Too Much in Pre-Tax Retirement?

Summary

Episode Overview

Episode Title: Too Much in Pre-Tax Retirement?
Podcast: Jill on Money with Jill Schlesinger (Audacy)
Date: December 16, 2025
Host: Jill Schlesinger, CFP®
Caller: Bill from the Twin Cities

Theme:
Jill Schlesinger fields a listener’s question about balancing pre-tax and post-tax retirement savings. Bill, nearing retirement with a substantial nest egg primarily in pre-tax accounts, seeks advice on whether to continue contributing to traditional (pre-tax) accounts, switch new savings to Roth or brokerage, or rebalance given accessibility and future tax implications.

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Key Discussion Points & Insights

1. Bill's Financial Profile (03:22–07:04)

• Age & Timeline: Bill is 58, plans to work "another two years or less."
• Marital Status: Partnered, living together, but maintains separate retirement savings.
• Monthly Expenses: $5,000 (Bill's share).
• Current Assets:
  • Traditional 401(k): $2 million
  • Traditional IRA: $500,000
  • Roth IRA: $220,000
  • HSA: $41,000
  • Brokerage Account: $60,000
  • High-Yield Savings: $53,000
• Income: $150,000/year
• Debt: None
• Home Ownership: Lives in partner’s house (she owns it).
• Social Security Estimates (07:57):
  • Age 67: ~$4,000/month
  • Age 70: ~$4,900/month
• Family: No children. Mother is self-sufficient. No plans for elder care.
• Health & Longevity: Good health; family has decent longevity.

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2. The Core Question: Where Should New Savings Go? (03:47–05:07; 08:46–14:21)

Bill asks if he should:

• Continue contributing to his traditional 401(k) (pre-tax)?
• Switch to Roth 401(k)?
• Skip extra retirement savings in favor of a brokerage (taxable) account for liquidity?
• Clarifies his employer offers a generous "7% dollar-for-dollar" 401(k) match.

Jill’s Initial Analysis

• Bill has "so much money that hasn't been taxed yet"—over $2.5 million in pre-tax accounts.
• Jill recommends:
  • Always contribute enough to get the full employer match.
  • If the match is only on traditional contributions, continue with pre-tax for the match only (08:59).
  • For additional savings, strongly considers putting into brokerage or Roth rather than adding to pre-tax.

Quote:
"You have so much money that hasn't been taxed yet...I would put. If they say, 'Oh, we'll only do the match in the traditional,' then I would do that match. And then...I would be happy with you just putting adding money to the brokerage account."
— Jill Schlesinger (09:05)

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3. Retirement Withdrawal and Tax Considerations (09:05–11:29)

• Jill’s Strategy:
  • After retiring at 60, Bill should start drawing down his pre-tax accounts to minimize future Required Minimum Distributions (RMDs) and spread out the tax hit.
  • Suggests withdrawing $100,000/year (adjust as needed) from retirement to cover expenses, remaining in the 22% tax bracket as long as possible before Social Security starts.
  • Once Social Security begins, taxable income will likely jump Bill into the 24% bracket, which is fine, since future taxation is inevitable given the size of accounts.
  • Emphasizes Bill has "more money than you will probably ever spend"—the problem is a "good one" (10:30).

Quote:
"You need to pull money out of that account, otherwise you’re going to have some walloping required minimum distributions...But I think you’ll be taking money out at your lower tax bracket actually..."
— Jill Schlesinger (09:42)

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4. Debating Roth vs. Brokerage for New Contributions (12:14–13:32)

• Mark’s Take: Mark prefers Roth contributions (after getting the match), arguing for the tax-free growth and withdrawal benefits, especially since Bill will be able to access funds at 59½.
• Jill’s View: Jill leans toward brokerage for liquidity, flexibility, and opportunities for tax loss harvesting or gifting. She admits she’s "agnostic," acknowledging both are valid and ultimately Bill can't go wrong.
• Agreement: Strong consensus to not add significantly more to pre-tax; Roth or brokerage are both smart.
• Notable Quote:
  • Mark: "No pre tax. That’s the message." (13:30)

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5. Advanced Strategies: Mega Backdoor Roth (13:34–14:21)

• Bill mentions he already utilizes the Mega Backdoor Roth, contributing 9% of after-tax dollars, converted monthly.
• Mark favors the Roth even more, given this structure.
• Jill: Reiterates that Bill is "doing it anyway" and is impressed with his proactive planning.

