← HerMoney with Jean Chatzky
HerMoney with Jean Chatzky
Ep 489: Your Retirement, The Truth About Social Security, And How to Prepare NOW
00:37:12
Plus, what to do if we’re heading for a recession.
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Transcript40 lines
- [00:02]
A
I won't ever tell you not to be afraid and scared because you have to feel what you need to feel. But don't act on that. Really look at your financial situation and does this make sense for you right now? We don't know what's going to happen in the future. Maybe it'll be worse, but maybe it'll be okay. And so just look at that. And if you know that you're going to be on the edge and even waiting a year to get your full benefits is going to really hurt you, then it makes sense for you to start collecting now.
- [00:34]
B
Hey everyone. Welcome to Her Money. I'm Jean Chatky and today we are tackling a subject that has been dominating the headlines and stirring no small amount of anxiety. Yes, I'm talking about Social Security. Look, if you've been reading the papers lately, you've probably seen words like shortfall, cuts and insolvency splashed across the pages. None of those are reassuring, especially if you're retired, approaching retirement, or simply hoping that Social Security will be there when your time comes. Which is why I am so excited that Michelle Singletary is here today. You all know Michelle. She is one of our favorite guests. She is the nationally syndicated personal finance columnist for the Washington Post, one of the clearest, most trustworthy voices cutting through the noise and I'm honored to say a friend of mine. We're going to take a very quick break. You know that feeling when you walk in the door, kick off your shoes and just melt into your favorite spot? For me, that's my bed. Especially now that I have Cozy Earth sheets. Cozy Earth bedding made from viscose from bamboo is temperature regulating very important. It's also buttery soft and don't even get me started on their bubble cuddle blanket. It's got this plush feel that turn an ordinary night on the couch into a full on self care moment when the world feels chaotic. Cozy Earth helps reset and once you feel it, there's no going back. Plus it's a risk free upgrade. You get a hundred night sleep trial and a 10 year warranty. But personally I don't think you're going to need the return policy. Head to cozyearth.com and use my code hermoney for up to 40% off. That's cozyearth.com code hermoney. And if you get a Post purchase survey, make sure to let them know you heard about Cozy Earth right here. Because your bed should be more than a place to sleep, it should be your happy place. Cozy Earth makes that possible? At Hermoney we are all about making smarter choices and that doesn't stop at your budget. It also means knowing what you're cooking with. That's why we love Caraway's Non Toxic cookware and kitchen essentials. Here's a scary stat. Over 70% of the cookware sold in the United States is coated in ptfe. That's the stuff that releases toxins in just two and a half minutes of overheating. Well, no thank you. With Caraway's ceramic cookware, you're getting premium quality without the scary chemicals. If you've been eyeing their Internet famous 12 piece cookware set, now's the perfect time to buy. You can shop caraway risk free, enjoy fast, free shipping, easy returns and a 30 day trial. Plus, if you visit Carawayhome Hermoney, you can take an additional 10% off your next purchase. This deal is exclusive for our listeners, so visit carawayhome.com hermoney or use code hermoney at checkout Caraway Non Toxic Cookware Made Modern. We are back with Michelle Singletary of the Washington Post. Michelle, welcome back to her money.
- [04:01]
A
Oh, thank you so much.
- [04:02]
B
So the latest Social Security report, it suggests that the shortfall could be coming for the trust fund sooner than expected in the next decade or so. The year that I keep seeing splashed about is 2033. 3. What does that actually mean for people who are in retirement or near retirement?
