1931: The New Rules of Retirement Planning. What Actually Matters Today

Summary

Podcast Summary: So Money with Farnoosh Torabi

Episode 1931: The New Rules of Retirement Planning. What Actually Matters Today
Release Date: January 14, 2026
Guests: Christine Benz (Director of Personal Finance and Retirement Planning, Morningstar)
Host: Farnoosh Torabi

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Overview

This episode explores the evolving landscape of retirement planning in 2026 with renowned financial expert Christine Benz. The conversation addresses what’s changed in the past few years—like long market runs, persistent inflation, longer lifespans, and concerns about Social Security and healthcare costs—and identifies the new rules and best practices for ensuring a secure, meaningful, and flexible retirement. Christine brings both professional insights from her research at Morningstar and personal experience as a caregiver for aging parents.

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Key Discussion Points and Insights

1. The New Landscape of Retirement Planning ([03:35]–[06:21])

• Market Run Implications: The extended bull run in both U.S. and non-U.S. stocks offers optimism for those approaching retirement, but Christine emphasizes now is the time for pre-retirees to increase safer assets like cash and bonds.

  • Quote: “As you approach your 50s, it makes sense to start de-risking a portion of your portfolio…you want to have some safer assets to draw upon to prevent yourself from having to get into stocks after they've declined.” ([06:21], Christine Benz)

• Inflation Protection: Especially critical for those nearing or in retirement. Older adults drawing on their portfolios need explicit inflation-protected investments.

  • Tools mentioned: I Bonds and Treasury Inflation-Protected Securities (TIPS). ([08:27]–[10:06])

2. Safe Withdrawal Rates & Dynamic Spending ([10:06]–[12:18])

• Christine's team at Morningstar continues to advocate for a ~4% initial withdrawal rate (currently 3.9%), but urges retirees to stay flexible based on yearly portfolio performance.
  • Quote: “Most 30-year retirement time horizons aren't a worst-case scenario…Be prepared to vary your withdrawals based on what has gone on in your portfolio and also be prepared to take more as you age.” ([10:30], Christine Benz)

3. Importance of Professional Guidance ([12:18]–[14:35])

• Even for savvy ‘DIY’ investors, retirement involves complexities beyond investment management, such as tax planning and Social Security filing decisions. Christine suggests periodic, not necessarily ongoing, hourly engagement with planners for second opinions and stress-testing assumptions.

4. Redefining Retirement: Visualization and Emotional Prep ([14:35]–[17:54])

• Retirement is increasingly less about “extended vacationing” and more about finding new purpose, structure, and social connection.
  • Quote: “…you need something to relax from…you need that balance that comes from actually accomplishing stuff. So maybe it's getting more involved in your community, maybe it's working in some fashion, but at a job that you think is fun…” ([15:25], Christine Benz)
• Social connection, activity, and health habits are all crucial for retirement wellbeing, particularly for men whose networks are forged at work.

5. Healthcare, Longevity, and Long-Term Care ([21:39]–[27:19])

• Long-Term Care Misconceptions: Many falsely believe Medicare covers custodial long-term care. It does not.
  • Quote: “The biggest misperception is that this is something that’s part of the Medicare system. It is not…People need to make a plan for confronting that level of care.” ([22:40], Christine Benz)
• Funding Strategies:
  • The “self-funders”: Those with ample resources may need to earmark $500,000+ for potential long-term care costs.
  • The “government-reliant”: Those with few assets will depend on Medicaid after spending down their savings.
  • The “in-betweeners”: Middle savers might consider long-term care insurance, but Christine warns of qualification and payout issues.
• Personal Connection: Christine's guidance comes from her parents' experiences of high long-term care costs and the burden of self-funding.

6. Caregiving Burdens on Adult Children ([27:19]–[30:36])

• The emotional and financial fallout of caregiving often falls on adult daughters, who may be forced to curtail their own retirement savings and career progress.

• Jean Chatzky's advice: “Even if it takes your whole salary to pay those caregivers, stay in the workforce and do that because it will preserve your ability to keep working when your parents are no longer around.” ([28:35], Christine Benz paraphrasing Jean Chatzky)

• Cultural expectations often heighten these roles, especially in some immigrant families.

7. Emotional Transition—Getting ‘Retirement Ready’ ([31:07]–[33:06])

• Start planning for the non-financial side early—demo days, test new routines, and communicate intentions with friends, family, and community.
  • Quote: “You still want to have structure in your life…start really thinking about what your days will be like in retirement.” ([31:37], Christine Benz)
• “Covid taught us that a lot of unstructured time, not good…” ([33:06], Farnoosh Torabi)

8. The “Choose Your Own Adventure” Retirement Era ([33:06]–[36:24])

• The shift from pensions (“everyone was on the bus”) to 401(k)s (“we’re all in our own cars”) puts more responsibility—and risk—on individuals, with highly variable results.
  • “Some 401 overachievers here and then you’ve got people who have really struggled to amass significant savings…” ([36:24], Christine Benz)
• Frequent job changes and ‘leakage’ from 401(k)s make consistent saving harder for younger generations.

9. Optimizing 401(k)s and Alternative Options ([36:24]–[41:04])

• Target Date Funds are described as the “dynamite innovation” for making default investment options simpler and more intuitive for employees.
• Cost vigilance: Look for plans with investment options under 0.5% in fees; small employers often have more expensive offerings.
• The big advantage of a 401(k): Automatic, seamless contributions from paychecks.
  • “I have a hard time telling people to not take advantage of that…system that we get with 401ks.” ([40:06], Christine Benz)

10. Special Considerations for Women ([41:04]–[44:38])

• Women face distinct challenges: wage gap, caregiving gaps, longer lifespans, and a greater likelihood of living alone in old age.

