NerdWallet's Smart Money Podcast - Smart Planning Sessions: When is it OK to Stop Saving? (Plus: Spring Cleaning Your Finances)

Episode Date: April 28, 2025

In a new Smart Planning segment, a finance expert tackles retirement goals and savings questions with a listener. How can you gift savings bonds? When is it time to stop saving for retirement early? Hosts Sean Pyles and Elizabeth Ayoola offer tips for “spring cleaning” your finances, including refreshing your budget, resetting your financial goals, updating your insurance and estate plans, and getting back on track if emotional spending crept up earlier this year. Then, they debut Smart Planning, a new segment where a registered financial advisor helps a listener tackle real-life money questions. In this session, Certified Financial Planner Barbara Ginty, host of the Future Rich podcast, talks with listener Kay about navigating the transition from saving to spending. They dive into how to know when you’ve saved enough to scale back at work, how to plan for rising medical costs in retirement, and how to gift savings bonds the right way. If you’ve ever wondered what financial freedom could look like after decades of diligent saving, this conversation is packed with insight. Inspired to navigate your finances with an advisor? Use NerdWallet Advisors Match to find vetted professionals today at https://www.nerdwalletadvisors.com/match  Track your budget and credit score on the NerdWallet app, and let the Nerds guide you toward your financial goals: https://www.nerdwallet.com/p/mobile-app  In their conversation, the Nerds discuss: updating financial goals, savings bonds, how to gift savings bonds, budgeting tools, emotional spending, estate planning checklist, updating beneficiaries, Roth IRA contributions, SEP IRA contributions, dollar-cost averaging investing, semi-retirement planning, when to stop saving for retirement, how much to save for retirement by 55, Medicare vs Medicare Advantage, retirement healthcare costs, setting up travel insurance, travel insurance for seniors, Roth vs traditional IRA in retirement, retirement income planning, safe withdrawal rate, 4% rule retirement, and required minimum distributions.. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Sean, it's spring and I can finally throw my jackets in the back of the closet and get back to being the tropical princess I was born to be. What are you growing in your garden during this season? I have a bunch of seedlings growing in my greenhouse right now. Tomatoes, hot peppers, herbs, some annual flowers. I always feel so invigorated by spring and I just love to spend all of my free time in the garden this time of year. Well, while we're on the topic of growing things, spring is a good time to clean up I'm a little bit of a little bit of a little bit of a

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little bit of a little bit of a little bit of a Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles. And I'm Elizabeth Ayola. This episode, we have a new segment, Smart Planning, where we pair a listener with a financial expert, Barbara Guinty, to help walk through some questions around gifting and saving.

To start off the episode, though, we're going to chat a bit about spring cleaning your finances. But first, we want to acknowledge the news has been pretty wild lately, especially around trade policies and the economy. We designed this segment to be helpful no matter what's happening, but if something big breaks between the time we record this and when you're listening, remember you can check out our Thursday episodes or the NerdWallet News Hub for the latest updates and to see how it affects your finances.

Copy that, Sean. It's time to get your financial house in order, deep clean that budget, and get the dust off of those goals. Personally, I love a good spring check in with my finances. My summers tend to be so busy that I like to use this time to make sure that I'm on track with my financial goals and find a place or two to make some adjustments. So Elizabeth, where do you think folks should start? I think we should talk about budgeting first, since that is the foundation of personal finances.

Sean, have you had any major changes to your budget so far this year? Where does your budget need some spring cleaning? You know, my budget has been holding pretty steady so far this year, but it is about to go through some big changes. I recently paid off my car, which I'm very excited about. That frees up a few hundred bucks each month, and I'm about to start renting out my house in Washington and splitting the cost of my partner's mortgage in Portland, so we're both about to be spending less on housing.

Between those shifts, I'm planning to evaluate how I can make the most of this money each month. Day to day though, my spending hasn't changed a lot. I'm mostly still trying to reduce my discretionary spending amid the economic uncertainty we've been seeing. What about you, Elizabeth? Well, I want to say those are exciting changes and congrats on paying off your car note. Thank you.

All right. So my budget had a few cobwebs and I had been putting off whipping out my duster. But a couple of weeks ago, I decided enough is enough. It felt so good to get back on top of my budget and also get a clear picture of where I was with my money. So what exactly was hiding in those cobwebs and did you learn anything insightful by cleaning them up?