- [04:28]
A
So basically what they are forecasting, if nothing changes, everything stays the same. As it is that when that shortfall happens, that's what it is, a shortfall. That benefits could be cut anywhere from 20 to 25%. So whatever you're getting, if nothing change, your benefits could be cut because they won't have enough money coming in to pay everybody who's receiving benefits. So your Social Security check won't go away, the benefits won't go away, but it could be cut. I don't believe that they will allow that to happen. Can you imagine the chaos it would create across the country? And just a lot of other people in addition to the people getting Social Security will be hurt. The markets will be, you know, tank. It will be really pretty awful. And so what I think people should expect is that in the next several years, if not sooner, there will be changes in how benefits are calculated for people who will be coming into the system. And so a lot of times when they make claims, make changes, it's also it's not retroactive to people already receiving it. And so if you're a young adult or you're in your 30s or 40s or 50s, then what might happen is the full retirement age might be lifted as it was in the past. It used to be 65. Now it's 66 to 67 for a lot of us seasoned people. Or they may move when the maximum benefits are reached. Now it's 70. They might move it to 71 to 72. Those are the kinds of things that could change right now. If you're a really high earner after, after. What is that? I think $168,000 or so, you are no longer. Your pay is no longer deducted for Social Security taxes that might go away. Those are the kinds of fixes that are on the table. So I've been telling people who are retiring, don't worry. And I truly believe that there will be changes that you're. What you're receiving now. The promises that were made will continue. But if you are younger than that, then you're going to have to plan a little differently because you're. You're going to either have to wait longer to get your full benefits, or you might not get as much as you would if you filed within the next couple of years.
- [06:31]
B
When you say that there is a shortfall, I just want to very sort of clearly define for people what we're talking about. This Social Security system, this trust fund that pays out Social Security benefits, has been running at a surplus. There's been excess money in that fund that has been used to essentially supplement checks over the past number of years. That's the money that's going to dry up. And so going forward, once we hit that year, if nothing changes, Social Security will only be able to pay out what it takes in. And that's the reason that the money's going to drop by 20 to 25%. Is this because we've got so many boomers now and fewer people in Gen X and millennials paying into the system?
- [07:24]
A
Yeah, that's exactly right. We have less workers paying into the system. We have an unprecedented number of people who are collecting Social Security. They're reaching that age where they're collecting it. And so you have a confluence of a whole bunch of things. Plus, people aren't having as many kids as they used to. I mean, I've got three. So I'm past. You did your job. I did my job, and it wasn't for Social Security. I wanted to hedge my bet for somebody taking care of me at my own age. And I'm fortunate. I had two daughters. Nothing against sons, but. So it's more likely that the daughters will take care of you. But it's. People are not having as many children, so there's not many workers. There's fewer workers into the market. Those workers that are there not putting in as much, and also just expenses. So it's all of those things wrapped up. There's nothing nefarious going on. People like all these conspiracy theories that the government robbed the trust fund to do all the kind of things like that. When they pulled money out, they would give them a special bond just for that. So the money was always put back. The money's always there. And as you said, the surplus is no longer there. Will. Will no longer be there. And so it's just like the rest of us who we live in life. You make a paycheck, you pay your bills as they're coming in. Social Security will have to do that if they don't make some changes so that they can rebuild that trust fund. And so that's what's really going on. There's a lot of conspiracy theories out there, but basically there's not. There will not be enough money coming in from current workers to pay people who are collecting benefits.
- [08:48]
B
We've been talking about this coming shortfall for, it feels like decades, right? I mean, since the surplus was running at great levels and started to fall, what do you think it's going to take for Congress to act? Social Security is often called the third rail of politics. People don't want to mess with it because you. It's something that could definitely, if it doesn't go well, screw up their chances of being reelected, of holding onto whatever seat they're holding from whatever state they live in. You have lived in and around Washington, D.C. for as long as I've known you. How do you think this is going to play out?
