C (3:33)

This is a statement from your book Statistics. I should say, according to the National Institute of Retirement Security, one in four Gen Xers don't have a retirement account. And the majority of Gen Xers expect to postpone their retirement. And you dive into some reasons for those statistics. First of all, let's start with pensions. When did we see employers in the private sector begin to phase out pension plans?

B (3:57)

Yeah, these really got started as we were talking when Gen Xers were stepping into the workforce, as they began to slide away. And there are still traditional pensions out there, but it's far fewer than ever was in the generation previously boomers. And so as that started, so over the last two or three decades, we've really seen this slowly disappearance and more the reliance on do it yourself savings. And that takes a great deal of discipline, particularly when you think, I don't have anything to spare here. So I think that's really the nut of it. This was an experimental generation trying to figure out how to go about getting this retirement stuff together. And I gotta add, with longevity, it's very possible we're gonna have longer working lives quite naturally, because if you were to step out of the workplace in your 60s, my goodness, you could have two or three decades to finance and retirement. So I think a mind shift needs to get in place here to think, hey, you know, work is not four letter word. In fact, I can embrace work. But now in the next chapter, make it something I really want to do.

C (5:08)

At the same time, you write that 401ks were not used in the same way that they were back in the 90s as they are today. So what Are the biggest differences between 401ks in the 80s and the 90s compared to today?

B (5:22)

Yeah, that's a great question. That it has just become more, there's been more focus on how do we get workers signed up for these accounts as soon as they start a job. And so it sort of takes that decision process out of the way and so more and more. And in fact it's law now for a certain size of companies that they have to auto enroll their new workers in these retirement plans, 401k plans, and also do auto escalation each year to ramp up how much is set aside. So that's become a big issue because you know, yes, you can opt out of it, but most people don't. There's a certain paralysis that happens. So if you, if someone gets you started, good chance you're going to stay in this. So that's one of the big, the biggest changes I've seen. And in addition, you can put more aside than you could in the early years. The, the, the amount of money that is allowed to be set aside in these plans has gotten higher and more employers are matching funds. And so maybe it's not dollar to dollar, but it could be, you know, something that significantly can add up. Also employers have the Roth 401Ks which is a great thing for over the long term retirement savers because while they don't get the deduction from their taxes and their earnings right now, when they take that money out at retirement, they won't be taxed on it. And so that's a pretty important thing to consider.

A (6:50)

I've got a text here and if you can answer it. Great. If you can. I understand that says I'm 55, I have a mortgage, student loans, and now I have developed large credit card debt in the last year and a half due to my bills going up over $1,000 a wow. Do I take money out of my meager retirement account to pay for the credit card? Do I take a loan out for the retirement? Do I default on the credit card? What's the best thing to do under these circumstances?

B (7:15)

And that's a tough one. I mean credit card debt is truly something that knocks you back because the interest rate is phenomenally high if you're rolling it over month to month. I Wish you were 59 and a half because then you could take money out of that retirement account without a penalty and still pay the tax on it. And so on some, if you're a bit older, that's often what I would recommend. Because if you don't have the penalty today. You would have that 10% penalty. So it really requires doing some hard thinking yourself on, on if you feel that it's worth it in some ways getting that, that, that double digit, you know, what are we talking, 17, 18, 19%, maybe higher credit card rollover rates on what your APR you're being charged in many cases. Smart to just get it, get rid of it. But there are other great ways to start paying down credit card debt that, that you can explore and, and think about ways to really whittle away at that. But that's critical to get that down.

A (8:18)

This question says, never thought retirement would be possible, but now it might be reality. Worried about costs and my spouse may not have enough put away. Do you have a gauge of how much people who are say 60 years old should put away?

B (8:35)

Yeah, you know, again, it's so hard to say because it's, it's, it's not kind of a cookie cutter thing. This is an individual by individual situation. What your lifestyle is like and what, what kinds of things you might expect to be doing where you live, what your health is like. So the sort of, the rough thing a lot of financial advisors tell you is to have, you know, 70% of your final salary set aside for annual, you know, that that's what your living costs will be going forward. Well, what do I say? You know, people throw around these million dollar numbers, I need a million dollars saved. You know, don't freak out about that because it's not always just that retirement account. You have other assets. Look at what else you have. Often the great thing about Gen X is Gen X has quite a bit of home equity set built up. And so this can be a possible source. You may have other real estate assets at your disposal. And, and so in their opportunities to move to parts of the country where the cost of living isn't so high. And I say the number one thing you can do to make sure you have control of your costs in retirement is if possible, get physically fit. Because your medical costs, your health costs are going to be one of the biggest chunks of your cost of living as you age.

A (9:51)

I want to say that your book starts with a discussion of psychology around money.

