Teresa Ghilarducci: How to Retire with Enough Money

Teresa Ghilarducci

Did you know a majority of Americans have less than $30,000 in retirement savings? One third has saved nothing at all. Tens of millions of middle-class Americans turning 65 in the next decade are on track to be living in or near poverty after they quit working. My guest today refers to Baby Boomers as “When 60 is the New 17.”

Welcome to a Career Strategies podcast on TotalPicture this is Peter Clayton — today we’re going to be talking about How to Retire with Enough Money: And How to Know What Enough Is. This just happens to be the title of a new book by my special guest, Teresa Ghilarducci, an expert on retirement, pensions, and personal savings. Teresa is the Bernard L. and Irene Schwartz Chair in Economic Policy Analysis at The New School for Social Research. She has a PhD in economics from the University of California, Berkeley and taught previously at the University of Notre Dame.

Talking Points: Questions Peter Clayton Asks Teresa Ghilarducci

Teresa thank you for speaking with me today. I watched a YouTube interview from the Institute of New Economic Thinking with you titled the Retirement Crisis. Perhaps you can give us a brief overview of the some of the data points you bring up in the interview and in your new book relating to the retirement crisis?

I want to read a brief passage from the introduction of How to Retire with Enough Money “…do not withdraw any funds if you lose your job, have health troubles, get divorced, buy a house, or send a son or daughter to college (or bail him or her out of jail if you don’t have an honor-student type kid.”

We all know people who’ve had their savings wiped out due to divorce, health problems, dot-com crashes, job loss, recession, or a combination of these devastating life-altering factors. So… what advice you can share with us?

You paint a very bleak picture for the baby boom generation, many of whom will be forced into retirement with no savings. And it seems to me more and more of these folks will be taking low-wage jobs really meant for teenagers — to use your headline — 70 is the new 17 — and will retire when they drop dead.

On the other end of the spectrum of course we have recent college grads going to work – having to pay-off thousands of dollars of student loans. What strategy for saving do you have for them?

I’d like you to talk about 401k and other company retirement plans. As you write, there’s a big difference between the traditional retirement accounts (from the Mad Men era) to what is generally offered today… what you refer to as DYI plans.

As you know, according to the Bureau of Labor Statistics, most millennials will have 15-20 jobs during their lifetime — how do you protect your retirement funds when changing jobs? And what can you do to make sure they’re not lost? You advise not to convert these to IRAs?

A number of young people join small start-ups that have no retirement plans, or are self-employed. What advice to you have for them?

You write, “the smartest people have fantasy based retirement plans.” Can you expand on this?

To sort of expand on this, lots of professionals believe they can score big in the stock market and/or real estate. You thoughts?

What happens to retirement funds when a company goes bankrupt?

What do economists mean when you talk about secure retirement?

Why do you advocate for a retirement income equal to at least 80% of your pre-retirement income?

Talk to us about debt… Credit card debt, auto loans, mortgages… as you write, many people consider their mortgages as forced savings – with the tax write-off as an added bonus.

I’d like to to talk about what you refer to as “a guy,” AKA financial advisor. I would assume that most professionals earning six figures have a “guy” or a woman financial advisor. Can you briefly outline some of your advice from chapter 5?

Since this is an election year and the final chapter of your book is called voting or civil involvement, please give my listeners a call to action.

Teresa Ghilarducci is an expert on retirement, pensions, and personal savings and the Bernard L. and Irene Schwartz Chair in Economic Policy Analysis at The New School for Social Research. She has a PhD in economics from the University of California, Berkeley and taught previously at the University of Notre Dame. Her 2008 book, When I’m Sixty-Four: The Plot Against Pensions and the Plan to Save Them, was recognized for containing the best economic idea of 2008 by The New York Times. Her book Labor’s Capital: The Politics and Economics of Private Pensions won The Association of American Publishers award for the best business book of 1992. She has written for and been featured in The New York Times, Money, Kiplinger’s, Businessweek, U.S. News & World Report, Parade, and more

Again, we’ve been speaking with Teresa Ghilarducci, author of How to Retire with Enough Money: And How to Know What Enough Is. published by Workman press. It’s a quick read, 121 pages including the Appendix – will cost you less than a cheap glass of wine in a New York restaurant, and I highly recommend it. Visit her show page in the Career Strategies Channel of totalpicture.com for contact information and resource links.

Have you been putting off saving for retirement? If so you are definitely not alone. Nearly 1/3 of American adults have no retirement savings at all while a majority of Americans approaching retirement age have managed to save less than $30.000. If you do not want to be flipping burgers at age 70 then it is up to YOU to do something about it….and sooner rather than later. Teresa Ghilarducci is a labor economist and a nationally recognized expert in retirement security. She has cobbled together an extremely informative and very readable little book that will assist you in devising a strategy to help ensure a comfortable retirement. In just 116 pages “How To Retire with Enough Money (and How to Know What Enough Is)” covers it all starting with the importance of paying down debt. This is a strategy that the nationally-syndicated radio talk show host Dave Ramsey has been advocating for more than two decades. Very sound advice!

Meanwhile, the author also makes a series of other common-sense recommendations. For example, if you are not currently participating in your company’s 401(k) plan you are making a huge mistake. She offers some examples to explain why. Also, she is definitely not a big fan of financial advisers. She suggests a more do-it-yourself approach and insists that investing in stock and bond index funds will produce greater returns in the long run. Ghilarducci also offers some extremely practical advice on how to maximize your social security benefits. Whether you are 28 or 58 these are issues you really do need to familiarize yourself with, Indeed, time is of the essence. Here is a single-sit read than can change the course of your retirement. Written by Dr. Teresa Ghilarducci, an economics professor, a retirement and savings specialist, and a trustee to two retiree health-care trusts worth over $54 billion, How to Retire with Enough Money cuts through the confusion, misinformation, and bad policy-making that keeps us spending or saving poorly.

It begins with acknowledging what a person or household actually needs to have saved—the rule of thumb is eight to ten times your annual salary before retirement—and how much to expect from Social Security. And then it delivers the basic principles that will make the money grow, including a dozen good ideas to get current expenses under control. Why to “get rid of your guy”—those for-fee (or hidden-fee) financial planners that suck up valuable assets. Why it’s always better to pay off a loan or a mortgage.

There are no gimmicks, no magical thinking—just an easy-to-follow program that works.

Visit Teresa Ghilarducci on the web  teresaghilarducci.org / Twitter: @tghilarducci

 

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