- [09:35]
A
I don't think it will play out well. And you asked me at the beginning what is going to take. It's going to take courage. It's going to take politicians who aren't more worried about keeping their job and doing what is hard. No one likes changes, but particularly when it comes to Social Security. People felt like they were made a promise. I pay into the system. I'm going to get money back when I retire. And I think we also need to clear up that there is no account with your name on it with money that you put into this pot. Social Security is more like. Think of it like car insurance. We all pay for car insurance. We may never use it. And so the insurance Company takes the money that we pay, and they pay, pay other people who have car accidents or they invest it so that when, if there's more accidents and they have money coming in that they won't go under. So that's sort of like with Social Security. It's a contract between the American public that says, listen, we want you to have a minimum standard of life so that you are not in, you know, that you can put food on the table and hopefully pay for the roof over your head. So there's no Social Security account. This is Michelle Singletary, who's been putting in it for. I've been working for 40 years of war.
- [10:42]
B
Oh, me too.
- [10:43]
A
All right, so there's no account that says, here's all the money Michelle put in and this is all her money to be used for her and be damned the rest of you. It's not. It doesn't work that way. And it was created so that we make sure we take care of seniors. And so if you operate from that perspective, that this isn't your money per se, that we all have to say, okay, and we have different things going on right now, less children, less workers. But we want to fund this very important benefit for folks. And so those in Congress have to say, it's going to be hard. People are going to be mad. But we do need to make those changes. It could be stretching the full retirement. It could be lowering some of the money so that it stretches for everybody. But right now we have congresspeople who are really still serving and they're not thinking about, let's do the hard thing now. Because if you wait until we have to do it, you know it's going to be even harder. If you do it now, it'll give people chance to adjust to it, particularly people who are closer to collecting Social Security. So, like, say you raise the retirement age from now at 67 to 68. Well, maybe people will work a little bit longer. Maybe they'll say, okay, you know what? I'm not going to get as much money or I'll have to wait longer to get my full benefits. Let me try saving now. And so I would hope that there would be more courage in Congress and then obviously whoever's in the White House to say, this is a problem that we need to fix now because it is an important benefit to keep people at least above the poverty line.
- [12:23]
B
As you mentioned, full retirement age is 67, but people can claim at age 62. And recently we've seen more Americans do that. The Urban Institute recently reported that applications for benefits jumped 13% just in the first half of the year. There's no real sign that is slowing down. What do you think is driving people to. To claim earlier when they had been delaying more than in the past?
- [12:57]
A
I think a lot of people are afraid for exactly all the things that we just said, that they will be changes made, and if they go ahead and collect now, they will be grandfathered in. So they're worried that. Let me just get what's on the table now. I think all the talk about tariffs, the trade wars, people are worried about the economy, and they're just like, I'm going to get my money. And I. One of my friends who had planned on waiting, she said, you know what? I don't trust the government. I don't trust who's in the White House. I'm going to get my money now. And she's actually saving it. She doesn't need it. But she just was so worried about what other changes. Changes were going to come that she still went ahead and started collecting now. So for some people, you got to collect. When you need to collect, you hit 62, and that's. You need that money. Those of us who are in the business know that if the longer you wait, every year those payments go up. When you hit your full retirement age, from full retirement age till 70, it's about an 8% return every year. There's nothing in the market that can guarantee you that. And so if you can wait, it's a good return on your money to do so. And so I think people are just scared. And they know that based on past history, when changes are made, if you're already receiving a benefit or something, they don't tend to go back and try to snatch money back. And so they're hedging their bet that it'll be really awful changes. So let me go ahead and collect now. And I think every individual has to make that decision for themselves. I'm eligible. My husband's eligible. We have decided not to. We're gonna wait now. I'm still working. He's retired. But if we both were retired, we know we've been good savers. We would still probably do the same. We've got a plan in place. And I think that's the thing, is when it comes to your money, I won't ever tell you not to be afraid and scared because you have to feel what you need to feel, but don't act on that. Really look at your financial situation and does this make sense for you right now we don't know what's going to happen in the future. Maybe it'll be worse, but maybe it'll be okay. And so just look at that. And if you know that you're going to be on the edge and even a, you know, a year, waiting a year to get your full benefits is going to really hurt you, then it makes sense for you to start collecting.
