B (2:46)

That's right. You sound good doing it, though. I'll send you the script. So you know what to say.

C (2:50)

How do you feel about spending, you know, a big holiday? You know, you have the big holidays here. How do you feel about spe big holiday out of the country?

B (2:58)

So good.

C (3:00)

I did it once. Yeah, I spent the Thanksgiving in London.

B (3:02)

One year, I think I have spent one Thanksgiving in London when I was a student. But I've spent a Christmas in Africa, which came at the very end of our trip. And it was bad because we were just sort of itching to get home. So, you know, Jackie felt so. She was like, so depressed, by the way. There we were in, like, South Africa having some sort of, like, Christmas, and Jackie's missing her family. And then you have these British people who are in a restaurant, like, singing along to karaoke of like, Imagine. I thought she was going to lose her mind. She's like, I'm out of here. So we walked out and ordered room service. So I don't think that I'm going to notice the whole Thanksgiving thing while I'm traipsing around India. But, you know, could. It could happen. I'm feeling good about it. I'm feeling so good. I'm feeling quite grateful. Mark, I'm always feeling grateful for you. I, of course, and our listeners. So if you listener have a question, maybe during Thanksgiving you're like, I just need to escape and binge some of Jill and Mark shows. Go ahead to our website, jillonmoney.com and you will see everything that's there. Maybe you've missed some radio shows. Maybe you've actually not seen some videos. Maybe you're wanting to listen to old podcasts. Everything is on our website, jillonmoney.com and of course, if you're there and a financial question comes up, maybe you find out at Thanksgiving that somebody's leaving you a ton of money. Like, oh, I just wanted to tell you we actually have $5 million and you're getting it. That's a good thing to know. Give us a holler. Go to jillonmoney.com and click the contact us button. Today we are joined by Peter and Donna. They are listening to us in the Bay Area where Mark was just visiting. And Peter and Donna, welcome to the program. Thanks for joining us today.

D (4:49)

Thank you. Thank you.

B (4:50)

What brings you to us?

E (4:51)

Well, we are retired and we have some questions about asset allocations. Within the monies that we have, my wife and I are slightly disagreement.

B (5:06)

Oh, all right, then. She's right. Let's go. Moving on. Next caller. Mark. Next. Okay, so let's start with some basics. Donna, how old are you?

D (5:15)

69.

B (5:16)

And, Peter, how old are you?

E (5:18)

I'm 68.

B (5:20)

Okay, and you are both retired. Do you guys receive any pension income?

E (5:27)

No.

B (5:28)

Okay, and have you claimed Social Security yet? No. Okay, so you're planning at 70 to claim. Is that your game plan?

E (5:37)

Yes.

B (5:37)

Okay, what will the Social Security amounts at age 70 be?

E (5:42)

The total sum is what I have. It'll be 98,000 gross.

B (5:49)

Nice. Okay, good. How are you? You got Medicare right now, and you have some supplemental coverage, right?

E (5:55)

Yes.

B (5:56)

Okay, got it. How much do you think you spend right now, approximately?

E (6:02)

We know pretty well. We keep track. Copious notes all the time, so.

B (6:07)

Love that.

E (6:08)

16,500Amonth.

B (6:11)

Okay. All in, right?

E (6:13)

All in.

B (6:14)

Okay, gotcha. And you have some grown kids that. Anyone. Anyone still on the payroll for you guys?

E (6:19)

No one's on the payroll. They're. They're. They're out. And one is actually engaged to be married.

B (6:26)

Does that mean you have to spend a pile of money to help with a wedding?

E (6:29)

No, they're very frugal, and we're going to help a little bit, but it's not a big task.

B (6:35)

Okay, got it. So where is most of this money held traditional or Roth assets?

E (6:40)

Traditional.

B (6:41)

Okay. And Donna, how much is in the traditional bucket?

D (6:45)

The traditional is about 1.12 million.

B (6:50)

Okay, and is there any. Is there any money in Roth?

E (6:56)

Yes. 52,000 and 38,000.

