0:00

You're listening to an Airwave

0:02

Media Podcast. Hey

0:26

there! Did you know Kroger always

0:28

gives you savings and rewards on top of

0:30

our lower than low prices? And

0:33

when you download the Kroger app, you'll enjoy

0:35

over $500 in savings every week with digital

0:37

coupons. And don't forget FuelPoints to help you

0:39

save up to $1 per gallon at the

0:42

pump. Want to save even more?

0:44

With a Boost membership, you'll get double FuelPoints

0:46

and free delivery! So shop and save

0:48

big at Kroger today. Kroger, fresh

0:50

for everyone. Savings may vary by state.

0:53

Restrictions apply. See site for details. The

0:58

example that comes to mind is... embrace

1:08

all the benefits that come with

1:10

working, not just financial, and maybe

1:12

think about developing a roadmap that

1:15

will get you there. Hey

1:18

everyone, I'm Jean Chatsky. Thank you so much

1:20

for joining me today on Her Money. I've

1:23

been posting more on my social

1:25

channels lately, maybe you've noticed, and

1:27

one of my TikToks recently, I

1:30

don't know if you could call

1:32

it going viral, but it did

1:34

really well, where I talk about

1:36

Peak 65, also known as the

1:38

Silver Tsunami. If you haven't heard

1:40

about it, it's the fact

1:42

that more people are turning 65 this year

1:46

than at any point in history. Why

1:49

is this important? Well,

1:52

it's going to have a huge

1:54

impact on our economy, on social

1:56

security, on the upcoming election, but

1:59

it also... has a lot

2:01

to do with retirement.

2:04

Your retirement, my retirement, the

2:06

retirement world as we speak

2:08

now and in the future.

2:11

Which is why I thought we

2:13

would talk today about retirement

2:16

and whether the thought of

2:18

it or even the word

2:20

gives you nervous butterflies

2:23

or is the

2:25

kind of thing that you want to just

2:27

push off to the back

2:29

of your mind. The truth

2:31

is thinking about retirement can

2:33

feel surprisingly disempowering and

2:35

that's despite the endless

2:37

commercials showing golf courses

2:39

and grandkids and sailboats

2:41

and long walks out

2:44

into the sunset and so many

2:46

other cliches and that's because there's

2:48

so much bad information

2:50

out there that tells us

2:52

how woefully unprepared we are

2:54

and how little we

2:57

need to spend when we retire

2:59

if we want to have enough

3:01

to make it through those golden

3:03

years and have a good time

3:05

simultaneously. Whether you are turning

3:08

65 this year like 4.1 million people

3:10

or whether you're just starting to think

3:16

about how much you're going to

3:18

have saved up. I'm here

3:20

to tell you that retirement doesn't

3:22

have to be so scary. Planning

3:24

for retirement doesn't have to be

3:27

so scary. It can be empowering.

3:29

It can honestly be fun if you

3:31

focus on the dreaming of all of

3:34

it. Ann Lester is

3:36

former head of retirement solutions

3:38

for JP Morgan asset

3:40

management. She says she's

3:42

never been so good at saving

3:45

despite winning the prestigious

3:47

Ray Lillywhite Award for

3:49

her extraordinary lifetime contributions

3:52

to Americans economic

3:54

security. She says she didn't

3:56

start thinking about her own

3:59

retirement until... her second son

4:01

was born. She cops all

4:03

of this and more in her new

4:05

book, Your Best Financial Life,

4:07

Save Smart Now for the Future

4:09

You Want, where she talks about how

4:12

she got out of that

4:14

dangerous cycle and was actually

4:17

able to retire early on

4:19

her own terms. Before I welcome

4:21

Anne to the show, one

4:24

quick announcement. The Her My Podcast

4:26

is now on YouTube so you

4:28

can watch me and all of

4:30

our guests there. Subscribe, share, and

4:32

like your favorite episodes. Anne Lester,

4:34

welcome to the show. Oh, thanks

4:36

so much, Jean, for having me.

4:38

Thank you so much for being

4:40

here. Congrats on the book. Thank

4:43

you. It's very exciting. Yeah, it

4:45

absolutely is. So you have

4:47

worked in finance. You have

4:49

helped people essentially save for

4:52

their retirements your

4:54

entire career. But

4:56

in your 20s, you had maxed

4:58

out all your credit cards. You were in a

5:00

ton of debt. And as I said in the

5:02

intro, you said it wasn't until your second child

5:05

was born that you actually started thinking

5:07

about a 401k.

5:09

Tell us about your financial

5:12

origin story. You know,

5:14

I think it's a combination

5:16

for everybody of nature and nurture,

5:18

right? So we are born with

5:21

a certain genetic predisposition

5:23

to saving, to spending, to

5:25

your ability to control

5:29

impulses. I will just say right now,

5:31

I would have failed the marshmallow test

5:33

completely. I have very poor impulse control.

5:35

I just do. So whether it's the

5:37

cookie or the thing that I want to buy,

5:39

like I'm like, oh, goodie, that sounds like fun. And it's

5:42

funny because it's true about me. If I'm

5:44

a fiduciary managing other people's money, that's different.

5:46

That's not mine. So it's interesting the way

5:48

our brains work. So I'm kind of wired

5:50

as a spender. And then

5:52

there's the nurture side of it, right? So

5:55

that's the nature. How am I wired? The

5:57

nurture side is very interesting. My parents were

5:59

born with a spender. I was born in the early 30s. They

6:03

were children of the Depression. There

6:05

was just no money for them growing

6:07

up and so they never

6:09

spent what they didn't have. They were very

6:12

frugal people and

6:14

I grew up. My dad was a college

6:16

professor. My mom taught nursery school, comfortable growing

6:19

up. But I don't ever remember

6:21

hearing any conversations about how much

6:24

we could afford to spend on

6:26

anything. I learned and learned where

6:28

these are good things to spend money

6:30

on and these are bad things to

6:32

spend money on. So what I internalized

6:35

was there's enough money for the things

6:37

that align with values. So there was

6:39

money for music lessons for me. There

6:41

was no money for buying the cool

6:43

pair of shoes that everybody else had at school.

