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Jill Schlesinger: 'What Are You Going to Do With Your Life?'

The popular personal finance expert and author discusses the importance of planning for the worst, smart Social Security-claiming strategies, and why employees should be proactive in the current labor market.

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Our guest on the podcast today is Jill Schlesinger. Jill is a business analyst for CBS News and comments on the economy, investing, and personal finance for CBS television and radio programs. She also hosts the popular "Jill on Money" podcast and writes the nationally syndicated "Jill on Money" column for Tribune Media Services. Jill's first book, The Dumb Things Smart People Do With Their Money was published in 2019. She has received numerous awards over her career, including an Emmy Award for her work on CBS Sunday Morning. Jill is a certified financial planner and spent 14 years as the co-owner of and chief investment officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York following her graduation from Brown University.

Background

Bio

Jill on Money

The Dumb Things Smart People Do With Their Money: Thirteen Ways to Right Your Financial Wrongs, by Jill Schlesinger

Current Market

Coronavirus: Emergency Reserves,” Jill on Money podcast, jillonmoney.com.

Jill on Money: ‘New Normal’ Raises Financial Questions,” by Jill Schlesinger, mercurynews.com, Aug. 24, 2020.

CBS News Business Analyst Jill Schlesinger Discusses Inflation and the Housing Market,” by Grace Segers, cbsnews.com, June 4, 2021.

How to Fight Inflation,” by Jill Schlesinger, jillonmoney.com.

Fall Housing: From Boiling Over to Just Hot,” by Jill Schlesinger, jillonmoney.com.

Inflation on Hot Housing,” Jill on Money podcast, jillonmoney.com, Jan. 13, 2022.

Real Estate Conundrum: No Houses,” by Jill Schlesinger, jillonmoney.com.

Retirement

How to Avoid the Retirement Freak-Out,” by Jill Schlesinger, nextave.org, Feb. 14, 2019.

At 67, Is My 80/20 Portfolio Too Risky?” Jill on Money podcast, jillonmoney.com, Nov. 23, 2021.

Jill on Money: Thinking About Joining the Great Resignation?” by Jill Schlesinger, mercurynews.com, Aug. 16, 2021.

Should FINE Replace FIRE?” by Jill Schlesinger, jillonmoney.com.

Transcript

Christine Benz: Hi, and welcome to The Long View. I'm Christine Benz, director of personal finance and retirement planning for Morningstar.

Jeff Ptak: And I'm Jeff Ptak, chief ratings officer for Morningstar Research Services.

Benz: Our guest on the podcast today is Jill Schlesinger. Jill is a business analyst for CBS News and comments on the economy, investing, and personal finance for CBS television and radio programs. She also hosts the popular "Jill on Money" podcast and writes the nationally syndicated "Jill on Money" column for Tribune Media Services. Jill's first book, The Dumb Things Smart People Do With Their Money was published in 2019. She has received numerous awards over her career, including an Emmy Award for her work on CBS Sunday Morning. Jill is a certified financial planner and spent 14 years as the co-owner of and chief investment officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York following her graduation from Brown University.

Jill, welcome to The Long View.

Jill Schlesinger: Great to be with you.

Benz: Well, it's great to have you here. We wanted to start out by talking about all these new investors who have been pouring into the market. I think there's a lot to like about the fact that we've got new investors moving in. But do you worry that for this new group that things just might not turn out particularly well for some of these folks?

Schlesinger: I worry about that for everybody. I'm a Jew from New York, I worry about everything all the time. So, no doubt that there is worry. But I worry for older investors, experienced investors, young investors, mostly because investing can be so, so emotional, and it can be something that really does take your breath away. And so, I'm not actively worrying. I'm not losing sleep over it. And one of the greatest things about becoming an investor is learning how to endure some of the ups and the downs. My dad was a trader for many years. And he would say to me, “You know why they say you're a seasoned investor.” And I'd say, “Yeah, that means you have experience.” And he said, “Well you know how they season a piece of meat--you pound it with a mallet.” You have to get the pounding of a mallet to become a seasoned investor, metaphorically.

Benz: Yeah.

Ptak: A lot of big investment firms are cautioning investors to be prepared for a period of muted returns from stocks and bonds over the next decade or so. How do you think investors should incorporate that sort of information into their plans, if at all?

Schlesinger: Not at all. I just think it's nonsense. We're not in the business of trying to outguess when there's going to be an up market or a down market. We sort of all know. I think it's like the Morningstar mantra as well, which is no one really can time the market with any accuracy over time. So, I don't think you should be worrying about where the next up or down 10% or even 20% is going to be, especially if you think that's going to happen in the next year or even two years. But if you're a long-term investor, you've got more than 10 years, then I think you just ignore it. It's a lot of noise. It really is. And it can totally take your eye off the ball.