B (9:57)

Yeah.

A (9:58)

Why is it essential to, to talk about your place, to talk about the way you're thinking about money before you decide what you're going to do with your money?

B (10:09)

You know, Alison, that's the thing is people, it is so, you know, I don't want to get all woo woo here, but there is the power of positive thinking. Without question. You need to kind of get a grip on this. I mean, don't be doom and gloom. Study after study shows that people who are optimistic about their retirement, about their financial security in their future, tend to take action. They tend to save more. They tend to do that budget, which is one of those things we forget to do as we age. And we have lifestyle creep. You start spending on things and you don't even realize it. And I'm not just talking about streaming services. You know, it can be a lot of stuff that we start. You don't realize this creep in how much you're spending. So you need to really take a look at that budget once again. Get lean about that, but think of it in a positive way. And I include encourage people to do that inner MRI about, you know, what are your values, what's really important to you, what are things you would regret if you don't get to do that as you move forward in your life. And so once you get a beat on what are the things that matter and what are things you want to do, you can get even a vision board, something to motivate you, get psyched so that you may have to take some sacrifices right now. But there is stuff out there. And I'm not saying deprive yourself today because for gosh sakes, you want to balance things out. But when you know where you're going, you have a better chance of getting there.

C (11:34)

You note in the book that Gen Xers have a little bit of a negative view of talking about money.

A (11:41)

Do you understand why that is?

B (11:42)

Yeah, if I were to quote a Gen Xer, I'd say whatever. That's how it goes. It is sort of this. We've grown up. This was the latchkey kids riding a bike without a helmet, drinking from the hose. This group is a pretty scrappy crowd. And the idea of money is sort of something that sort of gotten pushed in, in the background a bit because it was, you know, they never, they always, never felt that they were going to get the sort of advantages that maybe that huge boomer population ahead of them did or the millennials below them. But the fact is it's all there. It's all in place. It's just a matter of, you know, trying to really pull back the covers on this and face it. Because it's not like something that you need to, you know, rage against the machine. To quote another big band. You need to like, like get. Let's get with it. You got this kid, you know, so it's, it's doing that. And I will say that some Gen Xers, and it's sort of like two age groups, but the younger Gen Xers, as you noted, they're from age 44 roughly to 60. The younger ones may actually get some wealth transferred from their parents. There might. They might have the tab. The advantage of inheriting some. The older boomers, not so much. Talk to Gen Xers.

A (13:01)

Yeah, let's talk to Angela from Brooklyn. Hi, Angela, thanks for calling, all of it. You're on the air.

D (13:07)

Hey. Hey. Thank you for taking my call while this is so on time. Number one, I guess I'm a Gen X. I'm 58, but. And I have terrible anxiety when it comes to money, so. And because we. I didn't grow up with money you're talking about, we may receive money from our parents. My parents don't have any money to give me or my mother doesn't. I have more money than my family has ever had. And so. Which is why I get nervous about money. So I received a payout and I just have the check sitting there. I haven't deposited. I haven't touched it because I'm so nervous. Like, what do I do with this money? You know, I'm 58. I'm not looking to become a millionaire. I have my TRS tda. I'm fine. But the fact that it's been sitting in this envelope for a week, because I just don't know what to do. I don't want to squander it.

A (13:54)

Yeah.

D (13:54)

And I know that I want it to make money for me. I have a son that's 20. I know that that money needs to be a passive income, but when you don't, when you use. When you're not used to having money, you don't know what to do with it when you get it. So I just heard a mention. Roth IRA was, one of my friends suggested. Then someone said, no, no, no, don't do that. Put it in X bank. That's giving you a 3.5%. So I'm about to leave with this check. What do I do? I don't know where. What do I do? It's been sitting here for over a week because I don't know what to do. I don't know how to handle this money.

A (14:27)

Angela. Yeah, let's. Let's talk about it a little bit. Some different things that someone who some. Not necessarily, Angela, but somebody who was inherited money has gotten their hands on some money some way somehow. What are some things people could do with that kind of money.

B (14:41)

Yeah. You know, I think the first step, Angela, is actually the advice about the High Yield Savings Account isn't a bad one. I would start there. It's a small right now, you know, they're not paying out all that much, as you noted. But it is something. It's better than it was, you know, five years ago. So, you know, all of the, you know, major banks have those. I like Vanguard, Fidelity, some of the financial services companies. There you can open up account very easily. The High Yield Checking account is not a bad way to at least put it right now. And you're getting a little bit for it, right? There's no minimum out you have to put in. The Roth IRA is certainly a one way to go, but you can't get into that money once you open that. You're stuck there for a couple of years. The rules are such that you can't just take that money out first. I think it's six years. There's a certain period of time there. So that would be something you want to take a little cautiously. I'm a big fan of investing in index funds. Again, this would be through a Vanguard or something. So there's different routes to go. But right now, if you need an immediate thing to get it out of the envelope, I would do a high Yield checking account.