• Long-Term Care Planning: Women are advised to prioritize securing long-term care insurance/plans, as they are likely to outlive spouses and lack a caregiver.

• Investment Strategy: Women should not be overly conservative; more years in retirement means a need for equity growth, especially during career peak earnings years. Save aggressively early for future flexibility.

  “If a couple has to make a decision about who to buy long term care insurance for, make it the woman because the data suggests that she will outlive her male partner.” ([42:00], Christine Benz)

11. Brokerage Accounts for Midlife Flexibility ([44:38]–[47:44])

• Farnoosh shares that opening a taxable brokerage account (outside traditional retirement accounts) gave her midlife flexibility for caregiving, health, or career slowdowns, which Christine enthusiastically supports.
  • “…such fabulous advice…having that flexibility in a brokerage account…” ([46:34], Christine Benz)
  • “We need to not just have it be this slog of work and then retirement one day, think about leaning in and out throughout our careers.” ([46:34], Christine Benz, referencing Laura Carstensen)

12. Social Security’s Future ([47:44]–[51:10])

• While benefit cuts or eligibility changes may impact younger savers, Christine doubts any near-retirees (mid-50s plus) will see major disruptions.
• She expects potential fixes like raising tax thresholds or full retirement age.
  • “For people…in your mid-50s and beyond, you’re probably safe in terms of your promised benefits. The younger age cohorts, I would say, yeah, probably haircut your promised benefit a little bit just to address what could be some changes in the system coming down the pike.” ([48:53], Christine Benz)

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Notable Quotes & Memorable Moments

• On flexibility over perfection in retirement:

  “Flexibility, not perfection, is the real secret to retiring well.” ([04:18], Farnoosh Torabi paraphrasing Christine Benz)

• On the importance of social connection:

  “Men need to be thoughtful about where they will go for putting themselves in connection with other people…” ([15:25], Christine Benz)

• On the reality of self-funding long-term care:

  “It cost an arm and a leg…there was a time there where my dad had Alzheimer’s… and it was a small fortune at the end of their lives.” ([22:40], Christine Benz)

• On deliberate career continuity for caregivers:

  “It can be really difficult to re engage with the workforce if you’ve been out of it for a couple of years…if your plan is to continue working after this caregiving stint is done, it’s best to try to have some continuity…” ([28:35], Christine Benz)

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Timestamps for Important Segments

• Retirement Planning in 2026: What’s New? — [06:21]
• Withdrawal Rate and Portfolio Drawdown Strategy — [10:06]
• Value of Professional Guidance in Retirement Planning — [12:18]
• Redefining “Retirement”: Planning for Purpose & Fulfillment — [15:25]
• The Realities & Costs of Long-Term Care — [22:40]
• Caregiving Dilemmas for Adult Children — [27:19]
• Emotionally Preparing for the Transition to Retirement — [31:07]
• The “Choose Your Own Adventure” 401(k) Era — [33:06]
• 401(k) vs. IRA: Simplicity, Fees, and Target Date Funds — [37:01]
• Special Planning for Women — [41:04]
• Brokerage Accounts: Midlife Flexibility — [44:38]
• The Future of Social Security — [47:44]

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Takeaways

• Start de-risking portfolios and building in inflation protection as retirement nears.
• Safe withdrawal rates are still around 4%, but retirees should be agile and update yearly.
• Long-term care needs careful, early planning—Medicare won’t cover custodial care, and long-term care insurance is tricky but potentially necessary for some.
• Women and adult children face particular financial vulnerabilities due to caregiving—plan proactively.
• Consider automating retirement contributions, and use target date funds or other default options if investment choices overwhelm you.
• Midlife ‘rainy day’ brokerage accounts provide essential flexibility.
• Social Security fixes are likely but expect changes mainly for younger earners.

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Tone and Style

Christine Benz brings a deeply practical, compassionate, and clear-eyed approach. Farnoosh is warm, candid, and reality-based, weaving in relatable anecdotes and actionable strategies throughout.

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For more resources:

• Christine Benz at Morningstar ([51:35])
• Book: “How to Retire: 20 Lessons for a Happy, Successful and Wealthy Retirement”
• Check show notes for links

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Transcript

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[Farnoosh Tarabi]

So money episode.

[Farnoosh Tarabi (Intro/Outro)]

1931 the New Rules of Retirement Planning what actually matters Today you're listening to.

[Farnoosh Tarabi (Podcast Host Introduction)]

So Money with award winning money guru Farnoosh Kharabi. Each day get a 30 minute dose 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.

[Christine Benz]

It's the elephant in the room in retirement planning and there's so much confusion about long term care, what it is, who covers it. The biggest misperception is that this is something that's part of Medicare, the Medicare system. It is not. It's all sorts of care that we might need if for whatever reason we're unable to care for ourselves, to take showers on our own, or dress ourselves or feed ourselves or make food, what are called the activities of daily living. If we're not able to do them and we need care to help us do those things, that type of care is not covered under Medicare and so people need to make a plan for confronting that level of care.

[Farnoosh Tarabi]

Welcome to Sew Money everybody. I'm Farnoosh Tarabi Today we're talking about our futures.

[Farnoosh Tarabi (Intro/Outro)]

Not just retirement as a number on a spreadsheet, but retirement as a real.

