How to Money Podcast: Ask HTM - Finding Travel Deals, 401k Match Changes, and Our Take on Long Term Disability #955

Release Date: March 10, 2025
Hosts: Joel and Matt | iHeartPodcasts

In this insightful episode of How to Money, co-hosts Joel and Matt delve into a series of listener questions that span from securing the best travel deals to navigating changes in 401k employer matches and making informed decisions about long-term disability insurance. With their trademark blend of humor and financial expertise, they provide actionable advice aimed at empowering listeners to make savvy financial choices.

1. Travel Deals: Maximizing Savings on Vacations

Listener Question: Nathan asked for tips on booking flights and hotels, specifically inquiring about the best websites, whether to book packages together or separately, and the advantages of booking directly with hotels versus third-party sites.

Hosts' Insights:

Joel and Matt emphasize the importance of flexibility in travel planning to snag the best deals. They recommend utilizing tools like Google Flights for comprehensive flight searches, including fare alerts that notify travelers when prices drop (50:12). Matt highlights the value of memberships like Scott’s Cheap Flights, which can provide access to exclusive deals that might not be widely advertised.

For hotel bookings, the hosts suggest a mix of third-party platforms such as Hotwire and Priceline, especially when travelers are flexible about the specific hotel, focusing instead on star ratings and general quality (51:41). However, Joel notes a shift in the landscape where direct bookings with hotels can sometimes yield better deals and more flexible cancellation policies compared to third-party sites. They also recommend calling hotels directly to negotiate rates or secure better terms, a tactic that’s often overlooked.

Additionally, Matt points out that leveraging memberships like Costco Travel can offer competitive pricing on all-inclusive packages, particularly for destinations like Hawaii or the Caribbean where package deals can lead to substantial savings (54:20).

Notable Quote:

Matt (50:22): "If you are a flexible travel nerd, Scott’s Cheap Flights are delivering those sweet deals to your inbox, and you might be like, 'Wait a second, Germany for $382? I'm in.'"

2. Navigating Changes in 401k Employer Matches

Listener Question: Chelsea reached out regarding her employer’s recent restructuring of their 401k matching program. Previously, her company offered a 7% match on eligible pay, but the new structure includes a 3% non-elective contribution for all employees and an additional 4% match on employee contributions, effectively maintaining the 7% total potential match.

Hosts' Insights:

Joel and Matt dissect Chelsea’s situation, highlighting that her employer’s shift appears to be a move towards ensuring every employee benefits from company contributions, regardless of their personal 401k contributions. Matt reassures Chelsea, suggesting that this change likely aims to encourage broader participation in retirement savings, especially in light of regulations like the Secure Act 2.0, which promotes greater financial literacy and employee investment in retirement plans (11:09).

They discuss the potential benefits of this change, such as immediate vesting and simplifying financial planning for the employer, which can lead to more predictable and manageable matching contributions. Joel underscores the importance of not reducing one's overall savings rate despite the structural changes, advising that any additional funds should be redirected into other retirement vehicles like Roth IRAs or HSAs to maintain robust retirement savings.

Notable Quote:

Joel (12:22): "The fact that Chelsea was there even before she got an added incentive from her employer is great. It's laudable and it's truly what most people should shoot for is, I think, a minimum savings rate of 15%."

3. Long Term Disability Insurance: Private vs. Employer Policies

Listener Question: Greg from Maryland inquires about whether he should maintain his private long-term disability (LTD) insurance policy or switch to his new employer’s federal disability plan. He expresses concerns about job security, preferring not to rely solely on his employer, and the longevity of maintaining a private policy.

Hosts' Insights:

Joel and Matt delve into the complexities of LTD insurance, emphasizing that while employer-provided policies can offer convenience and potentially lower premiums, private policies often provide more comprehensive coverage and greater flexibility. Matt explains that Greg’s private policy, which includes riders for inflation adjustment, likely offers more robust protection compared to standard employer plans (25:45).

They advise Greg to consider his personal risk tolerance and the specific coverage details of his employer’s policy versus his private one. Joel suggests that unless the employer’s plan matches or exceeds the private policy in terms of coverage and benefits, maintaining the private policy may be more advantageous, especially given Greg’s concerns about job security and the potential need for consistent income during prolonged disability periods.

Notable Quote:

Matt (27:10): "Getting a disability insurance policy can help you if you can't work for an extended period of time, but you might not need the one you purchased on the open market anymore, thanks to this new policy offered by your work. I say you might not."

4. Retirement Account Strategies for High Earners

Listener Question: Greg, also addressing retirement preparedness, seeks advice on whether to continue maxing out his Roth IRA, consider a backdoor Roth, or leverage post-tax contributions to his employer’s 401k. He is contemplating how to best optimize his retirement savings given his potential increase in income beyond Roth IRA eligibility limits.

Hosts' Insights:

Joel and Matt guide Greg through several strategies to continue maximizing his retirement savings despite income constraints affecting Roth IRA contributions. They recommend increasing contributions to a traditional 401k to reduce his modified adjusted gross income (MAGI), thereby potentially allowing him to continue direct Roth IRA contributions. Additionally, they discuss the Backdoor Roth IRA strategy, where Greg can make non-deductible contributions to a traditional IRA and subsequently convert them to a Roth IRA, bypassing income restrictions (40:18).

Matt also touches on the concept of a Mega Backdoor Roth, which involves making after-tax contributions to a 401k and then converting those funds to a Roth IRA, enabling even greater tax-advantaged savings. Both hosts underscore the importance of seeking personalized advice from a financial planner to navigate these options effectively, especially given the complexity and potential tax implications involved.

Notable Quote:

Joel (42:53): "The backdoor Roth can be the perfect way for you to basically keep contributing to that account if your income continues to rise."

5. Additional Financial Tips: EV Charging and Cost-saving Measures

Beyond the primary questions, Joel and Matt offer valuable advice on maximizing savings through everyday actions, such as optimizing electric vehicle (EV) charging times to take advantage of lower off-peak electricity rates. They advocate for strategies like unplugging EVs during peak hours and utilizing specialized electricity plans that offer reduced rates for EV owners (57:10).

Notable Quote:

Matt (57:37): "If you’re an EV owner in particular, it’s worth considering. Think about how much something like that could save you."

Conclusion

In this episode, Joel and Matt provide listeners with comprehensive answers to pressing financial questions, blending practical tips with strategic insights. From optimizing travel expenses and understanding employer benefits to safeguarding income through disability insurance and navigating retirement account options, the hosts equip their audience with the knowledge needed to make informed financial decisions.

Listeners are encouraged to submit their questions for future episodes and explore additional resources mentioned throughout the show on the How to Money website.

Notable Timestamps:

• 50:12 – Travel Deals Discussion Begins
• 11:09 – 401k Match Changes Introduction
• 25:45 – Long Term Disability Insurance Advice
• 40:18 – Retirement Strategies for High Earners
• 57:10 – EV Charging Savings Tips

This summary encapsulates the core discussions from episode #955 of How to Money, offering a comprehensive overview for those who missed the live session.