6:46

We don't spend money on that end. We spend money on

6:48

things like music lessons. But it was never we

6:50

have a finite amount of money and we're making

6:52

choices with this finite amount of money.

6:54

So I guess the other thing that

6:57

I think was particularly dangerous for people

6:59

my age, I graduated in the mid

7:01

80s from college, was that was when

7:03

credit card companies started heavily marketing credit

7:05

cards to college students. My

7:07

parents didn't have credit cards. It just wasn't

7:09

a thing. And so I think

7:11

now certainly people coming out of college in their 20s

7:13

and 30s are a lot more sophisticated.

7:16

They may still struggle but I think

7:18

we understand a little bit better how

7:20

this works. So and there's

7:22

certainly a lot more information about it. And I

7:24

think in fact those card companies aren't able to

7:26

market quite the same way they were. So

7:29

I think that's a little less difficult. But

7:31

I immediately, you know, I started working in

7:33

politics, I earned very little money. And

7:36

I just didn't have enough. And my

7:38

framing was if I can hit the minimum

7:40

payment on my card, I can afford it.

7:43

Yeah, which is not really true. It's

7:46

so funny you're talking about the marketing

7:49

on college campuses. And I'm flashing

7:51

on when I was in college too in

7:53

the mid 80s, I think I

7:55

got my credit card

7:58

junior year. And

8:01

for signing up, I

8:03

got one of those big

8:05

two-pound bags of M&Ms. That's

8:07

all they had to give me. Oh, there's nothing not

8:09

to love there, right? That is all they had

8:11

to give me to get me to sign

8:13

on the dotted line. Other people got t-shirts

8:15

or big bottles of soda. I mean, it

8:17

was just such a low bar to get

8:19

you to sign away your financial future. And

8:21

I ended up in credit card debt as

8:23

well, so I completely understand it. How

8:26

old were you when your second child

8:28

was born and when you had this

8:31

eye-opening experience? So

8:34

the thing is, I was 37, and

8:36

I vividly remember thinking, you

8:39

know, I set up an IRA. We lived in

8:41

Italy, so I didn't have access to a 401k

8:43

plan, and I was in the sort of official

8:45

Italian retirement system, which when you move across borders,

8:47

it really also messes up your retirement savings. But,

8:51

you know, I signed up for the 401k plan, but I hadn't actually paid

8:53

any attention to it. I had no idea how much

8:55

I was contributing. And I remember

8:58

thinking, well, okay, I've got two kids. I

9:01

really have to, like, get serious about this adult

9:03

stuff. Like, I can't mess around with this anymore.

9:06

And trying to figure out what to do

9:08

was so stressful. And

9:11

I found the language that was then – 401k plans

9:13

are a lot easier to use now. But

9:16

back then, it was so difficult and confusing,

9:18

and I had to answer all these questions.

9:21

And I would definitely remember one of the questions being, what

9:23

do I think the rate of inflation will be

9:25

between now and when I retire? And

9:28

I was just like, I am out. I'm done. I'm going to go do the

9:30

dishes. This is nuts. And

9:33

so I actually – I kind of realized I needed to do

9:35

something, but it took, like, another six months or a year before.

9:38

I was like, all right, I really got

9:40

to do this now. And actually, the trick

9:42

for me was not, like, finally growing up.

9:45

I actually, as a work obligation, really,

9:47

was asked to try to figure out

9:49

how to help people invest

9:52

for retirement. And that was

9:54

what unlocked everything for

9:56

me, because I started learning

9:58

about behavioral economics. this

10:00

brainwearing. And for me that was, I

10:03

don't want to say I get out of jail free

10:05

card, but it was such a powerful thing for me

10:07

to go, oh, I'm not

10:10

stupid. I'm actually not

10:12

even irresponsible. This is just the

10:15

way I'm wired. It's like my

10:17

height. Like I just like

10:19

this. And I stopped

10:22

blaming myself. When you're trying to do

10:24

something, maybe it's an A type personality thing.

10:26

I set up little challenges for myself. And

10:28

I do this with food too. Like I

10:30

can put the cookies on the counter and not eat them. Not,

10:33

right? I can't. I can

10:35

have money and have it sitting in

10:37

my checking account and not spend it.

10:40

Not. I can decide every

10:42

month that I'll save X. Not.

10:45

I can't do that. I'm bad at it.

10:47

Right. Yeah. I mean, most people are

10:49

bad at it. And the work that

10:51

you did with behavioral

10:54

economics and other people

10:57

digging into this combo

10:59

platter of we

11:01

have to save and we're

11:03

not good at saving. So

11:05

let's figure it out has

11:07

really revolutionized the retirement system.

11:10

But then we started the show talking a

11:12

bit about peak 65 and how

11:14

it's a real challenge for people. And

11:16

so I want to talk about what

11:18

you learned in your career, but also

11:21

in putting together this book that

11:24

can help people succeed, whether

11:26

they want an early retirement,

11:28

a later retirement, a

11:30

lavish retirement or a comfortable

11:33

retirement. So let's start with

11:36

people who are still in that

11:38

accumulation phase. Let's start with people

11:40

who've got a little bit of

11:42

road to run. What are the

11:45

boxes that you should

11:47

be checking now in

11:49

order to get yourself

11:51

situated for that comfortable?

11:53

Let's just go for

11:55

comfortable retirement sometime in

11:57

your sixties. There

12:01

are an enormous number

12:03

of ways to figure this out.

