Worried About Having Enough Money

Summary

Podcast Summary: "Worried About Having Enough Money" Jill on Money with Jill Schlesinger | Released December 17, 2024

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Introduction: Navigating Current Financial Landscapes

Timestamp: 02:09 – 03:40

In this episode of "Jill on Money," host Jill Schlesinger sets the stage by discussing the imminent Federal Reserve meeting scheduled for the following day. She anticipates a potential quarter-point interest rate cut and speculates that the Fed might pause rate changes in January. Jill emphasizes that while these financial shifts are significant, their impact may vary among listeners:

“For most of you, it's not gonna impact your life so much.” (02:20)

She invites listeners to engage with the show by submitting questions about interest rates, debt management, and other financial concerns via their website, jillonmoney.com.

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Main Topic: Assessing Retirement Readiness

Timestamp: 03:40 – 17:42

Listener Spotlight: Iris from New York City

Timestamp: 03:40 – 16:31

Jill introduces Iris, a 64-year-old professional from New York City, who is contemplating her retirement strategy. Iris seeks guidance on the optimal time to start taking Social Security benefits and whether her current savings suffice for a comfortable retirement.

Iris’s Financial Profile:

• Annual Income: $85,000
• Retirement Savings:
  • 403B Plan: $355,000
  • Traditional IRA: $30,000
  • Rollover IRA: $350,000
  • Roth IRA: $55,000
• Non-Retirement Assets:
  • Checking Account: $10,000
  • Cash and Short-Term CDs: $175,000 (earning 4-5%)
  • I Bonds and E Bonds: $30,000
  • Vanguard Brokerage Account: $10,000
• Additional Income: Small pension of $10,000/year
• Living Situation: Renting in NYC for $3,001/month
• Social Security Estimates:
  • At 67: ~$2,500/month
  • At 70: ~$3,300/month

Key Discussion Points:

1. Current Financial Health:

   • Jill praises Iris’s disciplined saving habits, noting her substantial retirement and non-retirement assets.
   • Jill’s Observation: “Putting away so much money. It's crazy. So it seems to me that there's no way in heck you are spending six grand a month.” (15:08)

2. Spending Habits:

   • Iris maintains a modest lifestyle, spending approximately $3,000/month on rent and minimal additional expenses.
   • Iris on Spending: “You think the outside figure would be 3 per month? Per month. And I would say that that takes in kind of everything over the course of a year.” (08:53)

3. Retirement Timing:

   • Jill advises that based on Iris’s savings and income projections, she is well-positioned for retirement.
   • Jill’s Recommendation: “I really want you to wait till age 70.” (12:55)

4. Maximizing Savings:

   • Suggestions include optimizing contributions to the 403B plan up to the employer match and reallocating excess cash into the Vanguard brokerage account for better growth potential.
   • Jill’s Advice: “I would just put up to 4%. Then I'd put money into my Roth IRA. And then the rest goes into the brokerage account.” (15:08)

5. Behavioral Finance Insights:

   • The discussion touches on the importance of balancing saving with enjoying life, emphasizing the need for Iris to allocate some funds for travel and personal enjoyment.
   • Jill’s Light-Hearted Suggestion: “Iris, go out to dinner a little bit, will you?” (15:25)

6. Iris’s Future Plans:

   • Considering travel destinations such as Dublin, Edinburgh, Australia, and Iceland, highlighting her desire to leverage savings for fulfilling experiences.
   • Iris on Travel: “There’s Australia.” (15:58)

Conclusion of Iris’s Interview: Jill and Mark commend Iris for her financial prudence and encourage her to enjoy the fruits of her labor. They also extend similar encouragement to listeners who may have comparable financial concerns, urging them to reach out for personalized advice.

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Key Takeaways and Insights

1. Comprehensive Financial Planning is Crucial:

   • Evaluating all income streams, including pensions and Social Security, alongside savings, provides a clear picture of retirement readiness.

2. Maximizing Employer Benefits:

   • Fully utilizing employer-matched retirement contributions can significantly enhance long-term savings growth.

3. Balancing Saving with Lifestyle:

   • It’s essential to maintain a balance between saving diligently and allocating funds for personal enjoyment and experiences to ensure a fulfilling retirement.

4. Flexibility with Investments:

   • Diversifying investments beyond retirement accounts, such as into brokerage accounts, can offer better growth potential and financial flexibility.

5. Engaging with Financial Advisors:

   • Personalized financial advice can help individuals optimize their retirement strategies and address specific concerns.

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Notable Quotes

• Jill Schlesinger:
  “For most of you, it's not gonna impact your life so much.” (02:20)
  Addressing the relevance of Federal Reserve decisions to the average listener.

• Iris:
  “I think I'm stuck in the spending mode that I adopted when I first moved to New York City over 20 years ago.” (09:53)
  Highlighting the challenges of maintaining financial discipline in high-cost living areas.

