April 12, 2024 • 49 mins
On this episode of The Middle we're asking you: are you saving for your future? We're joined by Money for the Rest of Us host David Stein, and Money with Katie founder Katie Gatti Tassin. The Middle's house DJ Tolliver joins as well, plus callers from around the country. #retirement #savings #socialsecurity #401k
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Episode Transcript
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Speaker 1 (00:05):
Welcome to the Middle. I'm Jeremy Hobson here with our
house DJ Tolliver, who, by the way, Tolliver, in addition
to your role here at the Middle, you are also
a funk musician and you actually have a song that
is perfect for what we're talking about tonight, which is money.
Speaker 2 (00:18):
I sture do. Actually, all my songs are about food
and money and cats, and that's like the holy trinity
for me. This is actually one of my newer songs.
Speaker 1 (00:25):
This is Boo Ya Bays.
Speaker 3 (00:30):
To make Money.
Speaker 1 (00:37):
That's that's pretty good. But by the way, you can
see Tolliver perform that live when we do the show
from Connecticut Public Radio in June. But right now, what
we want to know about is your relationship with money, specifically,
are you able to save for the future. That is
our question this hour. Our number is eight four four
four Middle. That's eight four four four six four three
three five three, And we're gonna get to your calls
(00:58):
in a moment. But first I just want to take
a moment to talk about last week's show. We had
Neil de grasse Tyson on and people really wanted to
ask him questions.
Speaker 2 (01:07):
Tolliver, Yeah, I learned more from our callers last week
than like eighteen years of school. It was even the
twelve year olds was schooling me.
Speaker 4 (01:13):
You know.
Speaker 1 (01:13):
There was actually one person that even wrote in with
a question about electromagnetism and said that her friend wanted
her to ask it since he was in the emergency
room with his wife. Oh my, so we hope that
his wife is okay. But listen to some of these
voice smails.
Speaker 5 (01:26):
Hi, y'all, my name is Taylor Arbono. I'm calling out
of Detroit, Michigan. I'm a really big fan. Love you,
mister Tyson. You're so sleigh. I was wondering if you
could speak on quantum mechanics and perception and possibly if
you could elaborate on how we each experienced time differently.
Speaker 6 (01:43):
This is ty and I'm calling from Salt Lake City.
And my general question was there's been theories that if
the earth suddenly stopped, would be like slamming on the
car's brakes going amongst me. My question is what would
happen if the world came to a gradual slow stop.
Speaker 7 (02:00):
Questions if whales are mammals and whales need the same
air system we do to breathe, are whales always treading water.
Number two is if gravity curves space, but space is
a function of gravity, which came first? That's Joe Citizen.
On the other hand, do whales called gravity?
Speaker 2 (02:19):
You can take those.
Speaker 1 (02:20):
Yeah, I'll answer those questions after the show. Thanks so
much everyone who calls in it. And in case you
missed it, Neil de Grass ties and answered even more
questions for our podcast extra. So you can subscribe to
the Middle of Jeremy Hobson podcast on the iHeart app
or wherever you listen to podcasts. Okay, let's get to
this hour. We're talking about saving money for the future.
As you know, coming out of the COVID pandemic, prices
(02:40):
of many things are higher than they used to be. Groceries,
for example, are up about twenty five percent from before
the pandemic. That means, of course, less money is able
to go into savings. The savings rate in the United
States is about three and a half percent right now.
That's about half of what it was before the pandemic.
So what's been your experience? It's are you able to
(03:01):
save for the future, whether that's retirement or something nearer
term tolliver? How can people reach us? It's eight four
four four Middle.
Speaker 2 (03:08):
That's eight four four four six four three three five
three where you can email us at Listen to the
Middle dot com.
Speaker 1 (03:14):
And now let's meet our panel from Tucson, Arizona. David Stein,
creator of Money for the Rest of Us, which is
also a podcast and a book. David, Welcome to the Middle.
Speaker 8 (03:22):
Thank you. It's great to be here.
Speaker 1 (03:24):
And we're also joined from Sacramento by Katie gaddy toasan
founder of The Money with Katie blog and podcast, a
personal finance brand. Katie, Welcome to the Middle.
Speaker 9 (03:34):
Thank you so much for having me well.
Speaker 1 (03:36):
And before we get to the phones, David, does that
three and a half percent savings rate concern you right now?
Are we in a particular particularly spend now, save later
moment in this country?
Speaker 8 (03:49):
No, not necessarily. I mean this, this personal savings rate's
been lower in the past. It tends to vary. Households
were flush with cash coming out of the pandemic just
because of the government brands that were given or the
money that was sent. So unfortunately that that money that
(04:09):
was sent is also what's contributed to the inflation. So
just the amount of money in the economy has increased
forty percent since the beginning of the inflation of the pandemic.
So if you got that much more cash around and
people buying stuff, that demand can push up prices, particularly
if there's some constraints in terms of the ability to
produce things.
Speaker 1 (04:30):
And as prices are higher, people are able to save less.
Speaker 10 (04:35):
Well.
Speaker 8 (04:35):
Well, absolutely, you're right. So if you look at food,
prices are up, just the cost of rent is up tremendously,
and so particularly lower incomes, it is more challenging to
save than it has been, and that savings rates going
down as people have basically eaten into the savings they
were able to sort of pull together during the pandemic.
Speaker 1 (04:55):
Andy, Katie, you talk to young people about this, what
do you say to people who say they can't save
right now because life is too expensive? Exactly what David's
been talking about. And when you're talking about young people,
you also could add in student loans.
Speaker 4 (05:09):
Yes, absolutely, Well, it's interesting because I think that there's
something too pronged happening here, particularly for young people, especially
when you look at not just the inflation rate over
time and that savings rate, but also when you consider
real wages for this young group. This cohort that I'm
a part of. I guess I would classify it as
(05:30):
like those that are now roughly twenty nine to thirty five,
who I guess in twenty twenty go back by three
years or four years. Now, we've actually seen our real
wages go up by I think twelve percent beyond the
rate of inflation, and that sounds kind of shocking. But
when you consider that this cohort is moving up in
(05:51):
their career and earning more, we do have that tailwind
helping us that many of us are actually on average
earning more than we were in the pandemic in that
phase in our career. The downside, and I think the
headwind that we face beyond even the student loan aspect
of things, is that our generation is kind of the
(06:12):
first one that has gotten it from all sides. When
it comes to the culture of consumerism. There's never been
more temptation in front of us at all times. And
so if you even just pull up the screen time
metric on your phone and you see, oh, four hours,
five hours, you are being hyper targeted by ads. They're
(06:32):
not just television ads that are playing for everyone. These
are ads that are algorithmically programmed to tap into your
innermost desires, and they are very good at it. So
there are very real factors that are making it harder
to save. I think there are also things that are
within our control as well.
Speaker 1 (06:50):
And none of those ads are telling you to take
your money and put it into a savings account or
a CD or something like that.
Speaker 4 (06:56):
No, they're saying by now, pay later, although maybe they.
Speaker 1 (06:59):
Will now that they just heard me say that, and
then now you're going to get targeted of us. David,
what is the difference between somebody who starts saving at
twenty years old versus someone who waits until they're say
thirty five.
Speaker 8 (07:14):
Well, that fifteen year gap potentially leads two a lot
less money, just the compounding effect over time, and particularly
in an environment right now where we can earn five
percent on our savings. And so there are many individuals
that are sort of got used to very very low
interest rates and just have kept money in their checking account.
(07:36):
They look at what the checking account's paying, oftentimes very
very low, and so some simple steps to just increase
our savings is to move it to a money market
mutual fund or a higher yield savings account so that
we can at least get the five percent that could
be had without taking any risk, and so that that's
an important thing that people can just to start saving.
(07:58):
See where you're a little maybe emergency fund is right now,
and move it to something that's yielding higher and that
can get that compounding started.
Speaker 1 (08:07):
And we want to hear from you, by the way,
whether you are young, middle, aged, older, are you saving?
Are you able to save? Is that a priority for you?
You can reach us at eight four four four middle.
That's eight four four four six four three three five three,
And let's go to the phones in Jane, who is
in Morehead, Minnesota. Jane, welcome to the middle. Go ahead.
Speaker 11 (08:28):
Hi uh so, I talked about that. I am a
teacher and my husband is a psychologist. We're fifty three
years old, and we've been very fortunate in that we
come from families that don't have a lot, but also
valued both education and savings. And so we even when
(08:54):
we started every job that we've ever ever started, we
make sure that we have at least ten percent coming
out of our paychecks directly into savings or retirement before
we even see that first paycheck, and we just we
don't look at that, we don't consider it as money
(09:14):
because we don't. It's not ours yet, it's retirement funds.
So that I think has helped. The other thing that
really helped is that we work really hard to live
below our means, and like even both of our houses.
When we've bought our house, we look for a house
(09:34):
that Okay, the bank says we can afford this amount,
but we you know, we go, okay, what can we
actually afford on one of our salaries instead.
Speaker 12 (09:44):
Of both of them?
Speaker 1 (09:45):
Yeah, so you're your fruit.
Speaker 11 (09:47):
And then we are we are, but we still you know,
I mean, I treat myself to coffee once in a
while and I you.
Speaker 1 (09:54):
Know, say good, yes, well that could be very expensive
these days. Jane, let me take let me take your
comments to our guests and Ki. You know, one of
the things that Jane brings up there, which I want
to talk about is if you grew up and you
didn't have a lot of money, it definitely influences how
you behave as an adult.
Speaker 4 (10:13):
Oh one hundred percent. I mean, how could it not.
I think the majority, I would say, of our money
stories come from what we observed as kids and the
way that our parents talked about it too. Even if
even if you know, the financial situation that our family
was in was actually maybe not that abnormal. Even the
language that has used in your home to describe money,
(10:35):
if it's like, oh, we can't afford that, versus oh,
we're choosing not to prioritize that.
Speaker 9 (10:40):
All of that.
Speaker 4 (10:41):
Influences the way that we come to think about it
as adults, and I think that that's why it's really
important to reflect on those types of narratives that you
may have inherited no pun intended, that aren't all that
helpful to you anymore, or that you might want to
rewrite for yourself.
Speaker 1 (10:56):
It's also interesting that Jane was talking about spending below
remains not everybody does that, David.
Speaker 8 (11:02):
Right, Well, no, And one of the things Jane has done,
which I think is smart, is they've automated the savings,
and so there are some hacks that we can use
in terms of the there's apps out there that will
automatically move your a portion of your paychecks directly into savings.
So as Jane said, she doesn't even see it, and
(11:22):
so and you get used to living on an amount
that doesn't include the savings, it's much harder to save afterwards,
you know.
Speaker 1 (11:31):
Tell Ever, When it comes to the importance of saving money,
we hear time and time again it is better to
start as early as possible.
Speaker 2 (11:36):
Yeah, that's right, Jeremy. That's why they're even giving savings
advice on Sesame Street. This is Elmo my favorite one in.
Speaker 3 (11:45):
A seconds, you can do with your money, put it
in three different jobs, the savings, not the spending, and
one for sharing saving.
Speaker 1 (12:04):
A good note from Elma there. I think Elma's first
appearance on The Middle ast of the last, not the last.
