Linda from Atlanta (3:21)

Hi Jill and Mark. I am so glad that you guys had me on. I sent you an email and I labeled the subject line, is it too late to take our retirement savings out of the coffee can that we buried in the backyard?

Mark (3:37)

Tell us more.

Linda from Atlanta (3:39)

My fears are showing through. So we've been married for 42 years. We have three adult kids, and we're very frugal savers. But we lost a lot of money in some aggressive retirement funds and in college 529s a few years back during that 2008 market crash. We didn't listen to the advisor who said, hang tight. And so fast forward to today. We've been saving, saving, saving, but our money isn't really growing. It's been sitting in very conservative accounts. So we're just not really sure where we're headed with this and if we're ready for retirement. And my husband is getting ready to retire. He's turning 70. He absolutely adores his tech career and does not want to retire. So what he's thinking is he might do a little bit of consulting on the side to stay mentally and socially in the field. And I'm 61 and I do not work. I unofficially retired back in 2013 to stay at home with one special needs child. And I never returned to the workplace after that. So we've just been saving, saving, saving, and I've kind of been the CEO at home. But now we're realizing this is what we've been working for and it's here and we want to make sure that we spend it wisely into the future so that there's enough there.

Mark (5:13)

A couple of questions for you. You've got money, you say it's conservative. The question I have is how much money have you saved? Let's start with in a retirement. Let's start with the orig retirement accounts. Let's just kind of go through what you have accumulated. So in retirement accounts, what do you guys have?

Linda from Atlanta (5:34)

About 1.2 million.

Mark (5:36)

When you say conservative, are we talking cash?

Linda from Atlanta (5:41)

Some of it is sitting in cash, some of it is in target funds, but I would say the majority of it sits in cash because we're terrified of losing what we earn.

Mark (5:54)

Okay, so non retirement accounts. Let's go with that.

Linda from Atlanta (5:58)

In non retirement accounts, we have 270,000 in what we call a growth savings account.

Mark (6:06)

Okay, you guys own a home?

Linda from Atlanta (6:10)

We do. We actually own two homes. So we have what we call our city home and it is valued at around 850,000 and it's completely paid off and we're hoping to downsize soon to something much smaller.

Mark (6:27)

And what's the other home? Is it a vacation home or is that where you will downsize to?

Linda from Atlanta (6:32)

We call it our, our country home. It is 120 acre farm located about two, two and a half hours from our city home. And we actually spend half of our time there now. So my husband's job is so great that he. It's kind of a hybrid approach since, you know, Covid came about. So we spend part of the time in the city and part of the time out in the country. It is, I don't want to call it a working farm. We work it, but we have some horses on it and we do a lot of specialty produce. So I have a tiny little farm stand and we just, we play with it. It's just our way of getting away from the rat race. But we still have a mortgage balance on it. It's 155,000 left on it. The value of all the property, probably about 500,000. And we're not sure what we want.

Jill (7:28)

To do with it.

Linda from Atlanta (7:29)

We love it out there. It's our serenity. But our kids want nothing to do with it. And I'm not too far from, you know, the lively stuff, so. But I'm not sure if that's really where we want to spend the final years because it is pretty remote, right?

Mark (7:47)

You're like, oh, I need to be actually close to a medical facility, which would be good as we get older. Right now, if we look at your husband's income. What does he earn currently?

Linda from Atlanta (7:58)

So right now, and it fluctuates because he's got a lot of management incentives and bonuses. So for this year he's at 280,000. Last year was 211,000. And all of that depends upon. He's not commission or anything like that, but it's goals that they've set up.

Mark (8:19)

If you look at that 280 or let's go the year before the 200. Do you know how much you need to spend paying your bills, living your life, not like skinny, but like, you.

Jill (8:31)

Know, kind of like your real life.

Mark (8:33)

What do you think you need to live on?

Linda from Atlanta (8:35)

I know exactly what we need to live on because he's proclaiming the CEO of the house. So we spend about 6,800amonth between the two homes.

Mark (8:47)

So if you look at his Social Security benefit at age 70, what would that be?

Linda from Atlanta (8:55)

So for Social Security benefit, we're looking at $4,800 a month.

Mark (9:01)

Wow. That's the two of you, right?

Linda from Atlanta (9:03)

That's him.

Mark (9:05)

That's just him. And what would your benefit be?

Linda from Atlanta (9:08)

My benefit off of his. I'm sorry, I'm sorry. That's his pension. I'm so sorry.

Mark (9:12)

Wait, he has a pension? That's his pension?

Linda from Atlanta (9:15)

Yes, he has a pension. That's. If he were to take without a 50% joint survivor annuity, what's the joint and survivor amount? 2416amonth.

Mark (9:27)

And it's just those two choices. Is there anything. So sometimes they have a joint. They have different gradations of what the survivor might need.

Linda from Atlanta (9:36)

I don't have the numbers on it, but I do know that there's a 75% and 100%. We just haven't gone that deep yet.