I think it's wonderful that all these big-wire houses still think that we care what they say, and maybe some people do. I just don't, and it's almost like they're yammering away when deep down everyone knows all they want is there to be some volatile action, up or down--it creates a lot of money for them. And frankly, I think it's just a silly, silly game to play to just guess where you think the market is going. You're not going to figure it out. It's just going to go where it's going to go over the long term. What we know is you will likely make money with a diversified portfolio of low-cost index funds if you save enough, stick to it over time, and don't mess around.

Benz: So, I'm curious, as someone who is employed in media, how do you thread that needle where you want to deliver sober advice and say what you just said, but it seems like there might be some pressure potentially to talk up volatility and get people scared? How have you navigated that over your career where maybe your bosses have said, “We've really got to talk about this sexy topic that you don't necessarily think is great for end investors”?

Schlesinger: Well, first of all, I have to be honest with you, I'm just not from the media world; I'm from the investment world. And so, I come at it very differently. What I do is I tell them exactly what I think. And I won't do certain things if they think that we should do it and I don't think we should, then I usually convince them, and they trust me. And that's the wonderful thing about being at a place for a long time.

And frankly, at CBS News, we have a very broad audience. We do not have the audience of people who want to know what is the next move going to be in markets. What we have is an audience that wants to know how do movements impact me? So, I think I'm blessed because I work for a great organization that trusts me. So, when the market falls out of bed, that I can very calmly go on the air and say, “OK, this sucks; this is bad; it doesn't feel good. I get it.” But your job is to hold those emotions in check and really try to ride this out.

And I think that this started when I first joined CBS in the beginning of 2009. So, it was still pretty bad news coming out of the financial crisis--there was a recession, the Great Recession, markets were turning upside down. And at the time, the guy who was running the news division said to me, “I think you really ought to tell people like how bad it's going to get.” I said, “OK, tell me how bad is it going to get? I don't know.” And there's a certain amount of candor that I have that it's just like, I don't know. I know that over the long term these things do work themselves out. It was a lot easier for me to go on the air every single day in the spring of 2020 when markets were rolling over and say, “We've been here before; you know what I'm going to say.” And Gayle King just pokes at me, and she says, “I know what you're going to say. You're going to say, ‘hold on,’ but it's hard for some people.” And I said, “OK, let me tell you why you're going to hold on.” And I think that people are really smart. They know if you give them context, that they don't have to be reactive. And that's been a really great thing to see in our audience.

Ptak: As a financial educator you know it can be tough to sell young investors on the merits of things like target-date funds and broad market index funds. Have you hit on any effective ways to talk to people about the advantages of getting started with dollar-cost averaging and these types of boring but really effective building blocks?

Schlesinger: I think that it's OK to allow people to dip their toes in the water of the more esoteric stuff and riskier stuff. I think that's how you learn. I grew up on Wall Street. I was an options trader. I traded gold, silver, and copper options. I know what the dopamine hit feels like when you hit it, and it feels great. So, what I try to explain to people is, why don't you experiment with a teeny portion of your overall. And so, do the real money, use your index funds, use retirement funds, use your target-date funds, get that going. Prove to me that you've earned the ability and the discipline to do that. This is true, kind of my mantra: cover your big three--tell me that you've got your emergency reserve fund of six to 12 months of your living expenses; tell me you've paid down your consumer debt and also probably a good chunk of your student loan debt; and then tell me you're maximizing your retirement account. Then you want to open a fun money account, you want to buy some crypto, you want to go nutty and buy some meme stocks, sure. But just know that the money that you put into that fun money account is the money that you would put into any fun entertainment endeavor that you would be willing to lose.

Benz: So, speaking of that three-prong approach, which you urge people to focus on: wiping out credit card debt, focus on funding their retirement accounts, building that emergency fund. Most recently, I noticed that you were telling people to really focus on the emergency fund piece. Why is that? Is there something about this particular environment that makes you think that having liquid reserves maybe more than usual would make sense?

Schlesinger: Remember the earlier comment that I always think like the worst is going to happen that I'm a worrywart?

Benz: Right.

Schlesinger: This is something that is sort of in my DNA. But I think there's an interesting timing issue that is helpful. And that is, before we had a once-in-a-century pandemic, I would talk about an emergency reserve fund and say, “You never know what's going to happen.” And it was kind of a nod toward was you could lose your job or something, you could get injured, and you'd lose income for some reason, and you'd want an emergency reserve fund. And I think that after going through what we've gone through in the last couple of years, I think people are more attuned to the idea that weird stuff can happen from out of the blue, and the people who have an emergency reserve fund, those that had six to 12 months of their living expenses socked away in, yes, a boring, barely interest-bearing account, they seem to be a lot calmer amid a crazy time. Even those folks who were already retired who had even more than that one year that was set aside, maybe it was even two years, they were able to weather the emotional disruption that you feel when bad things happen, knowing that I don't have to go into my account, sell anything because I have to pay the electric bill. So, I do think that I used to say I treat all three equally. I'm nudging toward emergency reserve fund because I think that it is something that gives people great comfort, and it can prevent you from doing something stupid.