By the way, if you are enjoying The Middle, go
and rate us on Apple podcasts or wherever you listen
to your podcasts. Give us five stars, tell everybody how
much you like the show. That would be great, and
we'll be right back with more of the Middle. This
(12:24):
is the Middle. I'm Jeremy Hobson. If you're just tuning.
In the Middle is a national call in show. We're
focused on elevating voices from the middle, geographically, politically, philosophically,
or maybe you just want to meet in the middle.
This hour, we're asking you, are you saving for your future,
your retirement, education, or even just setting aside money for
a rainy day? Tolliver? What is the number to call in.
Speaker 2 (12:46):
It's eight four four four Middle. That's eight four four
four six four three three five three. You can also
write to us at Listen to the Middle dot com
or on social media.
Speaker 1 (12:53):
I'm joined by David Stein, creator of Money for the
Rest of Us, which is also a book and a podcast,
and Katie Gaddy Tassan, who's founder of Money. With Katie
and before we get back to the phones, I want
to ask you each about the issue of social security.
When a lot of people think about their savings, they
think well, I'm going to have social security, or maybe
they think well, I'm not going to have social security. David,
(13:16):
do you advise people to rely on social security being
there for them?
Speaker 8 (13:21):
Absolutely? It would be political suicide for the government to
cut off social security ue to even people approaching retirement. Now,
maybe if you're in your twenties, it's not going to
be your primary measure of living in retirement, but this
is money that will be there. The government can create
(13:43):
the money to pay social security. The latest Trust Fund
report they say that the social security will be funded
completely out of the basically what's in that trust fund
through twenty thirty four and afterwards there's enough to cover
eighty percent of the benefit, so Congress can come together
with the President to close that gap. It can be
(14:05):
modified over time. Social Security you'll be there, and it's
an important component of our retirement savings, but not the
only aspect, which is why we're savings that we can
compliment social security.
Speaker 1 (14:16):
Katie, what about you? Do you tell young people millennials
gen z that they should expect social Security to be
there for them, or do you tell them, you know,
they're probably going to raise the age at some point,
it might not be there when you're in your sixties.
Speaker 4 (14:28):
Well, you know what's funny is I actually I very
much agree, But it's kind of a both For me.
It's that, yes, I would be very surprised. Obviously no
one has a crystal ball, but I would be shocked
if it went away for the same reasons that we
just talked about, which is that it would be incredibly
politically unpopular to do something like that, and also we
(14:51):
don't know what that funding is going to look like
when those of us that are in our twenties and
thirties now are ready to take it, and the chances
that the age will contake you to be you know, raised,
it's a pretty good shot that that's going to happen,
because that's what's happened in the past. And so there
are cool calculators that you can use. I believe it's
SSA dot gov that you can go in and estimate
(15:12):
what your benefit will be. But it is certainly not
I will say, a comfortable retirement supporting amount in most cases,
and so I think it's best to consider it a
supplement that will probably be there, but it's not something
that I would ever advise someone to rely on in
its entirety.
Speaker 1 (15:31):
Well, and even now, David, there are stories of people
who are in there what would be their retirement who
only have Social Security and maybe a little bit extra
or nothing else and are having to just work into
their seventies because they need the money beyond what social
Security can provide.
Speaker 10 (15:49):
Well.
Speaker 8 (15:49):
Absolutely, we have a family friend that her Social Security
covered her rent more than enough, but they're in Phoenix
where the rents up forty and so it's a real
struggle if you're dependent on Social Security, Well that keeps
pace with inflation. Everything else is going up, and so
it it's it's a travesty, really, but that's I have
(16:14):
to make it through somehow.
Speaker 1 (16:16):
Let me see if I can go to Anne who's
in Harrisburg, Pennsylvania, and welcome to the middle. What about you?
Are you saving?
Speaker 13 (16:25):
Thank you? No, I am not saving.
Speaker 14 (16:28):
I am in my.
Speaker 13 (16:28):
Fifties, I have no savings. I'm not able to pay
my most basic monthly bills on time, so there's nothing
left over for savings.
Speaker 1 (16:39):
How did you get into that situation?
Speaker 13 (16:43):
Well, the cost of living is just more than what
I can earn. I used to work at a job
that paid me more than what I needed. I would
say between twenty fifteen and twenty seven team I was
doing well. I could live below my means. I wasn't
(17:05):
living paycheck to paycheck. I would have a couple of
hundred dollars left over from each paycheck, and life was easy.
I switched jobs and my pay remained about the same. However,
(17:26):
the cost of living went up and my child went
to college where I did have to pay tuition, and
that stretched me beyond my means. I didn't anticipate that
the bills would be that expensive for the college, and
(17:46):
I actually ended up homeless due to that.
Speaker 1 (17:48):
Wow, and now but now you you you are, you
are housed.
Speaker 13 (17:54):
I am housed only because my child graduated college and
now as a full time income so that she can contribute.
If she were completely relying upon me, we would be
homeless because now the rents are even more expensive and
I'm unable to find employment at the same level of
(18:18):
ky that I had two years ago.
Speaker 1 (18:21):
Well, and thank you for calling in and Katie. One
of the things that Anne brings up there is the
fact that she's now relying on her child to help
her out. This is probably something we're going to see
a lot more of, is the younger generation having to
subsidize their parents later in life.
Speaker 4 (18:39):
Yeah, and you know what, and that story really breaks
my heart. I have to tell you, it breaks my
heart that in one of the wealthiest nations on Earth,
that anybody is in that position. It's really really well,
like David said, it's a travesty. And I do think
that what is scariest about it for me in my
work is that how common it is. How many people
(19:02):
are in ants position, how many people are a part
of the you know, the low wage workforce or the
workforce we're in. Their wages are not covering a very
basic cost of living. I think the last estimate I
saw is between twenty two and twenty five percent of
American workers fall into that bucket. That's not an insignificant
portion of the economy. So it is really, in some
(19:24):
cases quite impossible. And I do think that we're going
to continue to see and I hear from young people
all the time who will reach out to me and say, hey,
that's great love that you're helping me plan for my retirement.
Speaker 9 (19:37):
What do I do about my mom and dad?
Speaker 4 (19:39):
Because they they're in their sixties and they don't really
have much saved, So like, what should I do for them?
And it's a really unfortunate and difficult question to answer
because part of the answer as well, do you do
you have a time machine? Can we go back in
time and start saving for them? Because beyond that you
have to really start looking for creative solutions and intergeneration
(20:00):
living and things of that nature.
Speaker 1 (20:02):
Well, and David, what is the solution. Is the solution
something that an individual can do, or is the solution
something that the government needs to be doing differently to
make it so that you don't have a person like
Anne who didn't save and is in such a such
a troubling situation.
Speaker 8 (20:18):
Well, right, there's a couple of things that the government
can do. One, Anne invested in her child's human capital.
So by investing education, I mean it's okay that your
child is helping you.
Speaker 6 (20:31):
Now.
Speaker 8 (20:32):
One of the main things that's going on in the
economy over the last fifteen years, really since the Great
Financial Crisis, there's just not enough housing and so there
is there's about a three million dollars shortfall in terms
of housing units in the US. And so if there's
not enough housing that flows through the entire economy, it
(20:52):
pushes up the rents. And so government action to make
it easier to build housing, such as necessary units more density,
as well as expanding the housing voucher program for low
income individuals that there's a huge waiting list for people
trying to just be able to get some subsidy for
(21:14):
the housing. And so those two elements the supply of
housing needs to be increased, but also in that interim,
provide the ability for people to afford the housing that
is available.
Speaker 1 (21:24):
Let's go to Lilian, who's in Saint Louis. Lillian, welcome
to the middle What about you? Are you saving?
Speaker 6 (21:30):
Hi?
Speaker 14 (21:31):
Yes, I am actually.
Speaker 1 (21:34):
Tell us more nice, So I say.
Speaker 14 (21:39):
So, I actually have much more saved now than I
did a couple of years ago because I get some
really wonderful advice from my sister in law.
Speaker 15 (21:50):
Who you know.
Speaker 14 (21:51):
I asked her how did she become more well off?
And she said, you know, with every paycheck she puts
a little in savings. And you know, I have some debts,
and I was always worried, well, how do I pay
my debts? Like I can't save anything. I need to
pay my debts. It's just like you don't pay a
(22:11):
little to your debt, pay a little to savings every
every paycheck, just put a little away. Yeah, and I
have like three times as much as I had a
couple of years ago because of that.
Speaker 1 (22:22):
That is great.
Speaker 14 (22:23):
How old are you comfortable?
Speaker 12 (22:26):
I'm thirty thirty.
Speaker 1 (22:27):
Great, Well, thank you so much for calling in. Uh,
you know, Katie Lillian mentions debt. I will say that
one of the one of the first lessons I learned
about credit cards is the best way to play that
game is never ever carry a balance on your credit card.
You can use it all you want, just don't carry
a balance on your credit card because the amount that
you're going to pay on that debt is going to
be a lot. But your response to to Katie there
(22:49):
or to our to.
Speaker 4 (22:50):
Lilian, yes, well I love that that she What I
love about that story is that she asked somebody for
good financial advice and then she took it, she executed it,
which is the harder part of.
Speaker 9 (23:03):
The equation to then. You know, it doesn't sound.
Speaker 4 (23:06):
Like it would be that revelatory, right, like oh, you
just need to save money. It's like, oh, but okay,
take a little from each paycheck. Right, Even even having
those little those little finer points to put in place
of well, yes, you're gonna keep paying the debt, you're
gonna keep putting some towards the debt, but you're also
going to be setting some aside for yourself and then
taking action is amazing. And to your point about the
(23:27):
credit card debt, Yeah, you know what's interesting is when
I when I first started working, and all my friends
and I were in our first year post scrad and
everyone's getting credit cards for the first time. You really
wouldn't believe the amount of conversations that happened in that
group that were like, Okay, so do I need to
pay the minimum balance or the statement balance, or do
we need do I need to be the full balance. Like,
(23:47):
these things can be a little confusing if you've never
interacted with that language before, with those systems before. And
so I think a lot of people see the minimum
balance and they assumed that, Okay, I'll just I'll pay
that number. That's the smallest number.
Speaker 9 (23:59):
Why not.
Speaker 4 (23:59):
But you always want to make sure you're paying the
statement balance in full. And if you're comfortable with automating
that doing auto pay, that's far and away the best
way to avoid getting into that hole, because once you're
in it, it's pretty hard to dig it back out.
Speaker 16 (24:14):
True.
Speaker 2 (24:15):
Yeah, we actually got some folks commenting on social media
related to this topic. Caitlin and Flint, Michigan says, in short, no,
how can I worry about the future when I'm barely
making it through today. I'll probably end up working my
entire life. Marty and Jacksonville, Florida says, am I saving,
Oh my gosh, what is that?
Speaker 10 (24:32):
What is that?
Speaker 1 (24:33):
Brother?
Speaker 10 (24:35):
No?
Speaker 2 (24:35):
Seriously, in this economy, everything is going up and it's
causing me to tap into my savings. Granted, I'm a
functioning adult with the Form one K and all that
other stuff, but everything is going up except for what
you make, so you just have to make it work.
Send us some more comments and listen to the middle.
Speaker 1 (24:49):
Listen to the middle dot com. Let's go to Eric,
who's in Burnsville, Minnesota. Eric, Welcome to the middle. What
about you go ahead?
Speaker 11 (24:57):
Hey?
