What to Do With School Pension?

Summary

Episode Overview

Theme/Purpose:
In this episode of Jill on Money, host Jill Schlesinger answers a listener’s important personal finance question regarding a school pension. The listener, Mark from Nebraska, wants advice on whether his wife should leave her funds in her teaching pension plan or withdraw them now that she has left the profession. Along the way, Jill and her producer Mark Tularcia dive into broader family finance topics, including cash flow, retirement savings, housing considerations, and essential protections for young families.

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Key Discussion Points & Insights

1. Listener Background [03:27–04:27]

• Mark’s Situation: Mark’s wife recently stopped teaching after seven years (she is vested in the teacher’s pension). She’s currently at home with their three young children, ages 4, 2, and 9 months.
• Pension Details: The cash-out balance of her pension is approximately $34,500.

2. Should They Withdraw, Leave, or Roll Over the Pension? [04:27–13:04]

• Is Returning Likely? Mark’s wife is likely done with teaching and, if she returns to work at all, she’d prefer nonprofit or volunteer work.

• Jill’s Guidance: With no strong chance of resuming teaching, the default advice is to take the cash value and roll it over to an IRA. This consolidates retirement assets and offers more investment control.

  • Quote (Jill, 12:35): “I would roll it over, especially... she has really no ambitions about going back into teaching.”
  • Producer Mark concurs: “I would... I think I’m just inclined to take it.” (12:33)

• How-To: Mark’s wife already has her retirement accounts at Vanguard. The plan: do a direct rollover of the pension funds to her traditional IRA.

3. Family Finances: Cash Flow, Retirement, Emergency Fund [05:22–11:31]

• Income and Budget: Mark earns ~$101,000 (base plus bonus); the household is making it work on one income, though it’s tight.
  • Mark adjusted his W-4 to reduce over-withholding on taxes: “I'm not looking for a big refund check. I'd like it each month.” (05:47)
• Retirement Savings:
  • Mark’s 401(k): 6% of salary (Roth contributions); employer matches 4% and adds an extra 5% all to traditional, totaling 9% match. (06:20)
  • Combined retirement assets (not counting the pension):
    • Mark’s Roth IRA: $61K
    • Mark’s Traditional IRA: $42K
    • Wife’s Roth: $9.5K
    • Wife’s Traditional: $5K
    • 401(k) balances: Mark Roth ~$11K, Traditional ~$20K
• Remarkable Progress: “You guys have saved a lot of money and you're very young. I mean, that's incredible.” (07:58)
• Kid College Savings: 529 plans started for two oldest kids but contributions paused due to tight cash flow and growing family (08:14).
• Emergency Fund: $27,000 saved (11:24)

4. Housing Situation and Future Moves [09:12–11:24]

• Current Home: Worth ~$320,000, $148,000 remaining on a 15-year mortgage (rate: 2.125%).
• Potential Move or Expand: Considering moving for more space, but low mortgage rate is a powerful incentive to stay and consider an addition.
  • Jill: “Moving with that kind of a rate... I would absolutely investigate how the idea of adding to what you have could create more space for you.” (09:39–10:47)
  • A move would increase payments by $600–700/month—likely unaffordable on current budget.

5. Other Debts and Spending [11:31–12:05]

• Car Loan: $9,000 left, payments of $380/month at 6.5%.
  • Jill asks about keeping the car long-term: “Is it a car that you can just keep and own for a while?” (11:51)
  • Mark: Yes—a minivan “our children are in the process of destroying.” (11:59)

6. Final Advice & Hallmarks of Good Planning [13:04–15:59]

• Consolidate Pension: Direct rollover to Vanguard IRA; keep retirement accounts simple.

• Monitor Cash Flow: Wait to see the true impact of going down to one income and adjust savings/contributions as needed.

• Explore All Options for Space: Prioritize cheaper home addition over expensive move. If addition is possible, might reduce retirement contributions temporarily to save cash for it.