I'll tell y'all my business since you're begging. Please. So my budget was stale to be honest, because I was overspending over the last couple of months, I knew that I needed to review my budget to nip it in the bud. So what happened was my income increased over the past six months, some expenses dropped off and I took on some new expenses too. So after doing that budgeting exercise, I'm now clear about exactly what's going out and coming in so I can spend more consciously.

Refreshing my budget has also helped me to address some drivers around emotional buying that I was engaging in. You know, I'm always curious about how people manage their money and their budget on a really tactical level. So what tools do you use to manage your budget? I'm a little boring, so I use an Excel sheet to budget. I know it's a little old school, but it works for me. And also, I'm not a meticulous budgeter either,

as I use the pay-yourself-first budgeting system. So how that works is I save what I need to save, I pay who I need to pay, and then the rest is my business. So what I do is I just check in every so often to make sure I'm on track and staying within my budget. I'm pretty similar. I use a piece of budgeting software that gives me a granular view of my spending and saving and investing, but I don't check it every day because I also do the pay myself first method. I have my savings and bill payments largely automated, so I know that I have my finances covered without much data day maintenance.

For people out there who are looking for budgeting tools, we have an article full of options, and you could also test our NerdWallet app. We'll put links in the episode description for both. Moving along, a Spring cleaning item that comes to mind is refreshing financial goals. Some people may be totally amped to set new financial goals around the beginning of the year, but others may need a few months to get into the swing of things, and that's totally okay. Spring can be a good time to set goals, as symbolically it's a time of newness and growth. The seasons start shifting, nature awakens, plants begin blooming. Can you tell I'm a gardener?

I can tell, Sean. Well, anyway, spring is a great time to set or revisit your financial goals. Check in with the progress that you've made on your goals so far this year. We are somehow over a quarter of the way through 2025. So if you had a goal of regularly contributing to a Roth IRA and maxing it out, are you approximately $1,750 of the way to that goal? If you haven't been able to make as much progress as you would like towards your goals,

ask yourself whether they are still attainable or if you might need to pivot and if they still align with your values and long-term vision. Some people may be rethinking their goals or pivoting due to all of the economic uncertainty happening right now. Maybe you were planning to take a big vacation later this year, but now you're pulling back to focus on saving, for instance.

Or maybe you're moving up your timeline to buy a car. So Elizabeth, where do you stand with your financial goals for the year? Well, I definitely did some spring cleaning on my financial goals for the year. For one, I have increased my emergency fund goal now that my post-moving financial stress is over. I also decided to continue with my goals of maxing out my 401k and IRA, but added maxing out my SEP IRA to my goals this year. And although the stock market has been a bit of a yo-yo as of late,

now is a good time for dollar cost averaging as it relates to investing. Yes, y'all, stocks are on sale. TITLE CARD See, this is why we get along. I am also focused on the long-term strategy when it comes to my investing. Yes, y'all stocks are on sale. See, this is why we get along. I'm also focused on the long-term strategy when it comes to my investing. Things might be scary now, but this is the price of investing. And I still have many years until I need the money in my brokerage account or 401k. So I'm keeping my regular monthly contributions going. My big goal this year is funding my wedding and honeymoon. So I'm going to be allocating an even greater percentage of my direct deposits into my wedding fund

now that I'm about six months from the big day. Exciting. I think another spring cleaning financial task that isn't as tantalizing that people can do right now is ensuring their assets are protected through estate planning. I love this topic, by the way. It's probably not going to give you an adrenaline boost, but I think it's necessary. is ensuring their assets are protected through estate planning. I love this topic, by the way.

It's probably not going to give you an adrenaline boost, but I think it's necessary. Sometimes fear of death is a good motivator, Elizabeth. It is. And I know estate planning has many moving parts, but you can start by ensuring that your documents are up to date, assuming you have them. That includes your will, powers of attorney, advanced directives,

or trust documents. As a quick refresher for those who haven't done any estate planning yet, it doesn't have to cost a lot of money. Our nerds have put together an estate planning checklist that we'll link to in the episode description, and there are online platforms like Rocket Lawyer that offer templates that you can fill out, print, and get notarized if needed. If you have a complicated estate, you can hire a professional and that could cost anywhere from hundreds to thousands of dollars. But I personally think it's worth it. If you're medically incapacitated or you