• Jill Schlesinger:
  “I can't even believe this. Putting away so much money. It's crazy.” (11:49)
  Recognizing Iris’s exceptional saving habits.

• Mark:
  “This is behavioral finance.” (15:35)
  Emphasizing the psychological aspects of financial decision-making.

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Conclusion: Empowering Financial Confidence

Timestamp: 16:49 – 17:42

As the episode wraps up, Jill and Mark reiterate their support for listeners who may have financial worries similar to Iris's. They encourage the audience to reach out via jillonmoney.com for personalized advice and to consider appearing on the show for live discussions. The hosts emphasize the importance of taking actionable steps to secure one’s financial future while enjoying present endeavors.

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Engage with "Jill on Money":

• Website: jillonmoney.com
• Subscribe: Available on the Odyssey app and all major podcast platforms.
• Connect: Submit your financial questions or seek advice by contacting the hosts through their website.

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This summary captures the essence of the December 17, 2024 episode of "Jill on Money with Jill Schlesinger," focusing on retirement planning and financial security through the lens of a listener's real-life scenario.

Transcript

[Mark]

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[Jill]

Today.

[Mark]

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[Jill]

Welcome to the Jill on Money show. It's Tuesday, December 17th. An exciting day for you. I know you've got it circled on your calendar. The beginning of a two day Federal Reserve meeting tomorrow will conclude. I think we're going to get a quarter of a percentage point cut. Maybe, maybe not. But I just think we are. And, and I think the Fed goes on pause for January, but we'll wait and see. But for most of you, it's not gonna impact your life so much. I think for many people who listen to us, you say to yourselves, well, what do I care. I don't carry tons of credit card debt. Cause, I don't know, jillionaires don't have a lot of credit card debt. So if you do, you'll get a little reprieve. If you're a saver, you're gonna get a little less interest, but, you know, a full percentage point since the beginning of this year. And this is not exactly normalized rates, but we're getting down in the right direction. Okay? So if you've got a question about interest rates or something going on, or if you do have a lot of different debts and you want to know the order in which you should pay them off, give us a Holler. Go to jillonmoney.com, click the contact us button, and write us a note. And if you would like to join us on the air, check the box. Mark will do everything else. All of our content lives on the website, so check it out, including our free weekly newsletter comes out every Friday. So check that out, because Mark does a fantastic job compiling the stories you may have missed. All right, today we are talking to Iris, who is joining us from New York City. Hello, Iris. How are you?

[Iris]

I'm fine. Thank you so much for having me.

[Jill]

Of course. What can we do for you?

[Iris]

Well, I'm at retirement age, and I'm wondering when I should start to take my Social Security benefits. If the money that I have saved up for retirement is enough for me to retire on. What can I do to improve my situation?

[Jill]

Oh, I love improvement.

[Iris]

And how can I derive the best scenario, joy, delight, from the money that I have so carefully saved?

[Jill]

Oh, I. That's my favorite part of your whole question. So let's go in this order. Let's go in the order of. Let's see where you stand right now. So you're working full time, Iris, I'm working full time. How much do you earn?

[Iris]

I earn about 85,000 a year. I enjoy what I'm doing. I don't see a need to retire in the foreseeable future, I. E. The next couple of years. And I, I, I like what I do.

[Mark]

Great.

[Jill]

How old are you?

[Iris]

I'm 64.

[Jill]

Okay, so you're thinking you're going to work. Let's look at the end of next year for the heck of it. Just for fun, let's say you just worked one more year. Let's see how things stand. I already can tell you're nervous about this, so. Which must mean you have a lot of money already saved. So let's. Let's look at just for fun, retirement in, in a year from now, December of 2025. Then you can do whatever you want. Right. So you make $85,000 a year. And have you saved money based on that income? Do you have a retirement account?

[Iris]

I do. I have, let's see, I have a 403B plan which has about 355 in it. I have a traditional IRA.

[Jill]

Yeah.

[Iris]

Which is about, let's see, 30,000 of traditional IRA and rollover is about 353. 3350360.

[Jill]

Wait a minute, so you have a 403B, that's the current plan. And then another $350,000 in a rollover.

[Iris]

Correct.

[Jill]

Okay, got it. And the traditional is $30,000. Got it.

[Iris]

The traditional is 30. And I have a Roth IRA of about 55.

[Jill]

Okay, cute.

[Iris]

And so that's it for the IRAs.

[Jill]

Okay. What about other monies? Do you have money that is saved in a brokerage account that you've invested or in a savings checking cd, like what's in the non retirement bucket?

[Iris]

I have about 10,000 in my checking account, about 175. 5 in cash and short term CDs earning between 4 and 5%.

[Jill]

Not for long.

[Iris]

I know. 30 in I bonds and E bonds.