[Farnoosh Tarabi]

Phase of life, one that we're all hopefully heading toward, whether we're opening up our first 401ks or already counting down the years.

[Farnoosh Tarabi (Intro/Outro)]

My guest is someone I've turned to.

[Farnoosh Tarabi]

For guidance for decades.

[Farnoosh Tarabi (Intro/Outro)]

Christine Benz is the director of personal finance and retirement planning at Morningstar. And if you've ever read a smart, clear headed piece about investing, poor portfolio strategy or retirement readiness, chances are her work shaped it. Christina's helped millions of investors make sense.

[Farnoosh Tarabi]

Of their money at every stage of life, but especially at the moment when.

[Farnoosh Tarabi (Intro/Outro)]

The stakes feel highest, figuring out how to turn what you've saved into a sustainable, meaningful retirement. She's the author of how to Retire, a deeply practical and human guide that goes far beyond the math to tackle the emotional, lifestyle and health realities of aging. In our conversation, we dig into what retirement planning looks like today after a long market run amid persistent inflation concerns, longer lifespans, and big questions around Social Security, health care and caregiving. We talk about safe withdrawal rates, de risking our portfolios and how women need to plan differently and why flexibility, not.

[Farnoosh Tarabi]

Perfection, is the real secret to retiring.

[Farnoosh Tarabi (Intro/Outro)]

Well, let's get into it.

[Farnoosh Tarabi]

Christine Benz, welcome to so money. I'm going to still say Happy New Year even though Larry David says we're not allowed to anymore because I think he gives us like a three day cutoff into January. It's good to see you.

[Christine Benz]

It's so good to see you too. Thank you so much for having me on. It's an honor to be here with you.

[Farnoosh Tarabi]

I've been a fan of your work for decades, ever since really getting into my work in personal finance.

[Christine Benz]

You have been hugely influential in my world as well. So thanks for all you do.

[Farnoosh Tarabi]

For those of us in the audience who are not familiar with Christine Benz, you are the director of personal finance and Retirement planning at Morningstar. When I was doing a lot of my reporting and research, whether it was at Money magazine or TheStreet.com or Yahoo. Finance and even still now in my so Money world, often referencing your work and looking at your great research. And today we want to focus on retirement planning. So kicking off the year, so far into the year, we've talked about budgeting, we've talked about just general financial planning. We had David Bach on who's the author of the Automatic Millionaire. We had on Jesse Mecham, who's the founder of you Need a Budget. So now we're going to focus on the future and how we can really get retirement ready. We have many people in the audience at various stages. We have, I know listeners who are just, just starting out. They might just be looking into a 401k and then we have others who are really close to or even in retirement. So let's just take a huge step back, Christine, and if it is even relevant to bring in some of the 2026 issues, whether it's the cost of living, interest rates. What is your thesis for kind of retirement planning right now? I know some things don't change, but are there any kind of new ideas right now that you're having about retirement?

[Christine Benz]

A couple of things I would say. One is that we've had an extended stock market run which has been good for everyone's portfolios. People who have investments have had really nice appreciation from US stocks and then in 2025, great appreciation in non US stocks as well, which is a little bit of a change because non US stocks haven't been doing as well. So the net effect, especially for those people who are like I would say over 50, getting close to retirement, starting to think about retirement dates, that is a life stage when you do want to think about adding some safer investments to your portfolio. Stocks have been great. You want a healthy component of stocks, but you want to start to bring some balance into your portfolio. And the reason is that when we look at the data on people's retirement dates, we see that people oftentimes aren't really great judges of when they might retire. That oftentimes they're knocked out of the workforce for things that they couldn't foresee. Maybe they were laid off or they had health issues or their spouse had health issues, whatever. As you approach your 50s, it makes sense to start de risking a portion of your portfolio. And the simple reason is that you want to have some safer assets that you could draw upon to prevent yourself from having to get into stocks after they've declined. So that's the basic thesis. And here I would just keep it super simple. Yeah, focus on having a component of cash which you probably want to have on an ongoing basis as an emergency kind of buffer. But you probably want to enlarge that a little bit as you move into your 50s and certainly your 60s. And then you'd also want to think about adding some bonds to the portfolio. I would keep it simple here as well. I'd use high quality short and intermediate term bond funds. Keep the cost super low so that more of your returns flow to you. So that's one thing I would bring up right now. Extended stock market Ron, means that de risking is important, especially moving into older adulthood.

[Farnoosh Tarabi]

Yes.

[Christine Benz]

And then inflation is another thing that I think is top of mind, especially for, certainly for all of us. We're feeling it in our budgets. We're feeling higher costs at the grocery store and people who are renting are facing high rents, in many cases, higher rents. But the people who I would speak to, especially at this juncture, would be people who are getting close to retirement or already retired. If your plan is to withdraw a portion of your portfolio for your living expenses, you need to make sure that you have some inflation protection for that portfolio. So we get that with stocks because stocks have historically outgained the inflation rate. But if you have those safer investments that I was just talking about, you want to make sure that you have some inflation protection there as well. So there are two categories that I would point to for that. One would be what are called I bonds, which you can buy directly from the US Treasury. These are bonds that give you not just interest like any bond would, but they also give you some inflation protection that flows through to you as the bondholder. And then I would also look to what are called treasury inflation protected securities, another treasury issued bond. So they're very, very safe and they too give you a component of inflation protection. So that's something I would think about. You don't need it if you're a younger accumulator. But as you move into retirement, as you get close to drawing upon your portfolio, you do need some of those securities that are explicitly inflation protected. Yeah.

