Should We Invest in This Climate?

Summary

Podcast Summary: "Should We Invest in This Climate?" | Jill on Money with Jill Schlesinger

Episode Details:

• Title: Should We Invest in This Climate?
• Host: Jill Schlesinger, CFP®
• Release Date: May 1, 2025
• Platform: Audacy

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Introduction

In this enlightening episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger delves into the complexities of investing amidst today's volatile financial climate. Joined by her executive producer Mark, Jill addresses a series of listener questions, offering expert advice on topics ranging from tax strategies and retirement planning to investment diversification and market uncertainty. The episode is structured around real-life scenarios submitted by listeners, making the discussions highly relatable and actionable for a broad audience.

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Listener Questions and Expert Responses

1. Tax Strategy for Thrift Savings Plan (Michelle)

• Timestamp: [02:37]
• Listener Profile: Michelle, 68, recently retired from a 40-year government position with $900,000 in a 401k.
• Query: Seeking advice on withdrawing from her Thrift Savings Plan (TSP) while managing tax brackets.
• Jill's Advice:
  • Tax Bracket Management: Jill emphasizes the importance of understanding tax brackets, suggesting that Michelle likely falls within the 12% or 24% brackets based on her projected Social Security and pension income.
  • Withdrawal Strategy: She advises taking out sufficient funds to stay within her optimal tax bracket, possibly distributing withdrawals over the next year and a half.
  • Qualified Charitable Distributions: Jill mentions the option of deferring withdrawals by donating to charity, though this requires rolling over funds into an IRA.
  • Notable Quote: "The money's going to have to come out one way or another." ([03:30])

2. Consolidating Retirement Investments (Norman)

• Timestamp: [07:08]
• Listener Profile: Norman, retired for several years with investments spread across multiple accounts.
• Query: Looking to consolidate his investments to simplify management and reduce market volatility risks.
• Jill's Advice:
  • Consolidation Benefits: Jill encourages consolidating accounts for greater flexibility and easier management, recommending platforms like Fidelity, Charles Schwab, or Vanguard.
  • Investment Diversification: She suggests using short-term bond funds and maintaining a minimal allocation to stocks to balance safety and growth.
  • Notable Quote: "If you just don't really care that much about capturing any upside, the only reason I would say some stocks is that it's nice to have some money that grows faster than the pace of inflation." ([08:45])

3. Growing Funds for Down Payment (Lisa)

• Timestamp: [11:02]
• Listener Profile: Lisa, planning to purchase a condo within five to seven years, currently dollar-cost averaging into index funds.
• Query: Uncertain whether to continue with index funds or switch to a CD ladder amidst market uncertainties.
• Jill's Advice:
  • Market Confidence: Jill reassures Lisa that a five to seven-year time horizon is sufficient to weather market fluctuations, encouraging continued investment in index funds.
  • Dollar-Cost Averaging: She supports Lisa's current strategy, emphasizing its effectiveness in mitigating the impact of market volatility.
  • Mark's Input: "You have money to buy, this is a great time to buy." ([11:04])
  • Notable Quote: "I don't think this is going to be a five year meltdown." ([10:55])

4. Treasury Bills vs. CDs (Ty)

• Timestamp: [12:05]
• Listener Profile: Ty, evaluating whether to invest in Treasury bills or Certificates of Deposit (CDs).
• Query: Seeking the better investment option between T-bills and CDs.
• Jill's Advice:
  • Tax Considerations: Jill explains that the choice depends on Ty's tax bracket and state of residence, noting that T-bills offer tax advantages by being exempt from state income tax.
  • Personal Preferences: She acknowledges that many prefer CDs for their simplicity and association with banks.
  • Notable Quote: "It's sort of like the same thing with if you were going to buy a municipal bond fund or a taxable bond fund. It depends on your tax bracket." ([12:25])

5. Investing IRA in Stocks (Steve)

• Timestamp: [12:45]
• Listener Profile: Steve, 47, contributing $500 monthly to a traditional IRA, currently earning minimal interest.
• Query: Considering shifting IRA investments from money market instruments to stocks.
• Jill's Advice:
  • Investment Growth: Jill encourages Steve to invest part of his IRA in stock index funds to better capture market growth, especially given his long investment horizon.
  • Mark's Support: "If you have the money to invest, now would be a really good time." ([11:58])
  • Notable Quote: "We need to hold your hand to get through this." ([12:08])