B (7:01)

Okay, 52 and 38. Got it. And so we got 90 grand in Roth. And what about brokerage account? Do you have one of those?

E (7:09)

Yes.

B (7:10)

How much is in the brokerage account?

E (7:13)

938,000.

B (7:15)

Very nice. And you live in the Bay Area? It's expensive, I hear. Got a lot of. I heard. Despite reports that the Bay Area was in flames and never gonna regenerate. Of course, like, New York always comes back. It's a great place to live. Do you own a house in the Bay Area?

E (7:34)

We do.

B (7:34)

How much is the house worth?

E (7:36)

3.4 million.

A (7:38)

Whoa. Hello.

B (7:40)

Okay. That's a tidy sum. And is there a mortgage on that property? There is.

E (7:48)

225,000 at 2.25%.

B (7:53)

Oh, gosh. Too bad you didn't take more money out. Right? Okay, is this a house you're going to stay in? Is this one of those big, huge houses where you have to go up five Flights of stairs. And you're never going to be able to age in it.

E (8:04)

No, no, no. It's a nice size house. It does have two floors.

B (8:10)

Okay. But you're going to stay?

E (8:11)

We're going to stay.

B (8:12)

Okay. Is there any rental property?

E (8:16)

No. We have a second home in. Also in California.

B (8:21)

And you do still have it or you have.

E (8:23)

Yes.

B (8:24)

All right. How much is the. And this is a vacation home? Yes. How much is that worth?

E (8:30)

About a million.

B (8:32)

I feel like there was some weird hesitation. Does one of you like it and one of you does not like what's going on with the second home?

E (8:38)

We both like it. It just. It will be. If we have to sell it, we have to find money. That would be what would go.

B (8:48)

Okay. You would be willing to sell because you want to stay where you are, and that's the. That's the priority. Yeah. And is there a mortgage on the million dollar second home?

E (8:58)

Yes. $286,000 at 3.125%.

B (9:04)

Okay. And no kids want to buy that property from you or anything like that?

D (9:09)

No.

B (9:09)

Okay, got it. What else do we need to know about you guys?

E (9:13)

Well, we also have 401k.

B (9:17)

I thought you had traditional money of 1.12. That doesn't include your 401.

E (9:22)

No.

B (9:22)

Okay, let's go. Give me that 401k.

E (9:25)

$832,000.

B (9:26)

That makes me feel a lot better. The news just got better for Jill. Okay. And that 401k stays in the 401k. Right now, the 1.12 was just traditional funds. Was that one okay. And that's IRAs, or also, are they in the old retirement plan? What's the 1.12?

E (9:48)

It's traditional IRAs.

B (9:50)

Okay, got it.

E (9:51)

And they're handled with our broker.

B (9:53)

You got a broker?

E (9:54)

Yes.

B (9:55)

You like the broker?

E (9:56)

We do.

B (9:57)

You do. But you're calling me.

E (9:59)

Well, there's. There's. It has to do with our question. The broker siding with me on our question about allocation.

B (10:10)

Okay, well, the broker's wrong, obviously. The broker's a guy. Let me talk to Donna. So. Pipe down, Peter. Donna, how you feeling about where you are right now?

D (10:19)

I feel good, but I am. I do worry about our allocations because I asked our broker to sort of break it down in simple terms. And I worry that we're too far out there for the point that we are in retirement, you know, early retirement. But we are retired. We don't have until Social Security, you know, next year. We don't have retirement coming, income coming in so I'm just nervous that we're hanging out. Hanging out there. Too far.

B (10:51)

Yeah.

E (10:51)

I mean, you missed a few things that we still have.

B (10:55)

Okay, let's go. Keep going.

E (10:57)

We have High Yield Savings and checking and CDs. 700,000.

B (11:03)

Okay. And that's what you're living on right now? Yes. Okay. High yield savings, CDs. So 700 grand, of which 16,5amonth will be. Right. So we're going to just.

E (11:17)

We're going to say a little bit more.