Benz: I noticed that you said six to 12 months' worth of living expenses. I think some people may have heard three to six months. Can you talk about how that seems so daunting for young investors, I think, who are barely getting by and then to talk about having like a year's worth of income saved or cash flow-need saved, it just seems like a lot?

Schlesinger: I think that it may be a lot and may not be necessary. And if you have two young people who were teachers, and they are a couple, and they have very consistent cash flow, maybe the six months is just fine. But if you had two contract workers, one gig worker who is doing graphic design with somebody, or even just alone, and has inconsistent income, then I think you do have to be a little bit more careful. So, the range is a range. I hate rules of thumb. Everybody knows that I get very petulant when it comes to giving rules of thumb. That one is a rule of thumb because it's just easy to say, but everyone's situation is different, obviously. So, if Christine has this great job, totally secure, knows that if anything bad happened, there are parents there to help you out. Yeah, maybe. But I still think it is very good practice, best procedure, to consider like when you're looking at investing. Before you start going crazy investing, you really do have to have some safety net. And the next time we go into a recession, I'm going to guess--I could be wrong--but I'm going to guess that you're not going to get rounds of stimulus and extra unemployment benefits to help you out.

And so, when you consider how to build a financial foundation, having an ample emergency reserve fund has to be the critical aspect of this. And it's not sexy. It's like saying, do you know how many people at work I know, who are incredibly bright people, who just will not get their acts together to do their estate planning. And I cannot for the life of me figure out--do they think they're not going to die? Is this their secret maybe? And it's not these meat-and-potatoes aspects of financial wherewithal and wellness. To me, I'd rather talk about that all day long than talk about investments, which I find as someone who is an investment professional from, a very small child, from learning this from the beginning, that I just find that incredibly boring, and it's actually very easy to be a good investor. Again, you just have a well-diversified portfolio, you buy index funds, you put it on autopilot, and you save a bunch of money. It's not that much harder than that.

Ptak: You mentioned that you're a worrywart by nature. I think a worry for many now is inflation, which has surged over the past year. If people are concerned about higher inflation, what steps do you think they should take to protect their financial plans and their portfolios?

Schlesinger: Well, I think the first thing that's really interesting to me is that everybody says, “oh, inflation, inflation, inflation.” Now you bring this up two years ago when we were sub-2% inflation, and I loved it when people would tell me about their retirement plans. I'm like, “What inflation rate did you use, just out of curiosity?” And people would say “1.5%, 2%.” OK, fine.

So, I think the first thing to remember is that if you're creating a financial plan, which everybody should be, that I always plug in the higher-than-anticipated inflation rate and the lower-than-expected investment return. And then you can really start to test whether your plan holds up or not. Now, do I think that we're going to have 7% inflation for the next 30 years? No, I do not. Do I think it is possible that we go from a 2% to a 7% but only get back to maybe 2.75% or 3%? Yeah, we could be in a higher inflationary environment longer than anybody would like to think about.

Traditionally, when you look at inflation in general, stocks do start to roll over a little bit in the beginning, but they don't do so badly in an inflationary environment. So, I still like stocks. I do like shortening the duration of bonds. Having hard assets is not a terrible thing. So, having a REIT or having a little commodity fund might be a decent way to do it. But I wouldn't go crazy either. I don't think that when you're in an inflationary environment, and we're seeing a surge like we are right now, I do think that the most interesting part is that we have a lot of people who have never seen inflation. And that goes for a number of people who are managing money, this is the younger people. I think it's fair to say that anyone who is under the age of 40 has never really seen any sustained inflation. And so, this is really spooky to them, and I get it. But I also want to be clear that we have a Federal Reserve whose job is to maintain price stability and also full employment. And it might have taken them a little bit longer than I would have liked, but they seem to be coming around to the idea that this inflationary pop needs some attention, and they're going to take care of it. It's not going to be fun, and they may overshoot it. But I wouldn't go too nuts trying to prepare for 7% inflation for the next 30 years, because I just don't think that's going to happen. You could throw a little I Bond money in, and you could have some TIPS--although you're probably late to the TIP market--but I Bonds are not paying a decent number right now. It's only $10,000 a year, but it's not a bad thing to just park some money there.

Benz: So, speaking of inflation, home prices have been inflating really rapidly in some markets, and that seems to be largely because there's a supply shortage. So, how would you urge homebuyers to proceed in such an environment so that they're not locking in a home purchase at what in hindsight was an inflated price?

