← So Money with Farnoosh Torabi
So Money with Farnoosh Torabi
1925: Best of So Money 2025: Building Wealth and Securing Retirement
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- [00:00]
Commercial Narrator
Let's be real. When it comes to your health, authenticity matters. For nearly 30 years, Iherb has quietly built one of the world's leading online wellness destinations. Trusted by millions of customers in 180 countries. At iHerb, every product comes from verified top rated brands stored, handled and shipped directly from our own climate controlled, state of the art facilities. No third party sellers, no shortcuts, just the highest standards of quality and transparency from cart to doorstep. That's why more and more people are turning to iHerb, where wellness and integrity meet. Visit iHerb.com trusted wellness delivered worldwide. Okay, only 10 more presents to wrap. You're almost at the finish line. But first, There the last one. Enjoy a Coca Cola for a pause that refreshes. This is the new Weight Watchers. It works for members like Jojo, who's learning simple, healthy habits. Sharia, who's making progress with meds, and Kim, who still gets to eat what she loves. For over 60 years, we've helped millions of members find what works for them. Now it's your turn. Watch your life open up. Watch your story shift. Watch what you're capable of. Watch it work. Get started today@weightwatchers.com.
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Farnoosh Torabi
So many episode 1925 our year in review the best of building wealth and securing retirement.
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You're listening to so Money with award winning money guru Farnoosh Torabi.
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Each day get a 30 minute dose.
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Of financial inspiration from the world's top business minds, authors, influencers and from Farnoosh yourself. Looking for ways to save on gas or double your double coupons. Sorry, you're in the wrong place. Seeking profound ways to live a richer, happier life. Welcome to SO money.
- [02:23]
Welcome back to SO Money everyone. Continuing our Look Back series on most talked about most downloaded conversations of the year. And today we're picking a theme that is important to all of us. How to build wealth. New ways to build wealth, in fact, and secure retirement. Plus, what to watch out for as the money world keeps evolving, keeping us on our toes. This year we saw major headlines around crypto, the stock market and investing trends that are moving faster than the average saver can practically keep up with. And that's exactly why this epic episode is important. Because building wealth isn't just about what to do next. It's also about knowing what's being sold to you, what's being normalized, and what questions to ask before you opt in. We're going to start with one of the biggest and most polarizing topics of 2025, and that is cryptocurrency and how it's starting to sneak into spaces a lot of us associate with, quote unquote safe and boring, like the 401k in episode 1876. I sat down with Tess Wearsmith, an investing educator, to talk about crypto, private equity and other alternative assets that may soon show up in more of our retirement plans. So what does this mean if our 401k menu starts offering crypto exposure? What are the risks, the fees and the guardrails to know about and how to make sure that our accounts are still working for us and not against us? In this excerpt, Tess breaks down what's happening and what the average investor needs to know before any of this lands in their retirement plan options. Take a listen. There's news that crypto and other alternative assets like private equity are starting to appear in some 401k conversations. Can you tell us what the average saver should know about this? Sure.
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Tess Wearsmith
One of the big things that happened in the summer that I think you're right, slid past a lot of people just because there's so much happening in the world and so much policy being talked about. One of the things that was passed was legislation, an executive order that basically said we want to make sure that alternative assets are available for regular investors, for regular Americans with 401ks. And this was something that was definitely controversial. Depending on who you ask about it, it's important to understand what this is because this could show up in your 401k. So just to break down a little bit of what this means, specifically the order talked about alternative assets and some examples of alternative assets are private equity, which is bas an opportunity to buy into companies that aren't publicly traded. Just a super simple explanation. And then other alternative assets that were listed as possibilities to show up in your 401k cryptocurrency as well. One really important thing to understand is this is not going to happen tomorrow. But it is something that we need to pay attention to because it could impact the choices you have in your 401k, the fees in your 401k. It's not necessarily a bad or good thing and we can talk about the pros and cons. There are benefits and drawbacks of this, but it is something that we all need to know. And I think what concerns me about this legislation is that already most Americans, over half of Americans, have no idea what they're paying in fees in their 401k in the first place and don't really know what they're invested in already. So because this legislation was passed, but hasn't really been implemented, this is a perfect time to understand the basics of your 401k, start to use this as an opportunity to learn from what you're invested in. Doubt some of those fees. And then if these changes occur, and there's still a big if of whether you will actually see these alternative assets show up in your portfolio, you'll have a better understanding of what that actually means for your money in the future.