6. Retirement Timing and Social Security (Rome)

• Timestamp: [14:10]
• Listener Profile: Rome, 67, with substantial retirement savings, contemplating whether to retire immediately or work two more years to enhance Social Security benefits.
• Query: Deciding the optimal time to retire and when to claim Social Security.
• Jill's Advice:
  • Emotional Security: Jill advises considering emotional well-being, suggesting that if Rome enjoys his job, continuing to work can provide financial security and delay withdrawals from retirement accounts.
  • Social Security Timing: She recommends waiting until age 70 to claim Social Security for maximum benefits.
  • Notable Quote: "If you don't like what you're doing, then absolutely, we can help you out." ([14:24])

7. Medical Records Shredding (Roland)

• Timestamp: [16:00]
• Listener Profile: Roland, responding to a previous column about shredding medical records.
• Query: Clarifying which medical documents to shred post-recovery or dispute resolution.
• Jill's Advice:
  • Record Retention: Jill advises keeping surgical records but shredding routine medical exam papers and unused prescriptions unless involved in disputes with insurance or Medicare.
  • Notable Quote: "Once that's all done, routine stuff. Yeah. You can shred things you don't take." ([16:14])

8. Settlement from Rental Property Sale (Jenna)

• Timestamp: [16:34]
• Listener Profile: Jenna and Janice, 45 and 50, respectively, receiving $180,000 post-tax from selling a rental property.
• Query: Deciding between dollar-cost averaging into an index fund or holding cash amid market uncertainty.
• Jill's Advice:
  • Dollar-Cost Averaging Advocacy: Jill strongly recommends dollar-cost averaging, allowing them to invest methodically and mitigate the impact of market volatility.
  • Mark's Agreement: "I wouldn't even dollar cost average." followed by Jill affirming the strategy despite apparent anxiety.
  • Notable Quote: "Dollar cost averaging is a miracle. It really is." ([16:36])

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Key Insights and Takeaways

1. Tax Efficiency: Understanding and optimizing tax brackets is crucial when withdrawing from retirement accounts. Strategic withdrawals can minimize tax liabilities and maximize net income.

2. Investment Diversification: Consolidating retirement accounts can simplify management and provide greater flexibility. Diversifying investments, even minimally into stocks, can protect against inflation and enhance growth potential.

3. Market Volatility Management: Maintaining a long-term perspective and continuing regular investments, like dollar-cost averaging, can help navigate market uncertainties without succumbing to anxiety-driven decisions.

4. Retirement Planning: Emotional well-being plays a significant role in retirement decisions. Continuing to work can offer financial and psychological benefits, complementing strategic financial planning.

5. Record Management: Efficient management of personal records, especially medical documents, can reduce clutter and stress, retaining only what is necessary for ongoing or potential disputes.

6. Strategic Investing Post-Sale: Investing settlement funds thoughtfully, rather than holding large cash reserves, can harness market opportunities and foster financial growth over time.

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Conclusion

In this episode, Jill Schlesinger provides comprehensive, actionable advice tailored to diverse financial situations. Her empathetic approach, combined with Mark's supportive input, offers listeners valuable strategies to navigate retirement planning, investment decisions, and financial uncertainties. By addressing real-world questions with clarity and expertise, Jill empowers her audience to make informed and confident financial choices.

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Connect with Jill on Money:

• Website: jillonmoney.com
• Contact: Click the "Contact Us" button on the website for personalized advice or to join the show live.
• Subscribe: Access live webinars, back catalog content, and more through Jill on Money Live for $45/year.

Stay informed, take control of your financial future, and make the most of your money with Jill Schlesinger's expert guidance.

Transcript

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[Jill Schlesinger]

Welcome to the Jill on Money show. It's Thursday, May 1st and we are here trying to help you make better, less bad financial decisions. Now, if you've got something going on, if you're feeling that the gyrations in markets makes you crazy, if you think that you are working with somebody, a financial professional who maybe doesn't feel like is cutting the mustard right now, get in touch with us. Go to jillonmoney.com, click the contact us button, write us a note and if you'd like to join us on the air live, just check the box. And Mark does everything else. Cause he is the best. The best by far executive producer in the whole wide world. By the way, another executive producer that I work with said to me like why do you keep saying that about Mark? What about me? I'm like, you know your tv, whose history is longer ours or that person's exactly right. Anyway, I'm, I'm loyal to Mark and I'm a loyal person, really loyal.

