Traditional or Roth 401(k)?

it’s the weekend and you have financial
questions that need answering that can only mean one thing
it’s time for Jill on money the show that takes the mystery out of your
finances here’s your host Jill Schlesinger welcome welcome thanks so
much we are delighted you are with us hey you know we’re also delighted when
we get news stations and we just got our first Boston station this month so we’re
very excited about that thanks for listening Boston mark and I are both
lovers of Boston but not Boston sports teams because we are New Yorkers but
that said we’re very grateful so shout out to Boston shout out to all the folks
there who are listening right now remember if you’ve got a financial
question or maybe it’s a career question or anything remotely involved with your
personal financial life give us a holler the email addresses ask Jill at Jill and and we are broadcasting live from the
Capital One Bank studios all right so here we are it’s June a summer job time
for your kids Marc what was the worst summer job you ever had
okay Marc says he was a UPS loader which is real work and how did you get that
job did somebody get that job for you okay so she said somebody got the job
for him I think that most of the time kids are you know reliance on their
parents of their and friends now friends parents to get these jobs and and you
know I’m really down on the idea that kids should get the resume building job
I think they should get a job that pays I’m not into the internship thing I
think they should get a job that pays the labor market is tight right now so
you you might be surprised what could be available even this late in the game I
just think that those kinds of like horrible jobs like I’m a cocktail
waitress at a blankety-blank or I’m an the the grill at the municipal pool
that’s a tough job that’s always a tough one you know my summer job of being the
receptionist in a suburban real estate office with those Realtors who come like
barking at you freaking out about all the things that are wrong with the keys
and how they can’t get into the house and you’re just like 16 years old saying
like I just give you the key lady I didn’t say it was gonna work it’s
whatever I learned a ton so any job you’ll learn parents don’t forget to
take your kids through what that first paycheck is it’s a great opportunity to
do a little thoughtful lesson in taxes and make sure that the kid with holds
money for taxes if the employer does not do that all right let’s now get to a
call our first one it’s Shirley who’s on the line from Washington DC welcome to
the program what can I do to help you out today
hi Jill thanks so much for taking my call sure I am kind of in a dilemma
right now I’m trying to make the decision about whether to do my 401k
contributions on a pre-tax basis or using the Roth option that my employer
offers okay tell me a little bit about yourself married single and how much do
you earn I am a divorced woman I am about 47 years old I make about $70,000
a year I kind of have a mix of retirement savings right now so when I
retire I’m going to have a real diversity of income streams I’m going to
have some defined benefit pension I’m going to have hopefully social security
but I also have already have some I have a Roth 401k I have a couple traditional
IRA options and I also have a 457 deferred compensation plan account so
I’m just trying to weigh my options and figure out if it makes more sense
for me at this point to really invest in the Roth 401k option or if traditional
would still be better okay so let’s just run down to some of the numbers though
it in Roth assets how much do you have about I have about a hundred and forty
thousand in Ross okay and how about the traditional as the traditional IRA so
yeah with the traditional I’m gonna kind of love my deferred compensation plan in
with that it’s okay yeah I’m not sure if that’s correct
yep but I have about three hundred thousand in all of those other accounts
combined not including the defined benefit pension gotcha okay and right
now how how much money do you put aside and what how much money is going into
this potential either Roth or traditional retirement account so for
the 401k account with my current employer I have been contributing eight
percent of my salary so about five hundred dollars a month into the pre-tax
plan yep I recently got a raise and I figured out that I could afford with my
monthly cash flow I could probably afford to contribute about ten percent
if I contributed on a pre-tax basis but if I contribute to the Roth 401k I can
really only afford to contribute the eight percent gotcha that I’m currently
that I’m currently contributing which is the maximum that my employer will match
so just a frame of reference for the defined benefit plan do you have an
estimate at about how much that would be whatever twenty years in the future when
you retire about how much income you would get from that I have a really
really rough yeah at this point I’m still too young to get you know an
official yep I’m estimating it’ll probably be around
$2,000 a month mhm but that again that’s kind of a
rough estimate at this point so you’re in a funny situation haha no not that
funny an interesting situation because you’re in a tax bracket right now the
twenty two percent tax bracket the twenty two percent tax
it goes up to 80 $2,500 okay so in your case it goes from 38 7 to about 82 5 if
we were to presume that the tax structure stayed exactly as it is today
but we know it’s not right because it’s sunsetting so this is a funny plan all
right but even if we were to assume you pretty much would be in the same tax
bracket when you retired as you are right now right okay so now let’s let’s
roll the clock back a little bit and say okay well what happens when the Sun sets
you actually will go into a higher tax bracket under the current plan because
of that I think you are better off doing a 401k on a on a Roth basis because
you’ll lock in a tax liability that I think is probably gonna be lower than
where you’ll be at the worst case it’ll be the same and best case you’ll pay a
tax at this twenty two percent rate today and when if if for some reason
your taxes go up in the future you’ve kind of made a great trade you’ve paid
taxes at twenty two percent for all you know goes back up to twenty eight
percent so I think I’m gonna choose the Roth option for you today because okay I
just think you’re first well you already have a lot of money as you said three
hundred grand or so saved you’re going to have income between the defined
benefit and the Social Security not to mention the fact that you’ll have to
take money out of that traditional structure when you’re 70 and a half I
would like to have as much money as I could where I already know what my tax
liability is going to be I think you’re in great shape I would just do I would
do the Roth don’t freak out about like I have to do a little bit less that’s the
smart thing to do so do the Roth option okay great fantastic okay we will return
in just a moment during the break go to Jill on just go and there you
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back to Jill on money with Jill Schlesinger your back it’s Jill on money
if you’ve got a question we’d love to hear from you our email address is ask
Jill at Jill on and our website is Jill on
and there you can buy my book it’s called the dumb things smart people do
with their money thirteen ways to write your financial wrongs I’m ready to
compile my summer reading list mark I want to post that you know probably
fourth of July week what are your best tips for me I’d love you to tell me it
doesn’t have to be a classic financial book or even a personal finance but
could be any book that you are just devouring or excited to devour let me