Schlesinger: I think back to people who bought homes in 2005 and 2006--'04, '05, '06--and the housing bubble was really inflating then. And if they were buying for the long term, and it made sense, it doesn't feel good to be like, “Oh, I've just bought the top.” But years later, winds its way down, and you're no longer buying the top. And now, we have a housing price surge, which kind of tops where we were beyond that time. I guess, in my heart of hearts, number one, even though I own two dwellings, I hate being an owner. So, I really like to encourage people to continue to rent if they feel comfortable renting. And I also just would say that if the numbers work for you, and you can do this, then great, do it. I wouldn't stretch. In this kind of an environment what's great to do is to look at it from the other perspective, which is I own a home, I'd really like to downsize, I'd really like to go somewhere else. Is that an opportunity? Rolling down is a much more interesting prospect than rolling up. But if the numbers work, and you're going to be in a house for a long time, then buy your house. And don't worry if the prices are high right this second and don't worry that mortgage rates are a 0.5 point higher than they were six weeks ago. If the numbers work for you, if you're secure in your earning power, if you haven't committed too much of your money to this endeavor called buying a home, then go for it.

Ptak: What about pay down of a mortgage? That's an evergreen question that we get whether to pay down a mortgage or invest in the market? How would you suggest that people arrive at the answer that makes sense for them?

Schlesinger: It's so funny, because I think it's one of the huge questions that I get asked all the time on the pod. I would say paying down mortgage and Roth conversions are my top two questions that we get at Jill on Money. It's funny. If you've got piles and piles of money that is sitting in cash, and you're really not doing anything with it, and you're not going to deplete your entire emergency reserve fund by paying off your 3.5% 30-year mortgage and there's six years left, then fine, go for it.

What I think is more troubling for me is that a lot of people who are in the position of wanting to pay down their mortgages would be doing so at their own peril. And what they would be doing is they'd be soaking up and taking all the liquidity that they have. So, maybe they've got a brokerage account or some money in cash, and they would be willing to just basically take that down to almost zero, pay down the mortgage, and then they leave themselves with very little emergency reserve. And this is often a question I'll get asked by people who were contemplating retirement a few years out from retirement. And I'd say, whoa, whoa, whoa, before you just take all that gorgeous liquidity that's sitting there, all that money, you have to understand that in five years paying down the mortgage may feel good today, but if something bad happens, now you're forced to then invade a retirement account and pay taxes when you may not want to. And so, I think it's really case by case.

Generally speaking, it's not something that I love that most people would do. But if you're fortunate enough to be in a position where it's really not going to undo any of the great planning you have already accomplished, and you can take the money and say, “I was lucky,” or “I got a windfall, and I can use it.” And it may not be financially the smartest move because I do understand--I wrote a whole book about the dumb things smart people do with their money. And I do understand the emotions that surround the idea of carrying debt. But I would just caution people that if you are going to be depleting money that you may need as a cushion in the future, it's something I would be very careful about doing.

Benz: Jill, you referenced people retiring, and earlier on you talked about this kind of seasoning that we get as investors, like getting hit by a mallet and how we tend to get more comfortable with risk. For many of us, the older we get, the longer we've been doing this. We know that, yes, stocks go down, then they come back up. So, a question is, for people getting close to retirement, does it concern you--you mentioned you're concerned about investors at all life stages--are you concerned about complacency about risk and equity-market risk among older adults who are maybe thinking about retiring within the next couple of years?

Schlesinger: I've just read that headline. I think it was in the journal about older Americans carrying too much risk into retirement and too many holding stocks. It totally depends on your comfort level. So, if you're complacent, this is obviously a problem. I don't really encounter this. I don't find that most people are complacent. I mostly find that people don't really understand how bonds work and are scared because they hear in the press like, “Bonds are the worst investments to own right now, because it's a rising interest-rate cycle.” And so, they're scared of bonds.

But let’s say I'm retiring. So, I'm in my late 50s, early 60s, and my partner and I are going to retire. And we've got a portfolio that's 80% risky stuff and 20% less-risky stuff. Now, I think that that would be more risk than I personally would want to carry. But if I'm comfortable with a risk, and if maybe I have pension, or I have other passive income, and I don't need to pull money out of the portfolio, and I'm really in good shape, and I can really withstand it, I'm OK with that. I think the fear is that we have short memories. Not this second, because I think it just happened two years ago. So, it's not so short. But it was fascinating for me. I was a money manager when the financial crisis hit. And I was a very wimpy money manager. And so, I think that clients did pretty well, relatively speaking, but they still freaked out. And then, all those years of bull markets made people kind of forget how freaked out they got.

So, maybe what I would say to people who are older and retiring is think “How did you feel for those five weeks where the S&P 500 lost a third of its value? If that happened right this second, would it absolutely make you nuts? Would it cause you to feel like you had to do something?” And then maybe try to try to tamper yourself. But retirement is a long time. It's a long time for a lot of people. And the people that I hear from, they're not retiring it their late 50s and their early 60s. It's not the FIRE movement. The FIRE movement of my generation that I feel like I speak to when I talk to the people who listen to our podcast and radio show, we've adapted it. No one is talking about retire early. They're talking about financial independence, new endeavor, or next endeavor. They want to be in a position where they are totally willing to work from age 55 to 70. They don't want to do what they're doing. And so, if you need to draw money down from your portfolio to help you with that next or new endeavor, if you need to pull money out of a portfolio to support you doing whatever your dream job is next, then you may want to consider pulling back the risk. But honest to God, I am like a misbalanced investor. It's my Achilles' heel. I should be much richer right now except I don't like risk.