A (15:52)

We'll have more in a minute with financial expert Carrie Hannon. Her book is called Retirement A Gen X Guide to Securing your Financial Future. Stick around. This is all of it. This is all of it. I'm Alison Stewart. Let's get back into my conversation with finance expert Carrie Hannan, author of Retirement A Gen X Guide to Securing your Financial Future.

C (16:24)

And just a reminder, listeners, you'll hear.

A (16:26)

Us taking calls, but since this is an encore presentation, we won't be able to take your calls today. Carrie has a concept where everyone has.

C (16:36)

A magic retirement number. I asked her to explain what that.

A (16:40)

Is and how people can calculate it for themselves.

B (16:43)

Yeah, you know, again, this is something that you need you take into account. You know, we talked about what your last salary, your final income was and taking a grip on that. And then you kind of work backwards, like, how much do you think your cost of living is going to be? And you need to look at things like where you live and what kinds of things you want to do and look at your lifestyle in general. So I think the magic number gets. Gets a bit of a. Everyone touts it up as, oh, it's so important that everyone has this number. Things will Evolve. And you know the other thing, Allison, so many people are terrified. They get so like in the headlights about retirement in general and they're going to be woefully unprepared and they're going to outlive their money. And these are genuine fears. But when I talk to people who actually hit retirement or in retirement, you don't see that they figure it out. And a lot of it is a fear of the uncertainty, the fear of the unknown. And once you get into retirement, surprisingly most retirees figure out how to make ends meet and how to, how to juggle things around a bit. And I do think that we do build up this great fear. Certainly you need to have that financial it security to step away. But again, if you can continue, and we can talk more about that, if you want to continue to work even in some fashion in the, you know, the next, in the next stage of your life or even extend your full time job for another two or three years beyond when you thought you were going to retire, this can make a huge difference. And part time work or seasonal work, something moving forward can be that safety net that helps you from having to dip into those retirement accounts too soon in order like maybe you can continue to add to some of those retirements. You can push back taking Social Security until age 70 when you're going to get the biggest bang for your buck moving forward. If you think you're going to live a long life, then that's a good thing to do. And you get the mental, which you can't put a dollar figure on, sort of the mental engagement and the whole physical thing about use it or lose it, the mental engagement, feeling relevant, feeling needed. So you need to start thinking about in your 50s or even at 60, what you might want to do at 65 to sort of prolong your working life in a way that's going to work for you and that can often involve you have and even staying in your current position. You need to constantly be adding new skills to staying on top of your game because things are moving too quickly that you can't just sit back and be passive. So if you want to continue to make work part of your retirement plan, then figure out ways to add value to yourself constantly. You brought up Social Security.

C (19:21)

We have a question here. Should Gen X include Social Security in our retirement planning? Will it still be here in seven years?

B (19:29)

Yeah, I gotta say I'm a big believer in Social Security still being here. But that said, many financial advisors that I work with and talk to, they run the numbers for their Gen Xers without it sort of getting the sense of how are you going to be without it. But even it's not going to go away if it were to, if they don't get to making some of these necessary changes, there may be a reduction in the payout which the number they throw around is around 77% of the full value you owed. But frankly, this is your money, you earned it, you paid into it. I think it's going to be there for you. But if you want to run the numbers without it, by all means do. If it's going to give you that extra sense of security.

C (20:17)

Let's talk to Jill who's calling from Springfield. Hey Jill, thanks for calling all of it.

E (20:23)

Hi there.

B (20:24)

Thanks for taking my call, Alison. So my question is about.

C (20:30)

401Ks from the past.

B (20:32)

So over the years I've worked different.

C (20:35)

Jobs and moved around afterward and then.

B (20:38)

Of course companies bought other companies. So I know I have old 401ks out there somewhere. Is there any way to track them down? Are they still viable or are those just a loss? Without question they're still viable. And you absolutely got to do some get that, get that Inspector Glass out there and get going. You need to find that and you need to find a way to consolidate, get access to those, consolidate them. I encourage everyone. You know, we often have had numerous jobs at this point in our careers. So if you can roll them over into your own aira self directed that you control at one of the, you know, any of the big financial services companies can help you make that transfer. It's a bit tricky to make sure that it goes directly from that 401 plan to your new setup individual retirement account at a Vanguard or Fidelity T row, whatever it is. But there are ways to. I would start by going to the HR at some of those old employers and ask them to give you the contact for the plan provider and with your Social Security number and all of that, they can find these things for you unless the company has gone belly up and then there'll be another route. But, but I think you can get going just by contacting those employers, those former employers right now. But get on that, that's really important.