- [15:10]
B
Now, are there other reasons that it might make sense to start collecting earlier? I mean, if you need the money, I'm 100% with you. You got to pay to keep a roof over your head and your Medicare premiums coming and food on the table. You take those benefits because that's what it's there for. But are there other scenarios in which claiming early is the right move?
- [15:37]
A
Well, you look at your health history. If you have a family history of people, you know, passing away sooner than the average age most women and live to about their mid-80s, men their early 80s, then you might say, listen, I just have family history. And I know I'm not really that healthy. I'm not sure I'm gonna make it. So why don't I collect this money? Now, I've heard a lot of my friends who are in that 60 range, 60 to 70, like, look, listen, let me take this money and travel and do all the things that I wanted to do, because that's extra money that I can use to live out some of my life dreams. I. My husband and I both like to travel. So there are all kinds of reasons like that that are completely legitimate. Right? My. I have longevity in my family, as does my husband. Like, I have, man, my aunts live forever. And I'm gonna tell y', all, they some evil people. I hope none of them watch this. But by odds, ooh, they was never challenging. And they lived till that late 80s and 90s and hundreds, traumatizing all of us. I'm sure some of my kids are thinking, mom's gonna live alive cause she's crazy. So he and I both said, you know what? We don't have a whole lot of history of Alzheimer's or things like that. So we're sort of betting and being healthier. So we're thinking we're gonna hopefully prayfully live a little longer. So that's why we are saying, okay, we're gonna hatch that batch to wait to. So if there are health issues, if there are things you want to do now, maybe it's not about putting food on the table, the roof on your head, but you want to take that yearly cruise or go see the grandchildren or things like that. It's a perfectly legitimate to say I want that money now. And again it goes back to looking at your individual situation.
- [17:15]
B
On the flip side, I think often when we think about our Social Security benefits, we just think about our benefits. We think about ourselves as individuals. But if you're part of a couple, that's right. You're not just claiming for you, you could be claiming for the spouse that survives you.
- [17:36]
A
Right.
- [17:36]
B
Can you explain why that makes maximizing the benefit even more important?
- [17:41]
A
Yeah, this is particularly true if you're in a relationship where one of you made much more money than the other. If you both earned about the same, then it's kind of a wash. And that's kind of where my husband and I when we look at our financial Social Security statements. And by the way, if you're watching this and you don't have a Social Security account and you haven't looked at statement in who knows how long, please do that now. After you watch, wait till after you finish and go online to Social Security administration, set up the account so that you can see an estimate of what your benefit's going to be. They don't send it out to the mail like they used to. And so anyway, so my husband had pulled out statements and we've earned about the same over our careers and so our benefits are going to be about the same. If they weren't, let's say I earned half of what he did or he earned half of what I do. The longer I wait or he wait, then the more that survivor benefit will be for the surviving spouse spouse. If you are been divorced and you were married for 10 years or more, you can collect on your former spouse's record. So let's say you might have been a stay at home mom, you got divorced, he wearing off with the secretary. I shouldn't say that's a trope, you know, in that behind drive then you'll get and it doesn't affect his benefits or his, you know, maybe he married that her benefits so you can collect on that. And so if as you're collecting, look at, if you're a part of a married situation, look at both statements to sort of see what that would be and that would might give you reason to wait so that if you pass away, not if when you pass away your spouse will get a larger check because that's going to make a big difference because half of the money is going to be gone you And I think some people think the myth that you'll get to collect your spouse's check as well. You do not. You either collect on your own record or if you're a widow, you collect on a survivor's benefit. Or like I mentioned before, if you were divorced, you collect and it's only 50% of that check. So you know my, when I tell all my family business, but a relative got divorced and her, her ex earned substantially more than her. And so she's about at that age now where we're going to be looking at which makes more sense for her to collect on her record or his record. And he hasn't retired yet. So that is going to increase the benefit that she might get if she collects on his record. So I tell you folks, this is why you got to, you got to do your research. You got to have those documents. You got to look at all of this as you make the decision. You can't make it in a bub. Which is what your point is, Jane.