[Mark]

Although I'm Glad to know that they listen.

[Jill Schlesinger]

I know it is true. Certainly lately when everything's good, they don't listen quite as much. Anyway, while you're on the website, you can sign up for the free weekly newsletter, you can buy my book, the Great Money Reset, and you can subscribe to Jill on Money Live. That is where you have access to quarterly live webinars, our back catalog of all the webinars we've ever done. Bonus audio and video content. All of that is for 45 bucks for the next 12 months, Jill on Money Live. Don't forget, it's right there on the website. Okay, so Mark always tells me when markets go down, we get many, many more emails than when they go up. Hence our email box, our inbox somewhat flooded. So let's get through some emails and we will start with Michell, who writes. Hi, Jill, I would appreciate your advice for a tax strategy for my traditional thrift savings plan 401k. I am divorced, I'm 68 years old and I recently retired in February from a 40 year government position. Wow. Okay. So I have about $3,700 net from my federal pension every month. My plan is to claim my Social Security at age 70, which would be in a year from this fall and that would be $4,000 a month. So, okay, remember, net 3,700. Then she gets four grand a month at Social Security in a year and a half. Okay. Now Michelle also says she's got $900,000 in the 401k. It's all in the G fund, which is government securities. That's very rare. I don't usually find that a lot of people are in just the safest investment. It's usually the other way around. It's usually people who like, oh, because I have a pension, I can take a little more risk. So Michelle, very stable investor. Okay. She goes on to say, after listening to your programs, I think I need to take out as much thrift savings plan money before starting my Social Security in a year and a half. But I have to watch those tax brackets. I was thinking that I would put the money in tiered CDs as I do not like risk. So there she is. She hates risk. Okay. I have a large enough bank savings account to live on. I don't need the 401k anytime soon. There are no outstanding loans. My house and car paid off. Any advice is appreciated. All right, so, okay, I'm just looking at my little tax grid, the famous ED slot tax grid. So she's now only going for A year and a half is going to be getting four grand a month. So her top rate is probably. Probably 12%. I mean, you could take 100 grand out, right, and you'd be in the 24% bracket. I don't think I'd go above the 24% bracket. And I know that it's gonna be kind of a drag, but, you know, look, the money's gonna have to come out one way or another. So maybe you take out enough money from that account in the next year and a half. Well, just this year. I mean, I don't. I mean, she retired February. I don't know if she got a severance and what the amount is, but you'll have to look at just a tax grid. So you can look at it. But next year again, you'll get some Social Security, but later in the year. So maybe you get two years of taking out 100 or 150 grand, and then once the Social Security begins, you can take less money out, but maybe also stay in the 24% bracket until you get to 75, and then you've got your required minimum distributions. The thing that's interesting here is that the money's going to have to come out. And the real question is what tax bracket will it be when it comes out? And that's why I think maybe 24% is it. You don't need the money. And if you don't like risk and having money in your tiered CDs, fine with me. If you are at all inclined to be charitable, then this might be an idea, which is when you're 70 and a half, you could take money from. You'd have to roll the money into an IRA rollover account, but you could take some of that money and defer it and shoot it over to a charity in a qualified charitable distribution. But again, that money would have to be. It cannot come from a 401k or a thrift savings plan. It would have to be rolled into an IRA account in order to use a qualified charitable distribution. That's a good one, though. That's an interesting question.

[Mark]

Okay, file that under the, you know, good problem.

[Jill Schlesinger]