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6. Non-Financial/Planning Considerations (14:21–15:01)

• Estate Planning: Jill reminds Bill, since he isn’t married but lives in his partner's house, to ensure plans are in place so he’s not at risk if his partner passes.
  • Bill confirms that’s covered.
• Final Thoughts: Bill is in "amazing shape." Jill praises his frugal spending and steady saving habits. Bill reflects on his own surprise at having accumulated so much wealth over his career.

Quote:
"You have almost $3 million bucks. It’s incredible, isn’t it?"
— Jill Schlesinger (15:34)

Bill (15:34):
"It is...30 years ago, I never would have imagined that at 58, I’d be in the situation I am. So I am fortunate for sure."

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Memorable Moments & Quotes

• Jill (about Bill’s savings):
  "You have so much money, it’s incredible. You’ve done an amazing job. You don’t spend a lot of money. Only spend five grand a month. Completely ridiculous, you know, like what’s the match that you receive?" (08:30)
• Mark (on Roth preference):
  "Just because he’s at the magic age of 59 and a half and he can access the money which he needs to start doing to kind of defuse that bomb. I would put anything else into a Roth. There’s no better tax treatment than zero tax." (12:26)
• Jill (re: estate planning for unmarried couples):
  "Since you’re living in your partner’s house. Have you guys done some estate planning whereby, like, if she were to pass away, does she have kids or some...would you be able to stay in that house or would you get kicked out?" (14:45)

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Timestamps for Key Segments

| Timestamp | Topic | |-----------|-----------------------------------------| | 03:22 | Bill introduces his retirement question | | 05:07 | Beginning of Bill’s detailed situation | | 08:46 | Employer match and account split | | 09:05 | Jill on too much in pre-tax accounts | | 11:29 | Conversation turns to liquidity needs | | 12:14 | Roth vs brokerage debate with Mark | | 13:30 | Consensus on no new pre-tax | | 14:21 | Mega backdoor Roth strategy | | 14:56 | Estate planning for unmarried partners | | 15:34 | Bill reflects on his financial journey |

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Conclusion

Summary:
Bill exemplifies diligent long-term saving, modest spending, and prudent asset allocation. Nearing retirement, he faces a classic dilemma: how to balance tax-deferral with flexibility and impending RMDs. Jill and Mark agree: absolutely leverage the employer match, do not contribute more to pre-tax, and choose Roth or brokerage according to individual need—both have merits at this stage.

Tone: Friendly, affirming, and practical—Jill and Mark deliver direct (and jargon-free) advice, focused on real-life consequences, flexibility, and the importance of tax planning as retirement nears.

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For Listeners:
Regardless of your current position, the advice is clear: maximize matches, understand future tax implications, keep your withdrawal options flexible, and be sure your estate planning matches your living arrangements, especially if not married.

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Notable Call to Action:
"If people are listening and you’re hearing, like, Oh my God, I don’t have that much money...get in touch with us. Maybe we can help you out. All you need to do is go to the website jillonmoney.com, click the contact us button. Write us a note..." (15:45)

Transcript

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[Jill]

Welcome to the Jill on Money show. It's Tuesday, December 16th and we are here answering your financial questions. If you have one, just go to our website jillonmoney.com in the upper right hand corner. Wherever you actually navigate on the website, there is a Contact Us button. When you click that button a form will pop up. That's the email that we receive. Now if you're shy, you don't want to be on the program with us, which is a big mistake because we can make you anonymous. Don't worry. But if you are shy, give us a lot of detail in your email. So we have a lot of information that we can help you answer whatever question is on your mind. If you do want to come on the air, check the box, Mark. We'll do everything else. Hey, while you're on the website, check out all of the content that lives there. We've got free content like the weekly newsletter, which comes out on Fridays. Mark does a great job with that. We have another podcast. It's called Money Watch. We've got a blog. We have a radio show. There are videos. We've got resources. And if you do want to spend a few bucks, check out Jill on Money Live. That is our subscription service. 45 bucks for the next 12 months. That's it. Incredible. You will have access to quarterly live webinars, the back catalog of those webinars, bonus audio and video content, again, all for 45 bucks for the next 12 months. You can, you can check that out Jill on Money live. Okay, let's get on to you. Today we are talking to Bill, who joins us from the Twin Cities. Hello, Bill. What's going on?