12:05

I put a super simplified version of this

12:07

in my book. One rule

12:09

of thumb that a lot of people cite is

12:12

you should have saved up 10 times your annual

12:14

income if you want to be able to replicate

12:17

your lifestyle comfortably. And many

12:19

people think that's sort of 80% ish

12:23

of your pre-retirement income. So

12:25

if you're earning $100,000 a year, that means you

12:27

should have saved up a million dollars, let's say,

12:29

by the time you retire ish. And

12:31

that means the money you can generate from

12:34

that million dollars, whether it's using lifetime

12:36

income opportunities, whether it's combining that

12:38

with maybe some withdrawal strategies plus

12:41

social security, should give you 80% of what you

12:43

were living on before, which

12:46

once you take out the reduced costs of

12:49

you're not commuting, you're not saving

12:51

for retirement anymore. And a

12:53

few other things is a useful rule of thumb,

12:55

right? The answer is it depends for everybody but

12:57

that's a good sort of rough starting place. And

13:00

then I think as you get closer and closer

13:02

to that, it can make a lot of sense

13:04

to check out some more sophisticated calculus and your

13:07

financial services provider has one, your 401K platform

13:09

has one, there are a whole bunch of

13:11

other ones online but doing a

13:13

little more refined planning makes sense when you get

13:15

closer. So then the big

13:17

question is like how are you doing? How do you get

13:20

there? How do you get there? And

13:23

if you are in your 20s and

13:25

you are saving 10 to 15%

13:28

of your gross income and

13:31

your employer is matching a little bit of that, you'll

13:33

be fine. And you're investing

13:35

in something like what I used to do

13:38

for a living, which is a target date fund,

13:40

but you're investing in sort of an appropriately return

13:43

and risk oriented profile. So again, if you're

13:45

in your 20s, most people would say that

13:47

should be 90-ish percent, maybe 95%

13:50

equities and then you should gradually get more conservative. If you're doing

13:52

that in your 20s, 10 to 15%, you'll be fine. You

13:55

want to keep checking but you're fine. Most

13:58

people aren't saving that much. I think the... median

14:00

savings rate, right? If you draw a line of

14:02

how everybody's saving, the middle point is somewhere between

14:04

6 and 8 percent for people in their 20s.

14:06

It creeps up to 8 to

14:09

10 percent for people in their 50s and that means many

14:12

people are behind. So question

14:14

number one is how are you doing?

14:16

Are you on track? If

14:18

you're not on track, you need to save

14:20

a little more money if you want

14:22

to retire in your mid 60s

14:24

comfortably. So that

14:27

leads to a little bit of a reckoning with yourself, right?

14:29

Like, okay, how am I going to save a little more

14:31

money? Got to spend less money. Or

14:34

you need to work longer, which

14:36

may or may not be something that's

14:38

under your control. So that first point

14:40

of reckoning is an important one

14:43

and I'll just be honest, the younger you

14:45

do that, the easier it

14:47

is to course correct and the smaller

14:49

the relative sacrifice will be if you

14:52

still want to achieve that goal. It

14:54

was interesting to me. You said in your

14:57

conversations with young people, the ones who are

14:59

most on track for retirement are those who

15:01

are talking with their friends about money. I

15:04

mean, why does having those conversations

15:06

psychologically make us better savers? I

15:08

think it's kind of the classic, like

15:11

what you don't know is the really hard

15:13

thing to deal with and it's what you're

15:15

often the most afraid of and it makes

15:17

me think of the monster under the bed when

15:20

you're a kid. Like it's so terrifying to look

15:22

and then once you look, it's like, oh, that's

15:24

a really large dust bunny. That's the

15:26

guitar case that I kicked under there three

15:29

years ago and forgot, like whatever it is, right?

15:31

So knowing the

15:33

scope and the shape of the problem,

15:35

I think suddenly makes it less scary.

15:37

I do think there's

15:40

an enormous amount of very positive things

15:42

that you can find talking to family,

15:44

friends and peers, even social

15:46

media, podcasts like this, for instance, right? You

15:49

can learn an enormous amount and it just

15:51

starts desensitizing us to the fear of actually

15:53

understanding what's going on and I hope I'm

15:55

no longer part of the problem. I used

15:58

to be part of the problem. think

16:00

the financial services industry partly because we

16:02

think and talk about this stuff all

16:04

day long and partly because many people

16:07

in it have always understood how it

16:09

works. I think this is really cool

16:11

and fun and geek out and want

16:14

to share their like geeky enthusiasm and

16:16

we use language that's confusing, that is

16:18

disempowering, that makes people feel guilty, that

16:21

makes them feel ashamed to ask questions.

16:23

So the more you

16:25

just familiarize with stuff, the more

16:27

you get comfortable asking questions, I

16:29

think the more it lets you take

16:31

power over your own actions in finances.

16:34

We talked a little bit about behavioral

16:37

finance and the behavioral

16:40

finance innovations that have helped

16:42

people get on track and

16:44

stay on track. The big

16:47

three in my book are

16:50

auto enrollment into retirement plans

16:52

which the secure act now

16:54

says employers have to

16:56

do. You can opt out if you want. If it's

16:58

a new plan, they don't have to do it for

17:00

an existing plan so watch out for that one. Okay,

17:03

alright, good to know. Second

17:05

on the list target date then

17:07

which you'll be often defaulted into

17:10

as an investment and can keep

17:12

you on track without rebalancing because they

17:14

kind of do it for you. And the

17:17

third is auto escalation and

17:19

auto escalation is where once you're

17:22

in the retirement

17:24

plan, your contribution is bumped

17:27

up on a regular basis.

17:29

Do you find that people

17:31

are actually using

17:33

that? I mean to me one

17:36

big reason that people under save

17:38

is because they are defaulted

17:40

into these plans at a 3%

17:43

savings rate and never think to adjust

17:45

it. So I actually misspoke. The

17:47

thing that is not mandatory is the auto

17:49

enrollment is there. If you have a plan,

17:51

you have to auto enroll. What

17:54

secure 2.0 also says which

17:56

is fabulous is that you're setting up

17:58

a new plan. have

18:00

to auto escalate. Explain auto escalation

18:02

sort of where it came from

18:05

and why it's important. So as

18:07

you just said there's a

18:09

real danger in getting people

18:11

automatically signed up if you

18:13

don't also automatically

18:16

increase how much they're saving and I actually I heard

18:18

this in my focus group and it literally made my

18:20

hair stand up when I was you know behind the

18:22

mirror wall and I was like oh if

18:25

you get signed up and you get put

18:27

in at 3% which is a very common default

18:30

rate and the only reason companies use

18:32

this is the IRS used 3% it's

18:35

a beautiful example of behavioral economics in

18:37

action. The IRS used 3% as an

18:40

example in a letter that they explained how it

18:42

worked and that's kind of turned into the number

18:44

everybody thinks is the right number to start at

18:46

right because it was an example. Terrifying.