pass away, your loved ones have one less thing to worry about. They can grieve without having to jigsaw puzzle their way through your finances, which I think can be helpful. When I created my estate plan last year, I used online templates and I paid around $100 to get it notarized. Do you have an estate plan, Sean? Is it up to date? I do have an estate plan, but I'm due to revisit it. I haven't looked over my will in a few years, and since then my financial situation has

evolved. And as I mentioned before, I'm getting married later this year. So now is a good time to make sure that the plans I have set in place are still what I want. It really is. As part of my spring cleaning, I do need to update the beneficiaries in my trust documents. Now, for anyone out there who doesn't have a will yet or estate planning documents, remember to update your beneficiaries on your financial accounts in case you've had major life changes. That includes, like Sean is about to do, getting married,

a beneficiary dying, getting a divorce, or kids turning old enough to manage assets. And when I say financial accounts, I mean anything from your checking account to an investment account. And setting up your beneficiaries is shockingly easy. You can do it just by logging into your accounts in a matter of minutes. No need to get an attorney involved at all.

Estate planning aside, reviewing your insurance policies is another smart spring move and something that can help protect your finances. Do you have adequate life insurance coverage, especially if you've got kids? Maybe you recently started a family and haven't gotten around to getting life or disability insurance. Auto insurance and homeowner insurance are other types of insurance you might want to review, too. Costs have been going up, so shopping around is your best bet to save money. I definitely need to review my auto insurance and shop around for cheaper rates.

Of course, I'll be using nerd wallet comparison tools for that. And on that note, I have more than enough spring cleaning tasks to occupy myself with over the next couple of weeks. Same, but in the meantime, I might sneak off to the garden to see how my seedlings are doing. We're about to get to this episode's smart planning segment about gifting and saving. But before we get to that, listener, I've got a question for you.

What's your money question? That financial thing that keeps you up at night or that goal you up at night or that goal you just can't seem to make progress on? Maybe you're feeling overwhelmed with your credit card debt or you're wondering whether you should keep putting money into retirement savings during times of market volatility, or you're wondering whether now is a good time to buy a home.

Whatever your money question, we nerds are here to help you. Leave us a voicemail or text us on the Nerd Hotline at 901-730-6373. That's 901-730-NERD. And a reminder that one of our goals on Smart Money this year is to talk with more of you live on the podcast to help you with your money questions. So if you want to hang with Elizabeth and me and get a bit of nerdy wisdom, let us know. One more time, leave us a voicemail or text us on the nerd hotline at 901-730-6373. That's 901-730-NERD. Alright, let's get to our new segment, Smart Planning, coming up next.

Stay with us. Many of our listeners are looking for professional advice on elevating their wealth. So we invited another financial expert onto the show to take a deeper dive into listeners' financial questions and provide smart strategies for building and leveraging their money. Welcome to Smart Planning. Let's begin. This episode, we're talking with Kay, a listener with some questions about how to gift savings bonds and how to prepare for retirement. Kay, welcome to this segment of Smart Planning. Thanks for having me.

To answer Kay's questions, I'm joined by Barbara Ginty, a certified financial planner professional and host of the Future Rich podcast. Welcome to Smart Money, Barbara. Thank you for having me. So Kay, to start, I would love to hear about how you feel about your finances. If you could describe your financial situation in one word, what would it be and why? Stable.

I think I would pick stable. That is great to hear. Why do you feel that way? In the sense that my spouse and I have been in the same line of work for many, many years. We're both in our 50s and we've been able to pay down all debt other than our mortgage and invest in retirement pretty much throughout our whole working lives. That does sound very stable to me. Can you go a little bit more in depth

into your financial life generally? Where do you think you might still have some room for improvement, even though things feel stable and pretty good overall? I think we could do a little bit better with figuring out our plan for the future. We don't have a lot of that in terms of when we can stop working, if ideal.

And in some ways it would be nice to figure out how to be more flexible in spending. We've been in a very safe mindset for a very long time, and it's a little hard for us to transition to spending for fun. We've been doing a lot of improvement spending for our home and our residence. So you wrote into us with a question about gifting savings bonds. Tell us about that. Sure.