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Farnoosh Torabi
There are potential gains and big gains in alternative assets, but also big losses. What's your advice for how much to be invested in alternatives in your portfolio? And what are the questions we should be asking? Let's say our 401k manager, or if we're working with a financial planner. If you're working with a certified financial planner, they are your fiduciary. They're not supposed to sell you any products that would earn them a commission without disclosing that to you. You are their number one financial priority, at least on paper. And I think most do practice that law. But we still have to be vigilant. So what do we need to know about the limits of these and what do we need to know about the risks?
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Tess Wearsmith
Yeah, so you nailed it with the pros, right? People that are really for adding alternative assets. It's a way to diversify your investment. So right now, in your 401k, if you don't know what you're invested in, you're probably invested in stocks and bonds. So ownership of companies and bonds. Right. Those are the two main ways that you are diversified. And so the argument is that adding alternative assets like cryptocurrency or private equity can further diversify, put your eggs in different baskets. To your point, however, there is the potential for higher returns, but also higher risk. And so what's really important to understand about alternative assets is that historically they've been available to wealthier Americans, what's called accredited investors. So people that have a specific net worth or are making a certain amount of money, and they're deemed what's called sophisticated investors. And private equity has also been available to large government pension funds. And the reason for that is because these are people in institutions that have a huge amount of money, so they can afford to take a portion of that and put it into riskier assets. As a person that is trying to make sure you have enough money for retirement and your future and your family and whatever your financial goals are, it's really important to understand that wealthier people that have some leeway in terms of their finances and big pensions and funds are able to take those risks because it's not going to impact them as much. And so when we're thinking about alternative assets in our portfolio, you have to be really certain that you understand the risk and evaluate that against how much money you want to put into these assets. And so personally, I think most people, the average, I can't say exactly. It really depends on the person. But I think on average, most people shouldn't be putting more than 5ish percent. Rough guideline that's not financial advice. 5% of your net worth or your assets into alternative assets because they are what's called super speculative. The same goes with cryptocurrency. Right now people ask me all the time, do you invest in it? And I do. But it's a very small portion of my money and I look at it like Vegas odds.
- [09:15]
Farnoosh Torabi
That was Tess Wearsmith, 1876. The takeaway here is not crypto good or crypto bad. It's that if alternative assets start popping up in retirement plans, the most powerful thing you can do is get fluent in your your basics now. Know what you're invested in, know what you're paying in fees, and know what questions to ask before you click enroll. All right, next up, if Tess gave us the warnings and the watch outs, this next guest gives us a framework, a way to think about wealth building that actually changes depending on where you are right now financially. Earlier this year I spoke with Nick Maggiuli, author of the Wealth Ladder, Proven strategies for every step of your financial life. This was episode 1856. Nick introduces a six level framework for building wealth. And the idea that the right money strategy is not one size fits all. What you focus on when you're living paycheck to paycheck is not what you focus on when you're trying to protect and grow meaningful assets. In this excerpt, Nick explains what he calls the 0.01% rule. It's a benchmark for making smarter spending decisions based on your net worth and where you are on this wealth ladder. And then we'll get into his 1% rule that's reserved for deciding whether a career or income opportunity is actually worth your time.