[Jill]

Okay.

[Iris]

Another 10 in a Vanguard brokerage.

[Jill]

Okay, 10 in a Vanguard brokerage. Got it. And do you own or rent in New York City?

[Iris]

I rent.

[Jill]

Okay. And what's the rent right now?

[Iris]

3,001.

[Jill]

3,100.

[Iris]

Yeah.

[Jill]

So cheap. That's good.

[Iris]

I got a good deal. I think I got a good deal.

[Mark]

A lot of people listening would think that's insanely expensive.

[Jill]

Oh, no, but that's a, that's a good deal in New York.

[Iris]

It is.

[Jill]

Yeah, totally. And all right, so I got all the retirement assets. I got all the non retirement assets. Right now. You said There's. You said 100. How much in cash and CDs earning? 175.

[Iris]

175. Yeah.

[Jill]

That seems like a lot. Is it earmarked for something?

[Iris]

No, it was mostly the proceeds of a sale of a home. And I just wasn't sure what to do with it. And I wanted to stay liquid because I didn't know whether I was going to purchase something else or perhaps make a pivot and move back to the uk.

[Jill]

Wait, we're going to go to the uk? I'm excited. Hold on. Or when you look at your income, your 85 grand a year and then you're spending, how do you feel? Are you okay? Do you feel like things are tight? What's going on for you?

[Iris]

Well, I also have a small pension that I. About 10k per year that I draw from another. A job I did years ago.

[Jill]

Okay. So 95,000.

[Iris]

And I put away the full amount plus the supplement I'm allowed to for the ira. And I don't feel particularly pinched.

[Jill]

Okay.

[Iris]

I live very modestly.

[Jill]

I guess. So I mean, how much do you think you spend? 3,100 on rent? How much more do you spend every month?

[Iris]

You think the outside figure would be 3 per month? Per month. And I would say that that takes in kind of everything over the course of a year. Some months it's less than a thousand that I spend out of pocket.

[Jill]

Wow. It's amazing. Mark's laughing.

[Mark]

How do you live in New York City?

[Jill]

I mean, Mark is giggling because, I mean, really, this is. For those of you who don't live in the New York metropolitan area or in a big city, some of these number might seem, like really crazy when we're laughing about this. It's just hard to live in New York City sometimes. I have been speaking to a friend of mine who lives in Park Slope, and she makes a couple hundred grand a year, and she's like, I'm getting priced out of Park Slope. And so I think this is just the idea that people really have to.

[Mark]

Pay a lot in rent.

[Jill]

And then living a life in New York has its challenges and financial challenges. But you seem to be managing beautifully, Iris.

[Iris]

Well, I think I'm stuck in the spending mode that I adopted when I first moved to New York City over 20 years ago. Didn't earn very much, and I think I've just kind of stuck to that. And there's a lot of. There are a lot of free things you could do in New York. And of course, we're not short on public libraries. So you don't buy a book when you can borrow a book. And because if you're buying a book, you've got to store it somewhere in New York City.

[Jill]

See, I like this already. Okay, so let me. So you're going to always. You have that small pension, it's ten grand a year. And then have you looked up what your Social Security benefit would be at age 67? And then at age 70, I have. Okay, what's that?

[Iris]

So it's 67, it's about 2500, and at 70, it's about 3300.

[Jill]

Okay. And you're in good health? Yes. Do you have longevity in your family?

[Iris]

I think so.

[Jill]

All right, that's good. So right now you have this. I'm going to just sort of, let's do ballpark, right? So right now you have about $735,000 in retirement assets, plus the little Roth. So $740,000. Right. Okay. And then you've got this money in cash and your I bonds and your Vanguard. And when you said you maxed out retirement, are you putting money into the 403B, are you putting money into a Roth or a traditional IRA? What are you doing?

[Iris]

Right now I'm putting into 403. I have a 4% match, but I also put in up to the maximum, plus what's allowed at the catch up. And then for the ira, I also do the catch up to the max.

[Jill]

I can't even believe this. Putting away so much money. It's crazy. So it seems to me that there's no way in heck you are spending six grand a month. I get that some months you are, but there's no way you are. You're saving so much. So you're probably paying, it would seem, just from, you know, I can sort of look at a balance sheet and hear what you're saying. And you don't have any debt, right? No, I didn't think so. It doesn't seem to me like you're consistently spending six grand a month. So you asked the first question, which is sort of like, do I have enough? It seems to me that you have enough, because as I look ahead, you know, even, you know, at. You'll have at least. And I think I really want you to wait till age 70, but at 67, you would have probably about half of what you need from your Social Security benefit. And then, you know, you've got that small pension coming in, and then you'll pull money out of your retirement accounts. And. Mark, would you like to see Iris wait until age 70? I would like that, I think. But what do you think?