• Life Insurance/Estate Planning:

  • Mark: $2 million on himself; coverage on wife too.
  • Wills and guardianship done after first child, up-to-date.
  • “I think you’re in really good shape.” (15:43)

• Producer Mark’s Endorsement: “Ahead of the game... Definitely ahead of where I was when I was 30.” (15:55)

• Jill’s Closing Wisdom: “Do something nice for someone else today... Change your work, change your wealth, change your life.” (16:36)

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Notable Quotes & Memorable Moments

On Perfection vs. Practicality

• “I’m not into optimizing anything. I think you do the best you can do. Let’s try to get you a bunch of different options and get you where you want to go.”
  — Jill [01:49]

On Family Chaos

• “Oh boy, you have got your hands full.”
  — Jill, on hearing the ages of Mark’s children [04:59]
• “It’s a minivan that our children are in the process of destroying. So I’m sure, yes, we’ll drive it to the ground.”
  — Mark [11:59]

On Retirement Savings

• “You guys have saved a lot of money and you’re very young. I mean, that’s incredible.”
  — Jill [07:58]

On Housing Math

• “I would absolutely investigate how the idea of adding to what you have could create more space for you and then compare that to what it would cost to move.”
  — Jill [09:41]

On the Pension Decision

• “I would roll it over, especially... she has really no ambitions about going back into teaching, you know?”
  — Jill [12:35]
• “If she takes that and rolls it into her traditional IRA... now she’s got $35,000 in the account, it’s consolidated, it’s in one place.”
  — Jill [13:02]

On Being on Track

• “30 year olds doing great, right? Good savings, low debt, everything’s looking good to me.”
  — Jill [15:43]
• “Definitely ahead of where I was when I was 30.”
  — Producer Mark [15:55]

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Timestamps for Important Segments

| Timestamp | Segment | |-----------|------------------------------------------------| | 01:49 | Jill's Intro—her philosophy on advice | | 03:27 | Mark explains his wife’s pension situation | | 04:21 | Is she likely to return to teaching? | | 05:22 | Family income and cash flow | | 06:20 | Retirement plan and contributions | | 07:34 | Other retirement savings | | 08:14 | College savings status | | 09:12 | Housing dilemma—move or add on? | | 11:24 | Emergency fund and other debt | | 12:33 | Producer Mark and Jill: the pension decision | | 13:02 | How to roll over the pension | | 14:00 | Monitoring cash flow and spending adjustments | | 15:25 | Life insurance and estate planning check | | 15:55 | “Ahead of the game” conclusion | | 16:36 | Jill's closing words—philosophy and kindness |

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Summary: Actionable Takeaways

• Pension: With little chance of returning to teaching, roll over the pension to an IRA for better control and growth.
• Housing: Strongly consider a home addition instead of moving (due to historically low mortgage rate and high moving costs).
• Cash Flow: Track expenses closely as your financial situation changes; be prepared to adjust retirement savings if needed to meet future priorities like home expansion.
• Protect Your Family: Maintain adequate life insurance and up-to-date estate documents.
• Perspective: You’re doing better than you might think. Don’t stress about perfection—solid, sensible steps forward are what matters.

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This episode exemplifies Jill’s practical, jargon-free financial guidance. Her tone is encouraging, realistic, and adaptable to real family circumstances—which makes the advice both effective and reassuring.

