← HerMoney with Jean Chatzky
HerMoney with Jean Chatzky
Ep 481: Top Strategies For Making Your Money Last (And Grow) In Retirement
00:32:36
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- [00:02]
Hilary Hendershot
I think it would be great for women to really relate to the stock market like it's a scoreboard for human ingenuity and creativity and progress. Despite what the President of the United States might say, that person has far less impact on the stock market than the overall efforts of entrepreneurs everywhere. My clients hold 12,000 publicly traded companies. There just isn't one human being who can long term impact for the worst the price of those companies.
- [00:30]
Jean Chatzky
Hey everyone, thanks so much for joining us today On Her Money. I'm Jean Chaty and today we are talking strategies for making sure that your money lasts throughout retirement. Because the reality is women retire with less, we retire with a lot less. According to a 2024 study from Prudential, women have less than a third of the median retirement savings that men have. And we could spend all show today talking about the reasons why the gender wage gap, caregiving responsibilities, the list goes on. But a change of sorts is coming. Nearly half of American women expect to inherit wealth in the next decade. It's only a matter of years before women are expected to control over 60% of the assets in the world. That is massive. But it's not enough to just have this money. We have to get strategic about how we invest it, how we draw down our assets, how we minimize taxes, and how we continue to build wealth throughout our lifetimes in order to get through retirement, which can last two, three, four, four decades. And many of us want to do all of this while leaving a meaningful legacy after we're gone. How do we do that? Hilary Hendershot has some ideas. She is founder of Hendershot Wealth Management, a CFP certified financial planner, and host of the Love youe Money podcast. In other words, she's an expert, but she wasn't always. And she's gonna walk us through how she got there and how you can too. We are going to take a very quick break. The human body is pretty amazing. It can heal, rebuild and adapt in ways that even science is still catching up to. Trust me on this, I ran the marathon last year. But let's get real. As we age those natural processes, they slow down. That's where Ancient Nutrition's Multi Collagen Advanced Lean comes in. This is not, not just any collagen supplement. It's powered by clinically studied ingredients that are shown to support fat loss, build lean muscle, reduce joint discomfort, and bonus, improve the look and growth of skin, hair and nails. And right now, Ancient Nutrition is offering 25% off your first order. When you go to ancientnutrition,.comhermoney that's ancientnutrition.comhermoney for 25% off your first order ancientnutrition.comhermoney Here is something I've learned Making good financial choices does not mean having to give up the things you love like delicious home cooked meals. Think you have to spend big bucks or big hours in the kitchen to make that happen? Think again. With every plate you get flavorful, satisfying dinners like crispy Buffalo Ranch chicken or cheesy Mexican street corn hash and they are ready in 30 minutes or less. Every plate is one of my go tos for busy weeks when I don't want to overspend or fall into the what's for dinner spiral. What are you waiting for? Dig into these flavor packed meals your household will love. New customers can enjoy this special offer of only $1.99ameal. Go to everyplate.com podcast and use the code HERMONEY199 to get started. This is applied as a discount on your first box. Limited time only. I am back with Hilary Hendershot of Hendershot Wealth Management. Hillary hey, welcome.
- [04:37]
Hilary Hendershot
Thanks for having me.
- [04:39]
Jean Chatzky
Thanks for being here. I want to start with your story. I know a few of the highlights. You lost a home to foreclosure, maxed out your credit, watched your FICO score drop below 500. What flipped the switch for you and how did you get from here to there?