know it’s summer reading here at Jill on Monday ask Jill at Jill on let
us know good suggestions for summer reading 2019 you know what I think I’m
gonna do this is a little bit ambitious but I’m gonna try anyway
I think I’m gonna reread Anna Karenina which you know Tolstoy in the summer
what could be better anyway let us know let’s go take a call right now we are
about to talk to Laura who’s calling from Seattle hello thank you for taking
my call and giving me the opportunity to talk I love your show oh thank you my
main question is I am 10 years younger than my husband he’s 60 I’m 50 and I
just want to make sure our financial picture is solid and sound especially
being the younger one of the two we both work for the same company that’s funny
to you what you both were you work together or you just happen to work for
the same company no we my husband has been working for
this and for nearly 30 years we’re sales reps
haha so we worked from home our offices in our home but I came on with some
about four years ago because he is just so busy and I have my background is in
the same sort of background sales in detail and management and yeah ok so how
is it going for you guys financially I think ok I’m a worrier not so he thinks
for doing great I I don’t know I just want to get
another look at it ok so so let’s start very easy here
ok you’re married give kids we do they’re older they’re out of the house
ok how much do you guys earn together together before taxes about three three
hundred thousand three hundred fifty plus thousand more taxes census are
expensive to us that’s how yeah really because oh well cuz you’re in are you
independent contractors yeah okay okay so what let’s so pull back the the
numbers a little bit for me so out of the 350 what do you think you really are
earning like what percentage of that money of that 350 falls to the bottom
line for you oh I would say dollar-wise worried about 215 tell me a little bit
about the the amount of money you need to live on like if you were to you have
to pay taxes and you said you got expenses you’re putting money away for
retirement what do you mean you’re at 50 and your husband 60 so you know what do
you think you need to plan on in terms of income that you will need to produce
when you retire I would say roughly working out the numbers about forty to
forty five a year that’s it I no way you got to be living on more than that well
you got your own a home we do and give a mortgage outstanding on it not my I mean
forty three thousand will have that paid off before by the time
and and how much you but guys putting away into retirement right now we try to
max out our we have a stuff we try to max it out okay so alright because of my
age I’m limited to a thousand okay and for him
fifty thousand yeah that’s interesting okay so but you’re putting away how much
money do you have in retirement assets right now
roughly with both of our pictures I would say five hundred thousand okay how
long do you think you’re gonna work we have a lot of discussions about that I would say another five to eight years
okay and he’s gonna keep putting away like that kind of solid fifty grand a
year probably your guess would try yeah I mean look you’re putting away a bunch
of money here’s a here’s a good rule of thumb to think about let’s say that by
the time you retire in five or eight years that you’re you’re half a million
is I know eight hundred nine hundred maybe maybe
even it’s a million dollars I mean I don’t know I don’t want to I’m not
assuming that you’re making so much money on your money what I am assuming
is that you are actually able to contribute this much money and that’s
the advantage you have in other words I’m not saying you’re doubling your
money going from 500,000 to a million by the time you retire I’m assuming your
money make some money and you’re putting a lot away so that by the time you
retire if you had a million bucks okay which I I’m guessing you’re kind of on
track for just because you know if he’s putting away 50 grand a year and it’s
eight more years right there you’re getting pretty close to a million
without any growth so if you have that million if you presume that you know you
want that money to last cuz it’s got a you’ll be you will still be young and so
we need to make sure you’ve got enough money that you’ll generate about thirty
thirty-five grand a year out of that million dollars so if you have that plus
his social security plus your social security then
you’re probably on target to reach your needs he may be right that you know gee
whiz you actually do have a pathway to hit retirement goals
that’s so sorry is he gonna be happy about that all right so here’s the thing
I will say that when you’re worried about this it may mean that you just
need to get like another set of eyes or you just need to run some retirement
numbers yourself to convince yourself I mean you have a business where I presume
you know you’re always projecting out into the future right your salespeople
so right you got to take a little bit more of that approach when it comes to
your personal financial life because it’s it’s kind of a similar thing you
say you know well how how am I gonna reach my goal this is what I’m going to
do and you back it out just the way I did it if you’re worried and you need to
run those numbers or you want to do it with an advisor that’s fine but you’re
probably I don’t know I’m gonna just probably make your advisor mad because
you say you wrote in and you said you have an advisor right now right yeah so
I mean like if you’re if you’re worried that you don’t think you’ve got the
right advisor for you because maybe you don’t trust this so much and that’s why
you’re calling me just to sort of it I want to get a little extra assurance
then I think what is appropriate is that you can certainly go present this to
someone else but I kind of confident just based on what you tell me you know
a lot of income putting a lot of money away into retirement and also that you
don’t actually have huge retirement income needs that you’re on track but I
do want you to pay attention to the fact that if you have a financial planner
anyone listening if you have you’re working with somebody who’s either a
financial planner and advisor a CFP a CPA and you’ve got some funny feeling
that you don’t quite trust that I would listen to that and I would get another
opinion to confirm that you’re in a relationship that is were
while pursuing so what I would suggest to you Laura is I think you might want
to go check out a fee-only financial advisor maybe you can go through naphtha
and a PFA org and maybe pay someone to do a straight-up retirement analysis for
you and you pay that person by the hour or flat fee and you start to feel
settled in your belly that you’re on the right track because I think I can do
that in a very superficial way I would prefer that you feel more confident
about the person that you may be working with right now and maybe the only way to
do that is to get an unbiased third party to do so we’ll get back to more of
your questions in just a moment hey during the break why don’t you subscribe
to our sister program it’s a podcast called Jill on money you can get it on
Apple stitcher radio comm Google Play anywhere else you find your favorite
podcasts we’ll be right back back to Jill on money where Jill
Schlesinger helps you take the mystery out of your finances your back it’s Jill
on money if you’ve got a financial question we want to hear from you it’s
very easy ask Jill at Jill on okay ken is writing about the optimum
social security retirement age and you know whenever I get these questions it
kind of freaks me out because it’s kind of hard to do it’s a very long process
so first thing first everyone listening you have to go to you can manage