Ptak: So, in addition to maybe recalibrating their exposure to risky assets, are there other risks that you think new retirees ought to be attentive to as they're entering retirement, which many, many people are? We've seen a wave of people retiring in recent years, and that's likely to continue just for demographic reasons. But I think the pandemic has probably accelerated some of those trends. So, what apart from recalibrating exposure to risky assets or other risks that you think they ought to focus on?

Schlesinger: I'm sure you're in this situation often where you're with a friend, and you start talking about someone who you know who's died young. You're like, “Oh my God, that friend, I can't believe she's died just 50 years old. I'll tell you what, when I'm retired, I'm not going to wait around to do stuff. I'm going to do it all. Like you never know what could happen next.” Which is true. However, the big mistake that I think people don't recognize in retirement is they spend way too much money early in their retirement. That, to me, is a huge risk because you're no longer earning income.

And so, when I talk to folks and I'm trying to give them advice, I say, OK, how much money do you need to spend? “Well, I need to spend $80,000 a year in retirement.” I'm like, great, that works. “But we'd really like to take two great, huge trips every year.” OK, how much is that? “Another $50,000.” Oh, wait a minute. $80,000 to $130,000 is a very different number. I think what I had seen is the desire for people to justify their decisions by saying “You never know what can happen.” And I get to be the total Debbie Downer, which I call myself the dream crusher sometimes. It's terrible. And then I say, OK, it is true, you don't know what's going to happen. But what is the other way? I got a 98-year-old mother-in-law, 98. You don't know how long you're going to live. And I'll tell you what, you soak up all that money in the first 10 years, let's call it from 60 to 70, living large, you could live another 20 years. And it's a similar conversation that I have with people about just helping their own kids out or paying for a college education you can't really afford. I said, imagine if you're 80 and you got to ask your kids for help. That's happening a lot now.

Benz: One of the best ways to make sure that your money lasts is to delay Social Security filing, especially if you think you're going to live a really long time. So, people really hate being told that they should do that. I don't know if you find that, but they do…

Schlesinger: Totally.

Benz: …in my experience. So, how should pre-retirees approach this decision about when to claim Social Security? Do you have any resources that you like to recommend, or should everyone delay? How should people get into this decision?

Schlesinger: Honestly, I had this fight with my father. So, it's very funny. My dad was a little bit of a math head--so he's dead now--but he was a trader most of his life, and that's a job that you don't really get to work as long as you want. You age out pretty quickly. And he wasn't a trader, the kind that makes gazillion dollars a year. He was a journeyman. He was a guy who traded because he wanted to go to all of our games. I want a control over my schedule, basically. And he lived a good life, and he had fun, and we had a great upper-class life outside of New York. It was awesome. But what was interesting, I think, is that as he got to be 62, he had had some health issues. And so, I said to him, “Maybe you should delay Social Security.” Because here I am a certified financial planner, like I run the numbers. He's like, “How long do I have to live to get the most? Tell me what's the number.” Because that's the old joke. You tell me when you're going to die, and I'll tell you when to claim.

Obviously, you can claim as early as 62. The annual benefit is higher for every year you wait until 70. So, that's the boring thing that we say. But people are like, “But I want the money now!” And so, it's this weird, delayed gratification thing. My father claimed early, and he died at 76. Now, it was probably a terrible decision anyway, because I really just wanted him to wait to full retirement age because my mother was going to claim on half of his record. But he wanted none of that, and he basically was so arrogant. He was like, “I can beat that 8% return.” I'm like, “Can you? I bet not.” And so, it was, I must say, like the gallows humor. When he knew he was definitely going downhill, I said, “I guess, you were right claiming at 62, Dad. You were right.” And he goes, “Yeah, I wish I wasn't right about that one.”

But it's a very hard thing, because I believe the Social Security system is so complex and all these claiming strategies are so complex, my God. And it's very difficult. So, not to toot anyone's horns, you guys are familiar with Mark Miller, he just wrote a beautiful article in the Times about great software for Social Security. But an easy place to start is ssa.gov. And you create your account, and there's an estimator there. But if you have a complex situation, to pay 50 or 80 bucks for a one-time fee to get some software, that would be great. And if you're working with a real financial planner, that should be folded into the services they provide. They should be helping you.

Ptak: Working longer, say, past the age of 65, has a lot of financial benefits. And there may be physical, mental health, and social benefits, too, but ageism is also a force to be reckoned with. And other issues can get in the way of someone's stated desire to work longer, for instance, their health. Do you have any advice for older adults who want to continue working longer?

