NerdWallet's Smart Money Podcast

Episode: IRA Conversion Strategies and Reading Economic Signals During a Shutdown
Date: November 13, 2025
Hosts: Elizabeth Ayoola, Sean Pyles, and guest experts Elizabeth Renter and June Sham

Overview

This episode explores two major topics:

1. Interpreting Economic Signals During the Government Shutdown – A look at what alternative, private economic data sources (and some quirky indicators) suggest about the US economy when official federal data is unavailable.
2. IRA Conversion Strategies – A deep-dive into the pros, cons, and strategies of converting traditional IRAs to Roth IRAs, with actionable advice for individuals nearing retirement.

Segment 1: Economic Signals During the Shutdown

Guest: Elizabeth Renter, NerdWallet Economist

The Challenge: Limited Federal Data

• Government shutdown since October 1st has paused federal economic reporting.
• Reliance shifts to private sector data and unconventional indicators for insight.

Elizabeth Ayoola (Host) introduces the challenge:
“Now, since the government shut down on October 1st, we’ve had almost no federal economic data...we have to rely on private sector data to get a picture of how the economy is actually doing.” (01:59)

Key Private Data Reports and Their Context

1. Labor Market Data

• ADP Employment Report (03:25):

  • Showed +42,000 jobs in October.
  • Gains concentrated in healthcare, education, trade, and transportation.
  • Only covers private industry (misses government jobs, smaller firms, gig economy).
  • “These gains were pretty narrow, meaning they were concentrated across just a few industries...It may underrepresent smaller businesses and the gig economy.” – Elizabeth Renter (03:25)

• Challenger, Gray & Christmas Layoff Data (04:51):

  • October saw highest announced layoffs in a month since 2003.
  • Measures planned job cuts from company announcements—can overstate actual layoffs.
  • Not always aligned with reality: “What they plan to do and what happens are two different things.” – Elizabeth Renter (04:51)
  • Layoffs currently prominent in certain sectors (e.g., tech), but not at a crisis level economy-wide.

2. Additional Data Points

• Revelio Labs (Professional profile changes):

  • Estimated employment fell by 9,000 in October.
  • Includes government workers.

• Chicago Fed’s Nowcast:

  • Layoffs and unemployment relatively unchanged.

Conclusion:
All sources indicate “gradual cooling” of the job market—not a dramatic downturn.

“The labor market is indeed cooling, but not at a dramatic pace.” – Elizabeth Renter (06:18)

Consumer Sentiment and Expectations

• University of Michigan Survey:

  • Sentiment is “in the tank,” especially regarding personal finances and the economic outlook.
  • Exception: Investors/stockholders felt marginally more optimistic. (07:30)

• New York Fed Survey:

  • Improved credit outlook, but more pessimism on employment.
  • Based on October data—timing is key in interpretation.

Quirky Economic Indicators

1. Corrugated Box Indicator:

• Decreased demand = less demand for goods overall.
• Box manufacturers cutting production. Tariffs may also play a role.
• “Demand for boxes can be a proxy or a stand in for the demand for goods.” – Elizabeth Renter (08:38)

2. Champagne Indicator:

• Lower champagne sales could signal reduced luxury spending, but confounded by trends (young people drinking less, domestic substitutions, seasonality).

3. Men’s Underwear Index (Greenspan):

• Slower underwear sales = possible financial constraints in households.
• “If people are pulling back on necessities like replacing their underwear, the economy is in bad shape, or so they say, right?” – Elizabeth Renter (10:18)
• Many caveats: Price changes and alternative explanations.

Other Fun/Funky Signals:

• Lipstick sales, mini alcohol bottles, snack food sales, law school applications, used clothing sales, strip club spending, dry cleaning, diaper sales, rash ointment purchases.

Big Caveat:

• “Correlation does not equal causation.”
• “Maybe don’t hang your hat on them...don’t make financial decisions based on what’s going on with underwear demand.” – Elizabeth Renter (12:14)

Notable Quotes & Humor

• “Champagne or underwear. So all fun conversations to have during a tough economy.” – Elizabeth Ayoola (11:13)
• “I never thought I’d be on a podcast talking about men’s underwear.” – Elizabeth Renter (10:18)

[13:08] Segment 2: IRA Conversion Strategies

Listener Question from Daniel. Guest expert: June Sham, Investing Nerd

IRA Basics Refresher

• 401(k)s: Workplace retirement plans, often with employer match.
• IRAs: Individual Retirement Accounts (open to nearly anyone).
• Traditional: Pre-tax, lowers taxable income now, taxed upon withdrawal.
• Roth: Post-tax, no tax on withdrawals in retirement. Income limits apply (2025: $150k single, ~$240k married filing jointly).