Transcript

[A]

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[B]

Foreign welcome to the Jill on Money show. It's Wednesday, September 17th and we are here trying to help you make sound financial decisions. Now I said sound. It doesn't mean they're perfect. Sometimes many of you will come on trying to like optimize your life. That's not my jam. I'm not into optimizing anything. I think you do the best you can do. Let's try to get you a a bunch of different options and get you where you want to go. So if that's you and you're not into like, oh, I have to be the best, the da da da, the superlative, then why don't you get in touch with us? Just go to jillonmoney.com, click the contact Us button, write us a note and if you want to join us on the air, all you need to do is check the box and Mark Telercia will arrange to get you on the air. While you are on the website, you should check out all the content that lives there. We've got a free weekly newsletter. We've got resources and there are books. I have two of them. One is called the Great Money Reset. That's the most recent one. That's the one, I think that you guys are all starting to feel like you need to. To own. You need to at least incorporate into your lives. Resetting to a different place. It doesn't mean that you have to blow up your life, doesn't mean you have to spend all your money. But being much more thoughtful about how you're going to make changes in your life and be clear that the money is the way to make those changes. It is not about the money in and of itself. So. So check out my book. It's called the Great Money Reset. Okay. Today we are talking to Mark from Nebraska. So, Mark, welcome to the program and what can we do for you?

[C]

Hey, Jill. Hi, Mark. So originally my question was on my wife's pension. She stopped teaching this past spring. And so we are trying to decide if we should pull her out of the pension plan, keep her in. I've done a little bit more reading on the plan itself since then, so I kind of have some ideas, but let's kind of hoping to get some advice from you.

[B]

Okay, and how many years into the pension did she have?

[C]

She was. She had seven years into the pension and she's vested. Correct.

[B]

Okay, what's the balance right now of that pension? If you said we're done, she's never going to be a teacher again, We're. What's the amount of money that would be available to her if she wanted to pull it out right now?

[C]

It was 34,500 ish.

[B]

Okay. And do you think she is done with teaching, Mark, or do you think there's a possibility she'd go back?

[C]

I asked her that question and she said if we had to because she needed to make more money, she would. Otherwise, if she ever went back into the workforce, she's staying home with our kids right now. But if she went back into the workforce, then she'd like to do it at maybe like a nonprofit or like a volunteer organization rather than going back to teaching. So.

[B]

Okay. Because it's hard, that teaching thing. All right, you got some kids. How old are they?

[C]

Four, two and nine months.

[B]

Oh, boy, you have got your hands full. Is that Mark laughing there?

[D]

That's me laughing.

[B]

Okay. For. No wonder she's staying home. How can you work full time like that? That's exhausting.

[D]

Oh, my God. Mark sounds like, he's a little exhausted.

[B]

Well, he's exhausted because he had a car thing this morning, so. We already know that. Mark told us that off the air. Okay, so Mark, you're working full time and how much do you earn?

[C]

Base plus bonus is right around 101.

[B]

Okay, great. That's great. And Mark, how old are you guys?

[C]

We are both 30.

[B]

Oh, young. With your life ahead of you. And how are you guys doing on just the one salary, on the 100 1000, with the three kids, your wife's home, how are you feeling cash flow wise?

[C]

It's been a little bit tight, but I. I recently adjusted my W4 to kind of get it updated because we were we over withheld last year. We didn't make a whole lot of changes this year, and then I'll have to do it again for next year. Once we have, we really see the reduced income because I'm not looking for a big refund check. I'd like it each month.

[B]

Yeah, right. Like parcel it out so that you don't feel like you're so tight every month. And are you putting money into a retirement plan through work right now, Mark?

[C]

Yep. So I contribute 6% of my salary. Each paycheck in my work matches 4% and then adds an additional 5% on top.

[B]

Wait, wait, wait, wait, wait. That's pretty darn good. 6%. Is it a traditional or a Roth?

[C]

I contribute to the Roth portion, but my company's contributions are all traditional.

[B]

So you go 6% into the 401k, they do 4%, 100% up to 4% to the traditional, and then another 9%, another 5% or 9%. Did you say 5%? Right?

[C]

5%, yep.

[B]

So they're putting away 9% into that traditional. Wow, that's pretty amazing. How much money do you have in the Roth? Right now?

[C]

The Roth 401K, I think, was right around 11,000.

[B]

And what's in the traditional 401K?

[C]

I think around 20,000.

