Retiring on a Pension | Jill on Money

[Music] welcome to Jill on money powered by the compound I am Jill sler I'm joined by my co-host Mark tario he's also the executive producer but this is the show when he doesn't have to do anything except look pretty you do look pretty hello Jill hello Mark how are you doing today uh I am well you I'm just talking like this I'm thinking you're going to London soon aren't you soonish soonish right exactly so am I oh are we going to be there at the same time no I'm going mid April no different time I don't like to tell people exactly when I'm away I know or you really don't like to say where you're going either I know I was I was very very secretive I know well sometimes I now that you're back you still haven't even told people where you were oh I was in South Africa for a week and uh that was a long flight you know when you get on the plane and on the way down it was great it's like 13 and a half hours I'm like no big deal but then we got back on to come home 15 and 1 half hours I was like oh brother but watched a lot of movies so that was good uh and I ended up sleeping so it was okay hey I got this new watch this thing what is that look quite it's a garment it's chunky and my mother would kill me if she saw me wearing this on the air but um what it does is it actually tracks your sleep which I find very interesting so when I was I was like I slept on the plane I feel great and it says quality of sleep poor poor poor because you're up all the time but you would take poor over none zero exactly which is a long way of saying that uh rich or poor it's nice to have money so if you can fly with a flat bed in first or business class it's much better you know wow uh you know my favorite my favorite favorite is if you fly to the Far East and you go cath Pacific they've got beautiful like real like flat beautiful cushiony yummy this is okay it's all right so this is the this is the rub when we go to London you know Amanda's going for work so she's flying business class Theo Theo and I you know back of the plan in the back of the back of but you're very small so I mean like for Theo it doesn't matter and you also you can sleep anywhere can't you but one of these days I would like to experience you know you've never one time for work I flew from uh Phoenix to Hawaii first class that's a short ride what is that it was like six I don't know God it's like flying from here to best thing ever um it really is it it's like the reason to have money is to have a pampering like that although some people I know who have a lot of money are not willing to pay up for it they're just like G who cares it's a terrible experience being in an airplane no matter what either way right I don't know I like it uh gang this is not a travel show if you've got a financial question you want to learn how to actually travel business or first class or whether it's worth it yes um give us a holler go to Jill on money.com click the contact us button let us know what's going on and we would be happy to chat with you while you're there so many things to consider the free Weekly Newsletter how are our newsletter subscriptions Mark they always always are trending up I like up and also we have Jill on money live which you also said has been trending up right that's so exciting so 35 bucks we get you get four quarterly webinars you get special bonus content you're part of like the cool kid Community or The Maniacs who really do the jillion jillion the J billionaires check it out Jill on money live okay today we're talking to Regina and Dave and they've been very patient they are on vacation and talking to us Mark so let's let's make this worth there wild hi guys how are you good how are you great what's going on what can we do for you well we're calling in or the reason we contacted you Joe we love your show and we H Dave is retiring oh exciting and so he looks way too young to be retiring but he is retiring and so after 35 years working with the Department of Human Services of Pennsylvania right I'm getting ready to retire so that sounds like op hold on a second that sounds like a job that has a pension yes it does okay defined pension I love that so um how much were you earning before retirement Dave I'd say almost 90 okay and Regina are you also working yes how much you earn uh 85 and then with bonuses close to 90 okay great that's awesome and is that that combined income for you guys good like feel comfortable everything's rocking and rolling you feel in a good s situation cash flow wise definitely yeah we have no we really have no debt we also have a rental property o that the gross is about 3,000 a month oh amazing well how much do you figure you guys spend on a monthly basis I would say to do what we want to do and not have to like really um keep our belts tight like maybe 6,000 a month amazing that's good and Dave what will your pension benefit be when you retire well and that's why we were asking your help with because there's some options to where um that where I would just get the pension or I can get a reduced pension where Regina would continue to get get the pension as well so it could range anywhere from up to over a little over 6,000 a month to as low as you know at least the ones I'm looking at around 5,000 a month the way you're good you're great yeah I mean I'm I'm already psyched for you guys so the five grand a month would be a joint and 100% Survivor meaning that five grand a month is usually with the low end would be you get this pension day for your whole life as well as your wife who also will get that for her whole life is that about right yeah that's correct great and that would be around five grand a month yeah 5300 5300 yes amazing and this is just the pension what other money do you guys have in retirement assets so you have the