Should We Stay or Can We Go Now? - Jill on Money with Jill Schlesinger

Summary

Podcast Summary: "Should We Stay or Can We Go Now?"

Podcast Information:

Title: Jill on Money with Jill Schlesinger
Host/Author: Audacy
Episode: Should We Stay or Can We Go Now?
Release Date: March 4, 2025

Introduction In this episode of Jill on Money, hosts Jill Schlesinger, CFP®, and Mark Tularisio welcome Lynn and Maria, a couple from California, who seek guidance on their upcoming retirement plans. The discussion delves into their financial situation, retirement savings, real estate investments, and strategic tax planning to ensure a smooth transition into retirement.

Guest Introduction and Current Situation Lynn and Maria reach out to evaluate their readiness for retirement. Lynn, aged 59, plans to retire around June 2026, while Maria, aged 58, aims to retire within the year. Their primary concerns revolve around ensuring their financial stability during retirement, especially given the shrinking sector Lynn is involved in.

Lynn: “We just kind of wanted to do a check-in and see how we're doing and if this is gonna work for us.” [04:08]

Pensions and Income Streams Lynn has secured two pensions:

Previous Job Pension:
- Starts at $320/month at age 62
- Increases to $400/month at age 65
Current Job Pension:
- Monthly income of $1,700
- Additional supplement of $950 until age 62

Combined, these pensions provide a steady income stream, which becomes crucial as they transition into retirement.

Lynn: “I will have two pensions.” [05:03]

Mark highlights the importance of these pensions in ensuring financial peace of mind.

Retirement Savings Overview The couple has accumulated substantial savings across various accounts:

401(k)s: $2.8 million (traditional), with minimal Roth contributions (~$150,000)
IRAs: $930,000
HSA Combo: $70,000
Brokerage Accounts: $1.9 million
Cash in Bank: $200,000

Their diversified portfolio indicates strong preparation, though there is room for strategic optimization, especially concerning tax implications.

Lynn: “We are old. We didn't get to start that and we didn't want to convert.” [06:56]

Real Estate Investments Lynn and Maria own three properties:

Primary Home: Valued at $2.1 million with an outstanding mortgage of $600,000
Rental House: Valued at $900,000, generating a positive cash flow of $2,500/month
Duplex: Valued at $1 million, providing $700/month in income

Both the rental house and duplex come with outstanding debts, totaling $1.3 million.

Lynn: “We have debt on all of the property that we have. So our primary home, a small rental. Rental house and then a duplex.” [08:18]

Mark questions the sustainability of income from the duplex and discusses the potential need to sell rental properties post-retirement.

Expense Management and Budgeting The couple's combined monthly expenses amount to approximately $11,000, which includes property maintenance, insurance, and taxes. With pension incomes totaling around $2,650/month and future Social Security benefits estimated at $8,000/month at full retirement age, they need to bridge the $11,000 monthly gap through withdrawals and investments.

Mark: “So, like, we don't have to worry about, like, finding the very best asset to leave to my children because we want them to have Roth IRAs, right?” [14:25]

Tax Strategy and Withdrawal Planning Mark advises Lynn and Maria to strategically withdraw from their traditional retirement accounts to manage their tax bracket effectively. By consulting with their CPA, they can determine the optimal withdrawal amount to stay within the 24% tax bracket, minimizing their tax liabilities while ensuring sufficient income.

Mark: “You should pull as much as I could out of my retirement account that has not yet been taxed to keep me into the 24% bracket.” [14:25]

Additionally, with the impending sale of their $900,000 rental property, they face significant tax implications due to depreciation. Mark suggests utilizing charitable strategies, such as donor-advised funds, to offset some of the tax burdens.

Mark: “You could take money that from your brokerage account and move it into a donor advised fund.” [18:03]

Recommendations for Real Estate and Future Planning Mark encourages the couple to consider downsizing or relocating from their primary home to reduce maintenance costs and improve their quality of life in retirement. Planning ahead can prevent making hasty decisions during stressful times.