18:48

So what happens is companies sign people up

18:50

at 3% they often match half of

18:52

that so one and a half percent so you're saving

18:54

four and a half percent which is well

18:57

below the 10 to 15% that

18:59

you should be saving and because

19:01

people have been auto enrolled they

19:03

often don't even know they're participating

19:05

and if they do know they're

19:08

participating they think because the company

19:10

signed them up at that level

19:12

it must be okay. So

19:14

in fact in one of my focus groups somebody

19:16

said you know and I was looking at how

19:18

much people were saving and whether

19:20

or not they thought that was enough and

19:23

you could come up with this two by two matrix and

19:25

there was this really interesting group of people who thought they

19:27

were doing everything right and were not and a large

19:30

reason for that was they were getting automatically enrolled

19:32

at 3% and they said oh well it must be

19:34

enough because that's what my company did for me. Right.

19:37

So absolutely terrifying. Auto

19:39

escalation is when a company automatically

19:42

increases how much they're taking out

19:44

of your paycheck often

19:46

once a year the best way

19:48

to do it and I think this is very common

19:50

is to time that increase with when you get a

19:52

raise so that

19:54

you don't feel that you're losing money

19:57

with this higher savings rate and in fact

19:59

that's of the best tips ever

20:01

is be aggressive about increasing how much

20:03

you're saving when you're getting raises because

20:05

it doesn't hurt very much. But

20:08

that auto escalation is critically important. If you're

20:10

23 you don't have to start saving 15%

20:12

of your salary on day one. If you

20:14

can, fabulous, do it like 100%, but most

20:18

people struggle with that. You could start

20:20

at three or five. Just get there

20:23

over ten years, you'll be fine. Fantastic.

20:25

We are gonna take a very quick

20:27

break. When we come back

20:29

and I want to dig into the

20:32

people on the leader end of the

20:35

curve and what we have to do

20:37

to catch up if we're behind or

20:39

deal with the fact that we may

20:41

be retired earlier than we expect. So

20:43

we're gonna take a quick break. Her

20:48

money is proudly sponsored by Edelman

20:50

Financial Engines. You're saving, you're investing,

20:52

and you're ready to embrace a

20:54

bright financial future. But when was

20:56

the last time you took a

20:58

look at your budget? It

21:01

may be time for you to prioritize

21:03

different saving strategies and what they mean

21:05

for your overall financial future because knowing

21:08

exactly how your budget is allocated can

21:10

make all the difference when it comes

21:12

to your financial health and wellness. Learn

21:15

more at planefe.com slash

21:17

her money and schedule your

21:20

complimentary wealth checkup today. We

21:25

are back with Ann Lister, author

21:27

of the new book, Your Best

21:30

Financial Life. So

21:32

for the younger people we've established get

21:34

to 10 to 15 percent you'll be

21:36

fine. I just love the you'll

21:39

be fine of it all because

21:41

it's very clear, it's very encouraging,

21:44

it's sort of like you can do

21:46

this now and down the road things

21:49

will work themselves out even if you

21:51

don't know exactly what you're saving for.

21:53

But then there are people

21:55

who are already there. There

21:58

is the peak 65. The

22:00

Generation Peak Sixty Five as

22:02

the Alliance for Lifetime Income

22:04

Housing era people in their

22:06

sixties you are going to

22:08

be is you right in

22:10

your book. Brit hired a

22:12

lot earlier than they expect.

22:14

You point to a survey

22:16

in the book from the

22:18

Twenty Twenty Three Retirement Survey

22:21

of workers and it showed

22:23

that debts median age that

22:25

workers Tuesday and older expect

22:27

to retire is sixty seven.

22:29

Yet more. Than half

22:31

retire sooner than they

22:34

planned. What happens? What?

22:36

Happens is: people get laid off.

22:38

Companies change people's health. The Coins:

22:40

A spouse's health declines. If you're

22:42

in your late fifties, early sixties,

22:44

your parents' health declines if you're

22:46

lucky enough to her parents as

22:48

I am, if I had not

22:51

retired from Simply Morgan and Twenty

22:53

Twenty, I would have had to

22:55

have taken at least three or

22:57

four month leave of absence. That

22:59

over the summer because my mother, who

23:01

is now almost ninety dell and badly

23:03

broke her arm ends. I had

23:05

to drop everything and flat and take. Care of her. In

23:07

in it was covered in. There was a lot of craziness going

23:10

on. Both, it would have been really hard to hold

23:12

down my full time. I'd already announced I was

23:14

leaving and I was either still working, but it

23:16

was I could manage that I could not have

23:18

managed by former job that just would not have

23:20

happened. And things like that happen to people in

23:22

their fifties and sixties. Not. On

23:24

schedule and it's one of the most.

23:27

Heartbreaking. Things out there

23:29

for oneself. Which. Is

23:31

to look back on decisions that you made

23:34

and go. Wow if I hit understood the

23:36

consequences that decision. I don't know

23:38

that I would have made that decision. That's fine. Wrote the

23:40

book. But. Here you

23:42

are your favorite we do. Like

23:44

I said earlier year you used

23:46

to make. Some really hard decisions about

23:49

what you're going to stop spending money

23:51

on and ideally you do this by

23:53

you still have a job. well

23:56

in the book you talk about having what

23:58

you call oh shit fund and you put together

24:00

a checklist for having

24:02

one and it's to help

24:05

you through situations like this.

