantastic.

[K from California (Caller)]

And.

[Jill]

And do you own or do you rent in California?

[K from California (Caller)]

I own.

[Jill]

What's the place worth?

[K from California (Caller)]

About 520.

[Jill]

Okay.

[K from California (Caller)]

Is there a mortgage that remains 166,000 at 2.75.

[Jill]

Oh, boy. Crying in your tears there, Mark, huh? Do you want to stick around there? I mean, I would love you to for that mortgage rate, but you know, if you want to move, that's up to you.

[K from California (Caller)]

Yeah, the mortgage rate is keeping me there more than anything else. It depends on future jobs and possible moves. And also potentially I grew up in Washington state and so that could be a post retirement.

[Jill]

Do you hear why I went? Do you know why I did that? Because I'll tell you why. Because there's no state income tax in Washington state.

[K from California (Caller)]

That's right.

[Mark]

And when you hear the details of this pension, which may be the best one we've had yet.

[Jill]

Oh, all right, hold on. Mark's read ahead. I did not.

[K from California (Caller)]

You.

[Jill]

Kay, tell us about your pension. So you will not be remaining single for long. I've been talking to people about maybe when they have a lot of money they should just help our other listeners. But in this case, having a lot of money and a good pension might get you hooked up very quickly. So tell us about the details of the pension.

[K from California (Caller)]

It's a very generous state pension. I've been in the system now 23 years. So at 55, the multiplier is two times years of service. So I'd be at about 56% of salary.

[Jill]

Okay.

[K from California (Caller)]

Depending on what that final salary is, you know, somewhere between 12 and 15,000. At 55amonth.

[Jill]

Wait a second.

[K from California (Caller)]

And it goes up every year that I continue working. The multiplier goes up and obviously my years of service.

[Jill]

But wait a second. What's the likelihood that you work beyond 55? Should we just peg 55 as the. What do you think?

[K from California (Caller)]

It depends on how much I like my job at the time. Okay, so 55 is my get out of out of work.

[Jill]

That's your get out of jail free card.

[K from California (Caller)]

Yes, but 57 or I certainly won't work past 60.

[Jill]

And so at 57 would be even more so. It would probably be what, 60% of the salary?

[K from California (Caller)]

Yeah, 64%. And at 70 it's 75%. You're not going at 60. At 60. It's 75.

[Jill]

You're not even doing that. Let's. Okay, so of your salary, and that's in five years, and what have the increases been when you kind of just be reasonable here. Right. So by the time you're 55, you're making 225. Now do you suspect you'll be at 250?

[K from California (Caller)]

Yes, but if I change jobs, which is a potential in the next couple of years, it could be closer to 300.

[Jill]

Oh, my God. You just can't stop making money. This is crazy.

[K from California (Caller)]

Well, this is why I haven't saved as much in retirement.

[Jill]

Well, why would you.

[K from California (Caller)]

Back burner and a high cost of living when I didn't make as much money?

[Jill]

Yeah, I'm with you, but this is incredible. So you're going to have 150 grand. Ish. Let's just say at 55 a year, pre tax, right?

[K from California (Caller)]

Correct.

[Jill]

Is there any residency requirement around that? Like, okay, so you go to move to Washington state, then you actually are going to keep more of that money because you'll pay federal tax on that, but not state. So that's very interesting. Okay. How much do you spend right now?

[K from California (Caller)]

Spend about all in, including vacations and charitable contributions, about 11amonth.

[Jill]

In your situation, the question is, what do you think about the Roth versus just pushing down the income? I'm going to just say, K, that it does not matter in your case, Mark will make some impassioned plea.

[Mark]

I was going to say, like you just said, in this situation, there's no wrong move.

[Jill]

There's no wrong move. You can keep doing what you're doing. There is a possibility, though, even if you change jobs. Okay. That, you know, just keep using whatever you're using. You don't have tons and tons and tons of money in these accounts right now, which is fine with me. It's fine. And in fact, because you are charitable also, there's, you know, some cool things that you could be doing down the line about getting money out of this via a qualified charitable distribution. But you're in incredible shape. And I think that the choice you made about, hey, you know, I'm gonna live my life, I have a good life. And you're in a place you like, that you are in wonderful. You're in a wonderful place to be able to stay where you are, move out of state if you wish. There's no reason. I mean, I joke about, oh, there's no state income tax. Like, I wouldn't. I wouldn't move to Washington state because of that. But that is an added benefit. And you're in. I don't think there's anything that you're doing that I could say is like, oh, that's weird because you have all this money. Do you have estate documents?

[K from California (Caller)]

I do. Because of California's. Because I don't have any beneficiaries to, you know, children or whatever, getting a house out of prebate. So I do have a trust, a will and trust me.

[Jill]

Okay. And you have siblings?

[K from California (Caller)]

I do.

[Jill]

You like them so far?

[K from California (Caller)]

I do, yeah.

[Jill]

Okay, good. Parents that are alive.

[K from California (Caller)]

One parent remaining and he's in a similar situation that I'm in with his retirement and other assets. So he's very self sufficient currently and financially stable.

[Jill]

That's wonderful. I think that you are in great shape. I don't even have any. I have no notes. No notes.

[Mark]

Is there, is there any reason? I mean, the only thing I'm thinking of is like. But I don't even know if it's necessary because of that pension. That pension changes everything. But I was thinking, why do the 457 maybe just use a brokerage account? I don't know.

[K from California (Caller)]

Well, that was my other question. Is there a reason to do Roth versus brokerage? I don't have a ton of just liquid money.

[Mark]

Although you're not going to really need it though, because that's going to cover everything.