Schlesinger: You guys are so funny because this is my hot-button issue. So, you just glommed on to it. If you listen to my show--so, I'm 56, and when someone my age calls up and talks about retirement, I'm like, “What are you going to do with your life?” I get very angry. It's like I really have great transference around this because I don't know what I would do with myself, and I really love what I do. And hello, I'm a white-collar, knowledge-based worker who can do 75% of my job from home and 25% of the time I go into a studio, and they do my hair and makeup, not exactly the hardest life in the world.

I think one of the things that I'm watching in this current labor market is how do the older cohort, what do they decide to do? You're right, there is great evidence that a lot of people who were over 55 left the labor force, but not all of them said I'm done for good. If we always think of the young gig worker as the under 35, I'm kind of excited to see whether that starts more for the over 55. If they're employed, I think a great thing to do is to talk to a boss and say, “You don't want to pay my full freight anymore, and I don't really need it. I really need benefits for another 10 years. But how about if I go as a part-timer, and here's what I think we should do.” I think that there are more companies and employers who are willing to try to figure out how to retain these people who are really valuable. They have all the institutional knowledge, but maybe not a full freight.

And so, I do think that yes, there is ageism, but, thankfully, in a tight labor market that has gone out the window. It's like some of the old tropes that I always laughed at in other times where things were tight. I remember after the Great Recession--oh, there's a skills mismatch. Remember that one? Oh, there's a skills mismatch. People don't have the skills we need. And I'm like, why don't you pay them and why don't you train them, and then they'll have the skills you need. Amazing. And what we're seeing in this current environment, where workers have leverage for the first time ever, is that they are learning that they can use it, and I think for older workers, this is going to be awesome. I think that people have to be a little more creative. And just because I like what I do all the time, doesn't mean I want to do it as much. I don't love waking up at 4 a.m. five days a week. And so, that's not great. But I could see doing this a long time and doing certain aspects of my job for a really long time.

And I think about it. Maybe the part of this that's really important to pound home is, you want to be thoughtful about these issues and be proactive. Maybe your boss isn't the most creative person in the world. Maybe you can be the one who says, “I have this idea, what do you think?” I think that that's a great way to arm yourself and think about what you really want. I'm scared when people are like, “I'm going to go move near my kids, because I can be close to the grandkids.” And then the grandkids are teenagers, and they don't want anything to do with anyone.

Benz: So, you referenced the fact that we've got this tight labor market. Workers have a ton of leverage. And I thought that was a great discussion of what older adults could do to be creative about their next steps. How about for younger workers? What sorts of things should they be asking their employers for at this juncture to take advantage of the fact that they're really holding the cards right now?

Schlesinger: It's so funny, because I think part of this really is hard for a younger person, because you don't have the confidence to say, “Well, inflation is running at 7% and I know I deserve more.” And there are certain industries that are already paying that. But I think what's important to remember is that you have to determine what you want. And when you're younger, sometimes you don't know. I think that the COVID era has accelerated the ideas of what we think we want. So, if it's more money, that's easy to ask for. Is it more flexibility? “I want to be able to work from home this many days a week.” Or is it, “I'm a parent, and I want to go to a four-day workweek.” Or “I know it couldn't go anywhere, and maybe you can't give me a 7% raise. But how about a 4% raise and another five days of vacation?”

So, I think that you have to have constructive conversations with your bosses. And it's funny to me that a lot of people just don't want to leave where they are. But there's so much research that leaving pays off. You get a better bump in pay if you leave. But maybe that doesn't matter to you. Maybe if you have the ability to craft a work life that is better for you and your family, you don't need as much money and you could be happier, or maybe you can thrive. So, I think it's having these conversations. Every boss, every company, totally understands what's at risk right now. And so, I think it's just having the courage to do it, doing your research, and knowing what you want.

Ptak: You mentioned that Roth conversions and paying down a mortgage are two of the more popular categories of questions that you get from consumers. What are some of the other biggies that you get most often from consumers that you hear from?

Schlesinger: I have a weird listening audience, because I have three shows: I have "Jill on Money" the podcast; I have "Jill on Money" the two-hour syndicated radio show for CBS; and then I have a ViacomCBS product called "Eye on Money." And each audience is slightly different. I think that most of the questions that I get are simply, “Am I on the right track? I'm a little bit nervous. I work with a broker or an advisor, and I'm not sure this is the right thing for me.” “Should I make this move?” “I inherited a home. We're living in it. It's great. My friend told me that I should get a mortgage and invest. Should I do that?” It's almost like they want to come to Aunt Jill, and say, what do you think? Is this OK? They want another set of ears and eyes on a situation. And I'm lucky enough. I have an executive producer who is also a certified financial planner. So, he got that designation after meeting me. And it's like a check-in.

And I had this show for a long time. I've been doing the radio show for 11 years, and it's really changed. It's interesting to me that people really are much more focused on what they can do to take control of their lives. They were much more willing to cede control to the big-wire house broker. I think now with more options, with cheaper options, I feel like people get the idea that, this investing thing, I know it's important, but it's all the other stuff too, and they need help on the other stuff. And there's just not enough affordable help on the other stuff for them out there. So, they come back to me, and they just want to know, what do you think?