[B]

Wow, that's great. That's some match. Wow. Do you have money outside of this retirement besides the pension? Do you have money that's outside of this? Do you have other IRAs or Roth IRAs?

[C]

Yes. So my wife and I both have traditional and Roth IRAs outside. I have a Roth IRA that has 61,000 in it. Traditional IRA that has about 42,000 in it. Then my wife has a Roth IRA with 9,500 in it, and then her traditional has about 5,000.

[B]

You guys have saved a lot of money and you're very young. I mean, that's incredible what happens for these kids, for education. I assume that there is some thought about it. I don't know if you have the cash flow to do anything about it. What are you thinking?

[C]

Oh, we have 529s set up for at least two of them, but they're not anything special. I think the oldest has like 600 bucks in it and the youngest has like 200. We haven't, we stopped contributing to after the third one was born, I think.

[B]

Yeah, because you were like, oh my God, everything is so expensive and we're exhausted.

[C]

Yep, diapers get up there.

[B]

I know. I can't even believe it. I was just got, I was just fielding a question. I looked up the cost of a child in the first year of life. Yowza. Holy smokes. That's. That's a real number there with all the stuff. So when you look ahead, Mark, besides this pension question, I'm just wondering, is there anything else that you are thinking about for yourselves? About some other questions, other ideas, anything else that we should be covering as I get to the answer on the pension question?

[C]

I mean, we'll probably be looking to move in the next couple years, depending as rates go, but you know, we're kind of rate locked right now.

[B]

So how much is your house worth?

[C]

Zillow estimates about 320,000.

[B]

And what's the amount of the mortgage that's outstanding?

[C]

We've got 148,000 left.

[B]

And the rate?

[C]

2.125.

[B]

Can I convince you to do an addition?

[C]

That's what our neighbor is trying to tell us, that we can probably add on to the back. So we should investigate it.

[B]

Yeah, I mean, moving with that kind of a rate, I mean, how, how much would you have to pay to get into a house that you'd want to be in? I mean, I don't. I also I should say that like, are we talking about you're moving because you don't like your school district or just before space?

[C]

It'd probably be more for the space reason.

[B]

Okay, then we really have to look at how you guys can build up some money and think about doing some sort of addition. I think I would investigate that. Because if you were to move for space, how much more would you have to pay?

[C]

So we're on it. We have a 15 year mortgage. We've got about 10 years left, which is one reason why the rates. So, so if we did a 30 year on the next house and we got it for between 350 and 400. I think the payment per month would be. Would jump up by like probably 6, 700 bucks, which.

[B]

Right.

[C]

Probably a little too much. So.

[B]

So you'd have to do one of two things. Then you'd have to wait for rates to come down. Or alternatively, you would have to put more money down to make it a smaller note. Okay. Put it this way. I would absolutely investigate how the idea of adding to what you have could create more space for you and then compare that to what it would cost to move. That's what I would do. And what about just plain old money in the bank? You guys got some emergency reserves or brokerage accounts anywhere?

[C]

No brokerage yet. We've got about 27,000 in emergency savings right now.

[B]

Great. That's great. Because you got to pay for that car. Any other debt? Any debt besides the mortgage?

[C]

We have a car loan currently. That is probably like 9,000 left for the next couple years. It's like 380amonth.

[B]

Okay.

[C]

I mean, the rate, six and a half percent.

[B]

Oh. Not cheap. That's a real number. Is it a car that you can just keep and own for a while?

[C]

It's a minivan that our children are in the process of destroying. So I'm sure, yes, we'll drive it to the ground.

[B]

Thank you very much. I like the destruction, the. The mayhem, the four year old, the two year old, the nine month old in the process of destroying, working it over. That. That thing's going to be like Fred Flintstones car. Mark, you may be the only person who gets that joke. Mark Tulare. Okay. Yabba dabba do. Thank you. Okay, Mark Tulare, since you put yourself on the mic, what do you think about Mark's wife's pension? What should we do with that?