Speaker 17 (24:57):
Thanks, My wife and I are able to save each paycheck,
we're able to go on vacation, but have some questions
about what we should be doing to save for our kids.
We have an elementary schooler and a preschooler and looking
at what college could cost in ten and fourteen years
from now. And you know, we've heard some comments about
(25:20):
five twenty nine plans and that they're the best, and
they're people saying that they're not the best, and just
kind of wondering, what is the best idea for someone
living in the middle right now who's able to save
and kind of live a comfortable lifestyle, but want to
make sure that their kids are set up right for
college if possible.
Speaker 1 (25:37):
Great question, Eric, David, I'll go to you on that.
Speaker 8 (25:42):
Well, yes, you should say for college. Each state has
their own five to twenty nine plans. One of the
things you want to look at in terms of the
plans that are available, what are the fees, what are
the options? I think it's helpful to save, perhaps use
a five twenty nine plan, but that not be the
only way, because your child might not want to go
(26:03):
to college, and we're looking out fifteen years the world
could be very different, and so having the habit of savings.
You know, for example, our children, we never did use
a five to twenty nine plan, but we saved and
helped with college in other ways, and so it doesn't
have to be the only way is through a five
twenty nine plan. There are some benefits, but it could
(26:23):
be complemented with other taxable savings.
Speaker 1 (26:26):
Hey, Katie, I know that you talk about the fact
that one of the ways you were able to save
a lot of money quickly is that you did not
have student debt.
Speaker 4 (26:36):
That's true. That was a huge leg up that at
the time I did not really understand. I ended up
going to a state school that I could get a
scholarship to, and my parents covered the room and board
portion while I was there, And the whole time I
was there, they kept emphasizing to.
Speaker 9 (26:55):
Me, you have no idea how lucky you are.
Speaker 4 (26:57):
The fact that you're not going to graduate with student debt.
Speaker 9 (26:59):
You have no idea. You have no idea.
Speaker 4 (27:00):
Well, I had no appreciation of money at all at
that point. I was like, oh, yeah, sure, okay, it's
a pretty big deal. And it wasn't until I got
out into the real world and you know, started doing
this work that I realized how uncommon that is. So
I also would say, don't overlook the possibility that, to
David's point, yes, the world may be very different. There
are also amazing scholarships grant programs.
Speaker 9 (27:19):
Some schools will.
Speaker 4 (27:20):
Give full tuition scholarships just for getting a certain ACT score,
so there might be like an investment in upfront classes
for something like a standardized test that could end up
paying dividends if it leads to a full scholarship. And
I also just want to add that as amazing as
it is to save for your kids college, I want
to underscore the importance of making sure that your retirement
(27:42):
obligations are being fulfilled first, because there are student loans
for education and there aren't student loans for retirement, so
it sounds like they're saving, which is amazing. But some
people selflessly will want to save for college before they
have taken care of their own retirement needs and have
made sure that that is squared away.
Speaker 1 (28:01):
You're saying, put your own mask on first before helping others.
Speaker 9 (28:04):
Basically perfect metaphor.
Speaker 8 (28:07):
There you go.
Speaker 1 (28:08):
Let's sneak in one more call before we have to
take a quick break. Nellie's in Houston, Texas. Nelly, Welcome
to the middle. Tell us your story about saving.
Speaker 10 (28:18):
Hi.
Speaker 15 (28:19):
Yeah, so I'm thirty years old. I work for a
large retailer as a buyer or I guess in the
procurement team, and I am saving, but I feel like
it's harder and harder, honestly to save nowadays, just because
of the cost of living. I live for the past
five years in Austin, and as you guys know, Austin
(28:42):
just boomed like crazy, and every year when I would
renew my lease, it would just go up like an
extra two hundred, three hundred dollars. I mean, I was
sharing a three bedroom house and like each of us
were paying like twelve hundred dollars, you know for and
like in like a five hundred foot house. And so like,
(29:04):
I moved to Houston, and that's helped a little bit,
but I get scared that's the same thing will happen
where it's like things are just going to get more expensive.
So it's just it's a fear that I constantly have.
It's just like life is just getting way more expensive,
which is making harder to prioritize where my money is
supposed to go.
Speaker 1 (29:24):
Nelly, thank you so much for that call. And I
will say that you know, either the middle's average age
of listener is around thirty or people who are around
thirty are most worried about saving right now, which is
which could also be true. But Tolliver, I do want
to go to a ninety three year old next, and
here from billionaire Warren Buffett.
Speaker 2 (29:45):
Yeah, actually, did you know that by the time it
was fourteen Buffett it saved enough money from his paper
route to buy a forty acre farm.
Speaker 1 (29:51):
Wow?
Speaker 2 (29:52):
Did you know that?
Speaker 1 (29:52):
I didn't?
Speaker 2 (29:53):
Thank you Google. And today he's worth one hundred and
thirty eight billion dollars. Here he is in two thousand
and eight talking about saving money.
Speaker 18 (30:00):
There are plenty of people that I don't advise to save.
If you're struggling along and making a reasonable income, and
you have a job with a four oh one gaming
butt a side for you, and you have social security,
who's to say whether it's better to defer a dollar
of expenditure on your family on a trip to Disneyland
or something that they'll get enormous enjoyment out of, so
(30:21):
that when you're seventy five, you're going to have it,
you know, a thirty foot boat instead of a twenty
foot boat.
Speaker 1 (30:26):
I don't have any boats, neither do I? All right,
I will say the best thing to do is have
a friend with the boat. Then they can deal with
all the issues and you just join them on the boat.
Why Wow, more of your calls about saving coming up
on the middle. This is the middle. I'm Jeremy Hobson.
We're asking you this hour, are you able to save
for your future? Call us at eight four four four Middle.
(30:46):
That's a four four four six four three three five
three you can reach out at Listen to theemiddle dot com.
We're joined by Katie Gaddi Tossan who's the founder of
the Money with Katie blog and podcast, and David Stein,
creator of Money for the Rest of Us, which is
also a pod and a book. And before we get
back to the phones, let me just ask you, David.
You know we're having all these debates in this country
(31:06):
about the national debt and people compare it to personal debt.
Of course they're very different. But what does it say
to you about our society that, unlike many other cultures,
we really don't as Americans feel the need to save
that much. Is that about confidence? Is that about is
that stupid?
Speaker 10 (31:23):
Like?
Speaker 1 (31:23):
What do you think.
Speaker 6 (31:26):
You mean?
Speaker 10 (31:27):
Like?
Speaker 1 (31:27):
Individuals are the individuals and as a country, I mean,
we're just we're not a saving country.
Speaker 8 (31:32):
Well, as a federal government, it's impossible for them to save.
That means they're running a surplus, which means they're taxing,
they're taking money from households, and that's not the role
of a federal government. The federal government typically runs a deficit.
So putting that aside, yes, individuals need to save. But
I like the Warren Buffett quote in the sense that
(31:55):
he's saying, we did an episode on this in our
podcast a few years ago. We have permission to spend. Yeah,
some people just that's all they think about his savings.
They're trying to optimize their personal finances and save safe, save,
and they feel guilty spending at all. And so there's
an appropriate balance between saving and spending. We have to
just do some self reflections. Where are we on that spectrum?
(32:18):
Are we are we ignoring the entire conversation about saving,
or are we so focused on it we don't ever
treat ourselves. And that was sort of what Buffett was
getting at. Granted, most of us will not have a
yacht to choose from in terms of house way, Yeah,
but he made.
Speaker 1 (32:37):
Eight billion dollars. He has. Let's go to Let's go
to Fred, who's in Chicago. Fred, Welcome to the middle
of Go ahead.
Speaker 19 (32:44):
Hi, Hi, I thanks for taking my call. So I
I try to save whenever I can. It's really tough
now because the properties are so high, but a couple
of years ago you could get in on real estate
at a much lower price, and I usually use that
(33:05):
as a piggybank. I know that the value really doesn't change,
but at least at least with inflation, the property itself
will kind of protect the value of the money you
put into it. So that's I know.
Speaker 15 (33:23):
It's tough, and.
Speaker 19 (33:25):
It was tough for me to start doing that, but
I found that to be a good way to save.
Speaker 1 (33:32):
That's a great po great, great point, friend, because I
want to get to that, because that is really interesting. Katie,
what about real estate as a savings vehicle. Is that
do you recommend that for people?
Speaker 4 (33:43):
Well, it's certainly one way that you can build wealth,
particularly if you are thinking about it as an investment.
You're buying a property and you're renting it out to
other people like that caller from Austin who was like,
my rent keeps going up. You're on the other side
of that transaction. So I guess it's up to you
if you if you want to be that person to
somebody else who's making it maybe harder for them not.
Speaker 1 (34:05):
And also, if you have a fixed mortgage then and
the inflation you know, goes, you have higher inflation that
fixed mortgage is going to say the exact same for
thirty years or whatever.
Speaker 4 (34:14):
Well, yes, and no, I think the I think it
is a bit of a misconception that a house is
a really great mechanism for saving And I only say
that for well two reasons. There are other costs that
are going to change over time. Many people are experiencing
this right now. As tax assessed values are going up,
your property taxes are going.
Speaker 19 (34:35):
To go up.
Speaker 4 (34:35):
It's also likely that your insurance rates are going to
change as the value of your property rises, and as
anyone who's ever owned a home knows, things break and
things have to be replaced. And so often when we're
looking at the value of our home rising over time,
we're not really factoring in, Oh, but that HVAC system
we had to replace, and oh there was a time
the fridge went out, we had to replace that. These
are things that as a renter you're typically not on
(34:57):
the hook for, so it's important to factor those into your,
you know, long term thinking. For sure.
Speaker 1 (35:04):
Let's go to Javier, who's in Atlanta, Georgia. Javier, welcome
to the middle.
Speaker 12 (35:09):
Hey, happy to be on great.
Speaker 1 (35:12):
To have you go ahead.
Speaker 12 (35:14):
Yes, So what I was saying was, I'm a I'm
in Atlanta. I'm a public defender. Here in Fulton County.
We have a really generous retirement savings account. I think
they kick in I think about eight percent once everything
is said and done for every four or five that
we kick in. So I feel really good about that.
Our salaries are some of the best in the country,
(35:37):
you know, But I definitely still have some of those
anxieties about saving for the future. So I'm covered in
that regard, but in terms of any additional savings that
I have on my own, I haven't really explored those options.
And then you know, I'm thirty, I'm cohabitating with a
partner who, you know, we're looking at potentially getting married soon.
But she's on different financial footing that I am. She's
(35:58):
not able, She's not earning enough to save at all
at this point, you know, So I'm thinking and she,
you know, her parents aren't in a great position either,
So you know, we're in a position where I'm thinking
about the future and thinking about, you know, how much
is she going to be able to savor? Is everything
gonna be on me as we think about home ownership
and futures and everything of that nature.
Speaker 1 (36:18):
Yeah, I was wondering, are you as you think about
saving for the future, is it about being able to
buy a home? Is it about something else? It's about retirement?
Which what are you saving for?
Speaker 12 (36:28):
It's really all the above. Retirement is definitely the number
one I would say. But you know, as somebody who's
kind of dealt with what some of these other callers
talking about in terms of rent constantly going up in
a major city, you know, home ownership would absolutely be
part of the equation.