B (11:18)

Okay.

E (11:19)

Bonds, bonds.

B (11:21)

Separately, a separate bond account.

D (11:23)

Yes, just series I bonds.

B (11:24)

Okay. Okay. I. Bonds. Got it.

E (11:27)

How much in the Last is an HSA of 36,000.

B (11:30)

Okay. How much was in the I bonds?

D (11:34)

23,000.

B (11:35)

Okay. So.

E (11:37)

And there is one more.

B (11:39)

Okay.

E (11:41)

I am being bought out, and I have one. One more payment coming next year. 250,000 gross.

B (11:54)

Not taxed yet.

E (11:55)

Gross.

B (11:56)

Okay.

E (11:56)

Which is what we're using to live on.

B (11:59)

I got it.

E (12:00)

Till I'm 70.

B (12:01)

Okay. So next year, when Donna turns 70, there'll be some Social Security that comes. But of that 250 payment, you'll use that to live on, basically. Right. Essentially, that's after tax. That covers your 16,500 ish amount, right?

E (12:21)

Yes.

B (12:21)

Okay. So I don't have to really worry about that 250 that gets spent. What we really have to project forward about is, even if you spent more than that, like you're helping the kid with the wedding. Let's just pretend by the time you, Peter, are claiming your Social Security. Right. That your cash position. Again, I'm ignoring the 250 payment because you're going to use that to live on. Maybe you'll burn through some of the cash on hand that. Let's just pretend. If we just did a snapshot in time, that you have more. Like, let's just say it's 600,000. And I know it won't be that, but just to. In a year and a half or whatever, you'll have 600 left, plus all these other assets.

E (13:02)

Let's say that's true. Let's say that's correct.

B (13:04)

Right. Okay. So we'd have $2 million in your traditional. Together. Right. The 401k and the traditional 90 grand in your Roth. Almost a million bucks in the brokerage. 600 grand in cash, the bonds, the HSA. Done. Right. Okay, so we know that, like an abstract reading of this, that you probably have enough money to generate the money you need in excess of your Social Security. Right. I mean. Yes. You live in a high Tax state. I get it. But what we're really looking at here is, you know, we need to get to, uh, let. Let's say 98, 100. We need to generate. I'm going to be generous in this, like, about 150 grand a year from your assets. Is that about right? Because you're going to get 98 gross from Social Security. We need to get it, let's say 130. Another 130.

E (14:05)

That's exactly what we've calculated, right?

B (14:07)

130. So we need 130 a year from your combined assets, which is 2 million of the traditional. And I'm going to just round about a million and a half in cash brokerage. Okay, that should be doable, right?

E (14:27)

Yes.

B (14:28)

The issue about allocation is what, right now, like, you're feeling. You. I'm going to just put. Donna, you're feeling a little bit like we're hanging out with a little too much risk. And you, Peter, are feeling like, we're cool, we're good. What are you making. Why are you making yourself crazy? Is that about the right.

E (14:48)

Yes. And we feel that way because we essentially have close to five years of cash or readily available funds to ride out a bear problem, you know?

B (15:02)

Well, what is the allocation of the traditional and the brokerage account? What's it look like? Is it all stocks?

E (15:10)

No, it's 65% equities, 7% bonds, 28% cash and treasuries. Is all our monies.

B (15:21)

When you say cash and treasuries, you're including the high Yield savings and CDs, right? Okay, I got it. And Donna, is it. It's. It's probably that you're looking at that traditional account, and if the market goes down, there's like this big number, and you kind of. Do you kind of forget that the cash is out there as your buffer?

D (15:39)

I do. I mean, we burn through it pretty fast.

B (15:42)

I have to say, I know how that happens. What's the downside? Let's. Let's talk about this for a second. If you were to reduce the equity position a little bit, just a little bit, is there a huge downside that you see in this, Peter? I mean, again, even if at a very gentle withdrawal rate of 3%, you're gonna be able to create the income you need. So I guess the question is to maybe mollify the anxiety that Donna feels. Would it be helpful to just pull back some of the risk? Do you. Can you see that as a possibility, Peter?