Good problem to have. I know, you're right. Okay. This is from Normandy. Who says I've invested in the stock market. I've done well also have put money into 401ks. Now I've been retired for a number of years and I've got investments in five or six different places. I want to consolidate my accounts because it's too difficult to keep track of no kidding, man. Also, I don't want to be at the mercy of the stock market. He says I no longer think long term in the sense of investments. I've already done that and I've earned my money. I would like to have one or two places to consolidate the investments that are not at risk yet still making some money. Where can I put the money where it can earn a small amount of return and be safe from the volatility of the market? I never hear you talk about what to do with your money after retirement to keep it safe. By the way, I want you to know that I'm one of your greatest fans and I always enjoy listening to you and your advice. Okay, Norman, first of all, I love the idea of consolidating. I like to consolidate where I have maximum flexibility and access to index funds. So what does that mean? Well, that could mean that if you have an account at a place like Fidelity or Charles Schwab or Vanguard or T. Rowe Price or E Trade, you just pick one of these places and I get that you want something that is less risk. So you could use a short term bond fund. You could use a small amount maybe in some stock investments, but maybe not a lot and ride it out. You didn't really talk about how much money talking about and you didn't mention your age. But if you consolidate and you put a game plan together where you just don't really care that much about capturing any upside. The only reason I would say some stocks is that it's nice to have some money that grows faster than the pace of inflation. I get it, people. It's funny, I remember when inflation popped up in the beginning and we were telling people to use I bonds. People were like, I bond? What's that? You know when times of of dislocation in the markets. Yeah. You're going to feel completely freaked. So if you've learned that you just don't need to take that risk on anymore, fine, you don't have to. But if you still need to take some risk because you do want to grow your money faster than the inflation rate, you know what? We're here for you. Okay, here's a help question from Lisa. Hi Jill. I totally recognize all the frustration everyone is navigating in the markets. I am trying to grow funds for a down payment, hopefully to pay a large chunk of cash so I can own a condo of my own. Hopefully within five to seven years from now I was dollar cost averaging and putting any amount of funds, maybe one to $5,000 a month. In index funds. Now I don't know what to do. So she was going to put in the total stock market fund. It's five to seven years. That's not an unlimited time horizon. But that should be enough time to ride out whatever's happening right now. That I do. I really do think so. She says maybe I shouldn't. Maybe a CD ladder. I keep putting my funds into my 401k. I put smaller amounts in my high yield savings emergency fund. Thank you for all that you and Mark do to guide people and try to figure this out. I love your show. So, Lisa, I think you're okay five to seven years from now. I really do. Even if you thought like, okay, let's say the market crapped out and dropped another 25% from here. Keep putting the money in. I don't think this is going to be a five year meltdown. I don't, you know, like, if we really look at the. Let's look at the great financial crisis, that was a pretty bad crisis. And markets, I think top to bottom were down 57%. But they did bottom out and things came back and I think it should be back within five to seven years. Mark, do you think that the CD ladder is preferable or in addition to. What do you think? For Lisa, if you can buy, if.

[Mark]

You have money to buy, this is a great time to buy.

[Jill Schlesinger]

That's what I think. I think you're going to be rewarded by that. I really do. Okay. Ty wants to know which is better, treasury bills or CDs. Treasury bills. There's no state income tax on the income earned. True. Not that much income. You know what, a lot of people just like to have CDs because it's with a bank and it's easier and it's not that big a deal. If I look at T bills versus CDs, you just have to look at your tax bracket to see which one is better based on the state of residence. It's sort of like the same thing with if you were going to buy a municipal bond fund. You say, oh, should I buy a municipal bond fund or a taxable bond fund? Depends on your tax bracket. Depends on your state of residence. So you got to run that number or get back in touch with us. Ty. Okay. Steve wants to know. He says, I'm currently putting 500 bucks a month in my traditional IRA and the total amount in the IRA is $102,000. I'm putting 47 years old. Should I invest some of my IRA in stocks? I've Never done that. And right now I'm earning about 350 bucks in interest per month.

[Mark]

So all this time he's just been putting it in the money market.

[Jill Schlesinger]

Yeah, or. Yeah, or a short term bond fund. Steve, I'd love to hear from you. We need to hold your hand to get through this. I don't say just jump in, but this is exactly what Mark was just saying. If you have the money to invest, now would be a really good time. And you're only 47 years old, you can't touch this money for at least 12 and a half years. So I'd love it if we could hold your hand and help you figure out how to get that money to work. So, yes, we'd love it if you could buy a stock index fund. I don't know if you're just in a money market or if you're with a bank. I don't know. But could you follow up with us? We're going to hold your hand. We're going to help you do this. Definitely. Okay. So this is from Rome, who says, I just turned 67. I'm trying to decide when to retire. I have about $230,000 in an IRA, $60,000 in an online savings account earning 4%. There's that savings account, Mark, and I'm currently working. I earn 70 grand a year. No car payments. 10 years left on my 15 year mortgage. 2.375%, paying 250 bucks a month. It looks like extra on the principal, zero debt. My wife is retired after 40 years. There's a 403 with $600,000, an IRA with $80,000. I have, this is back to him, $30,000 in a 401. I'd like to retire this year, but if I work two more years, I'll receive more in Social Security payments. We live in Washington state, by the way. No state income tax. What do you suggest? I'm going to make Mark decide for you. Should I work two more years? My wife and I are in very good physical shape. Both of us get plenty of exercise. I am concerned about having enough money to pay the bills and having enough money to travel a couple of times a year. So, I mean, look, if you're worried about this and you don't mind working, I think working is great. But Mark, should he work just to get a higher Social Security benefit?