your account online you know and then you get a you know it’s always there so
it’s very good to do that the next thing is there’s actually an estimator which
helps you estimate your retirement benefits by the way these are all on the
website at Jill on just go under it’s very easy just go resources
and you click it and you’ll see there’s the Social Security manager accounts
online and the estimator okay so now let us get back to the question
at hand that’s important okay now Ken’s only 47 it’s just funny that he’s doing
this but god bless him he said most of the advice I heard in this issue is to
hold off as long as you can since you’d be better off in the long term the
monthly amount that you get is higher it’s true
the point of Ken’s question is Ken’s message is to question the conventional
wisdom that it’s always better to hold off receiving Social Security benefits
he goes through a whole long calculation okay and here’s the deal since you don’t
know when you’re gonna die it’s hard to make a calculation like this stick here
is what we generally know Ken so you before you go into the whole thing that
the break even on social security is
essentially you’ve got a litter – you’re looking at age 70 you’ve got to live til
about 80 – usually and then it makes it worthwhile to hold off till age 70 now
if you think you’re gonna die sooner because you’ve got bad health in your
family or you yourself have bad health already then it’s different so it’s not
he’s saying I’m not criticising anything you’ve said I just don’t recall you
mentioning on the topic instead of getting expect getting an 8% increase
the the the point is that all of this works the longer you live and if you
don’t think you’re gonna live long because again your family history you
can choose to receive it earlier we don’t like people to receive Social
Security benefits at 62 because the benefit is permanently reduced and that
one has a much better hurdle in terms of how long you have to live for it to make
to have it make work for you waiting from 62 to your full retirement age so
that’s the story and it’s you’re right we can’t use a cookie cutter approach
except that when you give information to the masses sometimes you sort of have to
give the big broad ideas especially if you’re married and someone else is
relying on your work history for his or her Social Security benefit can rights I
enjoy listening to your show keep up the good work
I was first introduced to you when you assumed the aunt Jill role on the 404
podcast with Jeff Wilson and Justin he just mentioned that he thought we might
want some demographic information anyway thank you Ken I appreciate it
good it’s a good point sometimes a you know there’s there’s also some cool
stuff like that I know this sounds a little bit morose but I think that there
is a website I think it’s called living to 100 that does life expect and say yes
here’s your we got to put this on the website mark it’s always fun there’s a
life expectancy calculator it’s living to the number 100 comm and it it
basically does kind of say here’s what my health history is my parents blah
blah blah and then it calculates so it it it’s just a general guideline that’s
all so check that out Deana writes she’s fifty nine husband
sixty-two they’re both retired they’ve got good monthly income muni bonds
traditional IRA Roth IRA stocks CDs annuity checking account house is fully
paid for they’ve got very low monthly expenses they’ve got two children
grown-up do you think we need to have a financial advisor who with a fee of 1.1
percent I think you can probably do it yourself but it really depends on you
know what you want to do in your retirement really I’m but they got a lot
of money probably more than they need and then too we have a lot of cash do in
your opinion do we have a lot of cash in the wrong investments how can we grow
our money and we don’t want to generate a lot of taxable income we’re
conservative we don’t like risk do you recommend that we buy more annuities or
rental property no one either so what I would think is this you got a bunch of
money I don’t know who’s managing the money currently but you got a what I
would say is you’ve got a lot of individual stocks it’s managed by some
financial guy at one point one percent I would probably you know be interested to
see what else this person is doing for one point one percent but you probably
don’t really need that CDs are great you already have an annuity so you don’t
need another one you know what you need you need an unbiased third party to take
a look at this you also may want to try to work with a Robo advisor that could
be betterment that could be vanguards personal service advisor it could be
Schwab the intelligent portfolio that’s probably what you’re gonna end up
needing the only thing is you have these stocks I don’t know what the cost basis
is I don’t know whether or not these are held in a retirement account or a non
retirement account but you probably could get someone to take a look at all
this and give you an opinion the best bet is to go to naphtha NAPFA
NAPFA naphtha org and there you might be able to get somebody who gives you some
unbiased advice but it depends how much you guys want to do that’s the other
thing a lot of people really have to remember that doing this is something
that requires time energy and a real good grip on your emotions amy is a 41
year old former software professional turn temporary stay-at-home mom 15 years
of career experience she’s been staying home for a while
should I convert some of my investments in a taxable account to a Roth IRA no
that’s not what you would do you would Tet you only convert from a retirement
account into a Roth IRA and you want to know about trading investments in your
taxable account I wouldn’t do that you trade investments with the money you can
afford to lose do it in a retirement account so it doesn’t create tax
liability alright if you need more help just give us a holler ask Jill at Jill
on we’ll be right back do I invest here should I put my money
there Jill Schlesinger can help you back to Jill on money your back it’s Jill on
money if you’ve got a financial question we’d love to hear from you you can just
go to the website Jill on click on the contact us button and there
we are you’ve contacted us while you’re on the website how about you help a girl
out by the book the book is called the dumb thing smart people do with their
money thirteen ways to write your financial wrongs love for you to buy it
at any book seller of your choice here is an email from someone who says in all
caps please don’t use my name okay got it so anonymous is 67 owns a business
with spouse 68 it’s a subchapter S income comes from royalties we’ve been
taking paychecks to fully fund our SEP accounts however there’s going to be a
huge drop-off in our payments from about 390 grand a year to a hundred grand e
are starting this year and we don’t expect it’s gonna ramp up again
unfortunately my feeling is that we should forego the paycheck thing thereby
not having to pay both sides of the federal and state withholding we then
take the money out of the business via distributions and pay quarterly
estimates which we do now thoughts hey I think this is actually a question that
you might want to talk to an accountant about there so it’s true you wanted to
pay tax but you wouldn’t be paying into Social Security either so maybe that
doesn’t matter because you’re so you probably maybe max out Social Security
but I would run this by a CPA or a tax preparer just to get a second opinion it
would be nice not to have to pay that that the the both sides of the federal
and the state and basically oh I see I’m sorry I
I lied they’re both paying they’re both drawing Social Security already so it
doesn’t matter so yeah I mean using it as just distributions that sounds fine