- [04:57]
Hilary Hendershot
Yeah, I was a massive overspender. I really had this scarcity mindset. If I made $100 I would spend 120 every single time. So yes, I dug myself a massive amount of debt until the point where I literally, and this actually happened, pulled my least convertible BMW into the gas station to get a tank of gas. I was on empty and my credit cards were maxed out and my bank accounts were empty. I literally couldn't even pay for a tank of gas. So I walked home from the gas station that day and had the pep talk of all pep talks with myself and I said, Hillary, I can see the future today. You know, I was in my 20s at the time and I said it is so very clear that if I continue to behave with money the way I've been behaving, that my future will always look like this. I'll always need someone to bail me out, I'll always be broke, I'll always not know how much I can spend and I'll always not be on track for financial freedom. And you know, I was an economics major. I was very much like by the book Like a very analytical mind. And I just said, obviously, what I'm doing comes from my psychology. It's not my book smarts, because that's in place. Right. I've managed that aspect of life, and it's not helping. And so I started attending events on money psychology and behavioral finance. I heard the term overspender for the first time. I had never heard that term, but I knew when I heard it that I was one. Right. And I put my entire focus on my own behavioral finance and money psychology. I turned everything that I was doing in my financial life on its ear and started to dig my way out. It took time, but as I learned those lessons and I could look back and see my own progress, I thought, these are lessons women will want to have. I'm not the only person on the planet struggling in the realm of money. And so now I'm able to embody and have empathy for and teach both of those sides.
- [07:07]
Jean Chatzky
Where do you think the overspending came from in your situation? We have a tool called money type. It's a diagnostic tool developed by a PhD that sort of takes a look at the nature of it, but sometimes the nurture of it, the home in which you grew up in, really contributes.
- [07:29]
Hilary Hendershot
Yeah, I do think it came from the nurture. I don't know how much nature met nurture. Right. You know, and my mother was a very conservative financial person. She was making a good living, but saving a lot of it. Okay. And I didn't understand or know that. So my experience was I couldn't have the things I wanted. You know, some of the pivotal memories for me. My mom would only spend $5 on my friend's birthday gifts. And I thought it wasn't enough. I was like, I'm walking into the birthday parties. I'm not enough. Like, this is embarrassing. I'm 5 foot 10. I was a starting center on the high school basketball team. I wanted Nike high tops. Everyone had Nike high tops. And she brought me to Payless Shoe Source. And I wore pro wings, right. I called them likeies. But it was embarrassing for me. And so I decided there's never enough money, you know, not only that. And my parents had a medium bad divorce anyway. My dad didn't want to pay child support. He said, I don't want your mother to have that kind of control over me. Said, oh, money is power. Right? So I got these two mindsets that were interplaying and then how you manifest there's never enough money. When money comes into your life, you have to spend it because otherwise you're wrong that there's never enough money. And the human brain, of course, can't deal with cognitive dissonance for very long. So I had to reverse engineer my way out of that thinking, well, good.
- [08:56]
Jean Chatzky
For you for actually doing it. I mean, I think that if we take the time to look at the psychology behind our behaviors, and not just when it comes to money, but when it comes to all aspects of life, there's a lot that we can figure out and there's a lot we can change if we just decide that we are going to head down that road. Putting on your expert hat for us, it's disheartening to hear that still in 2025, women have less put away for retirement than men. I know there are a lot elements here that have to do with life, but I also know that there are some things we could get better with if we got strategic about it. So what are the top mistakes that you see women making with their retirement plans?
- [09:51]
Hilary Hendershot
Yeah, there are a few key things I would just really love to see women get empowered about and stop making those mistakes. First of all, and Jean, you really hit the nail on the head when you said decide. I mean, there is an element of, you know, the first time I really internalized the message, nobody cares more about my money than me, it was profound. Right. There's billions of people on the planet and I'm the only one filling my retirement nest egg accounts. And that's like a sense of responsibility and clarity that informs your behavior around spending and saving. Right. So mindset is critical. You can't get there without an empowered and definite mindset, like, I'm going to produce financial freedom for myself. And the second thing is, gosh, I would love for women to really build an evidence based, very deep trust in the stock market. If you listen to the messages of the national financial news media, you know, the stock market's always terrifying. If it's going up, it's a bubble, it's definitely going to burst. If it's going down, it's different this time. It's never coming back up. Either way, you should be terrified. Think if you had that relationship to your spouse or your friends, you know, this is a very dysfunctional relationship. In reality, the stock market's the greatest generator of individual wealth in human history. And we as women, you know, I mean, not only do we retire with less, but we tend to live longer. We need the returns of a good stock portfolio over what is likely to be a two, three or more decade retirement. Right. So Taking the time to build that relationship and that deep trust because time in the stock market really matters, makes a huge difference.