[Mark]

And I don't even know if that's accurate at this stage of the game. Why would his benefit be increasing now based off of these 2 years?

[Jill Schlesinger]

Years I know, it's just waiting till 70 to claim. That's where you get your better bet.

[Mark]

Yeah, Yeah. I think his benefit right now is what it is.

[Jill Schlesinger]

If you're insecure about retirement and you have a job that you don't dislike, keep working. That'll make you feel more secure because that not only would you. Not again, not only will you be able to delay taking your Social Security, but you're earning money and you're not dipping into your retirement accounts. But I really think it's worth it for you to just take a deep breath and if you don't like what you're doing, then absolutely, we can help you out. It's not a problem. I think you're going to be able to retire. It's really about your emotional state as you consider this. All right, this is from Roland, who's said, I had an excellent column in the Virginia Pilot Easter Sunday, which was called what to Shred and what not to Shred. Here's a follow up question regarding medical records and what to shred. I can see you holding on to surgical records. How about routine medical exam papers? How about prescriptions that you no longer take? Okay, you can shred things you don't take. The only reason you hang on to medical records is if you've got a dispute with your insurance company or with Medicare. That's why. But once that's all done, Routine stuff. Yeah. Hop that into the shredder, fire it up, everything is good. Last question from Jenna, who says tomorrow we go to settlement on the sale of our rental property and we will leave us with $180,000 after taxes. We're 45 and 50. We, we want this money to grow for retirement. The plan was to dollar cost average into an index fund. But what's the best move right now given the uncertainty of the market? It's so funny, Mark. I was reading this, As I was reading this, I thought, oh my God, like, roll it, put it all in, let's go. But Janice says my brother invests corporate proceeds for a living. He's always hesitant to advise people about their personal money. He's thinking he's going to hold it in cash until the tariffs are settled. He doesn't think we've seen the bottom yet. I'd appreciate your thoughts on what we should do with the money. Hey, love your brother. Just like your brother. I think he's wrong. I think you should dollar cost average, you have $180,000. And I would put the money to work on a methodical basis. If Your brother is right. And the market keeps going lower, you'll keep buying lower. If you're wrong, big deal. You lose a little of your upside. Dollar cost averaging is a miracle. It really is. Get that money to work. Stop messing around. Agreed, Mark.

[Mark]

Oh, yeah. I wouldn't even dollar cost average.

[Jill Schlesinger]

I would, I would. I know, but that, but it seems that there's anxiety on some level. That's what we're hearing in that. So you know what? I think you're in great shape. If you need again anyone out there, you're listening and you need hand holding, we're here for you. Get in touch with us. Whether it's dollar cost averaging, what money to put to work, whether or not to use a cd, how should I get money into the market? Should you be in the market at all? All these are things that we can answer. And if you're not looking at the markets, okay, good for you. If you're just looking at your own financial life and you've got big decisions to make, maybe a new job, maybe you're freaking out a little bit, let us help you. We want to hold your hands. Go to jillonmoney.com, click the contact us button, and if you'd like to join us live. After you write that note, just check the box. Mark will do everything else you can on our website. Just sign up for that free weekly newsletter comes out every Friday, and Mark does a great job with that. And you can also subscribe to Jill on Money Live. That is where you have access to quarterly live webinars, the back catalog of those webinars, bonus audio and video content, and of course, the Ed Slot charts, which we all love. You can get that all for 45 bucks for the next 12 months. Jilonmoney.com is the website. You can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Don't forget to to do something nice for someone else today. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

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[Jill Schlesinger]

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[Jill Schlesinger]

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[Leukemia and Lymphoma Society Representative]

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[Jill Schlesinger]

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[Jill Schlesinger]

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[Leukemia and Lymphoma Society Representative]

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[Jill Schlesinger]

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[Leukemia and Lymphoma Society Representative]

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