[Farnoosh Tarabi]

And sticking with that advice, you recently at Morningstar looked at what's like the quote unquote safe maximum withdrawal rate of that portfolio. If you are going to draw down on that for living expenses, and it looks like it's stayed consistent at least from where we were like giving advice 20 years ago at 4%. Just under 4%, I think 3.9%. How do we figure out that number in general?

[Christine Benz]

Yeah, this is some research that we do annually on our team at Morningstar. And so we're using forward looking asset class assumptions. We're saying we're looking into our crystal ball and saying, okay, over the next 30 years, based on where we are with stock values, with interest rates, with what our expectation is of inflation, what can people expect? What would be safe? And so as you said, we came out with a 3.9% guidance in the ballpark of 4%. My main point here is that People who settle for like a 4% spending system oftentimes are underspending over their time horizon because it's built for a worst case scenario. And the good news is that most 30 year retirement time horizons aren't a worst case scenario. They're better than that. So a best practice in the realm of how much to withdraw from your portfolio is be willing to revisit that withdrawal rate based on what has gone on in your portfolio over the past year. So if 2026 turns out to be really bad for the markets and your portfolio has declined, take less if you possibly can in the following year. And the basic intuition there is you want to preserve the portfolio, you don't want to take from dwindling assets. And in better years like the ones we've just been through, you can take more. So be prepared to vary your withdrawals based on what has gone on in your portfolio and also be prepared to take more as you age because your time horizon is shrinking. And that means that you get to take more on an ongoing basis to account for that fact.

[Farnoosh Tarabi]

It sounds to me like at this phase and now sticking with those in the sort of approaching retirement in retirement phase, that working with a professional to give you that play by play, because it does sound like every year could be different, your withdrawal rate could, it would be smart to adjust it. The question of, do I start withdrawing from Social Security now versus pulling from the 401k versus I don't know, there's a lot of variables. Hopefully if you've planned right and you have all these options available to you, it's okay. What do I, what do I do now? What's the smart kind of order of hierarchy of, of, of execution here? That. Do you find that people who are really diligent about retirement during retirement, that they do continue or begin to even just work with someone for this chunk of time?

[Christine Benz]

Absolutely. I love the idea of getting another set of eyes on your plan. I'm active in the Bogleheads community, which is a DIY type, keep it simple, use index funds type, a type of mindset. And I love all that. But there's much more to retirement planning than managing that investment portfolio. As you said, there are tax considerations that come into play filing decisions. If you have a spouse who is also has Social Security benefits coming to him or her, you want to strategize about how the two of you will claim your Social Security benefits. So there are a lot more moving parts than just the investment portfolio. So getting another set of eyes on your plan Just having someone to maybe second guess some of the assumptions that you're making or push back on some of those assumptions I think is a great practice. And the point I would make on this front is it's not like you have to necessarily pay someone an ongoing fee to manage your portfolio. Maybe you do, maybe that's the arrangement you want. But for some people, paying on an hourly or a per engagement, like just see if I'm on track for retirement, that's a really good arrangement. So I think sometimes people don't recognize the different arrangements that you can get into in terms of paying for financial advice by the amount of advice that is right for your situation and for how much work you're willing to put into this.

[Farnoosh Tarabi]

You wrote a book called how to 20 lessons for a Happy, Successful and Wealthy Retirement. I'd love to go through some of the highlights of the book, including things like what women need to do differently, including just at the outset, how to visualize retirement. Because oftentimes we just skip to the number crunching, which is important. But to your point that you make in the book, and so many of the experts that you interview make in the book that less than half of proper retirement planning comes down to the math that a lot of it is the planning and the being the and the flexibility and the revisiting of the plan and knowing yourself. So let's start with step one, which is just understanding what you want out of retirement. And these days, what is it really that people are defining as retirement?

[Christine Benz]

Christine A lot of people unfortunately come into retirement with this vision of it as this extended vacation. And there probably is pent up demand for relaxation. And you may want to do that in the early months or years of your retirement where you're just maybe doing heavy travel, you're watching all the Netflix shows that you never had a chance to watch during your working years. Or maybe you're just really investing a lot in fitness and things that you maybe had to neglect while you were working. But Michael Finke, who I talked to in that first chapter of the book, he's a retirement researcher, talks about ideating about retirement getting a little deeper than that extended vacation. Because the point he makes is you need something to relax from that. Even if you're no longer working and earning a paycheck, you need that balance that comes from actually accomplishing stuff. So maybe it's getting more involved in your community, maybe it's working in some fashion, but at a job that you think is fun, that doesn't really tax you. So the one that comes to mind I think for a lot of people would be like working at Trader Joe's 10 hours a week or something like that, where there's nice camaraderie that happens and it's just easy. You walk out the door and you're not really thinking about that job after that. So really getting clear on what tangible things you want to try to accomplish. And then certainly work on the leisure side of the ledger as well. But think about that balance and then also think about the things that we know contribute to healthy aging. So one through line in a lot of chapters in the book is just relationships that for people who walk out of the workplace, if they haven't been thoughtful about how they will replace those social interactions that they had through work, that's a trouble spot. And the research suggests that men, and this is of course a huge generalization, but men a lot of times have their social networks through work and they have less robust social networks outside of work. Men need to be thoughtful about where they will go for putting themselves in connection with other people and then certainly physical activity as well. A lot of us do derive some level of physical engagement from working. Be thoughtful about where you will go for physical activity and keeping yourself in good health as you age.