[Bill]

Hi, Jill. Thanks for having me on. Really enjoy the show. It is informative and entertaining. So it's a thrill to be on with you. And Mark, thank you.

[Jill]

Oh, thank you so much for saying that. I really, I'm so happy. That's exactly what we're going for. A little bit of information, a little bit of entertainment, a little bit of humor and a lot of heart space. So hopefully we can get that through. So what's going on for you? How can we help you out?

[Bill]

So I have a question. I am 58. I hope to work for another two years, let's say, or less. And I have, I think, done a pretty reasonable job of putting away a lot of retirement savings. And I'd like to kind of hear your thoughts on that. But if I am going to work for another couple of years, I have some questions about should I. And you'll find out in a minute. I've put most of my money into kind of traditional retirement, so I'll pre tax. And so if I'm going to say the next two years, the money that I am going to put into what I would normally put into a 401k, should I put it into a traditional 401k like I have been, should I put it into a Roth 401k or should I do something completely different and say, you know, you've got too much money in retirement accounts, you don't have a ton that's accessible necessarily and you know, instead just say, like, take advantage of your employer. Match for 401k, but let's put the rest of it into a brokerage account or something else.

[Jill]

This is a great series of questions for us to consider. So you said you're 58 years old. Are you married? Single?

[Bill]

Partnered.

[Jill]

Partnered. Okay. And your partner and you live together. Do you combine your. We do. Okay. But you don't combine your money.

[Bill]

We share expenses. But for the most part, our kind of our retirement savings are separate.

[Jill]

Okay. So when I ask you a question about your expenses and what you're doing today, just give me your share of it so I have a sense of that. Okay, sure. Okay. And do you have any kids?

[Bill]

I do not.

[Jill]

No kids. Makes it easier telling you right now. Sorry, sorry, breeders. But it does make it easier. Okay, so let's go through some of this. Since I did, I'll go. I'll flip this on its head because I usually ask about the retirement account. So what's your expense level? What are you spending on a monthly basis?

[Bill]

I spend about $5,000 a month.

[Jill]

Let's talk about what you have saved already. So right now I'm looking at your retirement accounts. What is in your pre tax, your traditional accounts.

[Bill]

So traditional 401, I have $2 million.

[Jill]

Okay.

[Bill]

I have a traditional IRA, which is 500,000. I have a Roth IRA, which is 220,000. I have. Do you consider an HSA a retirement or not?

[Jill]

I'll call it. Let's just give me the HSA number. That's cool.

[Bill]

Okay. HSA is 41,000 and then the rest is. I guess you would consider, not retirement. So I have 60,000 in a brokerage account and about 53,000 in high yield savings.

[Jill]

Great. This is all great. Good saving, good level. How much do you earn?

[Bill]

I earned about 150,000 a year.

[Jill]

Wow, you saved a lot of money on 150,000 a year.

[Bill]

Yeah.

[Jill]

Thanks a lot. I mean a real lot. Okay, let's keep going. You own the house with your partner?

[Bill]

She owns the house.

[Jill]

Oh, all right. So that's good. And so you just pay your stuff. Any other real estate that you have, any rental property, anything like that?

[Bill]

No.

[Jill]

Okay, so we've got all.

[Bill]

No other debts.

[Jill]

Oh, fantastic. That's great. No pension, right?

[Bill]

No. I don't know if it matters. The IRA actually was a pension that I cashed out from a previous employer.

[Jill]

Okay, well, whatever it is where it is. Right. Do you happen to have your Social Security estimate for yourself?

[Bill]

I do. So if I draw at 67, it'll be right around 4,000. And if I were to wait till 70, it would be 4,900.

[Jill]

How's your health?

[Bill]

Fine, as far as I know. Yeah.