- [20:05]
B
Right. And just to be clear, when it comes to those divorced benefits, if you collect on a former spouse's record, you get 50% of their benefit. But if you're a survivor, you have the ability to. They call it stepping into your spouse's shoes. And you would get their full benefit, but you would no longer get your own. So not both. I want to turn to millennials and Gen Z for just a second sec because I've heard many people in these generations say Social Security just is not going to be there for me. They've internalized this message. They've started to write it out of their planning. Many of them. From your perspective, is that a good thing or a bad thing?
- [20:47]
A
It's a bad thing. They're giving into the conspiracy theories. Listen, this is such a huge benefit and we don't know where you're going to be when you time to retirement. It's going to be there. What form? We don't know. What benefits? We don't know. Is it. Are they gonna change? It could roll back to you your full benefit, collecting the 65. If there's a whole bunch of people having babies and people are working, who knows, the system might get better. So what I tell young adults is that I believe that it will still be there, but it might not be in the form it was for your parents. There was a time, like I've mentioned previously, that you your full retirement was 65. And so I would say that it will be on the table, but it won't contribute as much to your income as it might have in the past. I think right now about 40% for the typical worker replaces about 40% for you. For young adults it might be 30%, it might be 35%. So you take that into account and make that part of your saving for retirement. And the sooner you do it, the better. So I've got three kids, two of them in their 20s, one just turned 30. And so we've been preaching it to our children and so they're saving for retirement outside of retirement plan and we're getting to do that now. And we show them the numbers. And sometimes that's all it takes is to show you the numbers. That if you start in your 20s, just think about it. I mean even I, I was saving in my 20s, but I wasn't saving the way I should have been. I was way too conservative. And if I could go back and tell that 20 something year old Michelle, you don't have to be afraid of the stock market. You can put more money in it. I had all bond, Jane. That was crazy, right? And so it'll be there. And I think if you're listening and you've got adult children, I think you need to tell them that message as well. When they say that, I think you need to discredit that and say it'll be there. It may not be as much as I'm getting, but it can be a part and should and will be a part of your retirement plan.
- [22:43]
B
We were talking about how Congress has yet to act. Some members of Congress are trying to act. Senators Bill Cassidy and Tim Kaine are putting together a plan to help increase the funds for Social Security. Their idea is to invest $1.5 trillion over the next five years into an investment fund, give it 70 years to grow, to then use it to help cover the shortfall. This is yet another take at privatizing Social Security, which was something that was talked about in the Bush administration. I'd love your take on this plan in particular. First of all, 70 years, how does that work when it comes to solving a problem that is going to come around in 10 years?
- [23:34]
A
Well, let's see, I wrote about this when the Bush administration recommended it. I don't think that's a good idea. And I know that we are trying to get away from benefit programs for the American public. That's really what it is. And also there's a lot of lobbying from the financial services industry to get a hold of some of this money for their growth. But we need a plan that is not subject to the craziness that can happen in market at any period. I mean, look at what happened during the pandemic, the Great Recession. Can you imagine if people are afraid now about Social Security? Imagine if money was in the market at that time. I think some of the solutions that I mentioned at the top of the show will help shore it up. And the trustees have said that increase in the maybe full retirement age collecting. I mean, think about it. If people are making a lot of money, then why is part of their salary not taxed for Social Security? And so that's the sacrifice that you make if you are a high earner. Right. I think those will help shore it up. I don't like the idea of this sort of privatizing. We are people that have programs for when life happens and Social Security is one of those. And it was a brilliant concept. That doesn't need to change. I know we also think there's always a way to make things better. But in this case, having that money there not subject to the whims and sometimes even the manipulation of the market is, is something that we ought to fight for to keep it as in and just shore it up so that the benefits are on the table when people need it. And think about it already, people are responsible for saving for their retirement. When you we used to have pensions. So now you're going to add that uncertainty again on the table and I just don't think that will serve the American public well.