[Farnoosh Tarabi (Intro/Outro)]

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[Farnoosh Tarabi]

Because that also leads to savings. Potentially health savings, which is the health care cost or the big wild card. The biggest wild card probably in retirement. How are people affording that? I just did an episode. I thought for all this, for all these years I thought you get the long term care insurance because that's going to be obviously help you, but then I'm learning that often it's not really there to help you because it can get more and more expensive and then people drop the policy or it doesn't necessarily qualify for the things you thought it was going to qualify for. And so I know that this book, and also just in general, your interest in retirement planning for yourself and for helping others was inspired by your own caregiving story. Can you talk a little bit about that huge wild card and how people are working through that? And your recommendations for us as we look to securing our retirement, specifically with regards to our health, is it relates to our longevity, but also the cost of our retirement.

[Christine Benz]

Yeah, absolutely. It's the elephant in the room in retirement planning. And there's so much confusion about long term care, what it is, who covers it. The biggest misperception is that this is something that's part of Medicare, the Medicare system. It is not. It's all sorts of care that we might need if for whatever reason we're unable to care for ourselves, to take showers on our own, or dress ourselves, or feed ourselves or make food, what are called the activities of daily living, if we're not able to do them, and we need that, we need care to help us do those things. That type of care is not covered under Medicare. And so people need to make a plan for confronting that level of care. And they also need to understand the relationship between longevity. Like we love longevity, we love that people are living longer. But the net effect of that is that the longer we live, the more likely we are to experience some kind of cognitive decline. And that necessitates the type of care that I was just talking about. So both of my parents ended up needing long term care in their late 80s and they had not purchased long term care insurance. I think they had been advised that their assets were sufficient to self fund. And it turned out that they did actually have the money to pay caregivers to come into their house. But I will say it cost an arm and a leg. There was a time there where my dad had Alzheimer's and we had had caregivers in the home, but he experienced a couple of painful falls. And so we determined that it was going to be safer for him to be in a facility to receive care. And my mom also had developed a care need. So we had the 24 hour caregivers at home. So we had the two sets of care happening at the same time in separate settings. And it was a small fortune at the end of their lives. So the key point there is to understand how you're situated with respect to financing this type of care. If you have an ample portfolio and there's no risk of running out during your lifetime, then you probably are in the self funding camp where you can set aside a portion of your portfolio. And I think it depends on your specific situation. But for a married couple, I don't think $500,000 is unreasonable. As a bulwark against long term care is a lot of money. This is not money that you would have available to you for spending. It's just something that you would want to hive off and keep from your spendable portfolio. At the other extreme would be people who have very tight plans where perhaps they're living mainly on Social Security and have a small portfolio. They will have an expectation of being reliant on government provided care. So if you've exhausted your resources, you'd be in the category of qualifying for Medicaid provided long term care. The tricky part with that is that you do have to effectively spend through your assets. That might necessitate that you effectively impoverish your spouse if he or she is well and doesn't need care. And then the other big downside to Medicaid provided long term care is that you might not have much of a say over where you receive that care. So there are facilities that provide care under Medicaid, but you may not be able to pick and choose. In fact, you very likely wouldn't be able to pick and choose. So those are the two extremes. The very flush person who can self fund and then the person who will be reliant on Medicaid. And then in the middle would be the people who have been good savers who have portfolios that will cover their spending needs. But there may not be a lot of margin for error in that plan to cover your lifetime living expenses. And those are probably the best candidates for some type of insurance products, but they're complicated. As you said Farnoosh, there can be issues with getting the insurer to pay out when the time comes. So understand all of the nuances of those policies before you buy in. And also understand that the rejection rates are pretty high. If you have some health condition, you may not qualify for purchasing insurance coverage. So the idea there is to investigate long term care insurance if you think you'll need it while you're healthy, while you'll be able to qualify.

[Farnoosh Tarabi]

Yeah, and this is something that for women is particularly important. We'll get to more specific advice for women in a moment. But sticking with this whole healthcare dilemma and caregiving, often we hear from our audience, and I'm sure you hear this too, all the time, is that the children of the aging parents, that's the other kind of scenario, is that the cost falls on their plate and the time and the money falls on their to do list. My friend Beth just wrote a book called My Mother's Money. What's your advice? Amazing book. What is your advice for, let's say a Gen Xer or a millennial whose parent is aging and requires their help financially. But it does mean that this Gen Xer or millennial will then have to delay their own retirement because now they have to take from their savings and they have to take time out of their jobs to support their family. I think I was reading fast forwarding in your book to the Gene Chatsky chapter where she was like, maybe find a way to hire someone and so that you can keep working just because the net of that is in the end a better thing for you to keep working and hiring, outsourcing that help as opposed to you being the help. What do you think about that?

[Christine Benz]

I loved that point because adult daughters are often on the front lines, whether they are providing direct care for their elderly parents or they're in the situation that I was in, which is where we had paid caregivers. But that's a heavy lift to just manage a household when the caregivers have to be vetted and you can use an agency, but you have to be in charge of paying and paying all the bills for the house, doing the grocery shopping for the house. They're all different permutations of care that we might provide. But it can take a toll on careers, certainly. And Jean's point is if you're say, in your late 50s and you are an adult child and you want to help out, that the greater good. I think she made the point. Even if it takes your whole salary to pay those caregivers, stay in the workforce and do that because it will preserve your ability to keep working when your parents are no longer around. Whereas if you make that full stop and say you're in your late 50s or early 60s or something like that, it can be really difficult to re engage with the workforce if you've been out of it for a couple of years. Things are changing very quickly. Obviously, in terms of AI and everything else, if your plan is to continue working after this caregiving stint is done, it's best to try to have some continuity there in terms of your career path where you're staying engaged. So I loved that point. Of course there's so much personal baggage wrapped up in this decision making that all of these situations are different. But for me, I had a very forgiving employer who really wanted me to keep working, which was a best case scenario where they gave me a lot of grace to hobble through those years. But not everyone has that. People don't necessarily have super long tenures with their employers aside.

