Should I Be Making Financial Tweaks?

Summary

Podcast Summary: Should I Be Making Financial Tweaks?

Podcast: Jill on Money with Jill Schlesinger
Date: December 31, 2025
Host: Jill Schlesinger, CFP®
Episode Theme: Reviewing & Tweaking Your Financial Plan for the New Year

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Episode Overview

In this listener-centered episode, Jill Schlesinger invites Mary from Connecticut to discuss her financial situation and whether any tweaks are needed as the year wraps up. The conversation focuses on Roth vs. traditional contributions, retirement savings strategy, investments, and estate planning. True to Jill’s style, the discussion is jargon-free, supportive, and actionable, aiming to reassure listeners and offer easily implementable advice for those in similar financial positions.

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Key Discussion Points & Insights

1. Mary’s Financial Snapshot

[03:13]–[06:46]

• Background:
  • 64 years old, divorced, not partnered, three grown children.
  • Working, making $99,000/year, plans to work until at least 70.
  • Comfortable with continuing to work:
    • “I think I'd be bored if I didn't do it... I'm in the prime of my career now.” — Mary [03:50]
• Retirement & Savings:
  • Maxes out 401(k) (traditional only so far), balance at $280,000.
  • Additional savings: $60,000 in online savings, $51,000 in HSA (untouched, invested), $10,000 company stock (brokerage), $768,000 traditional IRA (from old employment/divorce, lump sum pension), small Roth IRA ($20k), $25,000 general brokerage account.
• Expenses: Approximately $70,000/year.

2. Pensions, Social Security & Income Streams

[06:03]–[07:16]

• Two small pensions:
  • $400+/month (starts at 65), $500/month (from current employer, after retirement).
• Social Security benefit of $3,550/month at 70.
• Alimony: $28,000/year, ends when ex-husband retires.
• Combined, pensions & Social Security expected to be ~$4,400/month, covering a significant portion of post-tax needs.

3. Should Mary Add Roth Contributions?

[07:46]–[10:05]

• Jill recommends shifting some retirement contributions from traditional to Roth moving forward:
  • “Of course you should have the Roth. That's an easy one because you already have now, you know, a million bucks that hasn't been taxed. And when you're forced to take that money out, it's going to be like real money.” — Jill [08:06]
• Reasoning:
  • Large pre-tax balances could force significant taxable withdrawals later.
  • Roth contributions can diversify future tax exposure.
• Recommended Experiment:
  • Consider putting 10% into Roth 401(k); direct incremental cash flow into the brokerage account for added flexibility.
  • “If in five or six years that brokerage account was more like $100 or $150 [thousand], I think that's a better way to go into your retirement years.” — Jill [09:35]
• On the higher taxes now:
  • Jill acknowledges potential for higher annual tax burden:
    • “You're going to have to pay more taxes, right?... Maybe there's like a $5,000 fudge factor.” — Jill [10:10]

4. Brokerage Account & Investment Strategy

[11:57]–[13:58]

• Mary’s Concern: Mostly using target date funds across her accounts, wonders if switching to a simple, three-fund portfolio (US stocks, international, bonds) is better.

• Jill’s View:

  • Target date funds are fine for tax-deferred accounts.
  • In taxable (brokerage) accounts, target date funds can create unwanted tax surprises due to capital gains distributions:
    • “I would not use a target date fund in your taxable brokerage account because there can be a lot of tax surprises... we'd rather that happen in your retirement accounts.” — Jill [12:20]
  • As brokerage account balance grows, switch to individual broad US stock index, international index, and intermediate-term bond fund.
  • For asset allocation:
    • “If you don’t love risk, you can go 40% US stock, 10% international, 50% bond. If okay with risk, go 50-60% stocks.” — Jill [13:58]

• Rebalancing:

  • Annual rebalancing sufficient; can be achieved with new contributions rather than triggering taxable events.
    • “...just the new money you're investing... you can really use that.” — Jill [14:01]

5. Estate Planning & Power of Attorney

[10:36]–[10:56]

• Mary has a will and health care proxy, but not a power of attorney.
• Jill explains the importance:
  • “Someone who holds your power of attorney can do those kinds of things for you. ... It's a very easy document.” — Jill [10:56]
  • Practical example: Needed if incapacitated for managing bills or asset transfers.

