7 Questions from Pre-Retirees

Today’s Wisdom:

We’re going back to the mailbag and taking questions that specifically deal with concerns from pre-retirees. Let’s look at strategies for building your 401k, how much you might need for retirement, and preparations to make as you approach your retirement date.

Want to save time? Click the timestamps below to jump ahead to specific spots in the episode.


What You’ll Learn:

We love using the podcast as a platform for answering questions that people might not want to bring directly to us just yet. Listeners from across Connecticut and the northeast come to us with a variety of financial planning topics, and most of them ask about things relating to that stage right before retirement.

On this episode of the Money Wisdom podcast, we take seven different questions from pre-retirees and try to provide as much guidance as possible based on the information provided.

A handful of the questions today ask about 401k accounts. This retirement account is one of the most popular savings tools for investors and it can be a powerful tool if used effectively. We’ll talk about why it’s not a good idea to pull money out of a 401k to pay off debt, why consistent contributions are critical for long-term success, and whether a company stock match is worth maxing out.

As you build that 401k account along with other savings, how much are you going to need for retirement? This is one of the top questions for planning and a general guideline says 15-20 times your annual salary will be enough to cover you. Is that correct? Joel will explain both sides on the show.

We also got two questions from people that are within months of retirement. First off, congratulations! Now, let’s talk about two financial items you might need to work out before that big day. If you have built up paid time off, it might not be the best idea to take it all in one paycheck, which we’ll explain. Then we’ll discuss healthcare. Are you going to be covered by Medicare and what if you’re not? How can you bridge the gap until you’ve qualified for coverage?

Joel Johnson and his team advisors work with clients on these same types of issues and decisions all the time and can help you as well if there are financial planning needs in your family. Contact us and find out how our Money Map can help get you on the path to retirement.

[0:23]Mailbag Question #1: I’m retiring in three years and I have almost a million in my 401k but I also have about $60K in consumer debt. Is it worth it to take money out of the 401k to pay it off now while I’m working?

[2:09]Mailbag Question #2: I’m retiring later this year and I’ll have about 16 weeks unused vacation and sick leave that they’ll have to pay me. I’m told I can take this all in my final paycheck or continue being paid on my normal schedule every two weeks after I retire. Does it matter which way I do it?

[4:02]Mailbag Question #3: I’m ready to retire but I won’t be old enough for Medicare for another six months. Should I just stick it out until then?

[4:50]Mailbag Question #4: I’m starting a new job with a lower base side but higher commissions. My base salary is too low to contribute to my 401k and pay my bills. Is it ok to just use my commissions for retirement savings?

[6:15]Mailbag Question #5: My company matches my 401k savings but they do it in company stock. I’m not excited about owning a lot of company stock but don’t want to miss out on the match. Should I still try to put in as much as I can?

[8:25]Mailbag Question #6: I’ve heard that you need between 15-20x your annual salary in savings to be able to retire comfortably. Is that accurate?

[9:59]Mailbag Question #7: My husband and I argue everyday about money because we haven’t done a great job saving for retirement and it’s stressing us out. Is this normal?

[12:15] – How we can help with all of these things.

Thanks for listening to this episode. We’ll be back again next week for another show.


Final Thoughts:

“It’s not abnormal at all for you to have a different approach to money than your spouse. The important thing is that you have a plan that both of you can understand, that you can look at. And sometimes it’s a compromise.”  

– Joel Johnson, Money Wisdom Podcast

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