Speaker 1 (36:44):
Javier, thank you for that David Javier has a public
sector job, which means that he's got the a retirement
plan that's different than a lot of people do in
this country, where they're really tied into the market and
with a four oh one K if they've got that.
Speaker 6 (37:00):
For sure.
Speaker 8 (37:00):
And that's one of the things that's changed over the
past three decades. Where your typical job used to have
a defined benefit pension plan, where there was professional money management,
there was a board overseeing that plan, and then corporations realize, hey,
it's a lot less expensive if we put that risk
(37:20):
on our employees. And that's where the four to one
K plan came to, where suddenly, as individuals that money's portable,
but we're taking on the risk and trying to figure
out and that has really and I don't think we've
seen the long term impact of that. You're just starting
to see baby boomers retired where most of their savings
(37:41):
was through the four to one K, and they're realizing, hey,
even two hundred thousand or three hundred thousand dollars, if
your only gets can spend four percent of that a year,
that's twelve thousand dollars. That's hard to live on. And
so if you have a pension, be very very grateful
and and the rest of us will sort of. You
(38:01):
have to navigate learning some basics of investing, because that
is our responsibility. I mentioned the hiled savings accounts are available.
We talked about compounding investing early. Those are the things
we have to take time to learn.
Speaker 1 (38:16):
Just quickly. If people are listening to this and they're wondering, well,
how much should I have saved when I retire? Is
there is there a hard and fast rule that you
give out David.
Speaker 8 (38:26):
Well, the first thing once you do is figure out
how much they're spending, like what does it take to live?
And then you can you can take that amount, you know,
back out social Security and then divide it by four percent.
And because typically a typical person will spend four percent
of their retirement nest egg. And so once you back
(38:48):
out and you can get a pension on social Security,
how much do I need If that's thirty thousand dollars
additional you need, you divide that by four percent and
if my math right, that's one point two million dollars. Yeah,
that's a lot of money. And that's why such a
daunting problem.
Speaker 1 (39:06):
Let's go to Joeanne, who's in Lincoln, Nebraska. Hi, Joeanne,
Welcome to the middle.
Speaker 15 (39:12):
Hi, thank you, thank you.
Speaker 1 (39:14):
What's what's your situation with saving?
Speaker 20 (39:18):
So my husband and I are not saving. We have
four kids, and I grew up super poor like Section
eight projects, homeless shelters, So definitely never had those conversations
in my house because we didn't have money for food,
let alone to save. But because we have four kids,
we want to make sure that their childhoods are enjoyable.
(39:39):
Like Warren Buppett was saying, like, I am less concerned
about having a boat at all than my kids being
able to have summer vacations and play sports which are expensive,
or do theater or whatever they want to do, and
be able to go to college that I am about
our retirement.
Speaker 1 (39:57):
Katie, what do you think about that? What do you
say to Joanne?
Speaker 7 (40:00):
Well?
Speaker 4 (40:01):
I think Joanne sounds like a mom who loves her
family a lot and is really embracing the fact that
she wants her kids to have a better experience of
childhood than she did, which I think is really really admirable.
The only thing that I would kind of call back
to is that earlier conversation that we had with the
previous caller who said, I don't have any savings. Now
(40:21):
I'm relying on my kids because I don't have a
retirement fund.
Speaker 9 (40:24):
So I think that this is about kind of for them.
Speaker 11 (40:27):
That wasn't great for her.
Speaker 1 (40:30):
Are you expecting like it wasn't great, but.
Speaker 20 (40:33):
I got four kids, like there's a good chance.
Speaker 10 (40:36):
That one of them will make good money.
Speaker 4 (40:39):
I mean, yeah, I think I guess what I'm getting
at is like, in an indirect way, you saving for
your retirement is also caring for them as well, because
it's then something that they are not going to have
to feel as though they are going to have to
support that for you. But I think that it's great
that you're trying to make sure that they have a
(41:00):
better experience than you did.
Speaker 1 (41:02):
Tlliver, We've got another message coming in online.
Speaker 6 (41:05):
Yeah.
Speaker 2 (41:05):
Luna, a teacher in Florida, says, I have a master's
degree and over a decade of working experience. My salary
is about fifty five K a year. Both my husband
and I work and we don't have childcare payments. However,
are not able to save more than three hundred dollars
a month? No four on one K with this inflation.
The majority of our expenses are for food bought in
a supermarket. I know plenty of teachers going to food
banks because our salary doesn't cover the living expenses. Our
(41:27):
fourteen year old is going to high school next year
college if and only if he gets a full ride.
Otherwise he's doing an apprenticeship and getting a blue collar job.
Speaker 1 (41:34):
Yeah, it sounds like a lot of people focused on
the rising cost of food and also, of course housing,
which has come up a number of times already. Let's
go to Olivia, who is in New Orleans, Olivia. Welcome
to the middle.
Speaker 16 (41:47):
Go ahead, Hi, thank you for having me.
Speaker 1 (41:51):
Yeah, go ahead.
Speaker 16 (41:52):
So I am twenty nine years old, So yeah, I
guess people in my age up are worried about saving.
I have started to be able to save, but I
don't think that I'm doing it in a responsible way
that is growing. I just have it in like a
(42:15):
savings account attached to my checking through a small credit union,
and I'm trying to figure out how to put it
into a place where it would grow. But I work
so many jobs in order to be able to save
this money that I feel worn out by the time
I sit down and try and navigate this new space
(42:38):
for myself.
Speaker 1 (42:40):
Well, let's ask David, David, what do you say to
Olivia there? What should she be doing?
Speaker 8 (42:46):
Well, first off, see what interest rate you're earning on
the it should be on your statement, how much you're earning,
and presumably it's very very low, and so as savers,
one of the things we need to learn how to
do is open up a brokerage account, an account at
Vanguard or Fidelity or Schwab. You can call them up,
(43:06):
you can do it online, and once you're there, there
are savings vehicles there. You can invest in what's known
as a money market mutual fund, which is a very
safe investment that's primarily invested in very short term government bonds,
and you can earn five percent. So figure out in
today's environment where rates are where they are, just that
(43:29):
simple step. I helped my niece the other day with this.
She had a little bit of money. We walked through
how do you open an account at Vanguard, how do
you purchase a money market mutual fund? And those are
basic steps we can take, so you could then once
you see and she called up a week or two later,
like I did it, like I was able to do
(43:49):
that and she's around thirty. She hasn't saved much in
her life, and so we can learn to open a
brokerage account, purchase one investment, one money market mutual fund,
and that sort of starts at education path.
Speaker 1 (44:04):
Thank you so much for that, David, and thank you
for that call, Olivia. I remember the first time I
opened up a broker's account and I invested I think
maybe two hundred dollars in GE and just let it
sit there forever until the company just sort of like
got smaller and smaller and smaller. That was not a
very good investment at that time, but it seemed it
was safe. It was definitely safe. Let's go to Portia,
(44:25):
who's in Groton, Connecticut. Porscha, welcome to the middle. Go ahead.
Speaker 10 (44:30):
Well, thank you for having me. I am in my
mid forties and I was driving home. I'm an elected
official from a budget meeting, talk about the pressure with
the rising cost in my community and having to help
set those numbers. I am a six year breast cancer
survivor Stage three. I was a single mom at the time,
(44:55):
in my thirties late thirties. I had a high it
uptible planned and I had a about my savings to
live to literally fight for my life. And I think
the concern was that thirty thirty nine I had a
high deductible plan. I was healthy, no medications, no concerns,
and now I'm trying to catch up. I have a
(45:16):
son who opted to join the military and serve in
the Submarine Force, which I'm very proud of, so that
did not put the pressure of college expenses. I have
my next son that's graduating this year, and he has
applied to twelve schools, accepted to twelve and planning to
pursue engineering. I don't expect to rely on him. I
do own my own home and I am working towards
(45:39):
paying that off in twenty years versus thirty to have
that equity and things like that. So I'm just looking
at other ways to rebuild after a huge stas medically,
it's a great problem to have, you know, worrying about
your kid's college expense, and I'm just thankful to be here.
(45:59):
But the car with so huge that most people in
their late thirties don't have to think about.
Speaker 1 (46:06):
And that's that's something that many people, you know, a
medical expense and a medical a medical experience can certainly
be a big a game changer, Katie, I'll go to
you there for a thought on that.
Speaker 4 (46:19):
Well, you know, the healthcare system in the US is
a real treat and the high deductible plan that she referenced,
it typically comes with something called an HSA plan that
you can opt to contribute to. You can make pre
tax contribution. So they're kind of saying, hey, we know
that it stinks that our you know, healthcare system is
(46:40):
for profit, but here's a consolation prize. You can contribute
to this pre tax plan and we'll give you a
tax break.
Speaker 9 (46:46):
Saving in an.
Speaker 4 (46:46):
HSA plan if you have a high deductible health plan,
is a good way to put some money aside get
the tax break. And so if you do end up
having to go out of pocket to pay that high deductible,
you end up meeting the deductible and then exceeding it.
In so cases with you know, the level of care
you need, that account can be there for you just
serve as a bit of a buffer. But the other
thing I'd mentioned on medical debt that I just feel
(47:08):
like I have to say is that much of it
is negotiable. Now, is that really what you want to
be spending your time doing when you're battling stage three
breast cancer. No, it's a shame that we're in a
system that requires that of us, and it's disgusting in
my opinion. But medical bills are something that there are
a lot of ways that you can push back with
(47:29):
billing departments. You can fight and get medical bills lowered.
We do a lot of content about how to do that,
and there are a lot of really great, you know,
people out there that are doing good work around that.
So always when you get a medical bill, know that
that is that's a suggestion, and you should push back.
Speaker 1 (47:45):
You know, we are out of time. But David, I
actually just want to ask you, just briefly, or are
you surprised at how many thirty year olds called in
talking about savings?
Speaker 8 (47:55):
No. No, As a thirty year old, I can relate
that that's important.
Speaker 1 (48:00):
We're all thirty, we're all thirty on the mid We're
all thirty. Everybody's thirty on the middle.
Speaker 8 (48:04):
Now, I think everyone's worried about savings. And definitely I
think once you get we have no one. Our oldest
son is around thirty, and you kind of get to
that age we realize, hey, I'm an adult.
Speaker 1 (48:18):
Now I gotta start what do adults do?
Speaker 14 (48:19):
They save?
Speaker 8 (48:20):
And then they start thinking about it.
Speaker 1 (48:22):
David Stein, host of The Money for the Rest of
Us podcasts and author of a book by the same name.
And Katie Gaddy Tossan, founder of The Money with Katie
blog and podcast. Thanks to both of you for joining
us on the Middle.
Speaker 8 (48:34):
Thank you, thanks so much.
Speaker 1 (48:35):
And Tolliver, what do we have on tap for next
week's show?
Speaker 2 (48:38):
We'll be talking about a different kind of green on
the show, Chairvy Oh, We'll be asking is cannabis legalization working?
You can call us at eight four four four six
four three three five three are right and at listen
to the miiddle dot com. I want you there sent
up for a newsletric Come.
Speaker 1 (48:52):
The Middle is brought to you by LONGNOK Media, distributed
by Illinois Public Media or Bandit Illinois and produced by
Joanne Jennings, Harrison Patino, John Barth, and Danny Alex and
our technical director is Jason Croft. Our theme music was
composed by Andrew Hay That's also to Nashville Public Radio,
iHeartMedia and the more than four hundred public radio stations
that are making it possible for people across the country,
(49:13):
many of them thirty years old. To listen to the middle,
I'm Jeremy Hobson. I'll talk to you next week.