We have a lot of nephews and we live far away from everybody. And something I started when one of the nephews was born was thinking about how to give them a gift over time. And we landed on high school graduation as sort of a natural ending point. So what we started doing was purchasing savings bonds in a small amount of $50 for each birthday and Christmas, as our family celebrates that with the intention of upon graduation, we would surprise the graduate with this somewhat larger than normal graduation gift. And so I've been doing that online, which

is fantastic, except now I don't know how to get it out. For the electronic savings bonds, you have to set up an account to purchase them with treasury direct.gov. And then you were purchasing them in the name of each recipient. So each nephew has their own. Right. Perfect. So they should be showing then in inside on the treasurydirect.gov website. When you're purchasing it in someone else's name for the intention of a gift, they should show in what's called your gift box.

So when you log in, you'll see your gift box inside of that online portal with the government. Absolutely. I see all of them in there. Here's the trick. Your nephew then needs to set up his own treasurydirect.gov account. And then once he does that, you would go in your gift box and select that nephew's treasury bonds or savings bonds. And then you would, it's like three steps, but essentially you would highlight the ones you're gifting in his name, and he has his account set up. And then you would click deliver, and it would be delivered to his account. Interesting. Okay. So I have to work with him afterwards to get it all figured out.

I am wondering about something that no one really wants to talk about, which is taxes. Barbara, would Kay or the nephew be on the hook for any taxes when this gift is given? There may be some taxes, but that is where you really want to talk to a tax professional. Okay. And where might the taxes arise? From the difference in the original value versus the value when the recipient receives it. So it will have grown in value. And so what Kay purchased versus what her nephew is going to receive, there is going to be a gain in the gift, right, from what she spent versus what he's going to receive. And that is where the taxation will come and whether the recipient is going to pay, which is what I would presume is the most likely

scenario, but you would want to talk to a tax professional. Well, Kay, any other questions around these savings bonds? I know you had just a pretty tactical question there. So I think that we've covered most of it. But yeah, what are you thinking right now? No, I think that's helpful a lot. Well, I want to shift gears a little bit and talk about some of your retirement questions, Kay. You mentioned a little bit about this earlier, but give us a picture of how you've been saving

for retirement and where you think you might need some guidance. So my spouse and I have been contributing to retirement accounts for the duration of our working lives, sometimes a little less than others. We've been contributing to Roths, particularly early on in our working careers, and then workplace retirement accounts whenever we had them, which is most of the time.

And again, the only significant debt we have right now is a home mortgage, and that's all we're expecting to have really going forward. So I'm just curious about what amount we should have saved by age 55 that might allow us to semi-retire and stop contributing. So I feel like we've been in the saving mindset and I'm feeling that we might be near the point where like additional contributions may not be necessary. And I'm not quite sure how to figure out what that amount should be. And it's not that I want to retire at 55, but I would maybe consider a step down phase and just

pay our day-to-day bills and expenses and stop using that until our mortgage is paid off, which should be by the time we're 60 to 65 years old. Okay. Tell me a little bit about when you say step down. So step down meaning that you no longer are saving for retirement or step down meaning you're going to change and maybe reduce hours at work. What does step down mean to you? I think it's all of the above.

So it would be, step down would be to me, it would be stop retirement contributions, which then means that we may not may be able to have flexibility in our current roles and whether that goes part time or how that means because to some degree, I feel like I continue working so that I can contribute to retirement, so that at some point I can stop working and I don't, you know, it's sort of the invest my time now and hopefully gain the rewards later. The magic question and I would say the number one question I get is how much do I need for retirement? And that is very specific to the individual in the household. And it really

comes down to how much you need to maintain your current lifestyle, right? Because most people in retirement want to be able to at least maintain, maybe make a little bit more, a little bit less, but be around where they currently are if they're currently comfortable. And so you said you're stable. So are you currently comfortable on your income now? And that would be what you're targeting for your retirement? I would say we could be comfortable on less than what we earn right now given that we're contributing about 20% of our income right now. Okay let me rephrase that referring to your net income so it's after those contributions so you would be comfortable on less than what you're currently netting. A little bit less yeah