[D]

I would. I think I'm just inclined to take it.

[B]

Me too. I would roll it over especially. Especially.

[D]

She has really no ambitions about going back into the. Into the teaching, you know?

[B]

Yeah. I would say that if she takes that and rolls it into her traditional 401k. Right. That $5,000 401k that she has. I mean, sorry. That traditional IRA that she has, the 5,000. I would just roll it in there. Where's that held? That traditional account and your Roth account, where are those held?

[C]

Her accounts are both at Vanguard.

[B]

Perfect. I would take. I think I would take the pension. I'd roll it over directly. Now she's got 35 grand in the account. It's consolidated, it's in one place. She's probably not going to be a Teacher again, be a teacher. She's got these three kids she's teaching right now every day. No relief. What I would be interested in seeing is how your cash flow looks after you do the adjustment. Your savings levels are incredibly high considering you're 30 years old. I mean to consider that right now You've got over $100,000 in more than that. Let me just see this. So you've got your roth, you got 100, then she's going to have 150, 60. So you have like $180,000 in retirement savings. I wouldn't do much to change that. I think you should explore what it would mean for you to potentially change the space that you have. And if you find like, okay, if we spent, I'm going to make it up 50 grand right now in our house. We could make it and have it and it'd be perfect. Then we might talk a little bit about how to maybe you, maybe you would pull back a little bit on your contribution to your retirement account and build up some of your cash so that you can help pay for that. Or maybe we would look at, hey, what would it look like to get a small equity loan or line of credit to do that work? It may work, it may be beneficial. Or maybe you're like, you know what, life's good. I'm no longer, instead of 100, I'm making more like 140. I've done really well and we could start looking at maybe it does make sense for you to think about another house. So I think you've got a lot of options. I do think from the world of whether you keep a pension or not usually is dependent on just whether or not she's going back to that place. And as Mark said, doesn't sound like that's happening. So I think you're in very good shape. So of course I will end by asking you the very boring questions of Tell me about the life insurance you have on your lives. She's the primary caretaker, you're the primary wage earner. You need life insurance. What do you got?

[C]

I have, I think I have 2 million on me.

[B]

Oh, that's good on her. Oh good, that's good, great. And what about wills, power of attorney, guardianship, all that fun stuff?

[C]

We got that taken care of after the first one was born and hopefully it's still current for all three.

[B]

Excellent. I think you're in really good shape, Mark Tularcio, what do you think about this? 30 year olds doing great, right? Good savings, low debt, Everything's looking good to me.

[D]

Ahead of the game. Definitely ahead of where I was when I was 30.

[B]

Oh listen, low bar there man. We are very grateful when you get in touch with us and come on the air and join us. So if you would like to be like Mark from Nebraska, you should just go to our website jillonmoney.com and there you in the upper right hand corner. Wherever you are on the website you will see there's a contact us button. Click that button, write us a note. If you want to come on the air then just tell us by ticking off that box. Mark Tularsi will do everything else and then we have fun conversations just like this one. So if you'd like to do that jillonmoney.com that's the website. All of our information and our content lives on that website. So check it out and just bookmark it. You can subscribe to us on the Odysee app or wherever you find your favorite podcast. Please leave us a rating and review wherever you listen and do something nice for someone else today. It's not going to take a lot. Just think about someone else. Do something nice and I think you're going to feel good about that. That person's going to feel good about that. Change your work, Change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

[E]

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[F]

Three judges, one bench zero room for nonsense. I'm Judge Dan Mentzer. Joining me are Judge Rachel Juarez and Judge Yodit Toelday. And on Hot Bench we don't just hear cases, we debate. What she's asking for is for the payments that she made on his car.

[B]

But there's still payments to be made.

[F]

Correct? And we deliver justice. That is the verdict to the court. Follow and listen to the Hot Bench podcast on the free Odyssey app or wherever you get your podcasts.