C (22:02)

Let's talk to Andrew in Westchester. Hey Andrew, thanks for calling all of it.

F (22:07)

Hey Allison, thanks for having me and taking my call. So my question is also about 401ks. I'm pretty sure I'm a Gen Xer. I'm 61, born in 63, so I could never tell whether I, I am the tail end of the baby boom or beginning of Gen X. But my question for you is when taking withdrawing from 401ks is the 4% rule, you know, withdrawing 4% a year in order to maintain the value of the 401k over the remaining lifetime, is that really solid or is there a way to get more out of that 401k without depleting it before you, you know, before the end of your lifetime?

B (22:48)

That is one thing so many people grapple with. And the 4% has always been kind of just a standard that was put out there. And yeah, there's probably nothing wrong with using that, at least for your math and doing the sort of outlook. But even the gentleman who started that, he has a new book out as well, who came up with the 401 the 4% rule, he's now edged it up to 4.1 or 4.2 or whatever. So the point is it gravitates year to year this number can shift and it will shift for you. Some years you may have more expenses and you want to do some things, in other years you may not. So you can use it as sort of your guideline. But I don't think more and more people are saying, you know, you've got to find ways to let it be a bit fluid here. But I don't think it's wrong to have that number in mind. But do realize that there are ways that you will be able to take more some years than other years.

A (23:48)

I did want to check up on something, clarify something. You said you mentioned a high yield checking account for the guest who called in earlier. Wouldn't it be a high yield savings account? A listener wanted to know.

B (24:02)

Oh, I'm sorry. It can be either way.

A (24:03)

It could be either way.

B (24:05)

Yeah, yeah. But the go do the savings just to make sure that you have access to. There are no rules about how it has to be invest be in that account for any certain period of time.

A (24:15)

We got a call from a text from Paul from Brooklyn. He's asking, does your analysis of the preparedness of Generation X for retirement include real estate? It seems to me that Generation X is more likely to own real estate than Millennials or Gen Z.

B (24:32)

That is a beautiful comment. Yes, indeed. You're correct. That is what I found through my research is Gen X Definitely. We mentioned earlier the home equity, but they're also real estate assets that many have have also moved into. So when you look at some of the studies and some of the from the retirement plan providers, they're often looking at just what people have in their retirement accounts, their, you know, their 401ks or 403bs, that sort of thing, their IRAs. So in fact that's why I say, you know, do that broad look at what are your assets, what do you have available to you? And you're right, Gen X has been quite good about investing in real estate and this can be a real boon moving forward and offering security.

A (25:18)

The last thing I want to ask you about are health care costs because quite often Gen Xers are taking care.

C (25:24)

Of their parents health and then they.

A (25:25)

Have to take care of their own health. What advice would you give Gen X.

C (25:29)

Ers for taking care of their parents.

A (25:31)

As they get older and then advice.

C (25:33)

You would give to Gen X for taking care of their own health?

B (25:36)

Yeah, that's so, so critical. Allison, the first thing is your parents. So there's a good chance you may have to step in and offer some financial help to your parents. This is something that's quite common and going to continue to be because in those last few years of life it can be pretty expensive and most people will need some form of assisted care which is outrageously expensive these days. So the chances are you're going to need to step in there. The best thing is the earlier you can have that conversation with your parents about what assets they have, what they have in place. Maybe they do have a long term care insurance policy, maybe they don't. But you need to know what's available to you there and have the discussion with them so you're clear on that. And with your siblings it often is a family effort to take care of the parents and usually one child doesn't take on the full responsibility. The second piece is yourself. And this is something most people still believe that when they hit 65 and sign up for Medicare that that's it. They're not going to have to worry about medical costs when in fact out of pocket costs, you know, after Medicare can easily amount to $165,000 over the rest of your lifetime. This is a fidelity number. They do this report every year so it can be significant and people don't focus on that. So as we mentioned earlier, if you can take care of your own health by staying fit, by eating with the ideal nutrition, anything you to keep yourself healthy. They say health is wealth. And so that's really. You do have some Runway ahead to work on that. Not everyone has that opportunity but certainly medical costs are going to be major moving forward.

A (27:26)

That was my conversation with finance expert Carrie Hannon.

C (27:30)

Her book is called Retirement A Gen X Guide. Securing your financial future.

A (27:38)

Up next, Buying and owning a home always comes with risks, but how is climate change impacting those risk calculations? Ron Lieber and Tara Siegel Bernard from the New York Times have put together a handy guide to help make sense of it. Hear all about it after a short break. This is Oliver.

E (28:01)

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