E (16:27)

We could. I just don't under. I don't have a strong feeling because we seem to have enough money to cover ourselves should there be a problem.

B (16:42)

Right. Okay, let me, let's, let's do this. Let's have fun for a second. Yeah, you're right. You have enough money. I'll concede that. Let's just say that next year your $3 million, right. The traditional money plus the brokerage account, let's just pretend. But that $3 million next year went to one and a half million dollars in your head, you know. Well, I have plenty of money in cash. We can ride it out. You sure you feel okay with that? I'm just giving you, I'm giving you the God's honest truth. Like that could happen. I'm not saying it's going to happen.

E (17:17)

Yeah, I wouldn't feel as good.

D (17:19)

Yeah, he's, he's an eternal optimist and I'm a cautiously optimistic, so.

B (17:26)

Well, I'm an out and out pessimist. So we're good. I'm going to bring Mark in here. So Mark, how are you feeling about this? They're in their late 60s. They got plenty of money to some extent. I guess that my pessimism is not so much that the numbers don't add up. I think they add up. I think you're right. I'm sure that the advisor is like these people, come on, they're fine. And it is true. But I do think the emotions do play into this, that if we go into, you know, a two year bear market where you're marked down from, you know, a $3 million portfolio to 1.8 or 1.6 and you blow through a lot of your cash because you're, you're not making as much. Right. You don't have the money coming in. Like that's a real thing. So Mark, what do you think? Do you think that pulling back on some equities might make sense?

C (18:13)

They're fine. They're, they're definitely fine the way they are. You know, if, if they were both on board with that, no problem. But they're both not on board with that. So there's got to be some sort of a happy medium here. And I don't know if that's pulling back some of the risk or making sure that, that 700,000 in cash never really goes below 700,000 in cash. They always replenish it. But there's got to be some sort of happy medium.

B (18:33)

So I was thinking something similar. You're going to have 250 grand coming in next year. What is the strategy around the traditional assets. Are you looking. Are you pulling some money out of there? Slowly but surely. Are you planning to do that once you collect Social Security? What happens over the next five years after that first payment, that last payment comes in of 250?

E (18:55)

Yeah, we plan to, as Mark said, leave a certain amount of our cash position, hold a line. And we haven't decided exactly what that line is. And when we start to go below that, we would start pulling money out of.

B (19:16)

Yeah, I mean. Yeah, I mean, well, first of all, I think you got to get some of that $2 million out. So that's. So did you get a $250,000 payment this year already?

E (19:26)

Yes.

B (19:27)

You did. And so you guys are in the 24% bracket, right? Yes. Okay. So I would make sure that I pull out enough money this year to get me, like, stay within the 24%. I would pull that money out. So you have it. Just have it set aside and you got this coming up. And, you know, I'm okay with putting that in the brokerage account. I think you guys, I think the line in the sand is probably making sure that the high yield savings and the CDs doesn't go much below half a million dollars. And I think that if it were to go, you just, you know, you pull your money out. But I think if you're going to stay in the 24% bracket, I think you should stay in the 24% bracket and you should actively be pulling money out of that traditional account, paying the taxes. Right. Pulling that money out, adding it to the brokerage account and. Or the CDs high yield savings, which you're going to be credited with less interest as the interest rates come down a bit, but that you never can go below that half a million dollars. That's the line in the sand. The broker's probably not going to be thrilled about that because they're going to be like, oh, you know, you don't need so much cash, but this is your sanity money, Donna. That is your sanity, and that's going to be where we go. So that way you don't have to pull back on the equity position. If you're a 7, look, 65, 35 is a perfectly reasonable position for you guys to be in right now. Also, we do know if the blank hit the fan. I mean, of course, if the blank hit the fan, the second home wouldn't be as worth as much. But if something really bad happened or if you're, like, not using the second home, we know there's plenty of money here, so I think it's okay. But I think we are in a partnership, Peter and Donna, Inc. And the partnership has to be that you're both comfortable with where you are. You know, you talk to the advisor or the broker, you say, we are. We are just never going below a half a million dollars in cash. That is like, our line in the sand. We're going to make sure that we stay right there, and that is where we are comfortable. And otherwise, we're fine with where we are. We want to make sure we're pulling money out of our traditional so that we don't get whacked with RMDs at 75, and we're going to stay within the 24% bracket, and then life is good. How does that sound as a game plan, Donna?