Mark: “If you really don't think this primary is the place where you're going to spend your longer term, maybe the second half of retirement is start looking around.” [20:28]

He emphasizes the importance of leveraging their real estate equity to fund their retirement dreams, such as traveling.

Conclusion and Final Thoughts Jill and Mark commend Lynn and Maria on their substantial savings and strategic investments, reassuring them of their financial readiness for retirement. They encourage listeners in similar situations to reach out for personalized financial advice, highlighting that effective planning can lead to a fulfilling and secure retirement.

Mark: “Lynn and Maria, you're about to have the time of your lives.” [19:19]
Jill: “Change your work, change your wealth, change your life.” [22:35]

Key Takeaways:

Diversify Income Streams: Relying on multiple pensions and Social Security ensures a stable retirement income.
Strategic Withdrawals: Plan withdrawals from retirement accounts to optimize tax brackets.
Real Estate Management: Consider downsizing or selling rental properties to reduce debt and generate liquidity.
Charitable Contributions: Utilize donor-advised funds to mitigate tax liabilities while supporting philanthropic goals.
Proactive Planning: Anticipate future needs and make informed decisions to enhance quality of life in retirement.

For personalized financial guidance, listeners are encouraged to visit jillonmoney.com and utilize the "Contact Us" feature.

Notable Quotes:

Lynn: “We just kind of wanted to do a check-in and see how we're doing and if this is gonna work for us.” [04:08]
Mark: “You should pull as much as I could out of my retirement account that has not yet been taxed to keep me into the 24% bracket.” [14:25]
Mark: “Lynn and Maria, you're about to have the time of your lives.” [19:19]
Jill: “Change your work, change your wealth, change your life.” [22:35]

This episode provides valuable insights into retirement planning, emphasizing the importance of strategic financial management, proactive decision-making, and personalized advice to navigate the complexities of transitioning into retirement.

Transcript

Jill Schlesinger (0:00)

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Mark Tularisio (0:43)

Get on with your life.

Jill Schlesinger (0:44)

Secure your families tomorrow so you have peace of mind today. Head to policygenius.com to get your free life insurance quotes and see how much you could save. That's policygenius.com for decades, real estate has.

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Mark Tularisio (2:08)

Welcome to the Jill on Money show. It's Tuesday, March 4th and we are here trying to help you make better financial decisions. Maybe just plan ahead. Maybe you've got something cooking, maybe something that's lingering and you want to just have an extra set of ears and eyes on the situation. That's where Mark and I come in. Mark is Mark Tularisio, the very best executive producer in the entire world. He is a certified financial planner. I'm Jill Schlesinger. I'm also a certified financial planner and you know, we really want to help you all navigate your financial journey. So if you've got a question, go to jillonmoney.com, click the contact us button and write us a note. If you want to join us on the air, check the box and Mark will do everything else. Now, if you've listened to the show for a while and you're like, wow, there's a. A lot of, like, really rich people who come on and you feel intimidated, may I encourage you to subscribe to our other podcast, which is called Money Watch. The Money Watch show is really going to be and has been focused on helping people build their financial blocks, meaning the. We know that some of the folks who come on this show, they're kind of sophisticated. You're all sophisticated. If you want to go back to basics, even if you have a lot of money, you just feel like you need a little bit of a. I don't know, like a tutorial sometimes. Head on over to the Money Watch Show. You can subscribe on our website or wherever you get podcasts, and I think you'll be very pleased because it's going to be a lot of fun to go back to the building blocks for ourselves as well. Mark and I love this, so check that out. That is the Money Watch show, and we drop Money Watch episodes on Saturdays and Sundays. So if you want seven days a week of Jill and Mark, you'll get it. All right. Now, today, let's talk to a lovely couple on the air. It's Lynn and Maria. They join us from California. Hello, you two. How are you?