Benz: So, speaking of getting advice, you're the senior CFP Board ambassador, and you have the CFP credentials. So, what are the signs that someone needs help from a professional financial advisor and shouldn't go the DIY route? Do you have any tips on how to know and also just how to find qualified advice because it almost seems like you actually need to know quite a lot to find a good financial advisor?

Schlesinger: So, let me just correct something that you said, which is, I was the former ambassador.

Benz: Got it.

Schlesinger: So, I no longer hold that title. I think there are lots of different kinds of people who need financial help. And if you are just looking for the investment of money, like, you worked at GE for 10 years, and there's $80,000 in your 401(k), and you don't know what to do with it, you rolled it over to an IRA rollover, and now you're going to go, I want someone to manage that. You don't need that. That's not worth paying for. Because you can go to any kind of investment platform like a Vanguard, or a robo-advisor, or a Schwab platform, and you can get that done automatically for you. So, there's plenty of options that are really affordable.

I think that people who tend to need help are people who have complicated lives, and the complications are such that it takes a lot to really focus on what you need to do. So, those are folks who might really benefit from working with a certified financial planner, a fiduciary, and those are people who should be looking around and trying to determine what is it I need help doing? Do I need a big financial plan? Should I go to the National Association of Personal Financial Advisors, which is napfa.org, and find like, what is it that you're seeking? Are you seeking someone to do a plan? If you want a plan only, there are types of advisors called fee-only planners. They will do a plan. They sometimes do it by the hour. They sometimes do a flat fee. And they're often folks who don't take any commissions for products. So, that's the kind of advisor you would find at NAPFA.

If you want to go to get a CFP, there is LetsMakeAPlan.org, and you can type in your zip code, and you can talk to people. But there are a lot of resources where you can get some advice along with money management. And that's why Vanguard and Schwab and Betterment and these companies that are really gathering assets first added financial advice, because they realized people needed financial advice. The thing is about the industry, it hasn't quite cracked the nut on how to provide advice to people who don't have a lot of money. And it's starting. I think there's some great resources out there. There's a company called Facet Wealth, there's XY Planning. There really are good folks out there, but it hasn't developed. And you'll know when things are really developing in a more robust way, when you start to hear that Robinhood is going to provide advice. I'm just kidding. They're not going to do it.

Ptak: What about paying for advice? You've already alluded to some of the different ways in which advice can be paid for. Do you have a view on what's the best way for consumers to pay for advice? And if the answer is, “It depends,” in your view, what does it depend on?

Schlesinger: I am somewhat fee-agnostic, I must say. I think it's clean to have a flat fee. But people don't like it, and that comes from experience. When I was a financial advisor and a money manager, we actually tried to do this. We tried to do a flat-fee pricing model. It was probably too early in the cycle because now it's probably 15 years ago. But it's tough for people to write checks. Now, I think it's a little bit better now. I do think that we have a generation of people that's used to paying monthly subscriptions all over the place. So, I think it's going to develop and become easier. But I think in general, this standard model of a “cost X percent of the money that I manage” is a model that's going to die eventually. It's not going to die yet. But that's a very classic model of how many financial planners, certified financial planners, charge.

So, Christine comes to me, she's got $1 million in her retirement account, she needs financial planning. And now, I can say to you, “You can pay us $10,000 a year; we'll just take 1% from your portfolio.” And you know what's crazy? People know the math. But they do like it. It's like, “Oh, just pull it from the portfolio.” What people are not so good at recognizing is that there's often more than that 1%--that sometimes it's 1.2%. And if it's less than a $1 million, it could be more like 2%. And there could be cost of funds that are inside the account that no one's really accounting for.

So, I think that as much as possible, you should have a relationship with someone where you feel very comfortable walking into the office and saying, “I would like a relationship with you, Ms. Advisor. Tell me exactly how you get paid.” And there should be no hemming and hawing. “Well, here's the cost. It's a flat fee of this, or it's this percentage of your portfolio. And by the way, for that, this is what we provide.” Oh, and one follow-up question is, “What about the cost of the funds that are inside of this account? Is that incorporated?” “No, that's extra. It's an extra blank percent.” But you've got to be armed with some information. I think most advisors really do want to disclose everything; it's just that they don't do it in a way that the potential client really gets it. And so, I'm still often surprised that there are people who contact us and really don't know how they're paying for the services that they are getting. So, that's a concern.

I guess it's weird. People still have some sort of embarrassment around it. Like there's a confrontation almost that maybe this is sort of hanging over them, and they feel like, “I kind of wish I knew that; I sort of remember, but I don't know.” It's OK. You're allowed to ask. It's your money. You're not going to a restaurant where you either have the prix fix menu and you know what that is. Or each item is itemized, and you know what it costs. It's impossible for people to feel comfortable about their decisions without understanding the cost of the services that they're paying for.