and you know I don’t know how much money you have in
the SEP accounts that would be another piece of the puzzle but I think this
sounds like the right decision for you guys right now given where you are in
your lives all right let’s keep going here come on Valerie’s husband was forced to retire
for medical reasons and one of his previous employers is forcing him to
take retirement at age 65 or forfeit it we’re trying to find a place to park the
funds until at least age 70 any suggestions well you know look you can
take that money roll it over and roll it over into an IRA rollover account and
you can park it anywhere you want so one of the things I don’t know if you’re
gonna need this money but one of the things you could do is you could go
directly to say a no-load mutual fund family okay when I say that I always
roll these numpties names off I’m gonna do it more slowly
Vanguard tiro price fidelity Schwab is a a TD Ameritrade these are all places
that have low or essentially zero cost index mutual funds available some of
them also have the online advisor platform so that would be Vanguard or
Schwab or a company called betterment which used to be the sponsor of my
podcast no longer is so I can happily say that it gives it’s a very good
service any of these companies would be a good place to park money now if you
think you’re gonna need the money if you think that you are going to actually
want your hands on that money you can also put some of it in a bank very easy
to do but don’t let them sell you anything got it pinky swear good this is
so cute because someone named Jessica sent something with a subject credit
card and there’s a little credit card although it looks like a an easy pass to
me not a credit card so I’m so glad that I found you and I ordered
new book I can’t wait to read it I’m a business owner and a distributor for an
eyelash extension cosmetic product from Europe this is a big deal I didn’t know
anything about this eyelash extension okay
now this all sounds great but I have a credit card balance 12 grand I don’t
know how to pay how I can pay it back sometimes I can’t sleep my business is
doing okay I say to myself before then that you got to get the credit card
balance to zero I paid some expenses through my credit card I think you know
my problem is any good advice on how it can work on this yeah he just couldn’t
put it on autopilot that’s the deal so what I think that you can do is set up
an automatic payment and and make sure that you don’t use this anymore no you
do not pay for any more stuff on this through the credit card and anyway I
just hope that you know if you prioritize it and make that payment
automatic is it’s usually the best way that people pay off these debts so I
wish you the very best of luck truly what’s my time dude one minute okay very
quickly this is Kathy who doesn’t have a 401 K she’s been using various
retirement plans she’s gonna be 62 next tax season
she said I can’t put as much as I wanted to a Roth and still max my IRA age
sixty-five hundred since it’s already been taxed I thought it was an extra
source of retirement funds no you can only put sixty-five hundred dollars a
year well now seven thousand this year total whether it’s Roth or conventional
IRA traditional so so maybe stop doing the traditional IRA maybe you don’t need
to do that anymore maybe you can just do the Roth I don’t know I know you might
make too much money for that anyway you could always just use an investment
account a lot of people freaked out about all this and tax rates are low
so maybe just invest in a non retirement account altogether if you’ve got a
question about your financial life I want to hear from you the email address
is ask Jill at Jill on money dot-com that’s asked Jill at Jill on we’ll be right back you’re back it’s Jill on money and you know a
lot of you asked for recommendations for financial advisors we’ve got that in our
resource section but I’ve always mentioned naphtha the National
Association of personal financial advisors it’s an Epiphone org let’s make
a plan org is the CFP website address where you can find a CFP in your
neighborhood and here we go Yvette is 67 tension income and Social Security and
let’s see some other stuff part-time income looks like there’s about 39
almost 5 grand a month I bought a condo about a year ago got a
20-year mortgage I’ve been paying about $300 a month extra towards the principal
when I turned 70 I’m going to take my own Social Security benefit instead of
my spousal benefit I will have about $25,000 in a Roth and about 175 grand in
stocks bonds traditional IRA I live within the amount I received from my
pension so I have about a thousand dollars a month extra I can either pay
down the mortgage or invest in the Roth why why can’t she put money in a Roth is
she I don’t get it she’s she’s um is she still working I don’t get that
okay so first of all you have to have earned income to invest in the Roth or
is your spouse still working because you have that spousal benefit but it looks
to me like that you can put the money into the Roth oh I see part-time income
okay so there is some part-time income yeah but the money in the Roth don’t pay
down the mortgage I mean unless the mortgage payment I mean an interest rate
is really high no no it seems like you got your you
doing fine so I might just put money into the Roth but if you really want to
be maybe what you should do is this if you really want to be debt-free why
don’t you split it why don’t you take half of it half of the thousand dollars
towards the principal and half the extra five hundred dollars you can put into
the Roth there we split the difference and everyone’s happy hooray another
happy person I bought myself a pair of all birds I see there they’re shipping
right now that’s what I just got in my computer thank you very much
uh-huh all right listen gang when you’re looking at all this stuff and you got
lots of questions just send us an email will ya don’t struggle on your own okay
it’s Jill on money we are broadcasting live from the Capital One Bank Studios
we’ve got a whole nother hour so stay tuned we’ll be right back it’s the weekend and that can only mean
one thing you’re listening to Jill on money the show that takes the mystery
out of your finances here’s your host Jill Schlesinger welcome welcome welcome
this is the program that takes the mystery out of your financial life it’s
Jill on money I’m Jill Schlesinger delighted that you are joining us we are
broadcasting live from the Capital One Bank studios in New York and if you
would like to come on board with us ask us a financial question ask us a career
question give us a shout ask Jill at Jill on today we’ve got a
great guest her name is Ellen Rupa’s she’ll she’s written a book called the
job work and its future in a time of radical change here is journalist
professor and author Ellen rupal she’ll what drew you to this topic oh wow
I think the glib answer would be masochism yeah it’s rough work is a
topic about which everyone has an opinion and unfortunately everyone has
their own facts so I actually resisted doing it for for
a good long time because I knew I was going to be jumping
into a morass right just a huge huge sweeping topic at a certain point I just
reached it I reached a point where I felt like I couldn’t avoid it because
everybody was talking about work it seemed that everybody was worried about
work in some way and very few people were actually doing much about work or
actually really committing much thought to it you know there were a lot of of
canards that there are a lot of there’s a lot of common wisdom that people were
ghulami onto and as a journalist with a background in science in particular I
just found that very unsatisfying and I really felt I needed to kind of get to