Welcome to the Middle. I'm Jeremy Hobson here with our
house DJ Tolliver, who, by the way, Tolliver, in addition
to your role here at the Middle, you are also
a funk musician and you actually have a song that
is perfect for what we're talking about tonight, which is money.
Speaker 2 (00:18):
I sture do. Actually, all my songs are about food
and money and cats, and that's like the holy trinity
for me. This is actually one of my newer songs.
Speaker 1 (00:25):
This is Boo Ya Bays.
Speaker 3 (00:30):
To make Money.
Speaker 1 (00:37):
That's that's pretty good. But by the way, you can
see Tolliver perform that live when we do the show
from Connecticut Public Radio in June. But right now, what
we want to know about is your relationship with money, specifically,
are you able to save for the future. That is
our question this hour. Our number is eight four four
four Middle. That's eight four four four six four three
three five three, And we're gonna get to your calls
(00:58):
in a moment. But first I just want to take
a moment to talk about last week's show. We had
Neil de grasse Tyson on and people really wanted to
ask him questions.
Speaker 2 (01:07):
Tolliver, Yeah, I learned more from our callers last week
than like eighteen years of school. It was even the
twelve year olds was schooling me.
Speaker 4 (01:13):
You know.
Speaker 1 (01:13):
There was actually one person that even wrote in with
a question about electromagnetism and said that her friend wanted
her to ask it since he was in the emergency
room with his wife. Oh my, so we hope that
his wife is okay. But listen to some of these
voice smails.
Speaker 5 (01:26):
Hi, y'all, my name is Taylor Arbono. I'm calling out
of Detroit, Michigan. I'm a really big fan. Love you,
mister Tyson. You're so sleigh. I was wondering if you
could speak on quantum mechanics and perception and possibly if
you could elaborate on how we each experienced time differently.
Speaker 6 (01:43):
This is ty and I'm calling from Salt Lake City.
And my general question was there's been theories that if
the earth suddenly stopped, would be like slamming on the
car's brakes going amongst me. My question is what would
happen if the world came to a gradual slow stop.
Speaker 7 (02:00):
Questions if whales are mammals and whales need the same
air system we do to breathe, are whales always treading water.
Number two is if gravity curves space, but space is
a function of gravity, which came first? That's Joe Citizen.
On the other hand, do whales called gravity?
Speaker 2 (02:19):
You can take those.
Speaker 1 (02:20):
Yeah, I'll answer those questions after the show. Thanks so
much everyone who calls in it. And in case you
missed it, Neil de Grass ties and answered even more
questions for our podcast extra. So you can subscribe to
the Middle of Jeremy Hobson podcast on the iHeart app
or wherever you listen to podcasts. Okay, let's get to
this hour. We're talking about saving money for the future.
As you know, coming out of the COVID pandemic, prices
(02:40):
of many things are higher than they used to be. Groceries,
for example, are up about twenty five percent from before
the pandemic. That means, of course, less money is able
to go into savings. The savings rate in the United
States is about three and a half percent right now.
That's about half of what it was before the pandemic.
So what's been your experience? It's are you able to
(03:01):
save for the future, whether that's retirement or something nearer
term tolliver? How can people reach us? It's eight four
four four Middle.
Speaker 2 (03:08):
That's eight four four four six four three three five
three where you can email us at Listen to the
Middle dot com.
Speaker 1 (03:14):
And now let's meet our panel from Tucson, Arizona. David Stein,
creator of Money for the Rest of Us, which is
also a podcast and a book. David, Welcome to the Middle.
Speaker 8 (03:22):
Thank you. It's great to be here.
Speaker 1 (03:24):
And we're also joined from Sacramento by Katie gaddy toasan
founder of The Money with Katie blog and podcast, a
personal finance brand. Katie, Welcome to the Middle.
Speaker 9 (03:34):
Thank you so much for having me well.
Speaker 1 (03:36):
And before we get to the phones, David, does that
three and a half percent savings rate concern you right now?
Are we in a particular particularly spend now, save later
moment in this country?
Speaker 8 (03:49):
No, not necessarily. I mean this, this personal savings rate's
been lower in the past. It tends to vary. Households
were flush with cash coming out of the pandemic just
because of the government brands that were given or the
money that was sent. So unfortunately that that money that
(04:09):
was sent is also what's contributed to the inflation. So
just the amount of money in the economy has increased
forty percent since the beginning of the inflation of the pandemic.
So if you got that much more cash around and
people buying stuff, that demand can push up prices, particularly
if there's some constraints in terms of the ability to
produce things.
Speaker 1 (04:30):
And as prices are higher, people are able to save less.
Speaker 10 (04:35):
Well.
Speaker 8 (04:35):
Well, absolutely, you're right. So if you look at food,
prices are up, just the cost of rent is up tremendously,
and so particularly lower incomes, it is more challenging to
save than it has been, and that savings rates going
down as people have basically eaten into the savings they
were able to sort of pull together during the pandemic.
Speaker 1 (04:55):
Andy, Katie, you talk to young people about this, what
do you say to people who say they can't save
right now because life is too expensive? Exactly what David's
been talking about. And when you're talking about young people,
you also could add in student loans.
Speaker 4 (05:09):
Yes, absolutely, Well, it's interesting because I think that there's
something too pronged happening here, particularly for young people, especially
when you look at not just the inflation rate over
time and that savings rate, but also when you consider
real wages for this young group. This cohort that I'm
a part of. I guess I would classify it as
(05:30):
like those that are now roughly twenty nine to thirty five,
who I guess in twenty twenty go back by three
years or four years. Now, we've actually seen our real
wages go up by I think twelve percent beyond the
rate of inflation, and that sounds kind of shocking. But
when you consider that this cohort is moving up in
(05:51):
their career and earning more, we do have that tailwind
helping us that many of us are actually on average
earning more than we were in the pandemic in that
phase in our career. The downside, and I think the
headwind that we face beyond even the student loan aspect
of things, is that our generation is kind of the
(06:12):
first one that has gotten it from all sides. When
it comes to the culture of consumerism. There's never been
more temptation in front of us at all times. And
so if you even just pull up the screen time
metric on your phone and you see, oh, four hours,
five hours, you are being hyper targeted by ads. They're
(06:32):
not just television ads that are playing for everyone. These
are ads that are algorithmically programmed to tap into your
innermost desires, and they are very good at it. So
there are very real factors that are making it harder
to save. I think there are also things that are
within our control as well.
Speaker 1 (06:50):
And none of those ads are telling you to take
your money and put it into a savings account or
a CD or something like that.
Speaker 4 (06:56):
No, they're saying by now, pay later, although maybe they.
Speaker 1 (06:59):
Will now that they just heard me say that, and
then now you're going to get targeted of us. David,
what is the difference between somebody who starts saving at
twenty years old versus someone who waits until they're say
thirty five.
Speaker 8 (07:14):
Well, that fifteen year gap potentially leads two a lot
less money, just the compounding effect over time, and particularly
in an environment right now where we can earn five
percent on our savings. And so there are many individuals
that are sort of got used to very very low
interest rates and just have kept money in their checking account.
(07:36):
They look at what the checking account's paying, oftentimes very
very low, and so some simple steps to just increase
our savings is to move it to a money market
mutual fund or a higher yield savings account so that
we can at least get the five percent that could
be had without taking any risk, and so that that's
an important thing that people can just to start saving.
(07:58):
See where you're a little maybe emergency fund is right now,
and move it to something that's yielding higher and that
can get that compounding started.
Speaker 1 (08:07):
And we want to hear from you, by the way,
whether you are young, middle, aged, older, are you saving?
Are you able to save? Is that a priority for you?
You can reach us at eight four four four middle.
That's eight four four four six four three three five three,
And let's go to the phones in Jane, who is
in Morehead, Minnesota. Jane, welcome to the middle. Go ahead.
Speaker 11 (08:28):
Hi uh so, I talked about that. I am a
teacher and my husband is a psychologist. We're fifty three
years old, and we've been very fortunate in that we
come from families that don't have a lot, but also
valued both education and savings. And so we even when
(08:54):
we started every job that we've ever ever started, we
make sure that we have at least ten percent coming
out of our paychecks directly into savings or retirement before
we even see that first paycheck, and we just we
don't look at that, we don't consider it as money
(09:14):
because we don't. It's not ours yet, it's retirement funds.
So that I think has helped. The other thing that
really helped is that we work really hard to live
below our means, and like even both of our houses.
When we've bought our house, we look for a house
(09:34):
that Okay, the bank says we can afford this amount,
but we you know, we go, okay, what can we
actually afford on one of our salaries instead.
Speaker 12 (09:44):
Of both of them?
Speaker 1 (09:45):
Yeah, so you're your fruit.
Speaker 11 (09:47):
And then we are we are, but we still you know,
I mean, I treat myself to coffee once in a
while and I you.
Speaker 1 (09:54):
Know, say good, yes, well that could be very expensive
these days. Jane, let me take let me take your
comments to our guests and Ki. You know, one of
the things that Jane brings up there, which I want
to talk about is if you grew up and you
didn't have a lot of money, it definitely influences how
you behave as an adult.
Speaker 4 (10:13):
Oh one hundred percent. I mean, how could it not.
I think the majority, I would say, of our money
stories come from what we observed as kids and the
way that our parents talked about it too. Even if
even if you know, the financial situation that our family
was in was actually maybe not that abnormal. Even the
language that has used in your home to describe money,
(10:35):
if it's like, oh, we can't afford that, versus oh,
we're choosing not to prioritize that.
Speaker 9 (10:40):
All of that.
Speaker 4 (10:41):
Influences the way that we come to think about it
as adults, and I think that that's why it's really
important to reflect on those types of narratives that you
may have inherited no pun intended, that aren't all that
helpful to you anymore, or that you might want to
rewrite for yourself.
Speaker 1 (10:56):
It's also interesting that Jane was talking about spending below
remains not everybody does that, David.
Speaker 8 (11:02):
Right, Well, no, And one of the things Jane has done,
which I think is smart, is they've automated the savings,
and so there are some hacks that we can use
in terms of the there's apps out there that will
automatically move your a portion of your paychecks directly into savings.
So as Jane said, she doesn't even see it, and
(11:22):
so and you get used to living on an amount
that doesn't include the savings, it's much harder to save afterwards,
you know.
Speaker 1 (11:31):
Tell Ever, When it comes to the importance of saving money,
we hear time and time again it is better to
start as early as possible.
Speaker 2 (11:36):
Yeah, that's right, Jeremy. That's why they're even giving savings
advice on Sesame Street. This is Elmo my favorite one in.
Speaker 3 (11:45):
A seconds, you can do with your money, put it
in three different jobs, the savings, not the spending, and
one for sharing saving.
Speaker 1 (12:04):
A good note from Elma there. I think Elma's first
appearance on The Middle ast of the last, not the last.
By the way, if you are enjoying The Middle, go
and rate us on Apple podcasts or wherever you listen
to your podcasts. Give us five stars, tell everybody how
much you like the show. That would be great, and
we'll be right back with more of the Middle. This
(12:24):
is the Middle. I'm Jeremy Hobson. If you're just tuning.