24:07

So what is it? I mean, is

24:10

it just your emergency fund or is

24:12

it different? It's absolutely

24:14

your emergency fund. So I called up the OSHIT

24:16

fund. Literally my husband and I had just bought

24:18

our first home and we'd had it inspected and

24:20

we were told we'd have to replace the roof

24:22

in a few years and that was fine. And

24:25

literally, I don't know, three or four months after

24:27

closing, we woke up and it was raining in

24:29

our bedroom to which we responded, oh, shi,

24:32

like no. And

24:35

we just spent all of our money on

24:38

the down payment and closing. We didn't have an emergency

24:40

fund. So if you're thinking about buying a house, don't

24:42

spend all of your money. Tip number one. So

24:46

that OSHIT fund is there

24:48

for expenses that are unexpected

24:50

that have to be paid and

24:53

have to be paid now. And the conventional

24:55

wisdom, it is an emergency savings fund. The

24:58

conventional wisdom is three to six months salary.

25:00

The reason many people talk

25:03

about that number is that

25:05

should cover the period that it will take

25:07

you to find a new job, right? So that's

25:09

kind of the ultimate bad news scenario. And

25:11

then we can layer on all sorts of

25:13

other horrible things that happen, massive home repairs replacing

25:15

a car, medical emergencies, etc. But like that

25:17

job loss is how that three to

25:19

six month number is typically calculated. And

25:22

if you've got an emergency fund and

25:24

you're faced with an unexpected job loss

25:26

in your late 50s or 60s, I

25:28

think a real question to ask yourself

25:30

is how likely do you

25:32

think it is that you'll be able

25:34

to fully replace your former income? And

25:36

I think many people discover that it

25:38

isn't. I wish the world were not that way, but it is.

25:41

And I'm retired, right? I retired early. I

25:43

am very engaged in the world and I

25:45

Am still working, right? as a board member,

25:48

writing this book, giving speeches, right? I'm still

25:50

earning income. I'm retired from corporate life. I'm

25:52

still earning income. And Part of my financial

25:54

plan is I need to keep earning income

25:57

until I'm well into my 60s. The

26:00

more fun, but that's part of my financial plan. So

26:03

if you go through that calculus

26:05

and you discover I'm probably. Not

26:07

going to replace my

26:10

entire income? What's the

26:12

game plan? I mean

26:14

do something. Right? Figure out what

26:16

you can do to replace as much

26:18

as possible. In hindsight, right? It's ideal

26:20

to have a little bit of a

26:22

game plan. And. I've always

26:24

had that gameplay night. Maybe because I

26:26

never felt super financially secure. Like if

26:28

something goes wrong, like what's the list

26:30

of stuff I. Just

26:33

I guess I initially did this. He is the

26:35

work and financial services. Your income can be quite

26:37

volatile from year to year in. We had a

26:39

couple of bad years in my team in two

26:41

thousand and one, two thousand and two and then

26:43

two thousand and eight, nine ten. And so I

26:45

always knew that with a risk And so it's

26:47

like, what do I need to basically keep the

26:49

lights on and keep us said And then what's

26:52

everything else. And so I

26:54

think if you've mentally. Done. That

26:56

checklist and. Started identifying and Discretionary

26:58

Spending Discretionary. That loaded word

27:01

because everybody's definition of what

27:03

discretionary. Nondisclosure. He is a little different, but

27:05

you can approaches to ways. One of the things

27:07

that you know you could just stop doing and

27:09

really not miss them. Like how many streaming services

27:12

you have. Those are easy, right? It's not a

27:14

ton of money, but it did. It does add

27:16

up. How often are you eating out right? You

27:18

can pretty quickly go down the list of have

27:20

you plan some vacations that was your county Easy

27:23

right? You can go through this list of things

27:25

that you consider sort of things you normally pay

27:27

for that you might not think about discretionary, have

27:29

a game plan for where you start cutting. I.