- [25:31]
B
We're going to take a very quick break. When we come back, we'll talk about Michelle's advice for retirees as a whole and and how to prepare for a recession before it's too late. You know that moment you're standing in front of your closet packed with clothes but somehow you have nothing to wear. Oh, I have been there. Which is why I'm obsessed with Armoire, the clothing rental service that's made getting dressed again actually fun. With Armoire, you take a five minute style quiz and then high end pieces tailored to your taste arrive arrive at your door in as little as two days. Most recently from Armoire, I rented a skirt and a top that I used for a shoot. It elevated my entire week and I got some compliments on Zoom and in person. Right now my listeners can give Armoire a try and get up to 50% off their first month. That's up to $125 off just this visit. Armoire style hermoney. That's a R m o I r e style hermoney to get up to 50% off your first month. Never worry about what to wear again. Try armoire today. Between work, family and everything in between, figuring out dinner every night can start to feel like just one more thing on your to do list. That's where every plate comes in. In at Hermoney, we love solutions that save you time and money. And everyplate does both. You get meals that are fast, flavorful and affordable, like sweet chili chicken with zesty carrots and scallion rice or Banh Mi style tacos with pickled veggies and sweet chili mayo. And they're delivered right to your door. The recipes are clear, they're easy to follow. Everything comes together in a about 30 minutes. No stress and no mystery ingredients. Just good food you'll actually look forward to eating. And here's the best part. You'll spend less on every plate than you would on your normal grocery run or a week worth of takeout. Great meals at a great value. That is something that we can all get behind. What are you waiting for? Dig into these flavor packed meals your household will love. Love. New customers can enjoy this special offer of only $1.99ameal. Go to everyplate.com podcast and use code HERMONEY199 to get started. Applied as a discount on your first box. Limited time only. We are back with Michelle Singletary of the Washington Post. Back in March you wrote about preparing for a recession. Recession now before we're officially in one. With recent jobs data looking a little shaky, are we on the brink of a recession? Are we already in one?
- [28:33]
A
I think we're on the brink of one. I am still amazed that we didn't fall into recession during the pandemic. My goodness. And all the economists were predicting it was going to happen. It was going to happen and we managed to skirt past it. I think a lot of the time the issues around the trade war may push us in that direction. And so I am worried, to be honest, I'm not an economist, but I can look at the numbers just like everybody else and see when I go to the grocery store, my eggs cost more, my milk costs more. If I want to buy furniture, it costs more. And inflation was at a 40 year high back in 2022. Now inflation is around 2 and a half, 3% depending on what the item is. That makes a huge difference for a family that is just getting by. We think 2 or 3%. Oh, you know, but no, that makes a difference. And so I am concerned that we are headed to a recession and particularly if we don't settle this whole idea about the trade tariffs. And so what I've been telling people is that I want you to boost your savings now. It's harder to do it when you're in the middle of the crisis, so do it now while you've got the extra.
- [29:43]
B
When you are talking about boosting your savings, does that mean the typical emergency cushion?