the bottom of it when you started the project
what was your own view of your work and your job
oh well I’m very fortunate in the sense that I’m a college professor and a
writer right so I’m one of those odd ducks who actually does have a lot of
control over a time and our job not entirely of course and of course that’s
changing even in academia you know that’s changing very quickly I’m kind of
old school and so I I’ve had those privileges but many many people I know
I’m from Boston including extremely well-educated people you know people who
went to those institutions we’ve all heard of we’re really being surprised
that despite their their high level education their high skill level they
were having difficulty and a lot of them were very afraid for their children and
one thing when I was testing the waters thinking about doing this book I’m a
correspondent also a long time for this magazine called the Atlantic so I wrote
a little essay for the Atlantic about work in its meaning just to test the
waters to see what if they get responded you know people would respond and I got
the tsunami of response to this flood of responses which kind of didn’t surprise
me because I knew everybody was talking about work and worried about working but
what did surprise me was how many people just starting out in the workforce were
we’re writing to to me and talking to me many of them had done everything right
they were you know young and they’re in their mid-20s they had gone to college
someone’s gone to grad school they had done all the right things and they were
writing me because even though they were what we would think of as successful I’m
sure their parents considering successful they were deeply dissatisfied
and unhappy with work some of them actually were putting in long hours and
more hours feeling like as long as I’m maybe what I need to do was work harder
and longer and and that’ll make me happy and of course that led to this downward
cycle for them and that really prompted me okay I’ve got to do something and
that probably was the biggest influence in my taking on this project in you
begin the book by saying that work has changed in America so without going so
deep and covering all the ground that you
give us a broad-brush of how you see that change well I think we all know it
right it’s been out there it’s been covered quite a bit there’s a lot more
contract work right so even though we have a very low unemployment rate a lot
of us have very precarious employment we might drive an uber you know a couple
hours a week that counts is being employed we might be a dog walker we
might have any kind of function that is really precarious and is or is contract
work right so our employer does not have great loyalty to us they’re taking us on
to do a particular task and then they’re letting us go so that whole idea of
loyalty to workers and maintaining a work force over a period of time of
course is less and less it’s not gone but it’s less and less right and to find
those companies where the employee is really the focus has changed so
dramatically I remember in the 80s we had you know Neutron Jack Welch at GE
who was out lauded for like he basically fires a bunch of people let’s the
building’s keep standing and he was seen as some great awesome leader by the way
I never bought that and all of GE troubles traced back to him but that
said when you see the happy person at work you mentioned control can you talk
a little bit about that because I I think that’s huge I think that even
people I know who work a ton and I would put myself in that camp sort of like you
where it’s like I’ve got a nice solid gig with CBS News but on the side I get
to do a lot of stuff but I do find myself working quite a bit but I don’t
feel out of control I feel like I control my own destiny why is that so
important control is important to many people in terms of work the thing that
people seek most in their job as opposed to work which are different things is
stability and people underestimate the importance of stability a lot of
employers a lot of academics actually who write about this and talk about this
don’t talk a lot about stability and work because a lot of what is said is
pea we’ll want challenge and variety and
novelty in their work well some people do and in fact a lot of academics and a
lot of hotshots do but most of us seek stability in our work and that is what I
think a lot of people feel is is is kind of slipping away and is making us feel
really precarious this there’s a word called the prokaryote that was coined by
an academic in England then many of us now feel like we can be easily traded
out we’re somewhat disposable and that makes people feel you know very insecure
and very nervous and also doesn’t put them in a position to negotiate better
terms of their employment the way you’ve been able to do okay as well right so
Murray yes but the vast majority of Americans cannot do that they don’t have
the leverage to negotiate so even though we have a startlingly low unemployment
rate economists would predict that there’d be wage growth very rapid wage
growth because there’s apparently a scarcity of employees but in fact wage
growth has been very very sluggish people do not feel that they have that
leverage to negotiate for their for their jobs and so when you’re talking
about the uncertainty of work when people are feeling that not only do they
have like a nervous system reaction but there’s no way that can be good at what
they’re doing because they’re always on edge and they’re always anxious and I
see that all the time and we hear from those people people who say to me I had
this job offer it is for more money but I really like where I am am i loser for
not taking that job right and my answer is you know happiness does count right I
think that that uncertainty is really fascinating you’re right people don’t
ask for raises and also maybe it’s why there are some people who would rather
opt out then subject yourself to this horrible anxiety we’re not even making
that much money and no one cares about you we’ll get back to our interview with
Ellen rupal she’ll in just a minute boy we’re talking about work what’s
going on in your career need some help need some negotiating tactics give us a
holler Jill at Jill on and don’t
forget you can go to jail on any time and sign up for our free weekly
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more great personal finance content your back it’s Jill on money if you have a
financial question if you have a comment if you have some ideas to help other
listeners help take control of their financial lives give us a shout our
email address is ask Jill at Jill on ask Jill at Jill on
all right so we’re gonna get back to our interview with Ellen ripple she’ll in
just a minute she’s written a book called the job worked and it’s future in
a time of radical change and I love this part of the interview because we talked
about the difference between a job and a career that is something that always
kind of interested me that some people just like a job some people say I want a
career what’s the difference we turn to Ellen ripple she’ll for the answer do
you feel like there is some difference between when you say a job versus a
career and what is this like weird pornography about working till you know
midnight and you know you tell the story of the young investment banker barfing
into his trash can I mean what is that yeah well there’s a you know there’s a
long history of that of course and you know people who in the 50s you know the
organization man it’s a it’s a long history of people overworking but to get
back to your to your question about career versus job I mean I obviously
today that’s a pretty artificial distinction it’s really hard to know
what constitutes a career versus what constitutes a job I mean obviously