[Mark]

Yeah. And, you know, that's kind of an easy decision because she enjoys what she's doing and she doesn't see herself retiring anytime soon. So.

[Jill]

Yeah. So, I mean, so if you look at that, if just kind of look ahead, all right, and you say, well, what will I have in income at age 70? You would have 3,300 from Social Security, about 800 from your small pension. So giving you 4,100, and you're almost 2 thirds of the way towards your high end of expenses with five more.

[Mark]

Years of growth and contributions.

[Jill]

Exactly. So, I mean, presumably you could probably pull the trigger next year. If you like what you're doing, then I'd stay where I am now. I guess the only thing that is the little asterisk, Iris, is that if you were to move to the UK or Canada, would your expenses go up? No, Not. No way. You're like, no way. Not even possible. Okay.

[Iris]

Just not. No.

[Jill]

Okay. Just checking. London's in a very expensive city. I think you're in great shape. So I think that you are. You have enough. You have done a good job. I would. I wonder if maybe you don't need to have so much money in cash except that you still want to stay liquid if you were to make this move. Right.

[Iris]

Correct.

[Jill]

All right, well, look, at some point, you may want to just take some of that 175 and push it into your Vanguard brokerage account. Right. If you make one. When you make a decision one way or the other. Otherwise the E bonds and the I bonds, they're fine. Are the E bonds still paying interest?

[Iris]

Yes, they are. They're. Let's see, there's going to double in, what is it, 15 years?

[Jill]

Okay. All right, fine. Yeah. I think you're in great shape. I don't see any problem when you're like, can you do anything differently? The difference, I think I would say is I would probably just put money into the match of the 403 and otherwise I might just not max out the rest of that account. Unless you have a Roth option. Do you have a Roth option at work?

[Iris]

No, I do not have a Roth option.

[Jill]

So I would just put up to 4%. Then I'd put money into my Roth IRA. All right. And then the rest goes into the brokerage account. You don't need any more tax. You don't need tax deferred money. You can pay the tax that's on this and it's fine.

[Iris]

Yeah, absolutely.

[Jill]

And just add that to the kitty and then you're in great shape. You really are. I don't know how to. Mark, what should we do? What should we do with Iris to spend her money? This is so much fun.

[Mark]

This is. This is behavioral finance.

[Jill]

Iris, go out to dinner a little bit, will you?

[Iris]

It's absolutely. It's something I just don't enjoy, but I do. I think I really do need to take a couple of trips.

[Jill]

Yes.

[Iris]

You know, there are places that I would like to go take a little holiday.

[Jill]

And you should. Where should we go?

[Iris]

Well, let's see. There's Dublin.

[Jill]

Mark and I love Dublin. We've both been there.

[Iris]

Edinburgh yeah.

[Jill]

Are you only going in? You're only going to be in the United Kingdom. Is that what's happening? We can't get you outside of there.

[Iris]

I can think of other places to go as well. There's Australia.

[Jill]

Oh, that's a biggie. Well, then we'll spend a quick one then. Your cash position is going to go from 175 to 150.

[Mark]

She likes the Commonwealth nations.

[Jill]

She loves the commonwealth countries. Right. She's going to go to South Africa, Australia, Canada. All right.

[Iris]

Iceland for some Iceland.

[Jill]

All right. Well, that's a very expensive trip, so may go see those northern lights. Iris, thank you so much for joining us and let us know what happens next. It's very exciting. If you're like, iris, boy, we must have the real worrywarts in our listening audience.

[Mark]

People who are like, I got money.

[Jill]

And I don't know if I have enough money and I'm kind of scared. And you want to know, like, what to do next or you want permission to think about how to exit what you're in right now. Like, I don't think Irish should get, like, on the retirement train if she's happy doing what she's doing. But it is clear she's done a great job of saving. And if you are in a situation where you just want another set of ears and eyes on your particular case, give us a Holler. Go to jillonmoney.com, click the contact us but button, write us a note, let us know if you want to come on the air live. All right. You can subscribe to us on the Odyssey app or wherever you find your favorite podcast. 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.

[Jenna Fisher]

I'm Jenna Fisher. And I'm Angela Kinsey. We are best friends and together we have the podcast Office Ladies where we rewatched every single episode of the Office with insane behind the scenes stories, hilarious guests, and lots of laughs. Guess who's sitting next to me, Steve. It is my girl in the studio. Every Wednesday we'll be sharing even more exclusive stories from the Office and our friendship with brand new guests. And we'll be digging into our mailbag to answer your questions and comments. So join us for brand new Office Ladies 6.0 episodes every Wednesday. Plus on Mondays, we are taking a second drink. You can revisit all the Office Ladies rewatch episodes every Monday with new bonus tidbits before every episode. Well, we can't wait to see you there. Follow and listen to Office Ladies on the free Odysee app and wherever you get your podcasts.