Podcast Summary: "Should I Leave My Job for a Pension?"
Jill on Money with Jill Schlesinger
Release Date: May 21, 2025

In this enlightening episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger, CFP®, delves into the nuanced considerations of leaving a current job in favor of securing a pension. Through a series of listener-submitted questions, Jill, alongside co-host Mark T. McGowan, navigates complex financial scenarios, offering actionable advice and expert insights.

1. Cheryl’s Dilemma: Funding Mother’s Care

Timestamp: [02:30]

Cheryl writes in seeking guidance as the power of attorney for her 83-year-old mother, who is preparing to move into a retirement community. Cheryl outlines her mother's financial landscape:

• Assets:

  • $210,000 from selling her home.
  • $357,000 in traditional IRAs generating $2,800 monthly from Social Security.
  • $800,000 in a taxable stock portfolio yielding approximately $5,000 quarterly in dividends.
  • A small Roth IRA intended as an inheritance.

• Expenses:

  • $4,500 monthly for care, while only $2,800 is currently available from Social Security.

Discussion Highlights:

• Jill’s Analysis: She notes, “Cheryl’s plan to utilize the traditional IRAs and the home sale proceeds appears feasible” (04:15).
• Mark’s Input: Emphasizes tax implications, stating, “You can't really minimize the tax liability on that,” advising Cheryl to consider the tax bracket differences between her mother and beneficiaries (06:00).

Key Takeaways:

• Evaluate the necessity of additional income sources to cover care costs.
• Consider tax-efficient strategies to preserve assets for inheritance.
• Assess the potential benefits of leveraging the taxable stock portfolio's dividends versus required minimum distributions (RMDs) from retirement accounts.

2. Robert’s Retirement Plan and Tax Concerns

Timestamp: [07:45]

Robert, aged 60, inquires about his retirement strategy, presenting the following financial details:

• Assets:

  • 401(k) from a previous job: $90,000.
  • Deferred compensation: $270,000 to be paid out in June 2028.
  • IRA: $1.1 million; his wife’s IRA: $200,000.
  • Investment account: $100,000.
  • Savings: $30,000 in the bank.
  • Home valued at $1.5 million with a mortgage balance of $280,000 at a 2.75% fixed rate.

• Income:

  • Continued employment: $200,000 annually.
  • Wife’s income: $100,000 annually for the next 5-7 years.

Robert’s Questions:

• Tax implications in retirement.
• Capital gains on potential home sale.
• Utilizing home equity to purchase a vacation property.

Discussion Highlights:

• Jill’s Response: She advises, “If you sell your home, you can exclude half a million dollars of capital gains under current regulations,” but cautions about potential taxes if the home’s value increases significantly (09:20).
• Mark’s Advice: Suggests consolidating retirement accounts to manage RMDs effectively and emphasizes the importance of having a sustainable withdrawal strategy (10:05).

Key Takeaways:

• Understand the capital gains exclusions available for primary residences.
• Develop a comprehensive plan to manage RMDs and tax liabilities.
• Explore leveraging home equity responsibly to fund additional investments, such as a vacation home.

3. Graziella’s Variable Annuity Conundrum

Timestamp: [11:40]

Graziella, a recent retiree, voices concerns about her variable annuity, which carries high administrative fees. She is contemplating whether to convert it to another annuity, as suggested by her financial advisor, but is hesitant.

Discussion Highlights:

• Mark’s Quick Assessment: “Ding, ding, ding, ding” (11:40), indicating Graziella is on the right track with her decision.
• Jill’s Guidance: She differentiates between retirement and non-retirement annuities, advising that annuitizing can eliminate high fees but may result in tax liabilities on accumulated gains (12:30).

Key Takeaways:

• Evaluate the type of annuity (retirement vs. non-retirement) before making conversions.
• Consider the tax implications of annuitizing versus maintaining the current annuity structure.
• Assess whether the annuity aligns with long-term financial goals and retirement plans.