so-called careers are elevated in the public mind the idea that you’ve got
even a vocation you’ve got a a some with a lot of status you know and a lot
of what we used to think of as just jobs now have fancy titles and they’ve been
elevated to careers but again that’s kind of a way to con people into
thinking they should work longer hours or not being paid hourly right there
moon paid salaries not wages right and so all that says okay now we pretty much
own you you know night and day of course with you know cellphone access and
Internet access 24/7 today it would be pretty high status to have a job and
actually be able to control your time and say you know what it’s five o’clock
I’m going home and I’m unplugging that I think would be great if that became high
status you know the idea that you actually control your time your employer
does not control your time the idea that you are available 24/7 to employer now
actually has high status I think lots of us have friends who say you know I’m too
busy I can’t I can’t do this I can’t do that with you I’m busy all the time
and what does that mean that means that that person is needed by their employer
right they’re essential to their job in their mind right that’s the idea and
that becomes high status one of the things I have a Kate in the book is to
rethink that calculation is that really high status or is that a kind of slavery
totally madly and ready like did like the way that you basically compare like
piecemeal workers with an adjunct professor which I loved and also by the
way we we see that in journalism all the time you know I’ll pay you by the word
or I’ll do this or you know you know there are certain parts of news
organizations that are unionized and there are strict rules around that but
all the new technology and all the online outlets there’s no Union there
there’s no one saying this is insane we cannot have people here 14 hours we just
can’t I mean there really has to be a national emergency that we’re covering
to do that right sure you know we get it that if there were an
emergency people would respond but not every day is an emergency and that’s so
well put Jill that every day now has become an emergency everything is and
you know with exclamation points it’s it must be done now the idea that
everything is so on and everything is like open-heart
surgery right when basically oftentimes just to get a product out or get some
software done or things like that and we’ve been we actually been conned into
thinking that this is really important stuff and one of the things I talk about
in the book is this so called what I call the passion paradox this idea that
we should feel passionate about our work in the book I talk about an outtake from
the TV show girls which is so funny because the heroine of that story Lena
Dunham plays that role she had just graduated from college and she was
trying to get a job in New York City and she’d applied for a job frosting
cupcakes and she was turned down for this job and she went very nicely and
she went to the manager of the cupcake store and said why did you turn me down
from this job I’m a college graduate I could do this job and he said well you
know let me give you a little insight here you didn’t feel passionate about
frosting cupcakes show passion about this now this was a joke obviously but
it also reflects a reality a lot of kids and her generation of how they were
feeling how do you go to a job interview you have to show passion you have to
show a total investment in the goals of your employer you have to put aside your
own goals and invest or at least show that you’re investing the goals of the
employer you have to create this emotional chemistry with your employer
to show that you’re in with the corporate culture so you’re not just you
know sharing your skills and your talents which of course is great on the
job all this emotional energy you’re putting into your job so that made me
reflect on those letters I’ve gotten in response to that little Atlantic you
know say those young people saying I’m so unhappy I’m so miserable the reason
is is because say one one guy was an accountant and he’s expected to invest
his body and his soul and being an accountant when being accountant can be
very interesting it can be a you know a well paid job it can be you know a great
job but the idea that it should be his whole life and he should feel feel
passionate about it it’s pretty unrealistic and then you have that weird
thing where people are Mining themselves and their passion by
their work and then they have nothing else and I know many people who leave
these high-powered jobs and they are on board without the work it’s very strange
actually you know I know that there are people who have plenty of money and they
don’t have to work ever again so I sort of think well they’re leaving the
workforce so time to do some good or go teach some kids or go be I don’t know
volunteer or have some fun and then they jump right back into them one of those
disgusting environments that they just complained about for 25-30 years why are
they doing that again one of these young people wrote me the idea that you’re
doing something for its own sake has really become discredited you know the
idea that you’re just doing something because you love it you enjoy it it’s
not necessarily productive in the sense of what we think of as productive it’s
just something that you enjoy and you feel fulfilled by that’s kind of
denigrated but this whole dissatisfaction with our work lives this
is almost at every level right and there’s some weird thing that’s like can
the consistency of this is it’s or the young people yeah it’s for the older
people it’s for the rich people it’s for the poorer people and it’s for everyone
in between it’s the hollowed out middle class and maybe they’re not even middle
anymore maybe they’re low but it seems consistent it is there’s a myth that for
example this I didn’t know this before I began this project that that factory
workers are miserable and in fact when you really look at it people working in
factories were not miserable and why you know it seems to some of us I think it
would seem like very tedious work well again they don’t go to work for novelty
they don’t go to work you know to be challenged every day they go to work for
things like kinship they want to show up at the factory and see their friend
Frank and their friend Susan and have lunch and talk about the grandkids and
and kind of be there they want a place to go and be they also feel like they’re
doing something that’s constructive so if you work in a factory you can
actually see hey this product actually came out so in fact in the 1950s and 60s
when people working in factories job satisfaction was actually higher than it
is today people are not saying they’re dissatisfied with their jobs now they’re
saying they’re not satisfied with their jobs right okay they’re not it’s not
it’s not making them happy right it’s not that they’re miserable I
know this sounds funny but they’re just not it’s not making them happy whereas
in the fifties in the 60s and 70s when people were working in factories a lot
of people actually found real contentment in their job situation and
of course they had wages that supported them where they could have a
middle-class life you know maybe they were making in today’s dollars 25 or 30
bucks an hour yes and they had lives and they had rich lives and families and
they had unions protecting them but all these different fraying of the labor
market has left people exposed and kind of on their own okay we will be turn to
our interview with Ellen rupal she’ll in just a minute hey have you checked out
our new podcast he’s not really new it’s just renamed it’s called Jill on money