I think we would. And is that before or after the mortgage payment goes away? That would be after the mortgage payment goes away. Okay, so if we took what you're netting now and then took out the mortgage payment, that would be about the right number that you would be comfortable on in retirement. Yes, I feel pretty confident with that, yes. Okay, perfect. And then the one other thing that I think is really important to consider in retirement is medical, right? And so are you both fully covered with medical at your jobs or one of you is covering medical? We are right now through our workplace plans. We would need to come up with whatever happens in retirement afterwards. So I think we would continue to use workplace plans for the duration of our working time

and then move into some, I don't know what it is. I haven't gotten that far. Medicare, Medicaid? Yep. So at 65, you'll be eligible for Medicare and that is the retiree healthcare system. If you retire with medical, that would become your secondary insurance. If not, you might want to get gap coverage. And so what I would say is the number I would use for what you would need, you know, ballpark, would

be what you're currently netting, subtracting out the mortgage, but then maybe adding a little bit more to buffer for potentially a higher cost for medical since it's currently covered. And you will have some expenses with medical. And I think a lot of people underestimate what that might be in retirement. And so what I always say to people is in retirement, no one's really ever upset if they have extra money. It's only if you have less than what you expected. When thinking about that medical cost and how to project that, is there any sort of formula or general wisdom of how to consider what that higher medical cost should be? Yeah, so there's actually a great government benefit. It's either the office of the aging or

the office for the aging in your local community, and it is a government-run agency. And you can sit down with them, and they'll do healthcare counseling, and they'll go over what the various costs are going to be and what they also see locally, right? And what plans are working well locally in terms of like gap coverage. And then you also have the choice, there's a big difference between Medicare and Medicare Advantage. Medicare is going to be your traditional Medicare where you have part A, part B, and then your prescription coverage.

Medicare Advantage is where you have a private company that goes in and puts all of your pieces together for you. And you just pay them, right? And so that oftentimes comes in a lot cheaper, and it's seamless because it's one, right, versus the various pieces that you have with traditional Medicare, and then you would get that gap coverage. The thing I like to warn people about in retirement is the Medicare Advantage will come in cheaper initially, but as we all know, as you get older and your later years of retirement, most people need more medical care at that stage. And so the Medicare Advantage might be cheaper in the beginning, but oftentimes isn't cheaper later on when you need more medical care. Additionally,

depending on your retirement goals, you might want to travel in retirement. And those plans tend to be very local specific. And so you could be out of network on vacation. Versus if you're doing Medicare, the traditional, which can come in a bit higher, you're not gonna be out of network when you're traveling because it's a federally run program. So it doesn't matter where you are. So that's one thing also to take into consideration.

Is that for domestic only? This is domestic only. So for instance, if you took a Medicare Advantage plan, and we'll just use the state I'm in, K, but I'm in Utah, and I did a Medicare Advantage. And so I'm in network in Utah, but then I go to New York to visit my sister. And I have, we'll just say I have a stroke and I need to go to the hospital. Well, that hospital most likely will be out of network because I'm no longer in Utah. But if you are on Medicare, Medicare is a federal program,

so it doesn't matter what state I'm in. But it's important to know too, if you're planning on doing international travel, neither would port abroad, correct, Barbara? Correct, nope, neither would port abroad. And that's why it's important. And oftentimes, and these are other expenses that come up in retirement, but if you're planning on

traveling a lot abroad a lot of my clients travel very frequently it is important to get your own travel insurance and oftentimes they have good medical coverage and it's worth as an adult this is another adult lesson right we pay for a lot of insurance throughout our lifetime with the hope that we never use it travel insurance abroad is really important especially with good medical coverage if you're going to be traveling and the hope that we never use it. Travel insurance abroad is really important, especially with good medical coverage if you're gonna be traveling. And the hope is that you don't have a medical event

while you're abroad, but it is important to have that travel policy separate for international. Kay, that makes me wonder about your retirement in general. When you talk with your partner about your retirement, what comes to mind? What do you discuss for potential plans? We are all over the map on that one. Mm-hmm.

Sometimes we say, you know, we live in a colder climate, so we say, you know, let's move somewhere more moderate or warmer or let's travel a lot or things like that. And at the same time, I know in my own sense of reality that we're both home bodies at heart. We like to travel occasionally, but I don't see us traveling widely, I know in my own sense of reality that we're both home bodies at heart. We like to travel occasionally, but I don't see us traveling widely,

like to any great degree. And I can also imagine a future where we don't move, where we stay exactly where we are and are happy here. I mentioned that because at this stage where you are, it can be really helpful to dream a little bit and talk deeply about what you think is realistic so that you can begin to map out what extra expenses you might have in your retirement

because you will probably have some expenses that will go down. Like you mentioned, you're getting close to paying off your mortgage, but you may have to pay for additional healthcare. You may have to pay for travel and all those things are important to talk through and make a plan for. Yeah, it's so tricky to kind of plan 15 years in the future without knowing all the variables.