In the Middle is a national call in show. We're
focused on elevating voices from the middle, geographically, politically, philosophically,
or maybe you just want to meet in the middle.
This hour, we're asking you, are you saving for your future,
your retirement, education, or even just setting aside money for
a rainy day? Tolliver? What is the number to call in.
Speaker 2 (12:46):
It's eight four four four Middle. That's eight four four
four six four three three five three. You can also
write to us at Listen to the Middle dot com
or on social media.
Speaker 1 (12:53):
I'm joined by David Stein, creator of Money for the
Rest of Us, which is also a book and a podcast,
and Katie Gaddy Tassan, who's founder of Money. With Katie
and before we get back to the phones, I want
to ask you each about the issue of social security.
When a lot of people think about their savings, they
think well, I'm going to have social security, or maybe
they think well, I'm not going to have social security. David,
(13:16):
do you advise people to rely on social security being
there for them?
Speaker 8 (13:21):
Absolutely? It would be political suicide for the government to
cut off social security ue to even people approaching retirement. Now,
maybe if you're in your twenties, it's not going to
be your primary measure of living in retirement, but this
is money that will be there. The government can create
(13:43):
the money to pay social security. The latest Trust Fund
report they say that the social security will be funded
completely out of the basically what's in that trust fund
through twenty thirty four and afterwards there's enough to cover
eighty percent of the benefit, so Congress can come together
with the President to close that gap. It can be
(14:05):
modified over time. Social Security you'll be there, and it's
an important component of our retirement savings, but not the
only aspect, which is why we're savings that we can
compliment social security.
Speaker 1 (14:16):
Katie, what about you? Do you tell young people millennials
gen z that they should expect social Security to be
there for them, or do you tell them, you know,
they're probably going to raise the age at some point,
it might not be there when you're in your sixties.
Speaker 4 (14:28):
Well, you know what's funny is I actually I very
much agree, But it's kind of a both For me.
It's that, yes, I would be very surprised. Obviously no
one has a crystal ball, but I would be shocked
if it went away for the same reasons that we
just talked about, which is that it would be incredibly
politically unpopular to do something like that, and also we
(14:51):
don't know what that funding is going to look like
when those of us that are in our twenties and
thirties now are ready to take it, and the chances
that the age will contake you to be you know, raised,
it's a pretty good shot that that's going to happen,
because that's what's happened in the past. And so there
are cool calculators that you can use. I believe it's
SSA dot gov that you can go in and estimate
(15:12):
what your benefit will be. But it is certainly not
I will say, a comfortable retirement supporting amount in most cases,
and so I think it's best to consider it a
supplement that will probably be there, but it's not something
that I would ever advise someone to rely on in
its entirety.
Speaker 1 (15:31):
Well, and even now, David, there are stories of people
who are in there what would be their retirement who
only have Social Security and maybe a little bit extra
or nothing else and are having to just work into
their seventies because they need the money beyond what social
Security can provide.
Speaker 10 (15:49):
Well.
Speaker 8 (15:49):
Absolutely, we have a family friend that her Social Security
covered her rent more than enough, but they're in Phoenix
where the rents up forty and so it's a real
struggle if you're dependent on Social Security, Well that keeps
pace with inflation. Everything else is going up, and so
it it's it's a travesty, really, but that's I have
(16:14):
to make it through somehow.
Speaker 1 (16:16):
Let me see if I can go to Anne who's
in Harrisburg, Pennsylvania, and welcome to the middle. What about you?
Are you saving?
Speaker 13 (16:25):
Thank you? No, I am not saving.
Speaker 14 (16:28):
I am in my.
Speaker 13 (16:28):
Fifties, I have no savings. I'm not able to pay
my most basic monthly bills on time, so there's nothing
left over for savings.
Speaker 1 (16:39):
How did you get into that situation?
Speaker 13 (16:43):
Well, the cost of living is just more than what
I can earn. I used to work at a job
that paid me more than what I needed. I would
say between twenty fifteen and twenty seven team I was
doing well. I could live below my means. I wasn't
(17:05):
living paycheck to paycheck. I would have a couple of
hundred dollars left over from each paycheck, and life was easy.
I switched jobs and my pay remained about the same. However,
(17:26):
the cost of living went up and my child went
to college where I did have to pay tuition, and
that stretched me beyond my means. I didn't anticipate that
the bills would be that expensive for the college, and
(17:46):
I actually ended up homeless due to that.
Speaker 1 (17:48):
Wow, and now but now you you you are, you
are housed.
Speaker 13 (17:54):
I am housed only because my child graduated college and
now as a full time income so that she can contribute.
If she were completely relying upon me, we would be
homeless because now the rents are even more expensive and
I'm unable to find employment at the same level of
(18:18):
ky that I had two years ago.
Speaker 1 (18:21):
Well, and thank you for calling in and Katie. One
of the things that Anne brings up there is the
fact that she's now relying on her child to help
her out. This is probably something we're going to see
a lot more of, is the younger generation having to
subsidize their parents later in life.
Speaker 4 (18:39):
Yeah, and you know what, and that story really breaks
my heart. I have to tell you, it breaks my
heart that in one of the wealthiest nations on Earth,
that anybody is in that position. It's really really well,
like David said, it's a travesty. And I do think
that what is scariest about it for me in my
work is that how common it is. How many people
(19:02):
are in ants position, how many people are a part
of the you know, the low wage workforce or the
workforce we're in. Their wages are not covering a very
basic cost of living. I think the last estimate I
saw is between twenty two and twenty five percent of
American workers fall into that bucket. That's not an insignificant
portion of the economy. So it is really, in some
(19:24):
cases quite impossible. And I do think that we're going
to continue to see and I hear from young people
all the time who will reach out to me and say, hey,
that's great love that you're helping me plan for my retirement.
Speaker 9 (19:37):
What do I do about my mom and dad?
Speaker 4 (19:39):
Because they they're in their sixties and they don't really
have much saved, So like, what should I do for them?
And it's a really unfortunate and difficult question to answer
because part of the answer as well, do you do
you have a time machine? Can we go back in
time and start saving for them? Because beyond that you
have to really start looking for creative solutions and intergeneration
(20:00):
living and things of that nature.
Speaker 1 (20:02):
Well, and David, what is the solution. Is the solution
something that an individual can do, or is the solution
something that the government needs to be doing differently to
make it so that you don't have a person like
Anne who didn't save and is in such a such
a troubling situation.
Speaker 8 (20:18):
Well, right, there's a couple of things that the government
can do. One, Anne invested in her child's human capital.
So by investing education, I mean it's okay that your
child is helping you.
Speaker 6 (20:31):
Now.
Speaker 8 (20:32):
One of the main things that's going on in the
economy over the last fifteen years, really since the Great
Financial Crisis, there's just not enough housing and so there
is there's about a three million dollars shortfall in terms
of housing units in the US. And so if there's
not enough housing that flows through the entire economy, it
(20:52):
pushes up the rents. And so government action to make
it easier to build housing, such as necessary units more density,
as well as expanding the housing voucher program for low
income individuals that there's a huge waiting list for people
trying to just be able to get some subsidy for
(21:14):
the housing. And so those two elements the supply of
housing needs to be increased, but also in that interim,
provide the ability for people to afford the housing that
is available.
Speaker 1 (21:24):
Let's go to Lilian, who's in Saint Louis. Lillian, welcome
to the middle What about you? Are you saving?
Speaker 6 (21:30):
Hi?
Speaker 14 (21:31):
Yes, I am actually.
Speaker 1 (21:34):
Tell us more nice, So I say.
Speaker 14 (21:39):
So, I actually have much more saved now than I
did a couple of years ago because I get some
really wonderful advice from my sister in law.
Speaker 15 (21:50):
Who you know.
Speaker 14 (21:51):
I asked her how did she become more well off?
And she said, you know, with every paycheck she puts
a little in savings. And you know, I have some debts,
and I was always worried, well, how do I pay
my debts? Like I can't save anything. I need to
pay my debts. It's just like you don't pay a
(22:11):
little to your debt, pay a little to savings every
every paycheck, just put a little away. Yeah, and I
have like three times as much as I had a
couple of years ago because of that.
Speaker 1 (22:22):
That is great.
Speaker 14 (22:23):
How old are you comfortable?
Speaker 12 (22:26):
I'm thirty thirty.
Speaker 1 (22:27):
Great, Well, thank you so much for calling in. Uh,
you know, Katie Lillian mentions debt. I will say that
one of the one of the first lessons I learned
about credit cards is the best way to play that
game is never ever carry a balance on your credit card.
You can use it all you want, just don't carry
a balance on your credit card because the amount that
you're going to pay on that debt is going to
be a lot. But your response to to Katie there
(22:49):
or to our to.
Speaker 4 (22:50):
Lilian, yes, well I love that that she What I
love about that story is that she asked somebody for
good financial advice and then she took it, she executed it,
which is the harder part of.
Speaker 9 (23:03):
The equation to then. You know, it doesn't sound.
Speaker 4 (23:06):
Like it would be that revelatory, right, like oh, you
just need to save money. It's like, oh, but okay,
take a little from each paycheck. Right, Even even having
those little those little finer points to put in place
of well, yes, you're gonna keep paying the debt, you're
gonna keep putting some towards the debt, but you're also
going to be setting some aside for yourself and then
taking action is amazing. And to your point about the
(23:27):
credit card debt, Yeah, you know what's interesting is when
I when I first started working, and all my friends
and I were in our first year post scrad and
everyone's getting credit cards for the first time. You really
wouldn't believe the amount of conversations that happened in that
group that were like, Okay, so do I need to
pay the minimum balance or the statement balance, or do
we need do I need to be the full balance. Like,
(23:47):
these things can be a little confusing if you've never
interacted with that language before, with those systems before. And
so I think a lot of people see the minimum
balance and they assumed that, Okay, I'll just I'll pay
that number. That's the smallest number.
Speaker 9 (23:59):
Why not.
Speaker 4 (23:59):
But you always want to make sure you're paying the
statement balance in full. And if you're comfortable with automating
that doing auto pay, that's far and away the best
way to avoid getting into that hole, because once you're
in it, it's pretty hard to dig it back out.
Speaker 16 (24:14):
True.
Speaker 2 (24:15):
Yeah, we actually got some folks commenting on social media
related to this topic. Caitlin and Flint, Michigan says, in short, no,
how can I worry about the future when I'm barely
making it through today. I'll probably end up working my
entire life. Marty and Jacksonville, Florida says, am I saving,
Oh my gosh, what is that?
Speaker 10 (24:32):
What is that?
Speaker 1 (24:33):
Brother?
Speaker 10 (24:35):
No?
Speaker 2 (24:35):
Seriously, in this economy, everything is going up and it's
causing me to tap into my savings. Granted, I'm a
functioning adult with the Form one K and all that
other stuff, but everything is going up except for what
you make, so you just have to make it work.
Send us some more comments and listen to the middle.
Speaker 1 (24:49):
Listen to the middle dot com. Let's go to Eric,
who's in Burnsville, Minnesota. Eric, Welcome to the middle. What
about you go ahead?
Speaker 11 (24:57):
Hey?
Speaker 17 (24:57):
Thanks, My wife and I are able to save each paycheck,
we're able to go on vacation, but have some questions
about what we should be doing to save for our kids.