- [11:28]
Jean Chatzky
I agree with you. And I'm just gonna jump in here because I want to make sure that people understand based on what you're saying. You're not saying that we have to be stock pickers. Right. We run our Investing Fix investing club for women. We've got hundreds of women who are learning about how to pick individual stocks from Karen Feinerman and from me on a regular basis. And it's super fun. It's really interesting. It's, I think, really, really empowering. And the women who are doing it, love it.
- [12:03]
Hilary Hendershot
Yeah.
- [12:04]
Jean Chatzky
But if you don't want to pick an individual stock ever, you do not have to.
- [12:09]
Hilary Hendershot
You do not have to. I myself do not pick individual stocks. I do my best to get my clients diversified out of concentrated stock positions. You know, when they have meaningful portions of their wealth in a single stock. I think that's probably a mistake or it's potentially devastating mistake. What I'm encouraging is the relationship to the stock market, that you can trust it. I myself use a more passive methodology with clients and in my own accounts. But that doesn't matter. The point is to get empowered about having your money in the stock market. Most importantly, during periods of time like the past six weeks or so when it has looked volatile, choppy, that you can take the step back, have the 30,000 foot view and say, look, I'm not going to sell that stock today because I refuse to buy high and sell low. Right. I'm in it for the long term. And I think it would be great for women to really relate to the stock market. Like it's a scoreboard for human ingenuity and creating creativity and progress. Right. You know, despite what the President of the United States might say, that person has far less impact on the stock market than the overall efforts of entrepreneurs everywhere. Right. My clients hold 12,000 publicly traded companies. There just isn't one human being who can long term impact for the worse the price of those companies.
- [13:30]
Jean Chatzky
So yeah, I interrupted you before. What was the third mistake you were gonna say that you see women making?
- [13:37]
Hilary Hendershot
Yeah. You know, and at the risk of sounding self interested, I can't tell you the number of really educated, well meaning women who've been trying to DIY their retirements for fear of paying a financial advisor a fee that they don't earn weeks or months after making, really a devastating financial choice that meaningfully impacts their retirement for the worse. You know, most of my industry Especially fiduciary advisors care deeply about our work and our clients. And of course you can't know that unless you have a relationship with one. But a good financial advisor can be big mistake. Insurance, we won't provide life altering advice every day, but over the course of the relationship we absolutely will. And the tax and financial landscape now is so complex. I mean, you just need someone to help interpret that for you.
- [14:25]
Jean Chatzky
For those women listening, maybe in their 40s, in their 50s, even their late 30s, who feel like they're behind, what's your advice for supercharging your retirement savings? If you're off track and I, I throw out a lot of benchmarks for the amount of money that you should have by a certain age, that, that by the age of 30 you want to have one times your salary put away for retirement and by 43 times, by 56 times, by 68 times, and by the time you actually retire, 10 times. And I know that every time I say that I am scaring people. So if people are feeling behind, how do they get back on track?
- [15:05]
Hilary Hendershot
Yeah. So you know, you may feel behind and at the end of this conversation we might call this the decide interview. But of course the mindset comes first. Right. So we're going to decide that no matter what happened, you know, just because some financial expert said you should have started saving at the age of 19 and you didn't. Most women don't. Most people don't. But let's get really real. What are the numbers? Takes stock, Right? You want an updated net worth statement. I often tell my clients the most important number in financial planning is the spending number. We have to know, as people call it, your nut. Right. What is it that you spend on needs and wants to live a life that you love living. And that is the number that we have to replace using Social Security income and income from your investments if and when you stop working. Right. And we have to be able to pay that to you over, like I said, a two, three or more decade retirement. So let's figure out where we are on that math. And then of course we want to know your debts. That's part of the net worth report. But you're going to want to rid yourself of consumer debt as soon as you can. There's no easy way around that. And that often means, you know, tightening the belt. Second, you're going to prioritize high impact savings. So making sure you're maximizing your company 401k plan. Hopefully you do have access to a 401k. The ability to defer into a 401k is so much bigger than the ability to put money in an IRA or a Roth IRA. That's $23,500 per year this year in 2025. And then of course, if you're over the age of 50, you get a 7, $500 catch up contribution. So that could be $31,000.