rental income which is a three grand a month gross we have a pension benefit um what have you saved well I have about uh 300,000 in uh a deferred compensation and I started that back when I started with the state but a lot of that is traditional okay so it's about 95 or around 97% I think is traditional until I was able to start contributed through a Roth right and then I also have just a little another Roth of about 20 okay and then Regina I'm looking at my assets here right now Jo because I pulled them up on screen just to make sure we have you could say some of yours yeah okay so a traditional Roth IRA of 177,000 uh or a traditional IR excuse me and then I have Roth IRA of about 85,000 I think it was and then we have about 70 it's about 78 now I or 75 in a an emergency fund liquid like money market great cash great do and and um I one thing I forgot to ask how old are you guys I'm 57 and she's 56 see they nice and young and Regina will you continue to work after your sloth of a husband retires yeah cuz he's swears he's going to take care of me make sure things done around the house yeah you better honey do honey do this honey do that but how much longer do you think you want to work Regina well I'm thinking you know I'm thinking five six years anyway because it's I can work remote so I can still travel I have decent time off and I can work from somewhere else if we want to do things I can't imagine never working I'm sure I'll do something down the road okay that's fair enough and you guys own a home yes how much would you say that's house is worth I'd say 325 300 somewhere around there and you said there's no mortgage because you said we have no debt right right correct okay how much is the rental property worth conserva 275 I would say and also no mortgage on that correct okay so on the three grand a month gross what do you guys net on the rental property well the last few years we've been really trying to do a lot of work there M but prior to that I would say we were netting twoth thirds of that whereas the last three years we were really putting money into it and we basically was like a pretty much a wash the last three years but is is that period of spending now over yeah I would say it's coming to an end so that we can just you know keep the money coming in and and that way um you know it stays with inflation so you know the nice thing about rental properties is we'll always have it St inflation absolutely and Regina are you a full-time employee are you a contractor what's your situation now full-time uhhuh and so are you putting money into retirement going like as in a in a in a 401k or is that right yeah they do uh 6% match so I'm doing that full six% okay great you guys have kids that are grown or what's going on with that yes two daughters uhhuh are they on their own2 one's 31 oh that sounds like people people were actually launched did they do you have to help them out nope no good oh my God Mark finally don't have to we we do sometimes we don't have to all right um what's the game plan here guys like you know you're in good shape what do you what's your concern about why you contacted us well I guess I just wanted to make sure there's also what they call present day value to where that they would put it's a little over a million to where if for some reason Regina and I both pass away prior to using the amount that I put into it and this this present value then the children would get the remainder and it's actually the same amount it's about that 5,300 the only time it increases would be where you get up to the 6,000 is to where if I passed away and I used up um because you can contribute a certain amount of money I did so I have about I'd say 194,000 in this defined pension and then of course the state puts in too so but once I use that amount up uh those higher amounts then you know your spouse wouldn't get any but I didn't know if I should if I should even include the kids since it's about the same amount if we both die prior to using that amount I mean I don't know Mark what do you think of this like just in terms of the different pension options what are what are your thoughts on that I'm really not factoring the kids into I'm more concerned with you know getting the full survivorship for his wife that's that's really my priority because it's it's not even that big of a haircut so yeah I mean usually what we'll do is we'll say okay what do you need to live on that's what we always start with when it comes to retirement right and you guys are very clear that your expenses are around six grand a month so that's huge because what I look at is well then I don't necessarily have to maximize the pension necessarily I have to make sure you got are both covered because Regina you know obviously women have longer life expectancies so the the the theory being if you're not taking such a huge haircut on the pension itself say let's say it's 6,100 to 5300 you say okay we're both covered $5,300 a month and then we have a couple thousand do from the rental property and we're not even talking about social security at that point right so you guys are right and so you guys are in amazing shape so in when we look at pension benefits what we try to do is almost take the the more conservative approach instead of maxing out and looking at your numbers and saying okay Dave can get 6,000 like well I'm not giving up that much to have the security of having both of you covered I'm not sure that the kids part of it is all that relevant because I don't know like what is the likelihood that you guys are both have both passed away before that that threshold is reached I don't know I think it's a low probability and the kids are going to get the house and the comp and the you know they going to be a lot of stuff here so it doesn't seem to me like the greatest