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Notable Quotes & Memorable Moments

• Jill’s empathy and optimism:
  • “So far so good. Really.” — Jill [07:46]
• On Roth vs. Traditional debate:
  • “Let's just not add to that [pre-tax] burden.” — Jill [08:06]
• Mary’s career outlook:
  • “I'm in the prime of my career now, so.” — Mary [03:50]
• On flexible planning:
  • “As that balance grows in your brokerage account, I would get out of the target date fund and ... choose the U.S. stock index, international index, and intermediate term corporate bond fund.” — Jill [13:02]
• Estate advice, keep it simple:
  • “It was very easy to do.” — Jill [10:56]

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Important Timestamps

• Financial Overview with Mary: [03:13]–[06:46]
• Pensions & Social Security Discussion: [06:03]–[07:16]
• Roth vs. Traditional Advice: [07:46]–[10:05]
• Estate Planning Advice: [10:36]–[10:56]
• Target Date vs. Three-Fund Portfolio: [11:57]–[13:58]
• Annual Rebalancing Guidance: [14:01]

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Key Takeaways and Action Items

• Shift some new retirement contributions into Roth 401(k); experiment with a 10% allocation, monitor the tax hit.
• Continue building brokerage (taxable) account for retirement flexibility, ideally with targeted mutual funds or ETFs rather than target date funds.
• Rebalance investments annually, primarily with new contributions in taxable accounts to avoid unnecessary taxes.
• Add a power of attorney to complete estate documents, using state resources for easy, low-cost solutions.
• Stay the course—Mary’s financial plan is in good shape with only minor tweaks needed.

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Jill’s Closing Encouragement:
“Do me a favor, do something really nice for someone else today. Maybe for yourself. That would be nice too. Change your work, change your wealth, change your life. Happy New Year.” — Jill [End]

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Transcript

[Jill Schlesinger]

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[Jill Schlesinger]

Welcome to the Jill on Money show. It's Wednesday, December 31st, New Year's Eve gang. What a year it's been. Boy, we could not have gotten through it without all of you. You are the folks that make this show work and we are so grateful for every single person who has written to us, who's come on the air with us and who listens to us. So thank you guys. This is a show that is about you. It was developed for you and you are really the key to our success. So we really are grateful for that. If you are finishing up the year and you are looking at your financial life or well, maybe we can help you out. All you need to do is go to our website jillonmoney.com, click the contact Us button, write us a note. Check that box if you'd like to come on the air live and Mark will do everything else while you're on the website. Don't forget to subscribe to the free weekly Newsletter. Love that newsletter. That newsletter also will entitle you to receive my blog. So whenever I write, you'll get something else, a little extra gift for the end of the year. Right now, let's talk to Mary from Connecticut.

[Mary from Connecticut]

So I just wondered if you could do that. Look, see that you often mention at my plan and just, you know, make me feel a little better about it. And I think, you know, I have some questions on things that maybe could be tweaked a bit, so.

[Jill Schlesinger]

All right, so tell us about yourself. How old are you?

[Mary from Connecticut]

I'm 64.

[Jill Schlesinger]

Married? Single? Partnered?

[Mary from Connecticut]

Divorced? Not partnered.

[Jill Schlesinger]

Okay, divorced. And are you working?

[Mary from Connecticut]

I am working. I am working. My income is about 99,000 a year, and I plan to work at least till 70, and I think that's feasible, and I'm hoping a couple of years longer so I can both have Social Security and an income at the same time to kind of look at you.