Yeah. Barbara, how do you approach that with clients? What do you think Kay should be considering here? I do think it's important to sit down and kind of come up with a vision for your retirement and what that looks like and a ballpark. It doesn't have to be exact. That's the trick with financial planning, right? We don't have all the variables to come up with the perfect plan. Most importantly, we don't know how long you're going to live, either of you, when we're planning for a household. But we can come up with approximate values, right? So we know we want to take one or two vacations. We know we'll have the mortgage paid off. We do know we might have... I would plan on having higher medical costs. Most likely that will happen. We know we want to take one or two vacations. We know we'll have the mortgage paid off. We do know we might have,

I would plan on having higher medical costs. Most likely that will happen. We know we're still going to have taxes, right? And so you just map out using your approximate inputs on where you think you're going to be. And I always say it's better to plan for more expenses than less, because as I said, nobody's ever been upset if they have a buffer, right?

They have extra at the end of the month that's never really been a problem. The only time it's a problem is if you don't have enough, right? Because the way I always describe retirement, it would be like jumping off the high board into the pool, right? You want to make sure you check the water first before you do it because there's no going back. And so I always think it's better to plan for a little more and have a bit of a buffer. And so when we're talking about what you need, the textbook rule is you wanna look at what you'll have

at your retirement and what it'll generate. And we usually use to be conservative, 4%. You can also use 5%, but I would say somewhere between 4 and 5% off of how much you have saved so for instance if you have a million dollars saved that would generate on the conservative side forty thousand dollars. And so then you know okay that's forty thousand but now is that forty thousand gross or is that forty thousand net and so if that million dollars is a million dollars in an IRA, traditional IRA, then we know we're also going to have to pay tax on that $40,000. So it's not really $40,000 in our pocket, depending on where we're going to fall tax-wise.

If it's a million dollars in a Roth, which would be amazing, then that is $40,000 to spend versus $40,000 on a traditional IRA. And that's where you start to kind of rough draft your plan and say, okay, this is how much we're gonna have, this is how much on a ballpark it's going to generate, and then you say what are our tax ramifications on that? And then that gives you an idea if that's going to be able to maintain your current

lifestyle. That is super helpful actually, that kind of philosophy. And we have to go back and look through how much we have in Roth versus how much we have in the standard IRAs to kind of figure out the tax liabilities there, too. So I would say the big missteps I see with people planning for retirement is they underestimate some of the expenses. We'll just say, in this instance, medical, right?

What medical is going to cost. And then taxes are often underestimated, depending on what you have saved for retirement. Oftentimes when people come in to work with me for retirement, the majority of their monies were saved through workplace plans, right? Right. You know, you're payroll driven.

And so oftentimes, especially people retiring soon, the Roth option wasn't there or wasn't a consideration. And so oftentimes, especially people retiring soon, the Roth option wasn't there or wasn't a consideration. And so oftentimes, the bulk of the money is going to be taxed ordinary income brackets that's going to be supporting them. I think we're more fortunate because when we started working, a Roth had sort of just recently been a thing. And so our personal investments were always through the Roth as much as we could. We max them out early on in our lives. And there were some years we couldn't, but we did as much as we could. So it looks not quite 50-50, but it is probably 60-40 split.

So that'll be an important consideration on how you're then going to spend your monies, right? Because on your workplace plans, you're going to fall under required minimum distributions. You're going to have those mandatory distributions and those will be taxable and then your Roth doesn't have them and won't have any tax. So it'll be important to see how you break that down in terms whether you, you know, start with the Roth or then maybe do a breakdown of some Roth, some traditional monies, right, to offset your tax ratifications. That makes sense. And we also have health savings accounts that we started a little

while ago, a couple years back. Would you recommend letting that grow if we can pay for our health expenses out of pocket initially, just to leave it sort of for what hopefully will be our later days in life when we need a little bit more healthcare and have it right there? Yeah, if you can. But once again, right, we don't know what our health expenses are going to be or, you know, and how our health is going to go. So if you can leave it, absolutely. You can then use it later on, which would be great. But if you need it, that's what it's there for. Right?