it doesn't I I wouldn't worry about the kids it's one thing if you're like have very young children you know but you have kids who are established already so it doesn't seem like a huge push on that have you guys um have you been thinking about you know I we're talking to you on vacation have you thought about anything else that you want to do in terms of we want to actually keep our home or we want to downsize our home we want to move to a different part of the country is there some part of your game plan that would Encompass that we would like I would like to maybe live somewhere like I wouldn't mind moving because we live in a lowcost living area but it's not there's not much to do um so I mean it doesn't cost much but there's a reason it doesn't cost much but um so it would be nice to maybe move to an area that's a little more expensive and if that meant taking out you know we we might have to take like a mortgage you know if we were to do that and I'm thinking if we did like a 100,000 mortgage um would that make sense 200 which I don't really you know would that well I mean yeah it makes sense if mortgage rates are back at three or 4% not at nine or eight you know so I think that it depends where what I always recommend is no matter what before you pull the trigger on doing something like that that you rent that you feel like oh I'm going to rent first I'm going to make sure this is the place we want to be and we focus on whether or not that's the right place for you and maybe renting is the better idea I mean maybe if you said well I don't know where your two kids are but you know we we'd like to rent someplace near them or try this out or try that out and not give up your your primary res res until you're clear that you want to be in a specific place because Mark how would you feel if all of a sudden they had a $200,000 mortgage well that changes things dramatically right now everything is uh easy peasy very comfortable right so I'm more inclined to say if that's something you want to do I it may be that like hey Regina in five years you're like okay now I really want to move or I want to go someplace else and I say okay well as long as you two of you can make a little bit of money extra on the side then maybe that does make sense but for where you are right now you know when we look at your situation if you took out you know you don't have that much money in savings it's that pension that's really the the bulk of your security for your retirement that until we unless I saw that mortgage rates came down or that you guys are like very hellbent on moving someplace and maybe renting for a while that maybe that doesn't happen with the mortgage until you have Social Security checks cuz have you looked at your future social security benefit for you guys I have what do you got there I'd have to look at it but it's I have it here but it's a few th000 too right like if you guys had another five $6,000 and you said hey that'll pay the freight of a mortgage or mortgage rates are lower yeah I'm much more inclined but like plowing through 100 or 200,000 of your Deferred Comp uh or or they sell what they sell their current Place yeah but if they sell their current place even if you sold your current place what you're saying is you'd move to a higher cost of living place would require would be better to rent and I didn't want to sell the rental because you know normally it provides a good bit of income last few years it's been a washed but normally that provide then that's done that income is done just the one well put it this way if if you discover you're like I'm going to make this up uh I want to move to the southeast and it would cost us $600,000 to be in the place that we really want to be mortgage rates are still high we we are willing to foro our rental income so that we could be in the place we want to live for the next 30 Years like you but you have to come up with that game plan of like oh my God this is the place you rent first you try it out you see how it goes before you sell anything and then maybe you get back in touch with us and maybe we're like you know what pull the trigger get rid of the rental property get rid of this move into the place you want to be this makes sense or hey you know what mortgage rates are back down we're in a terrible recession God forbid but okay that's going to happen we're in a terrible recession we can get a 4% mortgage it makes sense we'll have our social security then it might work but today knowing what we know I think that the easiest answer to your question is take the lower amount that covers both of your lives for the pension stay put in the home until you really are sure that you want to make you want to make a move and you know Regina you're a Workhorse keep working and as long as that is happening for you and keep stockpiling some cash I'm less interested in you guys you know putting money away in a traditional retirement account use a Roth use money outside of that if you want to but like I'm very clear you're in great shape right now the kids are going to be fine you helped them out you've gotten them this you what you get their 30s they got to be on their own look 30 20s you know listen Mark you just stop that's my hope I can only hope that's why you only had one kid um but I think that you're in good shape now last couple of questions for you guys do you have your estate planning done yes we do okay great and do you feel comfortable like as you move forward Dave will you have health care through the state Yes actually I'll have health care you know full medical and prescription the only thing we won't have is is Dental uh Envision Envision but that's minimal and where she works she could easily pick that up Regina also has that that same coverage through my work for his lifetime amazing so what do