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Here's Nick, the 01% rule. I will walk through the math on that in a second. But I think the main reason why I came up with this rule is because a lot of people in personal finance say, hey, don't let your lifestyle creep in. And this is a fine rule. I think people can take it too far and so my argument is like, I think you should allow for some lifestyle creep. I've done math on this in my first book, Just Keep Buying. But in this case, I said, hey, I want to come up with the rule that people can use of what's a trivial amount of money? What's like, amount of money that you could spend and it would impact you at all. And like, where this came from, there's a Jay Z lyric where he says, I'm not going to say the actual lyric because he kind of curses and stuff, but I'll just say he said, what's 50 grand to someone like me? Can you please remind me? And that's all he says. And it's very subtle. And I was like, what was his net worth at the time? It was around 500 million. So $50,000 at the time for Jay Z was 0.01% of his net worth, or that's 1,10,000. So if you take your net worth and you divide by 10,000 or multiply by 0.01%, you get to some amount, right? Some amount of money. And to me, that's like a trivial amount of spend. And so that maps onto the wealth ladder in a neat way, because when you go like in every level, you have different levels of what I call spending freedom. So in level two, for example, I call that grocery freedom. So as you get deeper and deeper into level two, you don't really have to worry about how much things cost at the grocery store, right? Because the marginal spend, once again, that net worth level is from $10,000 to $100,000. So if you divide by 10,000, your marginal spend is like one to $10. You can spend that extra one to $10, you know, every day and not really impact your wealth. That's the thinking here. And if you do that in level three, that's what I call restaurant freedom. So when you go to a restaurant, you can spend about ten to a hundred dollars more per day or per time you go to a restaurant, won't really impact you. Level four is what I call travel freedom. That's where you can start spending a hundred to a thousand by the time you get to the end of level four. Dollars more per day on things you like to when you're traveling or etc. So the whole point of this is you can think about the levels. I just like using the levels. Oh, if I'm in level four, I can get what I want in a restaurant, I can do what I want at the grocery store. But when I Travel, I'd be a little bit more picky. I mean, I still mostly fly coach. Once in a while I might get a window seat. I might upgrade to like the emergency exit row. That's where I'm at with my wealth journey. But hopefully one day I get to the point where I'm like, hey, I can go and spend this extra thousand dollars on this flight one day. So that's the thinking, because the theory, I'm assuming your wealth will generate 0.01% per day. And so if you do that, if you take.01% and multiply 365 days, yeah, percent, certainly that's only 3.7% a year. It's a conservative return. Says, hey, you're well throwing this off every day. It's a trivial amount of money. You can spend that every day. So when you get to $1 million in wealth, that's a hunt. Your wealth is generating about 100 bucks a day. When you get to 10 million, it's $1,000 a day. Which might not seem like a lot of money, but if you're like, hey, if you don't fly every day, but let's say you fly once a month or something, you don't spend any money on anything else. Like that thousand dollars a day, you can pound that into a month and that's now, you can now basically fly first class every time.
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Now in chapter two, you introduce the 1% rule. And this is where if you can pursue a career opportunity or an income generating opportunity that can grow your net worth by 1%, you should pursue it. Why did you want to provide this, this lens through which we should look at income generation?
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I think people get caught in their habits and they keep doing the same things over and over. And at some point they don't realize, wait, this actually isn't worth my time anymore. And so at some point everyone can think of, oh yeah, back when I was younger, I would do this for money or I'll drive across town to save a few dollars on gas. And that's fine and all, but at some point, if you can do other things that can generate more money, you should be doing those other things right. And so that's where I'm like, take 1% of your net worth as like this proxy. It's not perfect. And of course you have to. It's really based on how much time something's going to take you as well. It's not just the value, but I think it's just a way of just comparing like, hey, I'M thinking about doing this project and this project is going to generate me, let's say 5,000 this side hustle and it's going to create $5,000 for me over the course of however many hours. And then you can say is that worth my time or should I be doing a different project that maybe offers more upside potential, etc? And so I don't know, I'm just trying to come up with something that's really as just a secondary check on are my career actions making sense? Yes or no. And that's the big question.
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Behavioral finance. So well, and one of the tenets is that as humans we love a good rule of thumb and if we can apply more of those into our financial lives. And I know they're rules of thumb, so it's just a starting place. Right. We want to know how much to save, how much to invest, how to think about wealth building. Let's start with this idea and then personalize it. So as you're speaking, this 1% rule is, I think it gets a little bit more complex, the higher net worth you have. Right. So moving the needle 1%. At that point, you know, you're not doing a side hustle. You might be investing in real estate, you might be taking out a personal loan or a business loan to do something which yes, if all works out, this could increase your net worth by 1% or more. But it could also not work out. And there's a risk to that where versus the person who's like just doing the side hustle to earn an extra 1%, the downside is just making nothing or making 1% versus the other person over here in the higher rung, they're taking on some risk. So any advice for somebody who wants to make a bigger leap, which would require a little bit more risk essentially.