[Jill Schlesinger]

You're the. You're. You're taking advantage of the system. This is not even a scamming. This is just. I want to work, so you must like what you do. That's good.

[Mary from Connecticut]

I like what I do. I. I think I'd be bored if I didn't do it. And, you know, I was home with my kids for a doz, so it's kind of still. I'm, like, in the prime of my career now, so.

[Jill Schlesinger]

Oh, man, that's so great. So do you make contributions to a retirement plan through work?

[Mary from Connecticut]

I do. I have a 401k and I max that out, you know, including the over catch up. Yep.

[Jill Schlesinger]

Yep. Okay, good. And how much is in that 401k?

[Mary from Connecticut]

That is about 280,000 right now.

[Jill Schlesinger]

Great. And is it a traditional or a Roth?

[Mary from Connecticut]

It's traditional. And that's one of my questions, because I didn't even know what a Roth was a few years ago. And I have the Roth option, and I haven't used it, and I don't know if I should.

[Jill Schlesinger]

What about other money that you have saved up?

[Mary from Connecticut]

Online savings is about 60,000. I have 51,000 in my HSA. I use that just for investment. I haven't spent any of it. I have company stock also in a brokerage, which I don't need to leave there, but that's only about 10,000. I also have a traditional IRA, which is 768,000.

[Jill Schlesinger]

Right. Whoa, whoa, whoa, whoa. Where did that come from? An old job or is that the divorce?

[Mary from Connecticut]

Old job, divorce. And he. When he left his former company, he chose to take his pension early, so I was forced to take it. I could have done the annuity or I could have taken the lump sum. I chose to take the lump sum. That's where all that came from.

[Jill Schlesinger]

Good.

[Mary from Connecticut]

Yeah. And then I have a small Roth, also a small Roth IRA of about 20,000. And then in a brokerage account, I have about 25,000. That's pretty much it for the bucks.

[Jill Schlesinger]

Do you have kids?

[Mary from Connecticut]

I have three kids, grown up on.

[Jill Schlesinger]

Their own and doing fine. They don't need your help?

[Mary from Connecticut]

They don't need my help? No.

[Jill Schlesinger]

So how much do you figure you need to spend in general? Like, not like, not the skinny version. Like, what do you like to spend?

[Mary from Connecticut]

I mean, I have been pretty much spending about 70,000 a year in expenses. Totally.

[Jill Schlesinger]

Yeah. Great. Will you be entitled to any pension yourself?

[Mary from Connecticut]

I have two little pensions. They're small. One is about four. Four something a month. And one will be. And that starts. That starts next year when I turn 65. That's from a former employer. And then I have one at my current employer that's going to be approximately 500amonth. That starts when, you know, just after I retire.

[Jill Schlesinger]

And what's the Social Security benefit at age 70?

[Mary from Connecticut]

3,550Amonth.

[Jill Schlesinger]

So, you know, basically between the two pensions and Social Security, that's pretty amazing. I mean, it's $4,400 a month right there, and that's consistent. Is there any other income that you're looking at coming in?

[Mary from Connecticut]

No. No. Well, right now I have alimony. Oh, yeah. That's like $28,000 a year. But the, the caveat with that is it will stop as soon as my ex husband retires, and I am not privy to when that will be.

[Jill Schlesinger]

It sounds like he makes a lot of bad decisions, so who knows?

[Mary from Connecticut]

Yeah, I. I think he needs to continue working himself. So for as long as he does, I will be lucky. But if he chooses to stop working, then it will stop.

[Jill Schlesinger]

So the game plan is, let's just say you work till you're 70 or 71 or 72, whatever it is, you're collecting the alimony for as long as you need to, as long as he continues to work. And it's taxable to you. But, you know, you're kind of comfortably. Your top bracket is 22 to 24. I mean, if you have the alimony, you're popped up into the 24% without the alimony, you know, back in the 22. So that's all good. So what's the problem? I, like, I Already like this. So far so good. Really.