you what you what are you gonna do with Regina's salary I mean you guys are covered yeah what do we got what are we gonna do with all that money that's what maybe rent maybe we rent other places instead of buy so that if we want to go somewhere because I do want to go somewhere where I can do things yeah try before you buy that's what I would say try before you buy use that money and um where should we have them go and well that's what I was going to say like you want to do things what do you want to do where are you going to go you want to come to New York City what do you want come to New York rent in New York we we we been a lot we used to come there a lot and lately we've been just trying to get away from the cold for a little bit just to go somewhere I want to go to London and I figured I'll just work from there part of the time when I'm there you know we love that we love that game plan well I mean I think if you can work from wherever and you have that flexibility keep working don't and and by the way you might find five years from now you're like well I'm still working I'm still happy and there's nothing wrong with it keep working keep working as long as you can like that's a great thing as long as you're happy in that profession but I think you guys are I'm sure I will too you know he says that Mark I don't believe him he doesn't have to if he doesn't want to I know I know he's already done it for so many years and I have one other question should we I've heard about a revocable trust because we have these properties yeah um is that a good thing well I don't think you really need a revocable trust a revocable trust just means it's changeable it's a way to pass property now you own these properties jointly um if you were to put the house into a revocable trust the trust will own the property upon your death but it's not that big a deal you're not you don't have a huge estate tax issue I don't think that it's necessary as long as you have okay a will a power of attorney and a healthare proxy and your accounts are cleaned up and their beneficiaries are each other then you're fine you should be absolutely fine and when your kids inherit your property in the future they will receive what's called a step up in cost basis the property will it would be as if they acquired the property at the valuation on the date of your death so it's not as if you say okay I bought my $325,000 house for $15,000 they they don't care about that is upon death when you when they receive that property it's as if they bought it at whatever that value is at the day of your death so I don't think you need a revocable trust I think you know unless something changes dramatically in the estate tax law but as long as that's an up toate document I'm good with that okay and I also had another question yes I also had a question I also contributed to this defied benefit plan I have like 195,000 and you do have the option to actually pull that out and invest that elsewhere uh but you know I just didn't know if I should keep it in or not I my thinking is that you know the state is managing so much money that they're going to be making sure they get a decent interest well put it this way they have a promise that they make to you and that's the beauty of a pension and that promise comes no matter what like once you're retired they're not going to screw around with it and yes the newer employees probably are not going to have a pension that's as as um robust as your current one but I I am not I think that you're sort of like put yourself why put myself on the hook to deliver these returns when the state's on the hook right now and it's a guarantee so I wouldn't worry about that I don't feel I feel like that's a little bit of a sucker bet like yeah like let me take that money and I'll invest it like you can have fun with your defin defi Deferred Comp you can have fun with your WTH You can invest it because you know you have that $5,300 every single month coming in right right we can get riskier with that if you want I mean you don't need to either all right you guys are in great shape go find your go move to London for a year or three months hey thank you so much for joining us yeah and rent hey gang are you wondering about a rent versus own are you looking at your offramp are you have a pension are you lucky enough to have a pension and want to know how to actually choose the right option for you give us a or go to gillon money.com click the contact us button tell us what's going on and of course please please please check the box if you want to join us via video or audio we will get you on the air when I say we Mark you will do everything right must very good while you're on the website check out all of our content it lives there and you can subscribe to our podcast you can actually subscribe and like us here on YouTube we are so grateful for that we want to thank Duncan and John and Daniel and everyone at the compound for helping us put this show together they are the best don't forget to do something nice for someone else today change your work change your wealth change your life thanks for watching us thanks for listening to us and we'll talk to you next time [Music]

Channel: The Compound

Views: 39,241

Keywords: Stocks, Stock Market, How To Invest, Investing, Money, Trading, Retirement Investing, Financial Advice, Investment Advisor, Josh Brown, Michael Batnick, ritholtz wealth management, finance, downtown josh brown, financial markets, retirement, saving for retirement, wall street, the compound, financial services, investment management, investment, invest, investment strategy, business news, financial education, equities, personal finance, compound, podcast, inflation, pension, relocating, debt

Id: WyM1rcS5uqY

Length: 23min 48sec (1428 seconds)

Published: Sat Apr 13 2024