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Yeah, no, you're exactly. As your net worth grows and that amount by the 1% rule gets larger, it's harder and harder for your, let's just say labor income, your work that you do to impact your wealth. So as a result, you're going to have to rely on other things like income producing assets. Right. And so if you're like, oh, I want to buy this property, it could eventually raise my net worth by over 1%. Okay, great, then it's an opportunity. Then you still have to think about the risk and everything outside of that. But I just wanted this rule as like a threshold amount. Like I don't want people spending a lot of times on very low income opportunities that aren't going to really help them when there's other opportunities out there that would be better for them. And obviously it depends where you are, right? If you're in level one, like you can, anything you can do to get money is probably going to be a good thing to like, at least help you move out of level one. But as you move up the wealth ladder, you have to be a little bit pickier with how you spend your time. And so that's just the thinking I have behind this, and I hope it helps people. Just as another check, on top of all the other things you would think about risk and all that, this is just another check to say, hey, is this even in the ballpark of what I should be considering?
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That was Nick Majully episode 1856. I gotta say, I love the rules because they give us a clean reality check. It's not meant to make our lives rigid, but to help us stop wasting energy on decisions. We often talk about decision fatigue. This kind of cuts through it and allows us to start matching our time and our spending and our career choices to the financial stage that we're in right now. The book again is called the Wealth Ladder. Going online without ExpressVPN is kind of like leaving your laptop unattended at a coffee shop while you run to the bathroom. Most of the time you're probably fine, but all it takes is one moment, one bad actor, and suddenly your personal information gone. Anytime you connect to an unencrypted network, like at cafes, hotels, or airports, your data isn't secure. Anyone else on that same network can potentially access your passwords, bank logins, or credit card details. And it doesn't take a sophisticated hacker to do it. With some cheap hardware and basic skills, even a teenager could pull it off. That's why everyone needs ExpressVPN. It creates a secure, encrypted tunnel between your device and the Internet, keeping your information private. You can use it whenever traveling or working from public WI fi. It works on all your devices, phones, laptops, tablets, so you're covered wherever you go. And the security is top notch. Their encryption is so strong, it would take a hacker with a supercomputer over a billion years to break. And as someone who deals with finances and personal data every day, I know that protecting that information isn't optional, it's essential. Secure your online data today by visiting expressvpn.com so money, that's E-X P-R-E-S-S V P N.com somoney to find out how you can get up to four extra months. Expressvpn.com somoney I'm Farnish Tarabi, host of so Money and this episode is sponsored by Gelt. Feeling like your CPA is always one step behind, causing you to miss valuable tax advantages? Questioning if your tax plan is truly as optimized as it should be? That's where Gelt comes in. Gilt is a tax planning and strategy solution for you and your business. They're the modern alternative for entrepreneurs who feel like their CPA is reactive, not tech forward and maybe not asking the bigger strategic questions about how your business is growing. What I love about Gelt is this they make taxes part of the business plan. With Gelt your Partner in taxes, CPAs and AI align your tax strategy to how your business grows. That includes the real levers that matter. Choosing the right entity structure, maximizing retirement contributions and uncovering hidden credits and deductions. All handled alongside your business and personal compliance. And Gilt is proactive. Your tax strategy gets revisited every quarter by a dedicated cpa. Not just a tax time. No more slow replies. No more surprises. No more spreadsheets and email chaos. Just a slick dashboard. Clear next next steps and year round support. Schedule a call@joingelt.com today and learn how your taxes can become a lever for growth. That's join G-E-L-T.com and schedule your discovery call today. Farnoosh tarabi listeners get 10% off their first year of service. Just mention my name on your intake form.