[Mary from Connecticut]

I wonder if I'm investing properly. Should I be putting money into that Roth 401k instead of the traditional 401k, will it make much of a difference? At my age it'll mean I save less and then when the alimony does stop, I won't be able to save very much. So I'm wondering where, where I should be saving at that point.

[Jill Schlesinger]

If we look at the very biggest picture right now, I think the answer to the Roth question is yes, of course you should have the Roth. That's, that's an easy one because you already have now, you know, a million bucks that hasn't been taxed. And when you're forced to take that money out, it's going to be like real money. Now the thing is, when in the sort of larger sense, I feel very comfortable with where you are right now because you need a little bit less than let's say $3,000 a month, maybe it's, maybe we'll just call it three grand a month is what you need three to $3,500 a month from a taxable account to fund the difference post tax, you know, cause you're going to have $4,400 a month in income, but you need $5,800 a month. You know, we need to fund your gap. Your 70 grand a year is. When you say 70 grand, you're talking about post tax. So essentially think of it more like it's like 100 grand, you know what I mean? Like, or 90 grand is what you really need because so much of your money hasn't been taxed yet. And so you have the money to do that, which is all good. However, I do think that having all of this money pre tax puts you in the situation where you're like, eh, I gotta pull all this money out, right? That's okay. Let's just not add to that burden. Do you have a match up to a certain percent in your retirement account?

[Mary from Connecticut]

Yes. That's 5 or 6%, I can't remember which, but yes.

[Jill Schlesinger]

What if we said, why don't you just try this as like sort of an experiment. What if you put 10% into your Roth 401k option and then take the rest of the money that comes in cash flow wise and pop it into your brokerage account. I think that if in five or six years that brokerage account was more like 100 or 150, I think that's a better way to go into your retirement years because you'll have a little more flexibility.

[Mary from Connecticut]

The 10% to the Roth. I don't know what the tax implications will be.

[Jill Schlesinger]

So you're going to have to pay more taxes, right?

[Mary from Connecticut]

I know. So. So I guess I would keep some out and not put some of it in the brokerage.

[Jill Schlesinger]

Yeah, you can bet you have money in savings. I mean, it's not going to be like if there could be a surprise, like, oh, you have $50,000 to pay in taxes. Maybe there's like a $5,000 fudge factor. So you have a little extra money. See how it goes. You have to have a full year of it to really figure it out. Now you've got three grown kids, grandchildren or no grandchildren?

[Mary from Connecticut]

No grandchildren.

[Jill Schlesinger]

All right, so we don't have to give any money away to 529 plans or anything like that. Do you have your estate documents completed?

[Mary from Connecticut]

I have two. I have the. I have a will and I have the medical proxy, but I do not have power. Power of attorney, which I hear you mention. I never knew, you know, other than you mentioning it, I didn't even know I would need one at this point.

[Jill Schlesinger]

All right, I'm going to give you an example of why this is good to have. Let's just say, I'm not even saying you have some horrible illness, but let's just pretend for some reason you're like, you fell and you're in the hospital, like, you need a new hip or something. And it's at the moment where you're like, oh, geez, I didn't do the online bill pay and I don't have something automatic or I need money shifted from one thing to another. Someone who holds your power of attorney can do those kinds of things for you. They can like move money for you. Or they could say, you know, oh, mom needs to write a check to somebody who doing work in her house. She forgot to do that. Someone else can write a check on your behalf. It's a very easy document. There's a statutory part of. I bet the. The state of Connecticut probably has an actual durable power of attorney on the website. I did this for a friend of mine recently. I just went to the New York state website, printed it out, and we completed it and got someone to notarize it. It was very easy to do. Do we have any other questions or do you have any other questions that we can answer for you?

[Mary from Connecticut]

I do, I do. I. I have basically all of the large sums date funds. Is that okay? I mean, it's easy. They're very low cost. So so that's good. But should I really have like a three fund portfolio instead?