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cheese all over the place go to jail on
to find it all now back to the show with Jill Schlesinger you’re back its Jill on
money if you got a financial question we’d love to hear from you our email
address is ask Jill at Jill on today we are talking about the job
market and really the state of jobs generally in America we’ve got a
fantastic guest her name is Ellen ripple she’ll and the book that she has written
is called the job work and its future in a time of radical change and boy there
is a lot of change for a while we thought that at least in the recovery
period a lot of the jobs that people were gaining ground where they were the
high the high end jobs right the you need a technical career sorry a
technical credential now we are seeing a lot of job growth at the lower end so
here’s more of our interview with Ellen ripple she’ll the digital age capitalism
threatens digitally democracy by polarizing employment opportunities
adding a few more jobs at the top and many more jobs at the bottom I think
people would be very shocked to read some of the statistics in this book
specifically that all this growth in an expansion in the job market has actually
been are not all of it but most of it at the low end absolutely in fact until
about 2000 jobs were requiring more and more skills
since 2000 it’s been almost 20 years now people don’t realize this a lot of I
didn’t anyway jobs are becoming more and more d skilled so we actually have a
smaller small growth in jobs at the very top you know jobs that require multiple
degrees you know very sophisticated you know education and background but the
blar gist growth and jobs are the lowest skilled jobs what we now call the lowest
skilled jobs in fact the fastest growing job category in America right now in
terms of share numbers is home health care aid okay so one of the things I
think about though as someone you know with elderly parents as G wouldn’t I
love it if home health care aides were highly skilled yeah and well compensated
and since that is such a huge and growing job category in the United
States maybe we ought to rethink that we all want excellent care for our loved
ones okay there’s no question and for ourselves I mean we all want that there
should be a very very high priority but the people who do this work also can and
often do love this work we get in the way of their loving their work this is
something that they find very meaningful that they really enjoy they feel like
healers they want to be doing this work and yet their jobs are very precarious
uncertain many of them are contract workers they’re exploited we could
change that we could change that by offering certificates and some of the
studies I’ve read on this if you offer certificates and training to home health
care workers health care costs go down because a very well-trained home health
care worker can see problems coming down the road and prevent them or alert
medical authorities and these things are happening so actually this is a
money-saving proposition if we work it into things
like Medicare and health care costs some people I’ve talked to said well look
someone’s got to be at the bottom of the you know pecking order and medical and I
and I’m saying well can’t we at least elevate it to a good job they can do an
amazing amount of good a lot of people move on from health care aid as soon as
they can as soon as they’ve gotten all that experience not because they don’t
love the job but because it doesn’t pay enough and it’s not stable enough okay
they’ve accumulated say 10 years of experience are now expert home health
care aid people can’t we incentivize them to stay in the field it’s good for
all of us it’s a money saving long-term perspective and again this whole notion
of status around work and what constitutes status I mean we really need
to think about that here we’ll you know some app designer
who’s who’s designing some app that none of us need or even you know well you’re
married I mean look everyone needs a dating app but there are good day
now I know they’re competing with each other for things that already exist
rather than creating something new people want to end it want to innovate
something new fantastic but when people are at each other’s throats to try and
make an incremental improvement or oftentimes just make it seem like
there’s a slightly improved product we value that so much over the things that
we really need there is tons of work to be done in America okay
tons of work an important work and we just have to make sure it gets done and
incentivize people to do it who want to do it so this is not a prescriptive book
but there are some things that you go into and I’d love to talk to you a
little bit about education because you are representing all of collegiate
education right now in this moment okay and my colleagues I’m so happy about
this especially when we find out that since
2000 the wage gap between workers with at least a college degree and those with
only a high school degree has slowed to a halt yes
so is college worth it oh good question I think college is worth it for a
certain kind of person okay look if you’re a person who loves ideas and
wants to pursue them and just loves the life of the mind and you can get a good
scholarship fantastic and go for it enjoy it if you’re a person who is
looking for the kind of career like a dentist that requires you know the
credential of an undergraduate degree and then graduate work of course I think
that people have to be very careful when they think about college for their
children and like the person in the young person themselves has to think
very carefully about what do I want to get out of college I see a lot of
college students and I teach a lot of students who who they’re they’re coming
in and I’m not sure why they’re there they’re not necessarily interested in
the life of the mind there they’re really not interested in ideas they
think they’re going to get credentialed by going to college right because I have
to do this to get a job I have to do this to get a job you know even going
into the next 25 years only 25 percent of jobs will require a college degree
okay that’s that’s really true that’s a fact mm-hmm even among those jobs a lot
of them again this is a matter of credentialing you’re not actually using
your college education in that job so I’m a
huge fan of Education I mean huge obviously I work in the industry I
encourage everyone who can afford it and wants to pursue it
or can get help to do it I think we as a nation need to help everyone who can’t
afford it to do it but it is not for everyone advanced education is not for
and they don’t enjoy it they don’t benefit by it it’s incredibly costly so
people need other alternatives and they need to be encouraged so one of the
things that I’m thinking about is offering people opportunities on the
basis of their skills rather than the credentials you know if you have a BA
from some university you majored and you know something that is totally unrelated
to the job at hand why should that advantage you over someone who say has
an excellent high school record and has actually worked summers okay it’s it’s
really unclear that that should really be an advantage some people say well if
you’ve had 40 more years you’re four years older you’ve gone through the
school you know you’ve had all these experiences yeah but it doesn’t really
necessarily relate to the job well thanks so much to Ellen ripple she’ll if
you’ve got a question about your job or your career and anything else in between
that’s financial let us know our email address is ask Jill at Jill on
we’ll be right back Twitter Instagram Facebook YouTube
cheese all over the place go to jail on to find it all now back to the
show with Jill Schlesinger where’s that guy live who does our voice oh he’s a