4. Joe’s Retirement Readiness Assessment

Timestamp: [14:00]

Joe, a 58-year-old single individual from Northern California, seeks reassurance about his retirement preparations:

• Financial Status:

  • Brokerage account: $115,000.
  • Roth IRA: $135,000.
  • 401(k): $450,000.
  • Savings: $50,000 in the bank.
  • No debt, mortgage paid off.

• Income & Expenses:

  • Annual income: $75,000.
  • Monthly expenses: $3,000.

Discussion Highlights:

• Jill’s Encouragement: She affirms, “You are indeed on the right track,” highlighting Joe's substantial savings and lack of debt as positive indicators (15:10).
• Mark’s Addition: Mentions the importance of understanding Social Security benefits and ensuring that retirement income sources are diversified (15:30).

Key Takeaways:

• Maintain diversified investment accounts to ensure a stable income stream post-retirement.
• Continually assess and adjust savings to meet future retirement needs.
• Utilize Social Security strategically to maximize benefits during retirement.

5. Brad’s Job Offer: Private Sector vs. Federal Government

Timestamp: [16:50]

Brad, aged 38, wrestles with a job offer transition from the private sector to a federal government position:

• Current Position:

  • Private sector job: Approximately $100,000 annually.
  • 401(k) benefits.

• Federal Offer:

  • Salary: $75,000 - $80,000 annually (a 25% pay cut).
  • Thrift Savings Plan (TSP) and pension benefits.

Discussion Highlights:

• Jill’s Considerations: She emphasizes the need to assess whether the lower salary can sustain Brad’s lifestyle and long-term financial goals (17:15).
• Mark’s Perspective: Highlights the importance of evaluating the pension details and job stability within the federal sector, noting potential risks with government positions becoming vulnerable during budget cuts (18:00).

Key Takeaways:

• Weigh the immediate financial impact of a salary reduction against long-term benefits like pensions and job security.
• Analyze the stability and growth prospects within the federal job offer.
• Consider personal career goals and the value placed on retirement benefits versus current income.

6. Marcus’s Pension and Annuity Options

Timestamp: [19:30]

Marcus, soon to be 43, faces decisions regarding his state pension and a private-sector job following injuries that make his current state job untenable. He outlines his options:

• Options:

  1. Option 1: 12-payment annuity at $3,600 monthly with a 3% Cost of Living Adjustment (COLA).
  2. Option 2: Lump sum of $188,000 plus partial payment of $2,685 monthly with a 3% COLA.
  3. Option 3: Adjust the lump sum to $123,000 and increase monthly pension payments to $3,000.

• Additional Plans: Rolling over any lump sum into an IRA.

Discussion Highlights:

• Jill’s Inquiries: She probes about spousal benefits and long-term financial security, raising concerns about survivorship if Marcus were to pass away early (20:15).
• Mark’s Analysis: Suggests a preference for the annuity option, assuming it includes survivor benefits, but urges caution and thorough understanding of the contract details (21:00).

Key Takeaways:

• Prioritize options that offer financial security for both the individual and their spouse.
• Carefully consider the implications of each annuity option, including survivor benefits and flexibility.
• Align pension and annuity choices with overall retirement and financial planning strategies.

Conclusion and Final Remarks

Throughout the episode, Jill and Mark provide personalized financial advice, emphasizing the importance of:

• Comprehensive Financial Planning: Assessing all assets, income sources, and potential liabilities.
• Tax Efficiency: Strategizing withdrawals and asset management to minimize tax burdens.
• Risk Assessment: Evaluating job stability, investment risks, and the implications of financial decisions on long-term goals.
• Personalized Solutions: Tailoring advice to individual circumstances, ensuring that each listener's unique needs are addressed.

Notable Quote:

“Change your work, change your wealth, change your life.” – Jill Schlesinger (23:45)

Jill encourages listeners to engage further by submitting questions or joining live sessions, fostering a community of informed and proactive individuals striving for financial well-being.

For More Information:

• Visit jillonmoney.com to submit questions or subscribe to Jill on Money Live.
• Subscribe to Jill on Money on your preferred podcast platform or join their sister podcast, Money Watch, available on the Odyssey app.