Right. Barbara, I want to circle back to one of case first questions Which was when it's okay to pull back and if it is What are your thoughts based on what you've heard so far from K around whether? He might be in a place to do this or just in general whether it's best just to keep save save saving away So what I would say is it's going to depend on the answer to is there enough there currently that you are going to be able to maintain your current lifestyle and I would say with a bit of a buffer on the upside. So really digging into the numbers then? Well the numbers are going

to and should dictate whether or not you can stop saving. But what I will say, Kay, is between, you know, you're in early 50s and said maybe fully retiring at 60, right? 65 where you would start pulling from those accounts. Sure, yeah. So what I would say is you have an opportunity between now and then for your accounts to double one more time, right? Because if we're looking at compounding of interest, accounts using the rule of 72. So if your accounts are making 7.2% compounding interest, they'll double in 10 years.

So if we use that as a benchmark and say, what's the value today is a million, which is round numbers, and then we'll just say you're just 50, then at 60, they could be 2 million if they're making 7.2% interest. But if you're also contributing to them, even for half that time till 55 or even till 60, it could be a lot greater than 2 million. And thinking about that, that kind of brings up the next thing is if that's right. So right now we have our retirement accounts in sort of a target fund. So it's not at a higher or low risk,

it's a retirement fund target for 2040. I'm assuming that sort of titrates on its own down to something less risky as it gets closer to that. Is there anything we should do to be more careful closer to that timeframe? What I would say is though you're correct. though the 2040 fund is going to become more conservative as you get closer to 2040, which is in 15 years. But what I would say is I'm a big believer that time mitigates risk. Let's just say on April 1st of this year, as we know, we've had a lot of volatility in the last couple of weeks. If you were looking to make, you know, pull your monthly income out, it

would have been a very nerve-racking time to do that with what was going on in the market. So I believe more in the the bucket theory where you segment out your investments based on the time. And so what I would do in your shoes is if you know you're gonna start pulling from those accounts, we'll go back to the timeframe at age 60, right? And they're going to start supplementing your day-to-day expenses. The money that you're going to be spending over the next 12 to 24 months should be in a more conservative and I would argue a cash alternative because we know we're going to spend it. So it shouldn't be in the market. Got it.

Okay. I know we've run through a lot of information over the past 20, 30 minutes or so, how are you feeling at the moment? And what do you think your next steps might be? First of all, thank you for this more in-depth information. This is great. Gives me a little task to sort of do some math games with our numbers here. And I think, so in some ways, I'm kind of excited,

because I think we're in a space, if it doubles one more time, I don't think between now and when we need to touch it, I think we are in a good spot. Which means that it feels a little bit more tangible to have those conversations about if we stop contributing fairly soon, what could we do for fun while we're still healthy and relatively young?

And Barbara, do you have any final thoughts for Kaye or what could we do for fun while we're still healthy and relatively young? And Barbara, do you have any final thoughts for Kay or anyone else listening that is planning their own retirement savings? Yeah, absolutely. So, you know, as Kay said, she's been doing this, her, you know, they've been saving diligently and been very conservative with saving for her entire working career. And what I would say is it usually takes people around 30 years to get to their target retirement and have saved enough money. And so it is prudent for it to take a couple years to plan for your retirement and have those conversations about what do we want our retirement to look like, what do we want

to allocate for, whether you're a homebody or you want to travel, what does our retirement look like, and what are the things we want to plan for and start doing this, which is what Kay you're doing, which is wonderful, in advance of that retirement date so that you can really refine your numbers and make sure you have everything you need so you're able to maintain your current lifestyle and enjoy your retirement.

Well, Barbara, Kay, thank you both so much for joining me on this segment of Smart Planning. Absolutely, thank you so much, both of you. Thank you for having me. That's all we have for this episode. Want to appear in next month's episode? Let us know. Inspired to navigate your finances with an advisor yourself? Use NerdWalletAdvisor Match to find vetted professionals today at nerdwalletadvisors.com slash match. If this episode inspired you to reach out to a financial planner, our SEC registered affiliate, NerdWallet Advisors, can help through their Advisors Match service.

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