- [20:16]
Commercial Narrator
Let's be real. When it comes to your health, authenticity matters. For nearly 30 years, Iherb has quietly built one of the world's leading online wellness destinations trusted by millions of customers in 180 countries. At iHerb, every product comes from verified top rated brands, stored, handled and shipped directly from our own climate controlled, state of the art facilities. No third party sellers, no shortcuts, just the highest standards of quality and transparency from cart to to doorstep. That's why more and more people are turning to iHerb, where wellness and integrity meet. Visit iHerb.com trusted wellness delivered worldwide. This is the new Weight Watchers. It works for members like JoJo, who's learning simple, healthy habits, Sharia who's making progress with meds and Kim, who still gets to eat what she loves. For over 60 years, we've helped millions of members find what works for them. Now it's your turn. Watch your life open up. Watch your story shift. Watch what you're capable of. Watch it work. Get started today@weightwatchers.com.
- [21:35]
Farnoosh Torabi
All right. Now, speaking of reality checks, there's a lot of bad investing advice out there, right? We know this. And sometimes the best strategy is not to chase the next big thing. It's avoiding the unforced errors that are quietly destroying wealth over time. One of my favorite conversations this year was with Barry Ritholtz, co founder and CIO of Ritholtz Wealth Management and host of the long running podcast Masters in Business. Barry joined to talk about his book how not to Invest the Ideas, Numbers and Behaviors that Destroy Wealth. It's a sharp, timely guide to what derails investors and how to avoid those traps. We covered a lot of ground, from humility and mistakes to speculation, crypto, and how to think about risk when retirement is closer than it used to be. In this excerpt, Barry shares a humbling investing story. He explains the idea of having a small, quote unquote cowboy account for speculation. And then he offers practical guidance for adjusting risk as you approach retirement without panicking yourself out of the market. Here's Barry, you've had so many successes in your career as well as mistakes. You write about them in the book. You say you've made every mistake in your book. Thankfully, many were done when you were too broke for it to matter. Those were your words. Was there one mistake that hurt your ego more than your wallet? You talked about Wall street needing a dose of humility. And I'm wondering, did you have a humble moment that was very educational?
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Barry Ritholtz
There's two in the book and they're both very different and both instructive. One was so I've been a Mac fan for a long time. In grad school I had a Mac Classic. I've been using Apple products for forever and I ended up getting one of the very first ipods. Note I'm saying ipod, not iPhone. And so this was like late 02, early 03, something like that. And oh, I understand this is going to replace a Sony Walkman. I don't have to walk around with tapes or CDs. It's a thousand songs in my pocket. At the time, Apple was $15 the share price with 13 cash. And I recommended to the whole office. We were buying a ton of it and I'm watching all the prints go by. Look at all this Apple we're buying at 15 and a couple of weeks go by, it's 20 and now everybody's selling it.
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Farnoosh Torabi
It.
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Barry Ritholtz
Oh why? Why are we selling it? Hey man, you're up 33% in a crappy market. Take the win. I'LL show those guys I held onto it till it was a Triple. It was $45. Now understand since that 15 purchase, Apple split 2 for 1, 3 for 1, 2 for 1. So I think my purchase price was 28 cents, something like that.
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Farnoosh Torabi
Oh my God.
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Barry Ritholtz
And ran up to 100 and change. So that was humbling. Even though I did better than the retail guys that had taken the small win, I could have just let it run. Not that I could.
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Farnoosh Torabi
Yeah, I used to work with Jim Cramer and he said famously, pigs get slaughtered and Apple's an outlier. But had this been another stock look, we would have all loved to bought Amazon when we were in the womb. It's one of those things. You did have the foresight to buy it early. That's a.