[Farnoosh Tarabi]

And then you also have the, in some cases the cultural expectations. Right. That, that you're. The children will take care of the parents. It's ingrained in them because it's, it's a cultural expectation. It's pressure there.

[Christine Benz]

Absolutely, absolutely. And it depends on the culture. I was talking to a friend who is, she's a Chinese American and she was saying, oh, my mom's retirement plan is me, basically. She, she, she's moving in with us. Yeah, it completely depends on the culture, what the expectations are.

[Farnoosh Tarabi]

One of the chapters in your book is also about laying the groundwork for retirement. I thought this was a nuanced idea. This idea that if you anticipate retiring, let's say next year or in a couple of years, that you really do get men ready for the transition and emotionally ready and you think about all the non financial aspects of retirement. Talk a little bit about what you're actually doing during that, that, that time frame to get quote unquote, retirement ready. And why is this so important, you think?

[Christine Benz]

I think it's important to start communicating your plans about retirement within your community that I, you might have ideas bubble up that you might not have anticipated to start talking about it. Fritz Gilbert in the book talks about setting one of those countdown clocks. I've done them for my sabbaticals before. Where it gets you in the mindset of here are the things I want to get done before I split from work. Here are the things I want to look forward to as I move into this next phase. And another tip that came up in the book is this idea of actually trying to populate a calendar of what your days will look like when you're retired. Jamie Hopkins talked about that, about how when people talk about, here's what I'm going to do, I'm going to spend time with my grandkids or whatever. His point is, okay, you filled out like one morning of a calendar. Let's do the whole thing. Let's try to sketch out what the days will look like. Because it is helpful to get in the mindset of how you will Impose structure on yourself. Because even though we love the idea of unstructured time, getting away from work will give us more unstructured time. You still want to have structure in your life. You want to be cultivating healthy habits in retirement as well. I love the idea of people as they phase into retirement to start really thinking about what their days will be like in retirement.

[Farnoosh Tarabi]

Yeah. You said Covid taught us that a lot of unstructured time, not good, not good. We're going to end up making a lot of banana bread and being like. And questioning all of our life's decisions. Yeah, that, that, that can happen. You say that we got to this place in retirement planning where it does feel like a lot of it is up in the air and it just choose your own adventure. Thanks to the 401k, because our parents generation, for good or bad, they had more structure around the retirement. It was like, everybody line up, you go and you collect that pension and then you just enter retirement in, in a sort of structured format. You did go on that cruise, you did go and spend your days on the golf course. Whereas now it's. It is like that. Choose your own adventure. And do you think that the 401k ultimately is. Do you think it's better this way? Or do you think. Do you wish sometimes we were back in like the 60s that the 401k was developed? Was it the 80s or the 7? Late 70s?

[Christine Benz]

70S, I think. Yep.

[Farnoosh Tarabi]

Yeah.

[Christine Benz]

Jason Zweig at the Wall Street Journal compared it to when there were pensions. Everyone was on the bus. When you're riding along on the bus and then you get off and you're at your destination.

[Farnoosh Tarabi]

Yeah.

[Christine Benz]

With the 401k, it's like we're all in our own cars, driving our vehicles. Some of us don't. We may not have driven before. We may not know how to manage investment portfolios. So the 401k has worked really well for some people. And in part that's because equity markets have been so strong for really the past 30 years. We've had a pretty great market environment punctuated with some really bad market shocks. But for the most part, it's been quite a good period to be investing in stocks. So people who have had the opportunity to save in 401k plans and who have been consistent with it and have held on through periodic market conditions corrections, they've done just fine. But then a lot of people really haven't had the ability to save consistently. We see that people have 12 jobs on average. And when I look at Younger age cohorts, they really go through 12 jobs where it's just younger generations.

[Farnoosh Tarabi]

Not at the same time, just over the. Over their life career.

[Christine Benz]

Okay, exactly.

[Farnoosh Tarabi]

I should have said like the 12, 10, 99 or something. Okay, that's okay.

[Christine Benz]

No, over their lifetimes, people hop around jobs a lot. So in a way it doesn't really make sense to have this vehicle that is tethered to our workplaces if we're not staying in those workplaces that long. And so for people who do change jobs frequently, there can be leakage between jobs where it's oh, I'm trying to find a job, but here's my 401k, maybe I can spend from it because I need to plug this gap. So a lot of people are quite under saved with respect to retirement when they're hurtling toward it very quickly. They'll be exclusively reliant on Social Security, unfortunately, which will really constrain them with respect to what they can achieve in retirement. So to me it feels pretty bifurcated that you've got some 401 overachievers here and then you've got some people who have really struggled to amass significant savings in a 401.

[Farnoosh Tarabi]

I was reading recent articles, I think it was in the New York Times. Ron Lieber wrote recently about there's one company where their 401k was very complicated and now they're getting in a lot of heat for it. A lot of people will avoid the 401k for that reason. It's too complicated. I don't get it. In, in your opinion, when is it wise to opt into the 401k versus say an IRA or a Roth IRA? I mean, you can do both, I guess, but in some cases one could trump the other. I love a 401k with the company match, but even then it's like people don't even understand how to choose their investments.

