So Money with Farnoosh Torabi – Episode 1788: "It's (Almost) My Birthday! Reflections on Turning 45"

Release Date: February 14, 2025

Introduction

In episode 1788 of So Money with Farnoosh Torabi, host Farnoosh delves into personal reflections as she approaches her 45th birthday. The episode, released on Valentine’s Day, intertwines Farnoosh’s introspections with actionable financial advice tailored for individuals navigating midlife challenges.

Farnoosh’s Birthday Reflections and Turning 45

[01:34] Farnoosh Torabi begins the episode by sharing her unique birthday story: born on February 15th, just hours after Valentine's Day, she muses, “I love being born on February 15th. It just feels—you know, like we’re almost there.” This personal anecdote sets the stage for a deeper exploration of midlife milestones.

She connects her impending 45th birthday to broader life stages, noting, “This year is just a lot of milestones. 10 years of So Money. I'm turning 45.” Farnoosh resonates with her audience, many of whom are also in their midlife, facing various financial and personal challenges.

Navigating Midlife Financial Challenges

Farnoosh discusses the multifaceted financial curveballs that often accompany midlife, such as:

• Reentering the Workforce: Especially after time taken off to raise children.
• Rebuilding Financial Life: For those who find themselves single again.
• Saving for College and Retirement: Balancing the costs of supporting children’s education while securing one’s own retirement.
• Supporting Aging Parents: Deciding the extent of care and financial support.
• Healthcare Costs: Managing expenses related to perimenopause or menopause.

She empathizes with her listeners, acknowledging, “Life at this age, at this stage, gets very real. And many days, I'll be the first to admit it is tough.”

Key Advice for Midlife Financial Well-being

Farnoosh offers several strategies to manage the complexities of midlife finances:

1. Give Yourself Grace: Prioritize self-care and learn to say no. “It's not selfish to say, no, you can't be everybody's hero without taking care of your needs first.”

2. Invest in Yourself: Treat personal development and health as investments. She shares her own routine: “Every morning I get up and I work out... I relish the stretching.”

3. Build a Support Squad: Cultivate strong friendships and seek professional help when needed. “Get your support squad in place. Someone can be a financial advisor, a therapist.”

4. Revisit Goals and Plans: Regularly assess and adjust financial and personal goals to align with current life circumstances. “Your life today may not look like what you had envisioned in your 20s and 30s. That's fine.”

5. Embrace Midlife as a Time for New Beginnings: Farnoosh redefines midlife as an opportunity for reinvention rather than a crisis. “It's a midlife awakening.”

Audience Questions and Expert Answers

1. Angela’s Retirement Concerns

[14:47] Angela Gordon, a 60-year-old attorney, shares her predicament:

“I recently spent a large amount of money to support my aunt who needed 24/7 care... I fear that I will need to be saved.”

Farnoosh’s Response:

• Maximize Retirement Contributions: With an annual income of $270,000, Angela should max out her 401(k), including catch-up contributions. “Start with your 401k at work. Max it out.”

• Diversify Investments: Balance her portfolio with a mix of stocks and bonds appropriate for her age. “The shorthand math is you take 110 minus your age... 50% stocks, 50% bonds.”

• Open a Taxable Brokerage Account: To supplement retirement savings beyond tax-advantaged accounts.

• Establish an Emergency Fund: Create a 4-6 month cash reserve for unexpected expenses.

• Consider Long-Term Care Insurance: Protect against future healthcare costs without relying on family. “Long term care insurance helps pay for extended care services.”

Farnoosh emphasizes that it’s never too late to take control of one’s financial future, especially with a strong income and a commitment to strategic saving and investing.

2. Nat’s Backdoor Roth IRA Question

Nat, reaching out via Instagram, asks:

“I have two 401ks left with my previous employer... Does leaving them in 401ks help me perform a clean backdoor Roth IRA conversion?”

Farnoosh’s Response:

• Understand the Pro Rata Rule: This IRS rule affects the taxation of backdoor Roth IRA conversions when pre-tax funds exist in traditional IRAs. By keeping funds in 401(k)s, Nat can avoid the pro rata rule, facilitating a cleaner conversion.

• Evaluate Current 401(k) Plans: Ensure that the existing 401(k)s have low-cost index funds or consider rolling over to a new employer’s plan if it offers better investment options and lower fees.

• Simplify Account Management: Consolidating funds can lead to easier management and potentially lower fees. “If your new 401k has better funds, lower fees, it helps to simplify the account management.”

Farnoosh advises maintaining strategic oversight of retirement accounts to minimize tax complexities and optimize investment choices.

Conclusion and Upcoming Episodes

As the episode wraps up, Farnoosh teases the next week’s guest, Brittany Wilson, who will share her journey from a Fortune 500 job to running her own business full-time. She encourages listeners to subscribe and stay tuned for more empowering financial insights.

Notable Quotes

• Farnoosh Torabi:

  • “[...] it's called being more intentional.” [06:10]
  • “Midlife is far from the finish line. It has a specific connotation, but now is not the time to hit the brakes.” [11:30]
  • “Invest in yourself like it's your job, and not just your career, but your health.” [09:45]

• Angela Gordon (Listener):

  • “I fear that I will need to be saved.” [14:47]

• Nat (Listener):

  • “Does leaving my 401ks in place help me perform a clean backdoor Roth IRA conversion?” [15:44]

Final Thoughts

Episode 1788 of So Money with Farnoosh Torabi offers a heartfelt and practical guide for individuals navigating the financial and personal complexities of midlife. Through personal anecdotes and expert advice, Farnoosh empowers listeners to embrace this life stage with confidence and strategic planning.

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