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Barry Ritholtz
But not the foresight to stay with it and let it fully unfold. I which by the way, is the idea behind the cowboy account. Every now and then a portfolio comes into the Office and it's $15 million. 14 in Microsoft or 14 million in Nvidia or Bitcoin or whatever. And those are the rarities because most people, they get a little winner. Pigs get slaughtered. So they sell. So when they actually find that one in a million stocks. Yeah, they can't ride it out. The beauty of having a little. If you're that sort of junkie, if you're always looking for the dopamine hit, then take 3% of your net wealth and play with it. And if it crashes and burns, thank goodness it was only 3%. But if it runs up 500, 1,000, 5,000%. Most people just temperament wise are unable to let stuff run that way. Oh my God, I have $3 million. This is real money. What do I do? Oh My God, it's 10 million. Oh my. It just keeps going and they're just frozen and paranoid. And I have to. I've watched people start with a small thing, have it go all the way up and then come all the way down and they're just paralyzed the whole time.
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Farnoosh Torabi
Yeah, you mentioned crypto. I wasn't planning on a question about this, but it, but I'm curious, would you consider crypto as part of that 3% gamble?
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Barry Ritholtz
Sure, if you want to speculate, why not? I look at Bitcoin as well, market cap wise. I haven't looked at it today, but it's a little bigger than Facebook, it's a little smaller than Google. So I think of it as a technology company that's a solution in search of a problem. Eventually something will be figured out with it. I love the concept of smart contracts and artists being able to put ticket sales on a blockchain so only their fan base, with a certain email and a certain number can buy tickets. And if someone wants to flip a $50 ticket for $1,000, the contract that's on the blockchain says, hey, 80% of that money is going to Taylor Swift or John Mayer, not to Middleman. I know people who literally flew to Paris, stayed in a hotel, bought Taylor Swift tickets, went to the show with their family, flew back, and that whole experience was cheaper than buying tickets on StubHub.
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Farnoosh Torabi
Oh my gosh.
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Barry Ritholtz
Not that I want to offend StubHub, but yeah, something seems to be wrong with that picture. You want the fans to be able to afford to buy inexpensive tickets. And if someone's going to flip it, shouldn't the artist capture most of those revenues? That's a solution to a problem that perhaps the blind can apply. So I don't know how this gets integrated into real life. I've read a bunch of really interesting ideas out there. It's been a long time. The funny thing is the iPhone came out around the same time as Satoshi's white paper on bitcoin and the iPhone has become ubiquitous and indispensable. We're still waiting for the use case for crypto to reveal itself. Stable coins are becoming a thing. Ethan has become a thing. But I'm not an expert in the space. That's why it should. If you want to speculate with it, sure. Just make sure if it's small enough to not hurt you if it goes south.
- [28:16]
Farnoosh Torabi
I appreciate the solution. Looking for a problem. I think that is a good description. You started the episode talking about, look, if you've got a 30 year horizon until retirement, does a Wednesday down day in the Dow really matter? And I agree with you, it doesn't. But what if you are someone who is approaching retirement, who wants to. You have a shorter timeline for investing five years, seven years. What's the advice for that person?
- [28:43]
Barry Ritholtz
So a couple really interesting things there. First, you have two issues. One is you want to have a reduced amount of risk as you are rapidly approaching retirement. But the offset of that when you look at the traditional target date, funds that used to go 70, 30, 60, 40, 50, 50. The challenge is that so many people are living into their 80s, 90s and beyond. And so it's not like you work till 65, you retired, you played a few rounds of golf, then you dropped dead. That's a different world than today. So when we used to think about, hey, you want to go from 70, 30 to 60, 40 by the time you're 62, if you want to retire at 65, all those numbers have been pushed out. Obviously it's random and variable. But I was just talking with some people yesterday. Their mom is 98. Their dad lived till, like, their late, his late 80s. Hey, if you're 65, you shouldn't plan on just being retired for a few years. You probably have another 20, 25 years to go. That should affect your risk tolerance. You're going to need a little more risk to generate the sort of returns that'll last deep into your 80s or 90s.
- [30:04]
Farnoosh Torabi
So then you're talking, stick with 75, 25.