Guidelines for IRA Contributions

General Approach:

• Start with workplace plans, especially if employer matches.
• Max out IRA for broader investment choices (but lower annual limit).
• Back to workplace accounts if maxed IRA.
• Self-employed? Look into Solo 401k or SIMPLE IRA.

Traditional vs. Roth: How to Decide

• Consider current vs. future tax brackets.
• Roth: Better if you expect to be in a higher tax bracket upon retirement.
• Traditional: Better if you expect to be in a lower bracket later; allows immediate tax savings.

“A simple way to decide between Roth and traditional...think about where your tax bracket is now and consider where it may be in the future.” – June Sham (17:58)

Flexibility:

• It’s OK to divide contributions between both types.
• Personal stories show a variety of strategies.
  • Sean: Currently all pre-tax for current tax deduction, but has split strategies previously due to large life expenses (wedding).
  • June: All Roth for flexibility and delayed gratification.

Converting a Traditional IRA to a Roth IRA

Why Convert?

• Moves funds into Roth account with tax-free withdrawals.
• No required minimum distributions (RMDs) for Roth IRAs.
• Funds can continue growing for heirs, with better tax treatment.

“Your money can stay invested for much longer and also passed down to your heirs tax free.” – June Sham (20:26)

Trade-Offs & Cautions:

• Conversion is a taxable event; pay taxes now on converted funds.
• Can push into a higher tax bracket, impact Medicare premiums.
• Withdrawals of conversion amounts only penalty/tax-free after 5 years (first-in, first-out).

“You’ll need to pay taxes on it now...it can leave them with less money in their Roth IRA overall if they can’t cover the bill without it.” – June Sham (20:50)

Strategies for Roth Conversions

• Best during low-income years to minimize taxes.
• Consider during periods of high inflation or early in the tax year.
• For large conversions: “Roth conversion ladder” (spread over several years to avoid tax bracket jumps).

“If our listener has a lot of money to convert, they may want to spread that conversion over multiple years through something that’s called a Roth conversion ladder.” – June Sham (21:35)

Situational Considerations

• Sometimes, Roth contributions aren’t an option when income is too high, so conversion is a backdoor path.
• In early retirement, conversions may make sense as income drops but before mandatory distributions begin.

Professional Advice:

• IRA conversions involve many personal factors and complicated IRS rules. Always consult a tax professional for tailored advice.

“If you’re in the early stages of thinking about this, definitely talk to a tax preparer or financial advisor.” – June Sham (23:07)

Notable Quotes & Segment Highlights

• On quirky indicators:
  “Maybe don’t make financial decisions based on unmentionables.” – Elizabeth Ayoola (12:55)

• On contributions
  “I think I’m someone who likes delayed gratification and so I’m kind of hoping that in the future I can save on those taxes then.” – June Sham (19:45)

• On conversion trade-offs:
  “You’ll need to pay taxes on it now. Some people factor this into their conversion amount, but it can leave them with less money in their Roth IRA overall if they can’t cover the bill without it.” – June Sham (20:50)

• On splitting contributions:
  “You don’t have to go all in on a specific type of contribution and in your accounts too. So you can kind of split the difference each year depending on your goals.” – June Sham (19:45)

Timestamps for Key Segments

• [01:59] Main theme set up (economic indicators without federal data)
• [03:12] Labor market data deep dive
• [07:10] Consumer sentiment reports
• [08:21] The “quirky” economic indicators section begins (cardboard, champagne, underwear, etc.)
• [13:08] IRA strategies segment begins (listener question introduced)
• [16:06] IRA types and prioritization
• [17:58] Roth vs. traditional: tax implications
• [20:26] Why consider a Roth conversion
• [21:35] Roth conversion ladder strategy explained
• [23:07] June’s final advice: consult a financial advisor

Conclusion

• Economic segment takeaway: Look at a range of data (and don’t over-index on weird indicators) for a realistic view of where the economy is heading.
• Retirement & IRA takeaway: Consider your current and projected future tax situation when choosing or converting between Roth and traditional IRAs, and always seek professional advice for big financial moves.

Listener call to action:
“Remember, listener, that we are here to answer your money questions. So turn to the nerds and call or text us your questions at 901-730-6373.” (23:36)

This episode provides a lively, practical look at how to both interpret uncertain economic news and make smart moves with retirement accounts—even in complex situations.