[Jill Schlesinger]

Well, let me ask you this. You've got a 401k. Where is that 401k held? What. What's the big company?

[Mary from Connecticut]

That is the, that's at Fidelity.

[Jill Schlesinger]

Okay, so, I mean, look, you have a lot of money. It is certainly easy to do. However, I also know the target date funds are easy. Sometimes target date funds have a little bit more risk in them than people. So I'd look at that, but I don't know, it's probably not worth it. Mark is going to say differently. Mark, you probably want her to reinvest. You want her to invest in the traditional. You're. You're okay, right? We're okay with this. I'm fine with the target date funds in your tax deferred accounts. I would not use a target day fund in your taxable brokerage account because there can be a lot of tax surprises with these target day funds that people don't realize. That is true.

[Mary from Connecticut]

Yeah, yeah, that did happen this year. But it was such a, I don't have much there, so it didn't have a big impact.

[Jill Schlesinger]

As that balance grows in your brokerage account, I would get out of the target date fund. And then you can just, you know, you can kind of play it pretty mellow and be like, okay, I can choose the U.S. a broad U.S. stock index, I can choose an international index, and I can choose a intermediate term corporate bond fund would be just fine. If you don't love risk, you can kind of go 40, 10, 50, like 40 U.S. stock, 10 international, 50 bond. But you know, if you, if you're okay with risk, you can bounce that up to, you know, 60%, 50 or 60 in U.S. stock, 10% in Internet, you know, so you can play with it a little bit. We don't like you to trade in brokerage accounts that are taxable. That's why Mark is saying that target date funds can churn out capital gains and create distributions. And we'd rather that happen in your retirement accounts than in your taxable accounts.

[Mary from Connecticut]

Okay, do I rebalance the brokerage?

[Jill Schlesinger]

I mean, this would be a rebalance. This would essentially be a rebalance, but you would do it once a year. And the way that you probably would do it is you would probably do it with just the new money you're investing. You know, you don't have to do it and like take tax losses and gains. You could. But you know, the new money going in, you could really use that.

[Mary from Connecticut]

Okay, I See, I understand.

[Jill Schlesinger]

Keep us posted. Let us know how things go. Okay.

[Mary from Connecticut]

Thank you so much.

[Jill Schlesinger]

If you have something going on in your financial life or your real life that happens to touch anything money related, get in touch with us. Go to jillonmoney.com, click the contact us button and of course, write us that note. If you want to come on the air, check the box. Mark will do everything else. So make sure that you celebrate wisely tonight. I'm the kind of person who does nothing. But if you're out there partying, go easy. Know that the new year is just around the corner so we can always start new things in a new year. We are so glad that you that you've joined us this entire year. If you're a new listener, go back and listen to some old programming. It'd be kind of fun for you to see where we've come from. All right, that is it. That is the show. You can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Do me a favor, do something really nice for someone else today. Maybe for yourself. That would be nice too. Change your work, change your wealth, change your life. Happy New Year. Thanks for listening and we'll talk to you tomorrow. Now is your time to get into a new Dr. Horton home by taking advantage of its national red tag sales event. This Friday, January 2nd through Sunday, January 25th. Stop by any of its participating communities and find select red tag homes at incredible pricing. So whether you're buying your first home or looking for an upgrade, you don't want to miss the red tag sales event starting this Friday. Discover the Dr. Horton Difference. Tap your screen now or visit Dr. Horton.com Dr. Horton, America's builder and equal housing opportunity builder. What's up? It's Draymond Green. I'm back for my 14th NBA season and my podcast, the Draymond Green show is back too. This season, I'm breaking down games, reacting to the biggest NBA stories and sitting down with teammates, rivals and culture shapers. And trust me, I'm not holding back on the court or on the mic. Two new episodes every week. New segments, big conversations, real basketball talk for the real hoop heads. Listen to and follow the Draymond Green show wherever you get your podcast. We're back. We're better. Let's get it.