Mark (9:43)

Okay, and what about. So that's the pension. Now tell me what this. His Social Security at age 70 would be 4,166. I mean, even if you just did joint survivor plus his Social Security and whatever you get on, you know that you tally along. You guys are in great shape. You're in great shape because you have income. And in fact, even though I wished that you didn't go super duper conservative, it probably gave you peace of mind. You're in great shape. You're in great shape. There's nothing bad that is going to happen here. Okay? There is nothing bad that's going to happen. However, I think especially if he's going to keep working, even if he. I mean, I don't know if he's going to work part time for a Few more years, let's say that, you know, yeah, you do start collecting Social Security because there's no reason to wait once you reach 70. When you think about consulting, do you have an idea about what he thinks he's going to bring in? Like 50 grand. Is that reasonable?

Linda from Atlanta (10:42)

We haven't really talked about it yet. I know he's confident in it, but we haven't really sat down with, you know, pencil to paper yet on that piece.

Mark (10:51)

I guess it's also interesting for me to think about like the downsizing thing. You enjoy the country home now. There's no reason. And don't accelerate the pay down of the debt on that. Just keep that. It sounds to me like at some point that might be a little bit too much for you guys, but it's not yet. I don't even know. I'm not sure why you need to downsize. If you like your house, is it just too big for you guys?

Linda from Atlanta (11:16)

It's huge. We've got like three floors. We've actually got one adult child living in a community complete basement apartment with full kitchen. He's just getting ready to move out. But it's just, it's a big house.

Mark (11:29)

If you were going to downsize right now, Linda, do you think that you could find something? Give me, give me what you think you'd have to spend and we don't want you to get a mortgage. Obviously you pay cash for this, but what do you think you'd have to spend in just an easier place?

Linda from Atlanta (11:45)

Probably, I mean, for something half the size of what we have right now, probably 40, 400,000.

Mark (11:51)

Let's even say 500. Let's just say 500. Okay, you'll have this money then the proceeds from that. What I would do is I would think about, you know, just keeping that. I would, you know, let's say that you have 270 right now in that growth savings, you know, so let's say you put, you know, the balance you can put money in. You could do laddered CDs. You could buy, you know, longer term CDs. You could look out at building just, even just a government bond. You could buy some U.S. government bonds. If you want super safe stuff. You can buy some 10 years. You can just make it really easy. Really, really easy and simple and low risk. Because you don't like risk.

Jill (12:34)

I don't think you're going to have a problem.

Mark (12:36)

I just don't think you're. There is nothing to worry about here in making your pension choice. I'm going to Lean towards. If you are conservative and you are nine years, eight or nine years younger than your husband, I would have a joint survivor option and use that because between Social Security, even at the reduced amount for the pension, you're going to be fine. You're going to be fine, absolutely fine. And I don't think there's anything for you to really worry about here.

Jill (13:03)

I mean one, one last piece of.

Mark (13:06)

This is you have that you said you have a special needs child. Is there, have you guys done estate planning where there is some special needs trust that's been created?

Linda from Atlanta (13:15)

Yes, we, we did all of that and we've got our directives, our wills. The special needs trust was set up. So all of that shell is sitting there waiting to happen.

Mark (13:25)

Okay, perfect. If he really just wants to keep work, even just to have his like hand in it a little bit and it's, even if it's even a smaller amount, even if it's not 50 grand, he let's just pretend he's like, you know what, I'll do a couple of projects because I have friends who are in the business, whatever that is, let him do it. It's not going to be huge, but it's nice because it'll just keep contributing to your income. Look, the only thing that's going to happen, you are going to be forced to pull money out of that retirement, out of those retirement accounts, right?

Jill (13:56)

So what?

Mark (13:56)

So pay the tax that's due. Pay the tax that's due. Don't worry about anything else. If down the line you decide to sell the country home so you'll have even more money, but don't you, there's no many people who call in this situation what I'm yelling at them to do. Because if you didn't have a pension, here's what you would, you would have to do. You'd have to downsize the city home and sell the country home and have money available. But the pension saves your butts and amazing. So your conservative nature has not harmed your long term retirement plan. It has not at all. So you are in fine, I would even say really good shape.

Linda from Atlanta (14:35)

Oh, that makes me feel so good.

Jill (14:37)

If you need some assistance, if you are being confronted with a big decision and has to do with money or touches your money in some way, give us a holler. Just go to Jill on money dot com, click the contact us button and if you want to come on the air, don't forget to check the box. Mark will do everything else. You can subscribe to us on the Audacy app or wherever you find your favorite podcast. Please leave us a rating and review wherever you listen. And of course put your hands metaphorically on someone's back. Someone needs a pat on the back. I'm telling you. Change your work, change your wealth, change your life. Thank you for listening. We'll talk to you tomorrow.

Linda from Atlanta (15:13)

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Vaughn Miller (16:22)

It's Vaughn Miller, Super Bowl MVP, chicken farmer and now host of Free Range. This is a show where I go off the field and off the script. We're talking what's hot in music, film, trending news and everything blowing up your feed. If you love football, you'll feel at home. But if you're here for the vibe, the Internet deep dives, the conversation, this is your podcast. Join me every Wednesday. Follow and listen to Free Range with me, Vaughn Miller. Everywhere you get your podcast.