We have an elementary schooler and a preschooler and looking
at what college could cost in ten and fourteen years
from now. And you know, we've heard some comments about
(25:20):
five twenty nine plans and that they're the best, and
they're people saying that they're not the best, and just
kind of wondering, what is the best idea for someone
living in the middle right now who's able to save
and kind of live a comfortable lifestyle, but want to
make sure that their kids are set up right for
college if possible.
Speaker 1 (25:37):
Great question, Eric, David, I'll go to you on that.
Speaker 8 (25:42):
Well, yes, you should say for college. Each state has
their own five to twenty nine plans. One of the
things you want to look at in terms of the
plans that are available, what are the fees, what are
the options? I think it's helpful to save, perhaps use
a five twenty nine plan, but that not be the
only way, because your child might not want to go
(26:03):
to college, and we're looking out fifteen years the world
could be very different, and so having the habit of savings.
You know, for example, our children, we never did use
a five to twenty nine plan, but we saved and
helped with college in other ways, and so it doesn't
have to be the only way is through a five
twenty nine plan. There are some benefits, but it could
(26:23):
be complemented with other taxable savings.
Speaker 1 (26:26):
Hey, Katie, I know that you talk about the fact
that one of the ways you were able to save
a lot of money quickly is that you did not
have student debt.
Speaker 4 (26:36):
That's true. That was a huge leg up that at
the time I did not really understand. I ended up
going to a state school that I could get a
scholarship to, and my parents covered the room and board
portion while I was there, And the whole time I
was there, they kept emphasizing to.
Speaker 9 (26:55):
Me, you have no idea how lucky you are.
Speaker 4 (26:57):
The fact that you're not going to graduate with student debt.
Speaker 9 (26:59):
You have no idea. You have no idea.
Speaker 4 (27:00):
Well, I had no appreciation of money at all at
that point. I was like, oh, yeah, sure, okay, it's
a pretty big deal. And it wasn't until I got
out into the real world and you know, started doing
this work that I realized how uncommon that is. So
I also would say, don't overlook the possibility that, to
David's point, yes, the world may be very different. There
are also amazing scholarships grant programs.
Speaker 9 (27:19):
Some schools will.
Speaker 4 (27:20):
Give full tuition scholarships just for getting a certain ACT score,
so there might be like an investment in upfront classes
for something like a standardized test that could end up
paying dividends if it leads to a full scholarship. And
I also just want to add that as amazing as
it is to save for your kids college, I want
to underscore the importance of making sure that your retirement
(27:42):
obligations are being fulfilled first, because there are student loans
for education and there aren't student loans for retirement, so
it sounds like they're saving, which is amazing. But some
people selflessly will want to save for college before they
have taken care of their own retirement needs and have
made sure that that is squared away.
Speaker 1 (28:01):
You're saying, put your own mask on first before helping others.
Speaker 9 (28:04):
Basically perfect metaphor.
Speaker 8 (28:07):
There you go.
Speaker 1 (28:08):
Let's sneak in one more call before we have to
take a quick break. Nellie's in Houston, Texas. Nelly, Welcome
to the middle. Tell us your story about saving.
Speaker 10 (28:18):
Hi.
Speaker 15 (28:19):
Yeah, so I'm thirty years old. I work for a
large retailer as a buyer or I guess in the
procurement team, and I am saving, but I feel like
it's harder and harder, honestly to save nowadays, just because
of the cost of living. I live for the past
five years in Austin, and as you guys know, Austin
(28:42):
just boomed like crazy, and every year when I would
renew my lease, it would just go up like an
extra two hundred, three hundred dollars. I mean, I was
sharing a three bedroom house and like each of us
were paying like twelve hundred dollars, you know for and
like in like a five hundred foot house. And so like,
(29:04):
I moved to Houston, and that's helped a little bit,
but I get scared that's the same thing will happen
where it's like things are just going to get more expensive.
So it's just it's a fear that I constantly have.
It's just like life is just getting way more expensive,
which is making harder to prioritize where my money is
supposed to go.
Speaker 1 (29:24):
Nelly, thank you so much for that call. And I
will say that you know, either the middle's average age
of listener is around thirty or people who are around
thirty are most worried about saving right now, which is
which could also be true. But Tolliver, I do want
to go to a ninety three year old next, and
here from billionaire Warren Buffett.
Speaker 2 (29:45):
Yeah, actually, did you know that by the time it
was fourteen Buffett it saved enough money from his paper
route to buy a forty acre farm.
Speaker 1 (29:51):
Wow?
Speaker 2 (29:52):
Did you know that?
Speaker 1 (29:52):
I didn't?
Speaker 2 (29:53):
Thank you Google. And today he's worth one hundred and
thirty eight billion dollars. Here he is in two thousand
and eight talking about saving money.
Speaker 18 (30:00):
There are plenty of people that I don't advise to save.
If you're struggling along and making a reasonable income, and
you have a job with a four oh one gaming
butt a side for you, and you have social security,
who's to say whether it's better to defer a dollar
of expenditure on your family on a trip to Disneyland
or something that they'll get enormous enjoyment out of, so
(30:21):
that when you're seventy five, you're going to have it,
you know, a thirty foot boat instead of a twenty
foot boat.
Speaker 1 (30:26):
I don't have any boats, neither do I? All right,
I will say the best thing to do is have
a friend with the boat. Then they can deal with
all the issues and you just join them on the boat.
Why Wow, more of your calls about saving coming up
on the middle. This is the middle. I'm Jeremy Hobson.
We're asking you this hour, are you able to save
for your future? Call us at eight four four four Middle.
(30:46):
That's a four four four six four three three five
three you can reach out at Listen to theemiddle dot com.
We're joined by Katie Gaddi Tossan who's the founder of
the Money with Katie blog and podcast, and David Stein,
creator of Money for the Rest of Us, which is
also a pod and a book. And before we get
back to the phones, let me just ask you, David.
You know we're having all these debates in this country
(31:06):
about the national debt and people compare it to personal debt.
Of course they're very different. But what does it say
to you about our society that, unlike many other cultures,
we really don't as Americans feel the need to save
that much. Is that about confidence? Is that about is
that stupid?
Speaker 10 (31:23):
Like?
Speaker 1 (31:23):
What do you think.
Speaker 6 (31:26):
You mean?
Speaker 10 (31:27):
Like?
Speaker 1 (31:27):
Individuals are the individuals and as a country, I mean,
we're just we're not a saving country.
Speaker 8 (31:32):
Well, as a federal government, it's impossible for them to save.
That means they're running a surplus, which means they're taxing,
they're taking money from households, and that's not the role
of a federal government. The federal government typically runs a deficit.
So putting that aside, yes, individuals need to save. But
I like the Warren Buffett quote in the sense that
(31:55):
he's saying, we did an episode on this in our
podcast a few years ago. We have permission to spend. Yeah,
some people just that's all they think about his savings.
They're trying to optimize their personal finances and save safe, save,
and they feel guilty spending at all. And so there's
an appropriate balance between saving and spending. We have to
just do some self reflections. Where are we on that spectrum?
(32:18):
Are we are we ignoring the entire conversation about saving,
or are we so focused on it we don't ever
treat ourselves. And that was sort of what Buffett was
getting at. Granted, most of us will not have a
yacht to choose from in terms of house way, Yeah,
but he made.
Speaker 1 (32:37):
Eight billion dollars. He has. Let's go to Let's go
to Fred, who's in Chicago. Fred, Welcome to the middle
of Go ahead.
Speaker 19 (32:44):
Hi, Hi, I thanks for taking my call. So I
I try to save whenever I can. It's really tough
now because the properties are so high, but a couple
of years ago you could get in on real estate
at a much lower price, and I usually use that
(33:05):
as a piggybank. I know that the value really doesn't change,
but at least at least with inflation, the property itself
will kind of protect the value of the money you
put into it. So that's I know.
Speaker 15 (33:23):
It's tough, and.
Speaker 19 (33:25):
It was tough for me to start doing that, but
I found that to be a good way to save.
Speaker 1 (33:32):
That's a great po great, great point, friend, because I
want to get to that, because that is really interesting. Katie,
what about real estate as a savings vehicle. Is that
do you recommend that for people?
Speaker 4 (33:43):
Well, it's certainly one way that you can build wealth,
particularly if you are thinking about it as an investment.
You're buying a property and you're renting it out to
other people like that caller from Austin who was like,
my rent keeps going up. You're on the other side
of that transaction. So I guess it's up to you
if you if you want to be that person to
somebody else who's making it maybe harder for them not.
Speaker 1 (34:05):
And also, if you have a fixed mortgage then and
the inflation you know, goes, you have higher inflation that
fixed mortgage is going to say the exact same for
thirty years or whatever.
Speaker 4 (34:14):
Well, yes, and no, I think the I think it
is a bit of a misconception that a house is
a really great mechanism for saving And I only say
that for well two reasons. There are other costs that
are going to change over time. Many people are experiencing
this right now. As tax assessed values are going up,
your property taxes are going.
Speaker 19 (34:35):
To go up.
Speaker 4 (34:35):
It's also likely that your insurance rates are going to
change as the value of your property rises, and as
anyone who's ever owned a home knows, things break and
things have to be replaced. And so often when we're
looking at the value of our home rising over time,
we're not really factoring in, Oh, but that HVAC system
we had to replace, and oh there was a time
the fridge went out, we had to replace that. These
are things that as a renter you're typically not on
(34:57):
the hook for, so it's important to factor those into your,
you know, long term thinking. For sure.
Speaker 1 (35:04):
Let's go to Javier, who's in Atlanta, Georgia. Javier, welcome
to the middle.
Speaker 12 (35:09):
Hey, happy to be on great.
Speaker 1 (35:12):
To have you go ahead.
Speaker 12 (35:14):
Yes, So what I was saying was, I'm a I'm
in Atlanta. I'm a public defender. Here in Fulton County.
We have a really generous retirement savings account. I think
they kick in I think about eight percent once everything
is said and done for every four or five that
we kick in. So I feel really good about that.
Our salaries are some of the best in the country,
(35:37):
you know, But I definitely still have some of those
anxieties about saving for the future. So I'm covered in
that regard, but in terms of any additional savings that
I have on my own, I haven't really explored those options.
And then you know, I'm thirty, I'm cohabitating with a
partner who, you know, we're looking at potentially getting married soon.
But she's on different financial footing that I am. She's
(35:58):
not able, She's not earning enough to save at all
at this point, you know, So I'm thinking and she,
you know, her parents aren't in a great position either,
So you know, we're in a position where I'm thinking
about the future and thinking about, you know, how much
is she going to be able to savor? Is everything
gonna be on me as we think about home ownership
and futures and everything of that nature.
Speaker 1 (36:18):
Yeah, I was wondering, are you as you think about
saving for the future, is it about being able to
buy a home? Is it about something else? It's about retirement?
Which what are you saving for?
Speaker 12 (36:28):
It's really all the above. Retirement is definitely the number
one I would say. But you know, as somebody who's
kind of dealt with what some of these other callers
talking about in terms of rent constantly going up in
a major city, you know, home ownership would absolutely be
part of the equation.
Speaker 1 (36:44):
Javier, thank you for that David Javier has a public
sector job, which means that he's got the a retirement
plan that's different than a lot of people do in
this country, where they're really tied into the market and
with a four oh one K if they've got that.
Speaker 6 (37:00):
For sure.