[Jill]

All right, knock some wood for me. And you have longevity in your parents. You have still parents who are alive?

[Bill]

Yeah, reasonably.

[Jill]

Okay.

[Bill]

My mother is still alive. My father died around 84.

[Jill]

Okay. And do you have to take care of your mother?

[Bill]

No, I don't.

[Jill]

Nope.

[Bill]

She's very self sufficient.

[Jill]

Amazing. Okay. Why are we talking to you, Bill? You have so much money, it's incredible. You've done an amazing job. You don't spend a lot of money. You only spend five grand a month. I mean, completely ridiculous, you know, like what's the match that you receive?

[Bill]

7%.

[Jill]

Wow. You mean they match up to 7% dollar for dollar?

[Bill]

They do.

[Jill]

Wow. Okay. And they will. Will they only do that in your traditional or will they do that in the Roths also?

[Bill]

You know, that's a good question. I guess I am not sure. I'll need to find out.

[Jill]

Okay, I'll tell you what. You have so much money that hasn't been taxed yet, you know, 2.2 million, I'm sorry, $2.5 million that you know, I would put. If they say, oh, we're only do the match in the traditional, then I would do that match. And then I'm not sure that I would. I mean, I don't know if you have to do a Roth, I would be happy with you just putting adding money to the brokerage account. I think the game plan here is similar to like what we've heard from so many people, which is, you know, in two years you'll be 60, right. And at that point you will be, you will need to start taking money out of your traditional account. Pay the tax on that, you know, on the 401k or the IRA, I don't care which one. And you're going to live on that money until you start claiming Social Security. Okay. And so you have to take a little bit more money out. But it's a funny thing because in your situation, Bill, because you need to pull money out of that account, otherwise you're going to have some walloping required minimum distributions. I mean, for real, it's going to be significant. But I think you'll be taking money out at your lower tax bracket, actually, because I think you'll take out, let's just say you're single, right? And you pull out 100 grand a year in your retirement account. You Pay the tax it's due, and then you clear the money you need to pay for your expenses. And you do that 100 grand a year for either seven years or 10 years, you, you know, and maybe you'll see like how things are rolling. You don't have to make your Social Security decision immediately, but you will try to whittle down this two and a half million dollars as much as you can. Right. And then if you take out a little bit more, I would stay in that 22% bracket as much as I could, frankly, in your withdrawals. And I think that'd be great for you because essentially you have put money away. It worked for in your situation, which you put money away at the 24 bracket, you're pulling out at the 22% bracket, but you're popping back up into 24% as soon as you claim Social Security, right? That's what's going to happen. That's fine. Big deal. You got more money than you will probably ever spend. There is, there really is like not a problem here. And I know that you said I hope to work for another two years or less. Do you hate what you do? Do you like what you do? Where are you in the life cycle of your work?

[Bill]

I like what I do. I, yeah, I do. I like what I do. I like the people I work with. I think it's just. I'm ready to do, I'm ready to maybe think about doing something else.

[Jill]

All right?

[Bill]

It wouldn't be the same. It would be something very different.

[Jill]

And you could do something very different where you're like, oh, you know what? I just want to get something where I keep myself active and then help pay for your. Because you'll need health insurance, right? So either you'll get a job that'll help you pay for something on the through the Affordable Care act, or you'll get a job that has insurance that, you know, gives you that. But you're in great shape, man. I mean, I don't know, Mark, if you agree or not. I think that putting in up to the match and having all the other money go into brokerage is my preference. What do you think, Mark?

[Mark]

Believe it or not, I actually kind of prefer the Roth. I mean, obviously put in the match. Whatever you have to do to get the match. If that has to go in the pre tax, so be it. But I, you know, just because he's at the Magic Age of 59 and a half and he can access the money which he needs to start doing to kind of defuse that bomb. I would put anything else into a Roth. I mean there's no better tax treatment than zero tax.

[Jill]

Yeah, but what about having access to the money in the brokerage account?

[Mark]

Yeah, but he has access money to his retirement accounts.