[Christine Benz]

Absolutely. The Good news for 401k investors, the dynamite innovation over my career has been the target date fund, which is similar to getting on the bus where it's a preset pre allocated menu. Usually the preeminent target date providers are offering pretty low cost investments. Not too complicated. It'll be more stock heavy as you're young and then phase into more of a balanced approach as you age. Most 401k menus do include those target date funds, so I would put them at the top of the list for most 401k savers. But you do want to do a little bit of due diligence on the plan. And specifically you want to look at how much the plan costs. Unfortunately, small employers often are fielding pretty costly 401k plans. So the investment options are a good tell and you can quickly find how much you are paying for those investment options. You can find a prospectus or you can just hop on the fund company's website, whether it's Vanguard or Fidelity or the T. Rowe Price or whatever the case might be, and just do a little bit of homework on how much you're paying for those investments. A good threshold would be if it's under 0.5% for the investment options. That's a good indication you got a pretty low cost plan in place. But there can be additional layers of expenses beyond what you're paying for those investment expenses that cover the administrative expenses and the operating costs. So you want to do a little bit of sleuthing on what are we paying extra to have our plan provider oversee this whole thing for us?

[Farnoosh Tarabi]

Yeah, yeah. And I think too a lot of 401ks, similar to opening up a brokerage account on your own through a robo advisor. They'll have a lot of the automated recommendations for you. You can take a survey through your 401k provider. They'll ask for your age, your risk tolerance, your retirement goals, and they'll create at least a starter portfolio for you which you can then tweak that's got an allocated of allocation of stocks versus bonds and all of that. Whereas when I started Investing in a 401k 25 years ago, I was given like a pamphlet and I was like, pick go. And I was. I would go home and I would Google these five letter acronyms and I don't know, I would come back just to work the next day and I'd have to com. I would compare with my colleague across the cubicle. What are you investing in? I don't know. I'm just gonna do these five stocks, these five mutual funds. Well, you're right, me too.

[Christine Benz]

Exactly. I remember asking my dad because I was like, and bless him, my dad said, invest in the stock fund. I was 23 or whatever and what great advice, but I had no idea.

[Farnoosh Tarabi]

No idea.

[Christine Benz]

Cash account, the guarantee, Guaranteed account, maybe. But the good news is that target date funds are really helpful for people who aren't sure how to allocate. And then back to the question of 401k versus IRA. The real beauty of a 401k is just that automatic contribution thing that happens with a 401k where it might not be painless, but you just feel it a little less than if you have to make regular contributions to an ira. And of course you can set up those automatic contributions to an IRA, but the 401k is just super seamless from the standpoint of facilitating that. I'm busy. I don't have a lot of time to think about this. Guess what? Your contributions just go in good markets and bad and it turns out that's a great way to invest. I have a hard time telling people to not take advantage of that very sort of seamless contribution system that we get with 401ks.

[Farnoosh Tarabi]

Definitely going back to some of the specific challenges for women. On the one hand, we are going to, we are on the receiving end of the bulk of the generational wealth that is transferring currently and will be continuing to transfer. So that's the good news. But challenges remain. And that is as Gene Chasky, you interviewed for that chapter and she was my former boss at Money magazine, learned so much from her. We have the persistent wage gap. We are more likely to take gaps from our careers to caregive, which then it reduces our ability to contribute to things like our Social Security, our 401ks. And then we live longer. Good news, bad news, our money has to last longer for us. And so taking all that into consideration, Christine, what are some of the ways that we need to think and act differently with our retirement planning than men? Generally speaking?

[Christine Benz]

Yeah. Jean is so amazing. I love that her passion is around helping women do better with their money. So a few things jump out. One, we touched on this idea of having some kind of long term care plan because often our spouses predecease us by a couple of years on average when we look at the data. And so we often are providing care for our male partners, but there's no one around to care for us. And so if a couple has to make a decision about who to buy long term care insurance for, make it the woman because the data suggests that she will outlive her male partner. And if you're a single woman, a solo ager, all the more important that you really think through your long term care plan. I have several single friends who are my age and both have gotten advice to purchase long term care insurance even though it is an ongoing expense. The idea is that they'll have that sort of bulwark of care available for them. So think about your long term care plan. Think about investing reasonably given that extra longevity that you're apt to have relative to men. Historically, women have been A little more conservative than men in terms of the allocations that they want to make. They're more concerned with risk than men. That's good and bad. But the idea is that if you have some longevity, if you think you'll live a little bit longer, you need your money to last. You need to have the growth that comes along with stocks. So make sure that you have ample stocks in your portfolio. You also want some safer investments, but you want ample equity exposure as well. You also want to be thinking about the impact that caregiving might have on your ability to save for retirement. I have some loved ones, some nieces in my life, who are earning fabulous salaries in their 20s and early 30s. And my advice is go in terms of saving at this life stage to give yourself some flexibility later on. If you want to maybe take a couple of years away from work, away from paid work, I should say to spend time with kids, Give yourself some flexibility by really saving heavily in these early years of your earnings trajectory, because they may in fact be your peak earnings years. Women tend to peak earlier in their careers than men. And so take advantage of those early savings opportunities if you possibly can.

[Farnoosh Tarabi]

Yeah, one of the best things I ever did unknowingly, like, I didn't really know how it was going to show up for me, but I thought it can't hurt. In addition to obviously saving, investing for retirement. But I opened a brokerage account in my. I think I was 30, early 30s, to in my mind, like, maybe supplement retirement. But also, I don't know, maybe this could be something like when my kids get older, they want to get married. This could help with their wedding.