- [16:45]
Jean Chatzky
Well, and if you're over 60 like I am this year, you get even more.
- [16:49]
Hilary Hendershot
Congratulations.
- [16:50]
Jean Chatzky
Thank you.
- [16:53]
Hilary Hendershot
You know, know that and I, I'm sure you've seen this data. 50s tend to be your highest earning years. So naturally earnings goes up over time. You can of course take actions that impact this number by negotiating for more or focusing on profits as a business owner or starting a side hustle or maybe doing a training program that qualifies you for a higher income. And then like we've been saying, invest intentionally. Right. Avoid letting fear or lack of confidence keep you out of the stock market. And that money will compound. I mean the word compound interest is synonymous with exponential growth. It's really like magical. Someone called it the eighth wonder of the world. And you want to get that working for you.
- [17:37]
Jean Chatzky
I want to talk about the wealth transfer that we mentioned at the top of the show. We've been talking about this wealth transfer for years. It's grown in size. The estimation of how large, trillions, this transfer of wealth is going to be has just been growing and growing. It hasn't exactly happened yet, in part because people are living so much longer. But the gist of it is women are going to inherit twice. We're going to inherit both from our parents and from our spouses because we'll outlive them. What do we have to do before we inherit money or if the money comes as a surprise when we receive it?
- [18:22]
Hilary Hendershot
It. My experience is whatever you've done with money up until the day you inherit is what you will continue doing with money. So if you've been saving and investing, great, you're likely to roll that balance into your overall portfolio or nest egg and continue to treat it and interact with it the same way you have. However, if you're someone who hasn't been working or is an overspender like I was, you know, I have seen many, many inheritances really just devastated through money psychology, through what they in retrospect view as bad financial behavior. So take the time to. You know, there's so many money behaviorists, financial counselors, right. They're therapists that essentially have an empowered relationship with money, which not all do you know? So you can take the time to, to get yourself into that kind of guidance, a meaningful relationship or teach yourself good financial behaviors. Also, of course, the world, the technical world of inheriting money is a little bit onerous. There are rules about how you have to take money out of the accounts on a schedule once you inherit, especially and specifically if you inherit in an ira, which most inheritances contain an IRA balance. So you want to educate yourself on those or like I said, get yourself a relationship with a good financial advisor who can make sure you time those distributions according to the law.
- [19:48]
Jean Chatzky
We are going to take a very quick break, Hillary. When we come back, we're going to talk about the best strategies for making the most of your money when you're in retirement. Back in a sec. So you all know I travel a lot for work and that often means I need to get things done from a hotel lobby or an airport lounge. And going online without ExpressVPN is like leaving your laptop unattended at a coffee shop while you run to the bathroom. Most of the time maybe you're fine. But what if one day you come back and it is just gone? When you connect to public WI fi, your data is not secure. Hackers on the same network can steal your passwords, banking info, even your entire identity. That's why the hermoney team trusts ExpressVPN. It encrypts your Internet traffic and it creates a secure tunnel between your device and the web. And it works on every device, laptop, phone, tablet. With just one tap. Secure your online data today by visiting expressvpn.com hermoney that's E X P R E S s v p n.com hermoney to find out how you can get up to four extra months free. Expressvpn.com hermoney if retirement's on your radar, or even if it still feels far off in the distance, you need to know where your money's going today. Because here's the truth. You cannot plan for the future if you don't have a clear picture of the present. Enter Monarch Money. It's the personal finance platform that's more than just a budgeting app. It's a full command center for managing money with confidence. With with all of your accounts, checking, credit, investment, retirement, HSAs, even crypto connected in one place, users get a clear, real time picture of their financial lives. Monarch is the tool real people use and actually like, including my producer Hailey, get control of your overall finances with Monarch Money. Use code hermoney@monimalmoney.com in your browser for half off your first year. That's 50% off your first year. @monimalmoney.com with code HERMONEY. I am back with Hilary Hendershot of Hendershot Wealth Management. So when we get into retirement, the rules change. It's almost as if, you know, we've been on this path. Save invest, save invest, save invest, save invest. And now somebody says to you, okay, reverse engineer the entire thing. Make the money last, spend it down, do it tax effectively. Don't run into Medicare penalties, don't run into difficulties by spending too much. It's incredibly daunting. How do you help people make that transition?