27:32

think that's a very healthy thing to see

27:34

keep current regardless of what you think your

27:36

financial situation would be and so i had

27:39

a choice about when i chose to retire

27:41

but if you are in an industry that

27:43

facing lay off if you know your company's

27:45

not doing well if you feel yourself slowing

27:48

down and just kind of getting fatigued with

27:50

all of this is a really good thing

27:52

to have it's like a financial equivalent of

27:54

a girl bags what do i know i

27:57

can just start cutting off immediately an engine

27:59

you mentioned Second question, if you are planning

28:01

on retiring in your 60s and you're a

28:03

little short of your goals, that list then

28:05

can serve as the, all right, well, where

28:08

do I want to start? What's going to be relatively

28:11

easy to give up? What's going to be, yeah, I

28:13

won't love it, but no big deal? And then what's

28:15

going to be actually painful? The

28:18

other side of the equation is that

28:20

you could keep working. We know data

28:22

from the Bureau of Labor Statistics

28:24

shows us that the labor force

28:26

is expected to grow by about

28:28

96% by

28:31

the year 2030, which is around

28:33

the corner, for people who are 75 and

28:37

up. Is that because

28:39

people are getting to that retirement

28:41

point and realizing they don't have

28:43

enough money? Or is it that

28:46

they want to

28:48

keep working, want to stay engaged,

28:51

or a combo platter of both? I

28:53

think it's the combo platter. I think

28:56

there are a whole bunch of things

28:58

that are sort of sweepingly true, and

29:00

yet for every individual, it's a very

29:02

individual story. So it

29:04

really depends on what you're doing for

29:06

work, whether you like it, whether you're

29:08

physically or mentally capable of continuing to

29:10

do it, and then whether your employer

29:12

or another one has a need for

29:14

your skill set, right? So I

29:16

do think that a huge reason

29:18

people are working longer is that

29:20

many people are lucky enough to

29:22

be physically and mentally strong and

29:25

are looking at longer lifespans. Let's

29:27

remember that 65 that was

29:29

the traditional age for retirement, which is when

29:31

Social Security used to turn on, was

29:34

the actuarial expected age of death when we

29:36

did that, which is the equivalent of that

29:38

would be 85 today, right? So

29:40

all right, that kind of reframes it right

29:43

there. Now many people are not in good

29:45

health. Many people are not in

29:47

jobs that they can physically do. So

29:49

I think we have to leave some

29:51

space for that, but I do think

29:54

there's a host of very real benefits

29:56

for staying engaged, maybe not at the

29:58

prior level, right? in a

30:00

40 or 50 or 60 hour week job like

30:02

I did

30:04

not want to keep doing that for forever

30:07

certainly not even in

30:09

my late 50s but many people just love

30:11

what they're like I'm gonna keep doing what

30:14

I'm doing right now until I literally can't

30:16

because I'm having fun it's interesting with

30:18

great people I have fascinating conversations I'm earning

30:20

some money right those are all important to

30:23

me I think it's something like 40% of

30:25

those people that are working beyond traditional retirement

30:27

age are doing it because they need the

30:29

money and that's the only reason they're doing

30:32

it I think 20% were only doing it

30:34

because it was fun and they were enjoying

30:36

themselves and the other 40% was yes and

30:39

that feels kind of reasonable to me but

30:42

again I think it's an interesting thing to

30:44

think about again if you're in your 50s

30:46

and kind of trying to imagine what that

30:48

next decade looks like you can start planting

30:50

seeds now even in your 60s that might

30:53

lead you to an off-ramp that helps you

30:55

embrace all the benefits that

30:57

come with working not just

30:59

financial and maybe think about developing

31:02

a roadmap that will get you there let's

31:04

end this conversation where we started it

31:07

with peak 65 and the fact that

31:10

it is going to

31:12

reverberate through the world it's

31:15

going to have an impact these this

31:17

wave of people turning 65 on

31:21

everything on Social Security

31:23

on our economy on the

31:26

election on so many

31:28

different inflection points what

31:31

do you think the upshot of this

31:33

is going to be I hope it

31:36

continues to illustrate

31:38

and demonstrate what I've certainly been

31:41

seeing and feeling which

31:43

is that this phase

31:45

of middle life which I am thinking

31:47

of as middle-aged right as I I

31:50

turned 60 this year right I'm thinking

31:52

about this as middle-aged definitionally it isn't

31:54

definitely mentoring old age right and so

31:56

I guess I'm hoping that it starts

31:59

reframing right what people in this

32:01

age group can do and want to

32:03

do. And

32:05

I hope it also helps

32:07

illustrate for society at large

32:11

how important it is to be thinking

32:13

proactively about this and to

32:16

help us all understand how easy

32:19

it is to do when you have

32:21

30 or 40 years to plan for it and

32:23

how hard it is to do when you don't

32:25

use that time effectively. And that's true for finances,

32:28

that's true for social policy programs, that's

32:30

true for how we spend

32:32

our time as we age, it's true for

32:34

our health, right? So whether

32:36

we get there or not, I don't know,

32:38

but I think it's gonna personalize for so

32:41

many people in policymaking positions

32:43

such a change. And just a quick

32:45

story, I was recently at my son's

32:47

engagement party. And I have

32:49

just come back from, yeah, it's very exciting,

32:51

we're super thrilled. I just come back

32:54

from visiting my elderly parents and my son's fiance

32:56

is got a grandmother who's the same age as

32:58

my parents who's in failing health and we were

33:00

talking about it. And somehow at this engagement party,

33:02

right, all of their friends who are in their

33:05

mid and late 20s were talking

33:07

about elder care issues and nursing homes

33:09

and how their parents were dealing with

33:11

this. And I thought my husband and

33:13

I afters are like, we

33:16

didn't talk about that when we were in our 20s and

33:18

we sure didn't, like we were, I mean, my grandparents

33:20

were going through that, my parents were helping them. I

33:23

didn't have a clue. I was oblivious to all

33:25

of that. So I was like, wow, are these

33:27

just super wonderful kids, which they are, I shouldn't

33:30

say kids, wonderful adults, which they are,

33:32

or is this a difference, right? Is

33:35

this actually different? And I'm hopeful that

33:37

it's actually different. That is amazing. Thank

33:39

you so much for a terrific

33:42

and fun, wide ranging conversation.

33:44

Ann Lester, the book is

33:46

Your Best Financial Life. Thank

33:48

you so much for a

33:50

great conversation. Oh, thank you, Jean. And

33:53

we'll be right back with Julia and your mailbag. Did

33:58

you know that women are more likely to

34:00

outlive their retirement savings than men

34:02

are? Yep, in fact,

34:04

it's our biggest financial fear

34:07

and this savings gap is

34:09

where the ParityFlex multi-year guaranteed

34:11

annuity available from Gamebridge comes

34:14

in. If you are not

34:16

familiar with annuities, the concept is essentially

34:18

that you take a chunk of money

34:20

and you turn it into a paycheck

34:22

that you can start drawing on when

34:24

you want to, next year

34:26

or next decade. The

34:28

ParityFlex multi-year guaranteed annuity

34:30

caters to women's unique

34:33

retirement needs and with

34:35

a guaranteed lifetime withdrawal

34:37

benefit and it's flexible

34:39

withdrawal. It's like having

34:41

a paycheck for life. Plus, you'll also

34:43

get guaranteed returns at 5.15% ATY, making

34:48

the ParityFlex multi-year guaranteed

34:50

annuity the perfect compliment

34:53

to your existing portfolio.

34:55

Who's with us? Start saving now

34:57

at gamebridge.io. Please

35:01

visit gamebridge.io/ ParityFlex

35:04

for important information. This is

35:06

a paid endorsement. Hey

35:12

you guys, it's Jean. I wanna tell

35:14

you about another podcast I think you'll

35:16

love because I love it, Freakonomics

35:19

Radio. Every week,

35:21

host and bestselling author, Stephen

35:23

Dubner, dives into the hidden

35:25

side of business and economics

35:27

and so much more. He

35:30

interviews CEOs, historians, even

35:32

Nobel laureates to explore all

35:34

kinds of topics like whether

35:36

AI has a sense of

35:38

humor and whether two CEOs

35:40

are better than one. If

35:42

you are curious like me and

35:45

just looking to better understand the

35:47

world around you, you will find

35:49

it on Freakonomics Radio. Listen

35:51

wherever you get your podcasts. We

35:56

are back for Mailbag Julia Chefsky

35:58

joining me. as

36:00

always. Hey Jules. Hello, how's

36:02

it going? It's going pretty well.