[Farnoosh Tarabi (Intro/Outro)]

I don't know.

[Farnoosh Tarabi]

There was. There's just gonna always be these big costs down the road that are outside of retirement that I might want to have money for set aside that I don't need in the next 10 years so I can afford to put this in the market. But I realized that 10 years later, 15 years later, I would. I really appreciate having this money, having also compounded the way that it did because menopause, perimenopause, right. It's not like I want my life to slow down, but like, it's just been nice to be able to take. Have that money and know that, you know, if I need to just take a slower year because my health needs to take focus and I can't go at the speed that I was in my 30s or that maybe I do have, maybe at some point a parent that's going to be needing my help and I can afford to do that. That I have this brokerage account that has grown up with me and that I feel is like my. Has been my golden ticket in my midlife. That I had the foresight to just start little by little putting away some money in the stock market outside of a retirement account that would have prevented me to take it out without penalty. I can. It's a brokerage account. It's liquid, more or less without penalty. So that's my gift of advice to anyone listening. Because your midlife is. You don't know what's going to happen. Right. At any point in your life, but especially in midlife, it's very much a. It's just lots of stuff coming at you in your 40s and 50s.

[Christine Benz]

Exactly. I love that point. Because you're so right that you don't want all this stuff siloed in your IRA or your company retirement plan where you can't take it out without paying heavy taxes until you're in your mid-50s or beyond. So having that flexibility in a brokerage account, yes, you're not getting the tax sheltering benefits, but who cares in this context if you have this pool of assets that's available to you to be a little bit more flexible with your lifestyle. In fact, I think David Bach has been talking about this too. But Laura Carstensen, who's someone I interview in the book, was like, we need to retire more often in this country that we need to not just have it be this like slog of work and then retirement one day, think about leaning in and out throughout our careers. We need to be a little bit more flexible about it. So whether it's when you're in your midlife phase or maybe even earlier when you're raising young children to give yourself that optionality within investing with a taxable brokerage account. Such fabulous advice.

[Farnoosh Tarabi]

And especially since we're living longer, right? Like we could, if we're living let's say to a hundred at some point, like average now it's not there yet, but at some point maybe who's retiring at 60, right. Maybe you do a little bit of a break at 60, but then you get back in at 70 and you get. But it's like in and out. I think that's fine. And. But we have to be able to afford that. And so how do you do that? You gotta have these different instruments to help you get there, stay there. Before we go, the big other big like question mark around retirement planning is Social Security. And we touched on it. I have young kids I don't know what their future is, but it doesn't really matter because they're not paying into it. But there are many people who are currently paying into Social Security who are in their 20s, let's say, right now, working, and they're skeptical that they're going to have it. And I feel like they have to have it. If I'm paying into a tax and I don't get my money, we're going to have bigger problems in that world. But what is more, what is Morningstar's prediction or thesis on the future of Social Security, and what are you advising folks on how to plan around that?

[Christine Benz]

Yeah, it's a program that will need some adjustments for sure as the years go by to help address what will be a shortfall in the Social Security trust fund unless some adjustments are made. And so for younger people who are Maybe in their 20s, 30s, even 40s, I would say brace yourself, there may be some adjustments. There may be more adjustments around the amount of our incomes that is subject to Social Security tax. So that would be one fix. It might be that for people who are getting close to retirement, potentially there might be some means testing around the benefits that you receive. But for people who are, I would and never say never, but I would say if you're in your late 50s or over 60, probably not going to be huge changes in your promised benefits, because Social Security is a very popular program. People make their plans around their anticipated Social Security benefits. So if you I don't want to say over 50, but I would say certainly in your mid-50s and beyond, you're probably safe in terms of your promised benefits. The younger age cohorts, I would say, yeah, probably haircut your promised benefit a little bit just to address what could be some changes in the system coming down the pike. Do I envision Social Security going away entirely for younger age cohorts? I don't because it is a bedrock of our system. It's also an incredibly popular program. And we know that older adults vote, that they come out and vote. And so if Congress has plans to really make changes to a program that supports lifestyles for older adults, they'll be in trouble if they jeopardize the promised set of benefits. But for younger people, I would expect some adjustments. Maybe it's that the age gets pushed out even further of when you can begin claiming Social Security benefits that disproportionately helps, hurts people who have jobs that are physically difficult to do. But it may be some combination of adjustments around the margins to share Social Security. I would expect to see them coming.

[Farnoosh Tarabi]

Okay, Christine Benz, thank you so much. This has been a great primer, but also some new ideas around retirement planning that I think will be very helpful for those of us who are new to this. For those of us who are getting close to it, always appreciate your advice. You're one of my besties in this field. Hope to have you back again.

[Christine Benz]

It's been a privilege. Thank you so much.

[Farnoosh Tarabi (Intro/Outro)]

Thanks so much to Christine Benz for joining us.

[Farnoosh Tarabi]

You can learn more about Christine at Morningstar. I'll have a link to her work.

[Farnoosh Tarabi (Intro/Outro)]

In our show Notes and her book.

[Farnoosh Tarabi]

Is called how to Retire. I'll see you back here on Friday for AskFarnouche. Remember, you can send in your questions via Instagram arnouchtarabi. You can DM DM me there. And if you go to the Sew Money podcast website, you can submit your questions there through our form. Or you can send me a voicemail. I'd love to hear your voice. Until then, I hope your day is so money.

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