- [22:59]
Hilary Hendershot
That is a great question. So let's see. First of all, the mindset as you approach that retirement date, I say to people, that day that you stop working, that's the most important day in your financial life. Absolutely. Because on that day, you're betting everything that what you have saved in a nest egg will outlive you. I mean, that's really the thing I say, you know, we can have all kinds of complicated conversations about retirement. Ultimately, you want to know, Hillary, am I going to live longer than my money or is it going to live longer than me? The latter is the goal. In our saving investing years, we're looking at the balances, right? I have 500,000, I have a million. Our, you know, the stock market is down 20% now I only have 800,000. You're looking at that cumulative balance. The thing that becomes far more important than the balance of your accounts as you approach retirement is the amount that that balance can pay you in a sustainable way for the entire duration of your retirement. And that the technical term for that is the safe withdrawal rate. You know, in my industry, that rate is somewhere between, depending on who you talk to, 2 and 5%. Right.
- [24:03]
Jean Chatzky
I think such a big range.
- [24:05]
Hilary Hendershot
I know, I know it's a really big deal. But you want to be able to hang your hat on that number. And then you want to have confidence that you're not going to need to, especially not going to need to spend more than that when the stock market is down. Essentially, that is the, the biggest mistake that can get made in retirement is to overspend the balance when the stock market is down. And so working, working with your spouse or partner, ensuring you know what your spending number is, keeping yourself surrounded with enough cash, but also learning the behaviors that don't have, you have financial emergencies. You know, a lot of people, for example, don't think through, oh, my spending number is 3%. That's my safe withdrawal rate. But they don't think that they're going to need a $50,000 Lexus in four years. That's included. That's part of it. Right. So we have to think through all that lumpy stuff spending and ensure that you're not going to break down on the freeway and have to pull 50 or 60 thousand dollars out of your retirement accounts that you didn't kind of do the math to account for because that's not how you thought about it in your working and saving years. Right?
- [25:09]
Jean Chatzky
It's true. It's not. People have trouble thinking about lumpy expenses always, whether they're roof repairs, whether they're new cars, even in the case of quarterly insurance premiums. Right. We, we wrap our head around this idea of a monthly. But when it's something that's a little more intermittent or something that's truly an unusual expense because it doesn't happen very often. Those are the things that mess us up. Another one of the things that messes us up is taxes is the amount that you will be taxed on that money that you withdraw. I make it a point when I visit the financial advisor to look at the money both ways because, oh my gosh, such a difference. Which is why people talk about doing Roth IRA conversions strategically in those years leading up to retirement, sometimes even in retirement. When do you think Roth conversions make the most sense?
- [26:15]
Hilary Hendershot
Let me answer that question. And then I also want to talk a little bit about taxable accounts. The difference between a Roth Roth IRA and a traditional IRA are that you paid taxes on Roth contributions when they went in and you don't pay taxes when they go out. And it's the reverse for traditional IRAs. You defer tax in the year that you contribute and you pay the tax in the year that you distribute. Roth conversions are easy to do. There's lots of limitations on when you can put money into a Roth, but there are no limitations on conversion. So you have the ability to create large Roth balances if you want. However, they're only beneficial if and when the tax rate you pay in the year you distribute is higher than the year you convert. Okay, so great times to do Roth conversions. And we're doing lots of six figure Roth conversions for clients. In some cases are years when you have what you expect to be a low relative ordinary income tax rate. So we convert. One other benefit of the Roth conversion is that if your IRA balance is so large, some people listening might think this is pie in the sky. But it is the case for some people. The IRA balances are big and we expect to have required minimum distributions in our 70s that are larger than we want, larger than we need to spend. And so then you're in a position of putting the excess dollars back into a taxable account. And it just costs a ton of money in tax. So that's another benefit of the Roth conversion. And over the course of a two or three decade retirement, we'll go through lots of tax regimes. Right. The ordinary income tax rate will change. So I think it's great to give yourself some optionality right now. I'm generally recommending, if clients are willing, that we go into retirement with about half the nest egg in traditional IRAs of the balances that are in tax deferred accounts, half in IRAs and half in Roth IRAs. So that we have the freedom to say, I mean, let's say one year, the tax rate, your marginal tax bracket is up in the 70th percentile like it was in the 1970s. Well, then you have the freedom to say, you know what, I'm not paying any tax on my retirement distributions this year. I'm just going to pole vault that and have a zero tax rate this year and gives you those kinds of choices.