36:04

So here's a question

36:07

for you. I mean you're in your

36:09

20s. Do you and your friends ever

36:12

talk or think about

36:15

like, oh my god, am I

36:17

ever going to be able to retire? Or is that

36:19

just so far in the future? It's not even on

36:21

the radar. I can barely

36:23

think about what's for dinner next week, let

36:26

alone tonight. So no.

36:29

No, how about Adam? I mean

36:32

Adam, Jules's boyfriend, Adam definitely does.

36:35

He's like very future

36:37

focused. Yeah. And

36:39

yet he tells me not to think about the future.

36:41

So maybe I should point that out sometime. I

36:45

think we should get into our question because

36:47

it is a long one this week,

36:50

but it is probably relevant to

36:52

many of our listeners. So I think bear

36:54

with us as we get through the question

36:57

and then we'll get into it. Does

36:59

that sound good? That sounds great. All

37:01

right. Our question today comes

37:03

from Emily. She writes, Hi,

37:06

Jean and Julia. I'm a huge fan of

37:08

her money and I've shared it with many

37:10

friends. We talk about your episodes together and

37:12

I look forward to new episodes every Wednesday.

37:15

So I'm very excited to be submitting a

37:17

question of my own about

37:19

planning ahead for health insurance and

37:21

retirement. I am 45 years old

37:24

and happily single since getting a

37:26

divorce over 10 years ago. And

37:28

I have no current or future income

37:31

or benefits linked to my husband for

37:34

planning purposes. Assume that I will not

37:36

remarry. I took your

37:38

money type quiz on your website. I am

37:40

a producer and it sums me up

37:43

perfectly. Producers can be

37:45

financially conservative to their detriment. They

37:47

prefer to minimize their exposure to

37:49

risk regardless of how much money they have. In

37:52

addition, I loved your episode with Simone

37:54

Stolsoff about the good enough job. And

37:56

because of it, I read his book

37:58

and believe I do have a good

38:00

enough job. So to sum

38:03

up myself in a nutshell, I'm a

38:05

risk adverse over planner with a good

38:07

enough job. Although there are

38:09

many benefits that make my job good

38:11

enough, I think many of them could

38:13

be replicated elsewhere. However, I

38:16

am grandfathered into a retirement

38:18

health insurance benefit that holds

38:20

me back from considering other

38:22

opportunities because I worry that this benefit

38:24

is too good to give up. If

38:27

I stay with my employer for another 10 years, I

38:30

will be eligible to participate in

38:32

the company's health insurance plan whenever

38:34

I retire, even if that is

38:37

as early as age 55. In

38:39

today's dollars, that means I would pay that $230 a

38:42

month to

38:44

buy into what I consider an

38:46

excellent health insurance plan. And

38:49

although there would still be co-pays

38:51

and out-of-pocket expenses, my employer would

38:53

pay the bulk of the monthly premium. I

38:56

am eligible for this benefit because I

38:58

have 20 consecutive years of service at

39:00

my job. If I were to

39:02

leave and then come back, I would no longer

39:04

be eligible for it on the same timeline. I

39:07

make about $85,000 a year on

39:10

which I live relatively comfortably. I

39:12

have a mortgage balance of $80,000, but

39:15

no other debt have about $450,000 in my 403B and

39:20

Roth IRA accounts and have $25,000 in my

39:22

emergency fund. I

39:25

don't expect to be in a place financially to

39:27

stop working when I'm 55, but

39:30

I love the idea of having health insurance taken

39:32

care of so that I could spend my time

39:34

from age 55 onwards, potentially

39:36

doing part-time work or a

39:39

lower paid job about which I am passionate.

39:41

I recognize that many people may

39:44

consider my position financially stable,

39:46

but I'm still afraid to give up

39:48

this retirement health insurance benefit. I

39:51

go back and forth between telling myself to

39:53

stick it out for 10 more years and

39:55

become eligible for the benefit and then shift

39:57

to a job that speaks to my passions.

40:00

less stressful or on

40:02

the other hand telling myself that life is

40:04

too short and staying with the job for

40:06

another 10 years just because

40:08

of future health insurance benefits seems

40:10

foolish when there are other jobs

40:12

that may either pay more or

40:14

be a better match for my

40:16

interest now or maybe even both.

40:19

All of the older adults in my life seem

40:21

very impressed with this retirement benefit and caution

40:24

to me that I shouldn't give it

40:26

up because even if I get Medicare

40:28

it won't be as good as my

40:30

employer's insurance. I've tried to

40:32

research health insurance options but it was

40:34

hard figuring out what the options would

40:37

be if I wanted to purchase insurance

40:39

today let alone plan for insurance in

40:41

the future. Do

40:44

you have any recommendations for

40:46

thinking ahead about health insurance and retirement?

40:49

Are there things I should be doing

40:51

today to lock into

40:53

good plans? Is the

40:55

option I have with my employer rare enough

40:57

or good enough that it should motivate me

40:59

to stay with my company for another

41:01

10 years? Is there a way

41:04

to qualify the value of the benefit so

41:06

that I could calculate how much more I

41:08

would need to earn in a new job

41:10

to make up for losing this benefit if

41:12

I left my company? Do you

41:15

think I'm being risk-adverse to my

41:17

detriment in my typical producer style

41:19

to put so much weight on

41:21

this benefit? Thank you so

41:23

much for considering my questions and thank you

41:25

again for all you do. Next, Emily.

41:28

Wow. Well first of all

41:30

Emily thanks for laying all of that

41:32

out for us. Thank you for taking

41:34

the money type quiz. I hear from

41:36

people all the time that they've taken

41:38

it and and it's available on our

41:40

website. It's insight into

41:43

why you are the way you are with

41:46

money. It's a 40 question diagnostic

41:48

that was developed by a PhD

41:50

out in California. We recently had

41:52

her on the show. You can

41:54

listen to that if you missed

41:56

it and we just hear again

41:58

and again. Oh my god. this got me.

42:01

And I got to say, Emily,

42:03

my primary money type is also

42:05

producer. So I relate to how

42:08

you are feeling about

42:11

not wanting to take this

42:13

risk. I have to push myself to

42:15

take risks when I feel

42:17

like I shouldn't be taking them

42:19

or that I don't want to take

42:21

them. And in the

42:23

world of health insurance where

42:26

we know that benefits like

42:28

these are rare.