Chicago dude I gotta go meet him I gotta get to Chicago now’s the time of year
I’ve got this very narrow window of opportunity you know cuz too cold I love
Chicago I do love that city but I am too wimpy for that mm-hmm
no thank you you’re listening to Jill on money with your wimp host Jill
Schlesinger certified financial planner CBS News business analyst and your pal
your friend will help you figure out the mysteries of your financial life if you
have a question I’d love to hear from you our email address is ask Jill at
Jill on ask Jill at Jill on okay now
let’s get to some questions here this is from Martin who is saying the following
my wife and I are 82 and 87 respectively our home is worth 2 million bucks
mortgage free like that we have an annual income of $50,000 it’s comprised
of social security interests and a small annuity
we have $100,000 in liquid assets half in equities and mutual funds the balance
in a money market finally we have a bit more than $300,000 in three years CDs
paying 3% we can withdraw partially or fully any time without penalty receiving
all the accumulated interest we have a four hundred forty five thousand dollar
life insurance policy payable to our two sons upon the last of us to die that
would be called a second to die policy our entire estate will be left to our
family including 10% for each of our two granddaughters my ultra-conservative
stance is due to our advanced ages an apprehensive apprehension about what
lies ahead given he’s talking about giving like
what’s going on in the world your thoughts comments advice if any
would be greatly appreciated well I mean first of all it seems like just a fine
plan you are obviously cash house rich so relative to the value of your overall
estate you don’t have a ton of liquidity and in cases like that so when I talk
about that gang here’s what I’m talking about so you think two million dollars I
got a house but what’s actually available to this couple is much less
than that you know two million dollars so that there’s a hundred three hundred
okay so there’s four hundred thousand dollars liquid in a two and a half
million dollar estate basically and I wish it were flipped the other way right
I wish it was $400,000 in the house and two million dollars in money saved but
it’s not so relatively speaking it’s not the worst case scenario because you
don’t you’re you’re you’re seem to be living on your annual income now here’s
something to consider that if you needed to dip into this money in a more
significant way what would happen in other words if one of you were to get
sick what would you do and in that case I think there’s a couple of things that
you might want to consider the money and the insurance policy there’s probably a
cash value in there I presume you could probably borrow against that if you had
to you even could probably get a reverse mortgage if you had to but I wouldn’t
necessarily do anything like this unless you had the guidance of a fee-only
fiduciary financial adviser meaning I wouldn’t have any broker salesperson or
anyone touch this I would only have somebody who would look at your overall
situation and determine again this is only if something bad were to happen and
maybe you want to do it now just in case you want to know why quits the break
break the glass scenario what you would do
and in this case this is when you would seek somebody who is from an app’s
emember essentially somebody who is putting your best interest first no
matter what this would be incredibly important to me so that’s kind of how I
would look at that now on the other end of the spectrum here’s a fun thing
Parker’s a longtime listener of the podcast recently got engaged and says
I’ve been looking for online resources regarding combining finances with a
significant other and I haven’t been able to find much on the topic would you
discuss this on your show it’s pertinent given wedding season and it’s
approaching that is approaching okay so you know what I’m gonna do I think I
should probably write something about that what do you think mark should we do
a little wedding planning financial planning couples and all that kind of
stuff let’s do that I’m gonna do that Parker and hopefully get my button gear
and do it quickly cuz you know you’re right summertime I just got my save the
date for my nephew’s wedding and we have a godson’s wedding so I’m gonna get on
that and make sure I get it out there and we’ll talk about it on the show
how’s that I like separate you know me I like I like separate and then us and
then I like depends where you are in your life but I like keeping separate
accounts especially if you’re both working and then I like having one joint
account that pays the joint bills but it’s whatever you want
of course right that’s the thing that I think is important that you talk about
it and so part of a loving money kind of article and a marriage article is having
these difficult conversations and you know that’s something I talk about in
the book it’s just like we’re so weird we don’t talk about this stuff enough
although I think that Millennials are different you see all those surveys that
say like Millennials say I’m not I don’t want to date anyone who has any debt or
bad credit scar that’s pretty tough that’s some tough love there all right
you’re listening to Jill on money before we finish out the show we’re gonna do a
couple more emails so stay tuned during the break head on over to Jill on there you can sign up for our free weekly newsletter so go check it
out Jill on money we’ll be right back your back it’s Jill on money and before
we finish off the program just a friendly reminder that we’ve got a
sister show it’s a podcast same name Jill on money and you can get it on
Apple stitcher radio comm Google Play anywhere else you find your favorite
podcasts so check it out Jill on Monday the podcast Dan writes
that his godfather lives down in Fort Lauderdale and he recently attended a
series of conferences and there he was introduced to life insurance retirement
planning lerp el IRP and the book the power of zero by David McKnight my
godfather was talking to me about how the presenters at the conference were
quite smart and mentioned the future mentioned the future where there will
likely be higher tax brackets and this was similar to what Edie slot said on
your tax season tips episode their recommendation meaning the people who at
this conference down in Fort Lauderdale was to take some of my Godfather’s
stocks which had grown quite large over time and invest them into a universal
life insurance product in order to avoid taxes when passing these on to his
nephews the whole concept didn’t pass the smell test to me but I don’t know
what your where where you come from on this do you have any idea about these
people down in Fort Lauderdale okay so you know I had David McKnight on the
show who wrote that book the power of zero and I and and I agree with him and
Edie slot that it is likely that tax rates will rise however I’m not entirely
sure that I would be interested in putting all of this money of accumulated
gains into and insurance product so this is where I will diverge
from this advice so let’s say you believe that tax brackets are rising
sure go ahead and pay the tax that’s due today but why
would I then put it into an insurance product and lose my liquidity I don’t
know if I would do that anyway I’m happy to talk to you more
I would tell your Godfather to avoid this you have been listening to Jill on
money and we have been broadcasting live from the policy genius studios in New
York policy genius is the easy way to compare and buy insurance go check out
policy I am Jill Schlesinger he is Mark tiller
CEO and we will see you next week thanks for listening you

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