- [28:37]
Jean Chatzky
The stock market has been really volatile lately. We were talking about that a bit earlier. Very high highs, very low lows. It feels gut wrenching. How do you think people should be thinking about this?
- [28:55]
Hilary Hendershot
I think there are two things that contribute to the price of a stock. So, and people don't realize this, but company stock has an actual book value. There is a dollar amount that that stock price should be worth according to the financials of the company. The other thing that impacts stock prices is temporary investor sentiment. So moods, emotions. So when I see the mood about the stock market being volatile, I mean, we had one week in the past six weeks where the stock market went down 10% and then a day where it went up 10%. Right. And I'm taking screenshots on my phone. I said, I will in my lifetime. I'll never see this again. Right. This is tremendous. It's monumentous. So I relate to that. Like, and I encourage is assuming you have a good professionally constructed portfolio, right? Like, this isn't true about just any old collection of stocks. But assuming you have a diversified portfolio, you can relate to temporary investor sentiment. Like it's just that it's temporary. And if you have the mindset, time in the market is far more important than timing the market, you really can Sit back and let times like that pass. I mean, if you think about it, the stock market lost 30% in the first quarter of 2020 due to the COVID pandemic. But that's all in the rearview mirror. We're not emotional about that now because we've made it through. This too shall pass. And that's kind of the nature of how things go in the stock market, because anything that happens in the stock market is always unprecedented. It always is.
- [30:33]
Jean Chatzky
It's true. So much of this is confidence, right? Our ability to invest, to plan, to lead our financial lives with intention. As we wrap this up for women who are still struggling to grab ahold of that confidence, what's the first small step? Something somebody can do today to start shifting their mindset?
- [30:57]
Hilary Hendershot
I'm going to tell the women listening a little secret. I have been listening to people talk about investing and money at cocktail parties my entire life. And now, because of the way I look, they don't necessarily think that I know anything about the stock market. But I promise you, even though you think men have it in the bag, they don't. They talk about their wins and not about their losses. Their stock predictions aren't necessarily smart. The data tells us that women naturally invest better than men. Right. So just know you're starting higher up on the totem pole than you think you are. Right. And that not everyone who says they know what they're doing do. And the natural inclination for women to set it and forget it, like let it go and not touch it, not make changes because of fear of the stock market tends to have us perform better when it comes to investing. So that's a little feather in your cap. And just know that you're probably doing better than you think you are and that there's lots of resources and people who care about your financial future who can support you.
- [32:03]
Jean Chatzky
Hilary Hendershot is the host of the Love youe Money podcast. Thank you so much for being with us today.
- [32:11]
Hilary Hendershot
Thanks. I had a great time.
- [32:13]
Jean Chatzky
If you love this episode, please give us a five star review. On Apple Podcasts, we always value your feedback. And if you want to keep the financial conversations going, join me for a deeper dive. HerMoney has two incredible programs. Finance Fix, which is designed to give you the ultimate money makeover, and Investing Fix, which is our investing club for women that meets bi weekly on Zoom. With both programs, we are leveling the playing fields for women's financial confidence and power. I would love to see you there. Her Money is produced by Hayley Pasqualides. Our music is provided by Video Helper and our show comes to you through megaphone. Thanks for joining us and we'll talk soon.