- [30:08]
Barry Ritholtz
Or if you're 80, that might be a little. Might be a little aggressive. But think about if you were making changes at 60, 65, 70, maybe you push back those changes to 68, 72, 77. I'm just spitballing numbers, but maybe you got to back them up five or seven years because, you know, there's some crazy numbers that if you make it to 68, the odds of making it into your 80s go up dramatically. When you look at the distribution, the mortality tables, like, a lot of things happen when you're an infant, when you're a teenager, especially us men tend to kill ourselves in our teenage years. Ask any adult male. I bet they could tell you, oh, I once almost killed myself doing this. Remember that time you fell off the ladder or you're driving too fast in the ice? There's a million stories like that. And then there's a period in like, your 40s and 50s, the heart attack zone. If you get past that. All right, all the things that usually kill us now, you have a pretty good shot at late 70s, early 80s.
- [31:13]
Farnoosh Torabi
That was Barry Ritholtz, episode 1840. A big takeaway from Barry is that smart investing often looks boring. It's discipline. It's avoiding the big mistakes. And if you want to speculate and roll the dice, that's okay. But just do it in a way that won't take your whole future down with it. And finally, let's talk about retirement. Because the culture has been pushing early retirement for over a decade, right? And that's hard on a lot of us who are just trying to get to tomorrow, and we're tired of it. So here's a more realistic idea that's been catching on, and that's in part two. Thanks to social media, this trend called micro retirement in episode 1829. I spoke with Dr. Annie Cole about this trend, micro retirement. What it is, why it's resonating right now and how to do it without wrecking your finances. Micro retirement, she tells us, can take on a lot of forms. It can mean stepping away for a month, taking a planned unpaid break, using your pto, intentionally going part time for a period, or taking time between jobs to reset and retool. The point is not to disappear forever, right? It's to build rest and recovery into your life in a way that's intentional and financially planned.
- [32:29]
Commercial Narrator
I am so obsessed with the micro retirement because I think no matter what you call it, the goal is taking care of yourself and it's finding work life balance, which so many people these days are burnt out and need to be taking care of themselves. So I think it's trying to solve a major problem across our globe right now and want to make a retirement is really just taking a break from work. It can take lots of different formats. So you could be saying I'm going to quit my job cold turkey and take a year off to travel. I'm going to take an intentional one month break from work and plan it out with my employer. So it's either paid or unpaid time off. I'm going to take two weeks off using my pto. So it could be a lot of different things and a lot of different lengths of time, but the goal is the same. It's always I want to take care of myself, I want to replenish, I want to stop working for a little bit and just focus on me.
- [33:21]
Farnoosh Torabi
It reminds me of a book that my friend Neha Roosh wrote called the Power Pause. Now in that book she's talking about stay at home mothering, by and large, stay at home parenting. But as you're describing this micro retirement, it resembles. What she's describing is like you're intentionally taking a break from your career. A pause if you will. And it's not like you're gonna maybe to your point, maybe you're going to go travel, but for others it's I'm going to spend more time with my family because that's what I'm prioritizing right now. As we know, it's so hard to balance work and family in this country with such few resources. I think this has a real wide application where we think of this as like a social media trend. Oh, we're just talking to Gen Z or the younger workforce. But I think this is applicable to anyone who is on in the workforce, whether you're Looking to do this as a, because as a parent it's important to you or for your own mental health or you're in transition, you're like done with this industry and you want to figure out next steps. The big question is though, how do you afford it?
- [34:29]
Commercial Narrator
Yep.
- [34:30]
Farnoosh Torabi
How do you afford it?
- [34:31]
Commercial Narrator
And I think that's where it's really important. You use the word intentional a lot. And I, that's what I always come back to too. You want to be really intentional because if you just, let's say you quit your job cold turkey and you say I just need a break, what are you going to get out of that break again? Do you want to spend time with family? Do you actually need to connect with a therapist and get some real support? Because you are burnt out and you're experiencing psychological symptoms that you need to take care of. So being intentional as much as possible is going to be powerful because that means you're going into it with intention. So intentional about the outcome and then intentional about your finances. So if you can plan ahead, if you're not in a place where you need to take an emergency mental health break, you might decide you're going to set aside a certain amount and you basically backwards plan. So I know that I'm going to take a 45 day break. I've planned it with my employer. I'm going to use part pto, I'm going to part save up for it. You could financially plan for that so that you've set it up in advance. If you are going to take a whole year off in between jobs, you're done with your industry, you want to move on. In that case, maybe you want to look at all of your assets. So what do you have in savings? You know, I recommend you are not pulling out your retirement or anything else that's going to be really important to have over the long term. But potentially savings or one way you can do it is to pick up some sort of gig work or freelance work. Even though you want to take a break. There is a version of micro retirement where you just do something very light. Maybe you go part time at work or you try some freelance work to have the income. So really crunching the numbers and finding out this is how much it will cost to cover my expenses during this break. And then this is the different ways I'm going to bring income in or savings or whatever to cover that amount. So you know exactly what you're going to do.