[Jill]

I mean, that pension is going to get you there. You will eventually also have Social Security, which almost seems like silly at this point. Just going to be more and more money, right? If, I mean, you have plenty of money in your cash account. If you're, you know, if you want, now that you're doing all roth in the 457, it's fine. There's no match in either of these. Or, or is there? Right, no match. That's what I thought. Because a pension is all sort of like the contribution, you know. Listen, if you're like, you know what, instead of maxing out at 24,5, I'm going to put, you know, half as much in and put some in brokerage. Or if you start making a lot more money, okay, if all of a sudden you go 225, now you're going to get a new job, it's 300, you can keep doing the exact same thing. You don't have to put more money in the 457. Push some money into the brokerage account just so you have money that's already been taxed that you know, you could get your hands on, but you always have money to get to, you know, it's a funny thing that, you know, that pension is totally the game changer. Just, it is amazing. And so I think there's no good reason to upset your apple cart. Now, if you say to me, oh, you know what, when I'm 55, what I want to do is I want to keep this place here. Here's how I might change it. I want to keep my place here in California. I want to buy something up, you know, in Washington state or rent up there. And my expenses are going to be a little bit more, and I want to have a little bit of a bigger nest egg. Yeah, maybe. But I don't know, you seem to be in fantastic shape. I don't see. It's one of those things where people say to me, oh, all Roth, all the time. Yes, except in some cases, and yours is a case where it just does not matter. You know, I'm sure Ed Slott would listen to us and say, like, don't be crazy. Just tell her to pay the tax. We don't know what the tax rates are going to be in the future. She's going to have a high income because, you know, you're. Your tax bracket may or may not go down, depending on what happens with taxes. Right. So it is possible that in 20 years that we're talking and you say, well, you know, it was really a push because, you know, I get taxed, I'm mostly in the 24, 32% bracket, because maybe you'll be making 250 or more. And it is possible that once you're retired, you have your pension income and then you have Social Security. But I don't think it's going to be that big a difference. I mean, something really bad would have to happen in all these tax rates blowing up. But I don't think it's going to be someone like you who gets pinged on that. But I think you're great.

[Mark]

Unless you decide, you know, at some point in the near future that it's really important for, you know, nieces and nephews to get some sort of inheritance. Well, then the Roth is the best thing to inherit.

[Jill]

Yeah, big deal. Then let them pay the tax on it.

[K from California (Caller)]

Yeah, I mean, I've got. Yeah, they've. It'll be fine.

[Jill]

They're fine. We're fine, and they're fine. Don't worry.

[K from California (Caller)]

Grandpa's probably covering all of that, so, yeah, it'll be fine. The only thing is, if I do take another job, potentially move, obviously I would sell and then be in a different type of house. I don't think I would keep both. I don't have much interest in being a landlord, but so my costs would go up, but so would my income.

[Jill]

So, yeah, I, I, I, I personally think that when those kinds of decisions are coming up, then give us a holler if you're like, oh, you know, I'm going to move from one part of the state to another part of the state or out of state, whatever, like, then get back in touch with us. We, we, we got plenty of, of opinions about how great your life is going to be. Kay. All right, so I know, I feel silly.

[K from California (Caller)]

I just, the Roth thing, I'm like, should I just move it over? I just don't want the. But it's, I'll tell you, home pay right now.

[Jill]

You know, one of the things that I think is interesting is that when people say to me, like, how much money do I need for retirement? Like, this is a great example where you might be like, oh, there's a 50 year old and the 50 year old has $325,000 saved for retirement. No, this is a 50 year old who has 325, 350 grand saved and has a pension that has a present value in the millions. It is, it's as if you have saved millions of dollars throughout your last 23 years working. And that is what is turning on in that pension payment. So you've earned it. Don't kill yourself one way or the other. Any question that comes up when you're ready to, you know, we are. Oh, God. You know what? I really do want to buy a condo in Hawaii. I forgot to tell you that. Or something comes up, get back in touch with us. But for now, you cannot make a bad choice. And good luck to you and get in touch with us if we need to weigh in on anything else. Okay, Great. All right, Mark, how's your pension looking? What's the expected income? Is it still zero a month?

[Mark]

No, I think it's like 168amonth, to be honest.

[Jill]

Oh, wait, because you still have the old pension from cvs.

[Mark]

Yes. And then by the time I get it, that won't even buy me a cup of coffee.

[Jill]

Oh, you know, you might get like a beautiful glass of bourbon or scotch. Monthly. That's what it'll be. Monthly one. Hey, gang, if you need some just guidelines around Roth or not Roth. It isn't Roth. All Roth all the time. It is all Roth most of the time, but there are different cases as you can see with K. So if you've got a question about Roth, about Traditional, about retirement, about changes to your game plans, about buying and selling a house, or about how you're going to manage your adult children or your adult parents, all of these things are questions that we answer all the time. And we love doing it. Because Mark and I are both certified financial planners. Get in touch with us by going to jillonmoney.com click the contact Us button, write us a note, and if you'd like to come on the air, check the box. Mark will do everything else again. Don't forget to subscribe to the free weekly newsletter comes out on Fridays, which is today, and you can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Because it is Friday, we'd like to thank our wonderful composer, Joel Goodman. That's where our music comes from. Mark Talercio, the very best executive producer in the whole wide world and the king of all things web. And the lovely and fine folks at Odyssey who take care of the distribution of this podcast. Please, please do something nice for someone else today. Really, it's going to make that person feel better. It's going to make you feel better. Change your work, change your wealth, change your life. Thank you for listening. We're going to talk to you on Monday.

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