[Jill]

That's true, but it would pop him into another tax bracket. I guess I could go either way on that. I tend to like the liquidity, but I get Mark's argument, which is you have better tax treatment. I'm really hyper focused on this two and a half million bucks for sure. So I don't think you'll make a big mistake either way. It is really, I don't know. I'm, I, I can see both sides to this. If you just say I want to build up that brokerage account, it's accessible, I can start making, you know, if I, if I want to do some tax loss harvesting on a given year, if I want to make some gifts, I can do that. All that being said, I don't think, I think you have a lot of money in retirement assets. I would like, I lean brokerage, Mark Lien's Roth. It's. Either way you're going to be fine. Absolutely fine. Okay.

[Mark]

No pre tax. That's the message.

[Jill]

No pre tax. That's for sure. For sure.

[Bill]

And also, sorry, I was going to say does it change Mark's mind? So I will, you know, I'll certainly, I'll continue to max out what I can put in my HSA and our 401k plan administrator also allows us to do. I don't know, I guess you either call it a mega backdoor Roth. Yeah, so. So I can put up to. And I do. I put 9% of my after tax income into a super Roth and then it's just converted monthly.

[Mark]

So you know, so he's doing it anyway.

[Jill]

Basically. Basically what you're saying is while you still work, you're doing it anyway. Yeah, I mean I think that's. Mark, how do you feel about that with doing the mega backdoor?

[Mark]

I'm leaning broth in this situation.

[Jill]

All right, well, we have one of our first. Disagree. No, it's not really a disagreement. Again, I don't think you're going to go wrong. I really don't. And I think that Bill, for you, just a couple of things to keep in mind, which is number one, because you're not legally married, if I may point out that fact, because you're, I don't know, you do live in life and things are good, but since you're living in your partner's house. Have you guys done some estate planning whereby, like, any. If she were to pass away, does she have kids or some, like, would you be able to stay in that house or would you get kicked out?

[Bill]

That's a good question. And we have done that. And I would be able to stay there.

[Jill]

Okay, good, good, good, good. I think you're in great shape. I don't think. I don't have, like, I'm now, like, agnostic, whether you choose to put money in the Roth or use brokerage, but you're in amazing shape. You have stayed in the. You've, like, stayed in the market and been very frugal about, like, how you spend and accumulated a massive amount of money. I mean, does it astound you? You know, you're a guy. I don't know what you do for a living, but, you know, you make a good living. You don't go crazy, but, you know, you have almost 3 million bucks. It's incredible, isn't it?

[Bill]

It is. You know, when I think about. I mean, I've been working for a little over 30 years and, yeah, I guess 30 years ago, I never, never would have imagined that at 58, I'd kind of be in the situation that I am. So I am, I am fortunate for sure.

[Jill]

You are blessed and you've done a great job. So good luck to you. Let us know if there's anything el. We can do to help you out. And if people are listening and you're hearing, like, oh, my God, I don't have that much money and I make 150 grand a year, or, gosh, I don't feel like I'm ever going to be able to juggle retirement or I really am not even thinking about retirement because I got to get my kids through school. Whatever's going on in your financial life, get in touch with us. Maybe we can help you out. All you need to do is go to the website jillonmoney.com, click the contact us button. Write us a note if you'd like to join us on the air live. Check the box. Mark will do everything else. You can subscribe to this program on the Odysee app or wherever you find your favorite podcasts. Please leave us a rating and review wherever you listen. And of course, 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. Christmas is next week, and if you haven't yet, go see Stephen Singer, the I hate Steven Singer guy. He has the number one gift for Christmas Real natural diamond stud earrings. I'm sure you know that gold and diamond prices are at their highest level in history. Luckily for you, Stephen Singer has locked in his diamond studs at the old prices. His Anita diamond studs still start at just $298, all at the same perfect price as last year. There's no better time to get a PA of diamond studs from Steven Singer Jewelers. Each pair is eye flawless and near colorless. Plus with Stephen's full value lifetime trade in, you can trade in your studs anytime and get exactly what you paid towards a larger pair. Go to ihatestevensinger.com order right now with fast and free shipping to arrive in time for Christmas. Experience the difference at Stevensinger Jewelers Online at I hate StevenSinger.com I hate StevenSinger.com what's up world?

[Vaughn Miller]

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 vibes, 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.