- [36:20]
Farnoosh Torabi
Intentionality is really important also because you need a narrative when you're going back in the workforce. Let's say you're not going back to the same employer where they already know the situation. They've already agreed with on all this with you. But if you're looking to do a micro retirement so that you can get into another field, what's the story that you share? And I guess you want to be as honest as possible, but it's all marketing. You want to.
- [36:44]
Commercial Narrator
Yeah.
- [36:44]
Farnoosh Torabi
You want to make sure you're branding this. And could it. Could calling it a micro retirement versus other things be beneficial? I'm always curious why certain names are speaking to the times versus just calling this a break or calling this a sabbatical, which is what often employers. Some employers provide. They've been providing that for decades.
- [37:07]
Commercial Narrator
Yeah, if it was me, if I had taken a break and then I was coming back. I think like you said, the narrative is always most important when you're looking to get hired. People want to understand again, they want to know what is the value you're providing. So I would create a narrative that is tied to the value you're going to bring to that job. So if you want to call it a microturnment, you can. The hiring manager may have no idea what you're talking about. You could call it a break, but whatever you do, I would focus on what you got out of it. That is making you even more amazing for the job you're coming into. Because also hiring managers know people are burnt out. People sometimes aren't really passionate or committed to the job they want to come into. So if you have this, this renewed energy or this, I did this thing, I traveled to this place, I discovered this issue. Now I can't wait to make a difference in this field. That would be an amazing story. So I would just think about it that way. And also know you can share as much or as little as you want. You don't have to share a lot about your break if you don't want to. You can just say, I took a gap year and now I'm reentering the market. Frame it however you want. There's really no right answer.
- [38:15]
Farnoosh Torabi
What about the fact that right now we don't want to. We don't want to be job hunting right now. It's a really tough hiring market, depending of course, on your industry. But I'm thinking of like the federal government. People are getting laid off left and right. Grants are going away, so teaching jobs might be going away. And so it begs the question, like, is this the right time to be micro retiring? If your goal is to reenter the workforce in the next three to six to nine months, yeah, I think you.
- [38:47]
Commercial Narrator
Should first think about low hanging fruit ways to take care of yourself. Because to be completely honest, there might it might not be the right time to take a micro retirement. Maybe you're planning up for something that you're going to take next year or over the long term if it's not financially possible for you. It should not be a dichotomous I'm going to take a micro retirement or I'm going to do nothing. It should be I'm going to take care of myself in small ways. Because what we see in the research again is that folks are burnt out. They're not using their pto, they're not using their benefits. So use the things you already have. Take days off. Take real days off. Go and use your benefits to meet with a counselor or get the mental health support you need for burnout. Plan your day in a way that does all of the little things that promote well being, like eating good food, getting good sleep, seeing people that care about you. Those are very tiny things that we let go when we get busy and we don't realize that they compound on each other. So if you're not doing them, they compound and make us feel crappy. But when you add those things back in, they also can compound to make you feel like you have the energy to push through. So think really small if financially it's just not an option. You have lots of tiny things you can still do big.
- [40:02]
Farnoosh Torabi
Thanks to Dr. Annie Cole and that's our show. If you want the full conversations, you can listen to Tess Weirsmith, Nick Maggi, Barry Ritholtz and Dr. Annie Cole. All those links are in the show Notes. Thanks again for listening. I'm Farnoosh Chirrabi and I hope your day is so money.
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