D (21:38)

That sounds good. I just love you guys, your advice so much. And now it's three against one. So I'm in.

B (21:46)

Well, it's not like I don't want to say it's three against one. I am more in your camp. Like, I would. Okay, you want to know the other way to look at it? We have plenty of money. Why are we keeping risk out there? Who cares? We're like, we're. We're worried. Like, if it makes my nerves feel better, I'm a 6040 investor. Mark knows that. I really am all the way. I am married to a 6040 investor. We could be much richer if we were more aggressive in our portfolios. We're not. We're not. It just makes us feel better. And we haven't. If you have enough money that you don't need to take the risk, the alternative is like, I don't need to take the risk. What do I care? Now, listen, I don't have kids. I don't worry about a legacy. All I got to worry about is making sure Mark has a job for five more years. That's it. So, see, it was mark first eight years, maybe five. Five. Five is what I give you. I'm giving you five turning 60. God damn it. So I think that that's the alternative, but I also get it. Like, you're not in any stress. There is money. There is enough money for you to live your lives. There really is. So presuming you guys just feel good at that place, that's fine. Nothing bad is going to happen. And I think that really the second home is your real safety net. Because even if it weren't worth a million bucks, even if you went into some terrible bear market recession, you'd unload it. It would be 750 grand. You'd have another half a million dollars. You're done. Then you really don't worry about anything, right?

E (23:12)

Yeah.

B (23:13)

Are all of your docs in place, your estate docs, etcetera?

D (23:18)

Yes.

B (23:19)

All right. Good. All right. That's it? That's all you got? I think you're in good shape. I think you guys are going to be just fine either way. 60, 40, 65, 35. Make sure you got that half million dollars that's there. Get some money out of the traditional account along the way. Stay in the 24% bracket and enjoy yourselves. And don't get hit by a Waymo out on the road. Okay?

E (23:41)

Thank you.

B (23:42)

If you are like Peter and Donna and maybe have a slightly different outlook.

A (23:46)

On risk or you want us to.

B (23:48)

Help you quantify what that risk looks like, get in touch with us. Go to Jill on money.com, click the contact us button. Write us a note, let us know if you would like to join us on the air live, because this is a perfect example. First of all, I love having both people join us, both part members of the couple. And it also gives us an opportunity to kind of explore what's going on. I think that if Peter had just sent us an email with the facts, we would hear one thing, but we wouldn't really understand Donna's position in terms of how she was feeling. The feeling part of this matters, gang. I know you want it to just be a mathematical equation. It's not. So we want to make sure we pay attention to that. And if that's important, important to you, get in touch with us, okay? Hey, Thanksgiving. We are so grateful for you guys more than anything else. We'll talk more about that tomorrow. You can subscribe to us on the Odyssey app or wherever you find your favorite podcast. We ask if you wouldn't mind, leave us a rating and review. Wherever you listen today, tomorrow, this whole weekend, do something nice for someone else today. Change your work, change your wealth, change your life. Thank you for listening. We'll talk to you tomorrow.

F (25:00)

What's up? It's Draymond Green. I'm back for my 14th NBA season and my podcast, the Draymond Green show is back, too. This season, I'm breaking down games, reacting to the biggest NBA stories and sitting down with teammates, rivals and culture shapers. And trust me, I'm not holding back on the court or on the mic. Two new episodes every week, new segments, big conversations, real basketball talk for the real hoop head. Listen to and follow the Draymond Green show. Wherever you get your podcast. We're back. We're better. Let's get it.