Benz: Right. I wanted to ask about spending. We know that Americans historically have been challenged on the savings front. But we've had author Ramit Sethi on the podcast a few times. And he made the point to us that the financial-services industry is so focused on getting people to save and sometimes that is to the detriment of them living their best lives. So, do you have any tips on how people can balance those two really important goals? So, living your best life and saving for the future?

Schlesinger: Absolutely. I completely agree with that. I think the idea of scarcity is not a wonderful one. And I'm not a big fan of diets, even though I'm a lifetime member of Weight Watchers from 100 years ago. I think that the way to do this is to make sure you have a plan that is reasonable that accounts for what your real life is. It's not a great thing for people to live their whole lives save, save, save, save, save. It's fine if that's how you're built. But you should factor in, like, what do you want to do? You shouldn't be miserly either. So, I think that in many ways, having a plan can be a relief, because I can say to somebody, “Based on these numbers, you can be spending this; don't worry, it's OK. And you don't have to do that.”

We had a woman who just called into the show. And she had talked about wanting to take a gap year. She was just fried. And we were talking through all the numbers and everything. And then, she called us back because she said, “You're not going to believe this. But I had a cancer diagnosis, and it was terrible.” She is just like 40-something years old, very young. And she said, “I really want to now, like, blow it out. I want to do something really great for like a year.” I said, “Great. Let's do it.” Who am I to say, you just had this horrible experience, let's figure out how to do it. So, you owe it to yourself to be able to do the plan that incorporates the life you want to live, and you can't be dopey about it: I want to spend $900,000 a year but I make $100,000 a year. It's not going to work. So, it has to be reasonable. And there are trade-offs for everything. I find that one of the more painful conversations I have with people is their continued support for their adult children. First of all, I don't have children. So, of course, I'm an expert. My next book: The Non-Parents' Guide to Parenting.

So, I find it hard because, obviously, I understand--I'm an aunt many times over and I understand that there is a desire to help kids. What I don't understand is the number of people who do two things really wrong. One is, they infantilize their adult children, and the other is, they put themselves at risk. Those two things freak me out. And so, if you tell me I can do all the things I want to do, oh, except I have to give my kid $25,000 a year because my grandkid has to go to camp. Well, you give that money--that $25,000 every year for the next seven years--it kind of blows up some of your plans. So, tell me what's going to give?

Ptak:  What's another aspect of financial planning you think we're not talking enough about?

Schlesinger: I love death, you know that. You know me now for 54 minutes--on illness and death. Life insurance. Shocking number of people who just have such terrible insurance policies, just awful. Just buy term life insurance. The industry is so insane. Really, let's talk about the use case for whole life or permanent insurance. What percentage of people out there do we really believe should be buying permanent insurance, that they need life insurance in place for their whole lives? What percentage would you guys guess?

Benz: I'm afraid to. Pretty low, right? If people don't have dependents at a certain point that it seems less necessary.

Schlesinger: Right. Who would need life insurance for their whole life? Somebody who's got a special needs kid, you have to have a special needs trust fund.

Benz: Right.

Schlesinger: That's one group. Rich people who have estate issues and businesspeople who need buy-sell agreements. OK. I got to believe that's maybe 2% of the United States' population. So, you tell me how all of these products are justified. It's like a cartel. This is how I'm never going to get an insurance company to get my show in their rotation. It really is. It's insanity to me. So, I think insurance is very misunderstood. I think it's oversold. No one wakes up in the morning, “Oh, you know what I really want to do? I want to buy a variable universal life insurance policy.” No one wakes up that way. No one.

So, I think it is an industry that's gotten so aggressive, it has so much power, it has so much lobbying. It's crazy. And then, of course, I beg people every single day to do estate planning, every day. And it's funny, before COVID, I would say, “You need this, this, this and this.” And people would day, “Yeah, whatever,” and roll their eyes at me. They don't do it quite as seriously as they used to. I think that it was interesting to see that a lot of people were like, wow, bad things can happen at any time. They can happen when you're 20; they can happen when you're 50. Estate planning is not about money. To me, the whole idea of estate planning is like, if we just focus instead of saying “a will,” if we just said, “Who is going to be your healthcare proxy?” We get everybody to do the main three documents: the will, the healthcare proxy, and the power of attorney. We would, and we've just gotten a crash course on how important that is. So, that's the one, so unsexy. Oh my God. Can you imagine? You guys are going to say, “Well, what's the beta of that fund?” And I'm like, “What about your will?” I'd rather listen to you also.

Benz: Well, on that unsexy note, Jill, thank you so much for this illuminating conversation. We've loved having you here today.

Schlesinger: Well, thanks for having me. And I really appreciate it. It's a lot of fun.

Ptak: Thanks so much.

Benz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.

You can follow us on Twitter @Christine_Benz.

Ptak: And @Syouth1, which is, S-Y-O-U-T-H and the number 1.

Benz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.

Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email us at TheLongView@Morningstar.com. Until next time, thanks for joining us.

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis or opinions or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)