Speaker 8 (37:00):
And that's one of the things that's changed over the
past three decades. Where your typical job used to have
a defined benefit pension plan, where there was professional money management,
there was a board overseeing that plan, and then corporations realize, hey,
it's a lot less expensive if we put that risk
(37:20):
on our employees. And that's where the four to one
K plan came to, where suddenly, as individuals that money's portable,
but we're taking on the risk and trying to figure
out and that has really and I don't think we've
seen the long term impact of that. You're just starting
to see baby boomers retired where most of their savings
(37:41):
was through the four to one K, and they're realizing, hey,
even two hundred thousand or three hundred thousand dollars, if
your only gets can spend four percent of that a year,
that's twelve thousand dollars. That's hard to live on. And
so if you have a pension, be very very grateful
and and the rest of us will sort of. You
(38:01):
have to navigate learning some basics of investing, because that
is our responsibility. I mentioned the hiled savings accounts are available.
We talked about compounding investing early. Those are the things
we have to take time to learn.
Speaker 1 (38:16):
Just quickly. If people are listening to this and they're wondering, well,
how much should I have saved when I retire? Is
there is there a hard and fast rule that you
give out David.
Speaker 8 (38:26):
Well, the first thing once you do is figure out
how much they're spending, like what does it take to live?
And then you can you can take that amount, you know,
back out social Security and then divide it by four percent.
And because typically a typical person will spend four percent
of their retirement nest egg. And so once you back
(38:48):
out and you can get a pension on social Security,
how much do I need If that's thirty thousand dollars
additional you need, you divide that by four percent and
if my math right, that's one point two million dollars. Yeah,
that's a lot of money. And that's why such a
daunting problem.
Speaker 1 (39:06):
Let's go to Joeanne, who's in Lincoln, Nebraska. Hi, Joeanne,
Welcome to the middle.
Speaker 15 (39:12):
Hi, thank you, thank you.
Speaker 1 (39:14):
What's what's your situation with saving?
Speaker 20 (39:18):
So my husband and I are not saving. We have
four kids, and I grew up super poor like Section
eight projects, homeless shelters, So definitely never had those conversations
in my house because we didn't have money for food,
let alone to save. But because we have four kids,
we want to make sure that their childhoods are enjoyable.
(39:39):
Like Warren Buppett was saying, like, I am less concerned
about having a boat at all than my kids being
able to have summer vacations and play sports which are expensive,
or do theater or whatever they want to do, and
be able to go to college that I am about
our retirement.
Speaker 1 (39:57):
Katie, what do you think about that? What do you
say to Joanne?
Speaker 7 (40:00):
Well?
Speaker 4 (40:01):
I think Joanne sounds like a mom who loves her
family a lot and is really embracing the fact that
she wants her kids to have a better experience of
childhood than she did, which I think is really really admirable.
The only thing that I would kind of call back
to is that earlier conversation that we had with the
previous caller who said, I don't have any savings. Now
(40:21):
I'm relying on my kids because I don't have a
retirement fund.
Speaker 9 (40:24):
So I think that this is about kind of for them.
Speaker 11 (40:27):
That wasn't great for her.
Speaker 1 (40:30):
Are you expecting like it wasn't great, but.
Speaker 20 (40:33):
I got four kids, like there's a good chance.
Speaker 10 (40:36):
That one of them will make good money.
Speaker 4 (40:39):
I mean, yeah, I think I guess what I'm getting
at is like, in an indirect way, you saving for
your retirement is also caring for them as well, because
it's then something that they are not going to have
to feel as though they are going to have to
support that for you. But I think that it's great
that you're trying to make sure that they have a
(41:00):
better experience than you did.
Speaker 1 (41:02):
Tlliver, We've got another message coming in online.
Speaker 6 (41:05):
Yeah.
Speaker 2 (41:05):
Luna, a teacher in Florida, says, I have a master's
degree and over a decade of working experience. My salary
is about fifty five K a year. Both my husband
and I work and we don't have childcare payments. However,
are not able to save more than three hundred dollars
a month? No four on one K with this inflation.
The majority of our expenses are for food bought in
a supermarket. I know plenty of teachers going to food
banks because our salary doesn't cover the living expenses. Our
(41:27):
fourteen year old is going to high school next year
college if and only if he gets a full ride.
Otherwise he's doing an apprenticeship and getting a blue collar job.
Speaker 1 (41:34):
Yeah, it sounds like a lot of people focused on
the rising cost of food and also, of course housing,
which has come up a number of times already. Let's
go to Olivia, who is in New Orleans, Olivia. Welcome
to the middle.
Speaker 16 (41:47):
Go ahead, Hi, thank you for having me.
Speaker 1 (41:51):
Yeah, go ahead.
Speaker 16 (41:52):
So I am twenty nine years old, So yeah, I
guess people in my age up are worried about saving.
I have started to be able to save, but I
don't think that I'm doing it in a responsible way
that is growing. I just have it in like a
(42:15):
savings account attached to my checking through a small credit union,
and I'm trying to figure out how to put it
into a place where it would grow. But I work
so many jobs in order to be able to save
this money that I feel worn out by the time
I sit down and try and navigate this new space
(42:38):
for myself.
Speaker 1 (42:40):
Well, let's ask David, David, what do you say to
Olivia there? What should she be doing?
Speaker 8 (42:46):
Well, first off, see what interest rate you're earning on
the it should be on your statement, how much you're earning,
and presumably it's very very low, and so as savers,
one of the things we need to learn how to
do is open up a brokerage account, an account at
Vanguard or Fidelity or Schwab. You can call them up,
(43:06):
you can do it online, and once you're there, there
are savings vehicles there. You can invest in what's known
as a money market mutual fund, which is a very
safe investment that's primarily invested in very short term government bonds,
and you can earn five percent. So figure out in
today's environment where rates are where they are, just that
(43:29):
simple step. I helped my niece the other day with this.
She had a little bit of money. We walked through
how do you open an account at Vanguard, how do
you purchase a money market mutual fund? And those are
basic steps we can take, so you could then once
you see and she called up a week or two later,
like I did it, like I was able to do
(43:49):
that and she's around thirty. She hasn't saved much in
her life, and so we can learn to open a
brokerage account, purchase one investment, one money market mutual fund,
and that sort of starts at education path.
Speaker 1 (44:04):
Thank you so much for that, David, and thank you
for that call, Olivia. I remember the first time I
opened up a broker's account and I invested I think
maybe two hundred dollars in GE and just let it
sit there forever until the company just sort of like
got smaller and smaller and smaller. That was not a
very good investment at that time, but it seemed it
was safe. It was definitely safe. Let's go to Portia,
(44:25):
who's in Groton, Connecticut. Porscha, welcome to the middle. Go ahead.
Speaker 10 (44:30):
Well, thank you for having me. I am in my
mid forties and I was driving home. I'm an elected
official from a budget meeting, talk about the pressure with
the rising cost in my community and having to help
set those numbers. I am a six year breast cancer
survivor Stage three. I was a single mom at the time,
(44:55):
in my thirties late thirties. I had a high it
uptible planned and I had a about my savings to
live to literally fight for my life. And I think
the concern was that thirty thirty nine I had a
high deductible plan. I was healthy, no medications, no concerns,
and now I'm trying to catch up. I have a
(45:16):
son who opted to join the military and serve in
the Submarine Force, which I'm very proud of, so that
did not put the pressure of college expenses. I have
my next son that's graduating this year, and he has
applied to twelve schools, accepted to twelve and planning to
pursue engineering. I don't expect to rely on him. I
do own my own home and I am working towards
(45:39):
paying that off in twenty years versus thirty to have
that equity and things like that. So I'm just looking
at other ways to rebuild after a huge stas medically,
it's a great problem to have, you know, worrying about
your kid's college expense, and I'm just thankful to be here.
(45:59):
But the car with so huge that most people in
their late thirties don't have to think about.
Speaker 1 (46:06):
And that's that's something that many people, you know, a
medical expense and a medical a medical experience can certainly
be a big a game changer, Katie, I'll go to
you there for a thought on that.
Speaker 4 (46:19):
Well, you know, the healthcare system in the US is
a real treat and the high deductible plan that she referenced,
it typically comes with something called an HSA plan that
you can opt to contribute to. You can make pre
tax contribution. So they're kind of saying, hey, we know
that it stinks that our you know, healthcare system is
(46:40):
for profit, but here's a consolation prize. You can contribute
to this pre tax plan and we'll give you a
tax break.
Speaker 9 (46:46):
Saving in an.
Speaker 4 (46:46):
HSA plan if you have a high deductible health plan,
is a good way to put some money aside get
the tax break. And so if you do end up
having to go out of pocket to pay that high deductible,
you end up meeting the deductible and then exceeding it.
In so cases with you know, the level of care
you need, that account can be there for you just
serve as a bit of a buffer. But the other
thing I'd mentioned on medical debt that I just feel
(47:08):
like I have to say is that much of it
is negotiable. Now, is that really what you want to
be spending your time doing when you're battling stage three
breast cancer. No, it's a shame that we're in a
system that requires that of us, and it's disgusting in
my opinion. But medical bills are something that there are
a lot of ways that you can push back with
(47:29):
billing departments. You can fight and get medical bills lowered.
We do a lot of content about how to do that,
and there are a lot of really great, you know,
people out there that are doing good work around that.
So always when you get a medical bill, know that
that is that's a suggestion, and you should push back.
Speaker 1 (47:45):
You know, we are out of time. But David, I
actually just want to ask you, just briefly, or are
you surprised at how many thirty year olds called in
talking about savings?
Speaker 8 (47:55):
No. No, As a thirty year old, I can relate
that that's important.
Speaker 1 (48:00):
We're all thirty, we're all thirty on the mid We're
all thirty. Everybody's thirty on the middle.
Speaker 8 (48:04):
Now, I think everyone's worried about savings. And definitely I
think once you get we have no one. Our oldest
son is around thirty, and you kind of get to
that age we realize, hey, I'm an adult.
Speaker 1 (48:18):
Now I gotta start what do adults do?
Speaker 14 (48:19):
They save?
Speaker 8 (48:20):
And then they start thinking about it.
Speaker 1 (48:22):
David Stein, host of The Money for the Rest of
Us podcasts and author of a book by the same name.
And Katie Gaddy Tossan, founder of The Money with Katie
blog and podcast. Thanks to both of you for joining
us on the Middle.
Speaker 8 (48:34):
Thank you, thanks so much.
Speaker 1 (48:35):
And Tolliver, what do we have on tap for next
week's show?
Speaker 2 (48:38):
We'll be talking about a different kind of green on
the show, Chairvy Oh, We'll be asking is cannabis legalization working?
You can call us at eight four four four six
four three three five three are right and at listen
to the miiddle dot com. I want you there sent
up for a newsletric Come.
Speaker 1 (48:52):
The Middle is brought to you by LONGNOK Media, distributed
by Illinois Public Media or Bandit Illinois and produced by
Joanne Jennings, Harrison Patino, John Barth, and Danny Alex and
our technical director is Jason Croft. Our theme music was
composed by Andrew Hay That's also to Nashville Public Radio,
iHeartMedia and the more than four hundred public radio stations
that are making it possible for people across the country,
(49:13):
many of them thirty years old. To listen to the middle,
I'm Jeremy Hobson. I'll talk to you next week.
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