- [29:49]
A
It does. It means a couple of things. It's like cutting where you can. And even though my husband and I are great savers, we've been cutting, I revisit our insurance bill. I talked to our cable company, I have XM series radio in my car. So I called him up and was like, yo, no, just a little too much. My husband retired and I got that bill reduced. I'm always looking at ways to shave off money to put into my retirement. So start with expenses and then boost the emergency fund. And we talk about it all the time and people go, yeah, but I get it. Life gets in the way and it's not there. And so regular job folks, I say a minimum of three months, but if you can't even match that, just a month at least. And a month, because if you have to apply for unemployment insurance, it might take that long for that money to kick in. So at least you've got a cushion if you're living on the edge. I think to tell people to have three of three, six months is unrealistic. But at least try to have a month. And then if you are a highly compensated individual, meaning you make six figures or more, you need to about have about a year's worth because based on the statistics from the Great Recession, when we had great job loss, it took people making six figures anywhere from 15 to 18 months to find a job at that same salary level. So using that, I would say that you should try to have at least a year's worth of living expenses. And when I mean that utilities, mortgage, the car payment, the bare bones, not because you're going to cut, screaming, streaming and all those kind of stuff, adjust and then whatever it is for a month, multiply that times how many months you need to have. So say your budget is 3,000amonth with the bare bones. And you say three times 3,000 to reach that emergency fund and then set it and forget it. I don't. You're not going to invest it, you're not going to put it at risk. It's just going to sit. You find the highest yields account that you can park it there and don't worry about it, forget it. And then I also suggest you have what I call a life happens fund. So that's the fund so that you don't touch the emergency money. So that's your car breaks down. You got kids, they're going to break something. You got an animal, I have a dog. You know, you got to take them to the vet. So for those kind of expenses.
- [31:58]
B
So the emergency fund is really the unemployment fund or the disability fund. If you don't have disability insurance or even if you do. And the life happens fund is for everything else. And how much should be in that life happens fund?
- [32:13]
A
I would say depending on your life. So you look at if you got an older car, every time you take it to the mechanic, it's $1,500. I think they just have a little sign at the things, like just charge them $1,500. And so you want to err on the side of having money for that. If you got children, there's always stuff coming up, like I said, a pet. So you want to make sure you have. So I would say if you're just, just paycheck to paycheck, at least try to have like 3 or $400. If you can stretch it 1500. I would like to. If you can. I know this is a lot amount, but maybe 5,000, right? Because what will happen is if you've got to pull it out, then that just stresses you out, right? Like a big car repair bill and you're just like, ah. So if you got a cushion for the cushion. Got it to say. So I like to have a cushion for the cushion. So if I would say 25, I'd say have five. So that if you spend the 25 and then as you get past that financial emergency, you want to put the money back into the life happens fund. And this way you don't feel so bad when things happen of pulling it out. Because this is what happens, Gene. People will put money in the life happens fund and then still put the charges on the credit card because they don't want to tap that money. Right. And so I don't want you to do that. Go ahead and use that so you don't accumulate debt.
- [33:24]
B
Last question before we let you go. So you have mentioned you're nearing retirement. Maybe someday. So am I. Maybe someday.
- [33:33]
A
I don't know when.
- [33:34]
B
But beyond Social Security, what are the top few things that you think every near retiree should prioritize in their planning right now?
- [33:44]
A
So this is a little controversial and I say it all the time. And then all the financial experts will start emailing me, don't email me, I'm not going to answer you back. I would say as you head into retirement to get rid of your largest debt on your books and that's your mortgage. I just, I'm a firm believer of going into retirement without a mortgage if you can. I know it's not possible for everybody, but it used to be, we used to have mortgage burning parties. I actually remember that. You know, I didn't, I wasn't that old, but I watched other people in my life. And so that, because think about it, most people's mortgage or rent or whatever is about anywhere from 30 to in some areas 50%. So if you take that off of your budget, you can live on your retirement savings a lot better and a lot longer. So I would say make that a priority. And my husband and I did that from when we bought our first home. At that time we couldn't make principal payments because we had little kids. We were trying to save for retirement but we made it a priority. Once we got past that, once we got all our kids through college with no debt, we supercharged that and put money on that principal. And