42:30

In fact, only about 21% of

42:35

large companies offer retiree

42:38

health benefits anymore.

42:40

And that number has been

42:42

steadily falling as recently as

42:45

2021. It was

42:47

27%. You know, this is

42:49

something that is worth at least thinking

42:51

about holding on to.

42:53

However, 10 years

42:56

is a really, really

42:58

long time. I'm

43:00

about 10 years older than you makes

43:02

me 59. I'm going to be 60

43:05

this year. I can't believe I'm saying that, but I'm

43:07

saying it a lot to remind myself that I'm going

43:09

to be 60 this year and that it's not so

43:11

bad. And I got

43:13

to say, I'm at the age where

43:15

things are starting to happen to people

43:17

that I love. People are

43:20

calling with diagnoses and

43:23

life changes and

43:25

unexpected, unhappy

43:28

surprises. And although

43:31

I really have never been

43:33

a live

43:35

for today kind of a person, I

43:38

do think there is something to

43:42

making sure that you

43:44

aren't putting off the

43:47

important things until tomorrow.

43:50

And because work takes up so

43:52

much of your time, because

43:54

we spend so much of our lives

43:58

and our energy. At

44:00

work, I really enjoyed

44:02

my conversation with Simone Stoltzoff as

44:05

well, but I don't

44:07

really subscribe to the good enough job theory.

44:09

Not for me. I

44:11

want a job that is meaningful

44:13

to me. And it

44:15

sounds like you may want a job that

44:18

is meaningful to you and that you may

44:20

want it sooner rather than later. So here's

44:22

what I would suggest. Don't

44:25

quit. But start looking. Start

44:29

looking for a job

44:32

that speaks

44:34

to you a little more than the job

44:37

that you have right now. See

44:39

what the difference in pay looks like.

44:42

Consider whether you could

44:44

continue to, if you get a bump,

44:47

live on the amount that you

44:49

are being paid now and maybe

44:52

you could put some additional

44:54

money into a health savings account for

44:56

the future or just a

44:58

regular savings account or an investment account

45:00

that would allow you to feel a

45:02

little bit more

45:05

at ease about your future

45:08

health care costs. And then

45:10

two other points. The first is

45:12

when you have a plan like

45:15

this, plans

45:17

change. Plans

45:20

companies hit times

45:22

in their financial lives where

45:24

they're no longer able to

45:26

offer such a rich package

45:28

of benefits and they switch

45:30

things up. I'm not saying that this is

45:32

going to happen. I'm saying

45:34

that it could happen. And

45:38

the other thing is once

45:40

you are on Medicare, many

45:42

of these employer plans are

45:46

supplemental plans as

45:48

a general rule. You may first

45:50

be covered by Medicare and this

45:52

employer plan may fade into

45:54

the background to pick up any gaps.

45:56

Does that make it not valuable? No,

45:58

it's still valuable. But you

46:01

should understand how it's

46:03

likely to play out

46:06

in the future. So I would

46:08

do a little more exploration, Emily, and

46:11

let us know what you decide. Thanks for

46:13

writing and thanks so much for listening. And

46:16

Julia, thanks for laying that all out so

46:18

clearly. You are welcome. Thank

46:20

you, Emily, for writing such a nice

46:23

and well thought out question. Absolutely.

46:26

If you've got any other money

46:28

related questions, we'd love to hear

46:30

from you. Send them our way

46:32

by emailing us at mailbagathermoney.com or

46:34

leave a comment on our YouTube

46:36

page, at HerMoney on YouTube.

46:38

Thanks, Jules. Thanks. Bye,

46:41

everyone. We are going to take a

46:43

quick break. Hey

46:46

there, I'm Dylan Lewis, one of

46:48

the hosts of Motley Fool Money.

46:51

Each weekday on Motley Fool Money, we talk through the

46:53

business news you need to know and the stories moving

46:56

stocks on Wall Street. On weekends, we

46:58

dive into the industry shaping tomorrow and

47:00

host the experts, authors, and executives that

47:02

understand that. Tune in for insights,

47:04

a long term perspective on investing, and of course,

47:06

stock ideas, plenty of them. To

47:08

quote a listener, it pays to listen. Check us

47:11

out and subscribe wherever you listen to podcasts. And

47:17

we're back with your Money Tip of the Week. If

47:20

you are a longtime user and

47:23

fan of the free budgeting app

47:25

Mint, my condolences. It is shutting

47:27

down in just a few weeks

47:29

on March 23rd, but please don't

47:31

let your budget die along with

47:33

the app. Mint users

47:35

may have noticed that their data

47:37

is being moved over to Credit

47:39

Karma, which seems like a simple

47:41

solution, but has some limits. Credit

47:44

Karma is primarily a credit monitoring site,

47:46

and while you'll be able to do

47:49

some expense tracking, you won't be able

47:51

to categorize or set your monthly

47:53

budgets. So look at this

47:55

as a chance to shake things up and

47:57

try a new budgeting method that may work

47:59

better. better for you because we do know

48:02

that having a budget in place

48:04

can help improve your short and

48:06

long-term financial habits, help with managing

48:09

debt and saving money, and enable

48:11

you to reach your financial goals.

48:14

Now, here's the bad news. If

48:16

you really like having

48:18

the aggregation that's been

48:20

completed for you, you're probably

48:22

going to have to pay for it. We

48:24

recommend doing your research and checking

48:27

out the alternatives like YNAB, you

48:29

need a budget simplified by Quicken,

48:31

Monarch Money, or Tiller. But there

48:34

are other options. You can budget

48:36

your expenses the old school way

48:38

in a spreadsheet, which means just

48:40

putting some time on your calendar

48:43

to look at your different accounts

48:46

and keep track of that stuff on your

48:48

own. Thanks so

48:50

much for joining me today on Her

48:52

Money. Thanks to Ann Lester for sharing

48:55

why it's never too late to

48:57

start planning for a joyful

48:59

and stress-free retirement.