when he retired, we paid off our mortgage. And I'm telling you, I sleep better because of that, not having that debt on my book. So I would say that and then do a retirement budget. You know, here all these calculators, oh, it's going to be like 50% of when you are working. No, not really. Because you add in other expenses, health care, you want to travel more, all kinds of things happen. And so you might actually still be your expenses the same as when you were working. And so have a very realistic budget. Look at your numbers. And I tell you you need to know your numbers as much as, you know, I don't know your weight, I don't know weigh myself all the time. I weigh at any moment. So I really want you to know what your numbers are. What is in your retirement account, how is it doing, what are the fees? If you got a pension, what is going to be a payout? Pull that Social Security statement so you know, and then you can see, well, maybe I want to wait a little longer. Not 62, well, maybe I'll collect it at 64 or maybe I'll wait till my full retirement age. Like for example, my husband retired and then he got a part time job right away. Our church kind of tapped him and so we decided to put it off because if you are working at a certain and I'm not going to tell you the numbers because it's all complicated formula. But anyway, if you make over a certain amount, they deduct from your check. And so we didn't want that to happen. So he said, well, I'm not going to collect to my full retirement age. Once you hit full retirement age, there are no deductions. And so that was a decision that we made because we kind of knew the numbers. And so I would say get out as much debt, have no debt going into retirement, have a really good budget. Look at what if you. Maybe you're not going to be spending on dry cleaning or commuting, but maybe you want to travel more and build that in. Be realistic about it and then just know your numbers, know everything and don't be afraid. Don't be afraid of what you don't know. It's shows like Jeans that is so helpful, the conversation and listening to it. And I mean, Jean does a great job of just really empowering you and not just want you to say that. Because I believe it or not, I know this is going to sound crazy. You're not going to believe me, but I hate numbers. I mean, oh, my gosh, I have to pull out my cocktail all the time. I was like, what's 10% of X? And I'm just like. But. Because it's just. It just freaks me out. But you know what? I fight through that. I know I write for a living. You're thinking, does she have a first one? Let's go. This crazy woman. But I don't care. I want to know my numbers and I want to know them better than anybody else. And so the more that you can do that and feel comfortable with it, even if inside your head you're screaming, the better off you will be. And I think lastly, whatever someone tells you, check it out.
- [37:21]
B
Yeah.
- [37:21]
A
Please don't just listen. I mean, this show, you can trust this show. I mean, I trust Janeway. I've known her forever. But there are a lot of. There's a lot of misinformation out there. And I would just encourage you that whatever you hear, even from a trusted source, if I say something, I want you to check it out. Check out the things you know, and that will help protect you in the long run.
- [37:43]
B
Michelle Singletary, you are always a breath of fresh air. Thank you so much for all of this today.
- [37:49]
A
You're welcome. I love talking about money. I love empowering women. And because the fact of the matter is, statistically, we're going to live longer and we're more likely to not have a partner in our older age. And that means that you have to take care of your money. And you can do it, ladies. I know you can. And it's. There's just freedom, right? This is so much freedom for me. Right? You know, like, I negotiate all the car when we go buy a car. We pay cash for our cars when we go. I do all the negotiation because I love it. And they sit there, they talk to my husband and they're like chatting him up. And little do they know that when it comes time to talk to money, they got to talk to me. And now I'm mad because they ignored me. And I get an even better deal because now I'm mad. There you go. Secret sauce. I know, right?
- [38:37]
B
Thank you so much.
- [38:38]
A
You're welcome.
- [38:40]
B
If you love today's episode, please take a moment to leave us a five star review on Apple podcast webcast. Your feedback means the world to me. And if you're ready to keep the Money conversation going, HerMoney has three amazing programs designed to help you feel more confident and in control of your money. There's Finance Fix. It's our four week coaching program that helps you rethink your spending, find hidden savings, and make smarter choices for the future. Our pre retirement program runs for six weeks and walks you through building a retirement strategy that's personalized for your next chapter. Finally, there's Investing Fix, our investing club for women. It meets every other week on Zoom. It is a supportive space to learn, ask questions, grow your investing confidence and build your portfolio. And your first month is absolutely free. These programs are truly helping level the playing field for women financially. I'd love for you to join us. Her money is produced by Haley Pascalides and our music is provided by video helper. Thanks so much for listening and we'll talk soon.