How Women Can Plan Retirement Income With Mary Beth Franklin

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Full Transcript:

Note: This is an original transcript–edited for sense, length, and clarity.  If you have any questions or concerns, please email our host, Doria Lavagnino, at doria@sheventurespodcast.com.

00:00.00

Doria Lavagnino:

For Financial Literacy Month, who better to interview than a woman whose journalism career spans more than four decades. A powerhouse who honed her craft at publications such as UPI, Kiplinger’s Personal Finance, and Investment News, among others. Last year she won the prestigious EPPY Award for her business and finance writing. Her biggest pivot happened later in her career when she decided to study for and obtain a CFP, Certified Financial Planner, designation. She is a respected public speaker on retirement, Social Security, and more broadly, personal finance. Mary Beth Franklin, welcome to SheVentures.

00:49.16

Mary Beth Franklin:

Thank you. I’m delighted to be a guest on such a pivotal podcast. It’s so important. As we say, “You can’t be what you can’t see,” or in this case, “You can’t hear,” so I love sharing stories so other women can chart their own path.

01:05.77

Doria:

I appreciate that and glad that you feel the same way. Everyone on SheVentures has a career or life pivot and I know that you’ve had a few. I wanted to, before we delve into retirement and money, talk just a little bit for listeners about your earlier career, and I’m also thinking of myself 25 years ago when I was a young aspiring journalist, is that okay with you, Mary Beth?

01:36.15

Mary Beth:

It’s perfect because I’ve had several pivots in my career and it all came down to: If the rules don’t work for you, change the rules.

01:46.98

Doria:

That is a great quote. As a cub reporter, you spent a decade as a congressional reporter for UPI. I don’t know how many listeners know what UPI is but it’s, in my mind, kind of the equivalent to the Associated Press, maybe it’s more than that. It’s an American global news agency wire service, or was. What was it like — and I remember it was huge in the 80s, very big and well-known and before — what was it like for you to start your career for such a well-known agency? And what was it like as a woman in the early 80s?

02:30.60

Mary Beth:

Well I’m glad you asked that question, and how wise of you to remind readers who probably have no idea what United Press International was. But back in the days pre-internet, AP (Associated Press) and UPI were fierce global competitors, and that was back in the days when most newspaper writers wrote for either their afternoon edition newspapers or their morning edition newspapers and they would go home and go to dinner, and they would say to the rest of us on Capitol Hill, “Leave it to the wires.” That meant the wire services, UPI and AP. We were the original 24/7 news coverage. Now, I went to journalism school at American University in Washington, D.C. I was studying broadcast journalism at the time because I thought I was going to be the next great anchor and I had wonderful role models. My professor, head of broadcast journalism, was a person named Ed Bliss. Ed had been Walter Cronkite’s editor at CBS and prior to that he had worked with Edward R. Murrow. So it was truly a broadcast journalism dynasty, and he literally wrote the textbook on broadcast journalism news. 

That’s the way I started and I remember graduating from college and all the professors saying, “Well you need to go out to podunk someplace and learn your craft and make your mistakes out there where nobody will ever see you.” But again, I didn’t like those rules and I loved living in Washington, D.C. I happened to get a job as a cub reporter with a very small newswire at the time called Commodity News Service and it wrote about commodities, and I had grown up outside of Philadelphia and really did not know a whole lot about farms and commodities. But I did learn on the job. I spent a few years there, and by the end I was the assistant bureau chief, at about 23 years old. I was covering Capitol Hill, and I was covering the budget, and federal taxes, and Social Security reform later, actually. So I really earned my chops. But at the time, I ended up marrying somebody I worked with, and that was frowned upon so we needed to get different jobs. 

At the time, being originally from Pennsylvania, and this thing happened in 1979 called the Three Mile Island nuclear meltdown, and I was so taken by that I thought, “This is a piece of history, I have to be part of it.” I got hired as part of the public information staff of the president’s commission on Three Mile Island and, boy, did that sound so impressive, but I ended up emptying ashtrays and filling water glasses and thinking, “Well this sucks.” 

But, what was very interesting (so that was 1979), back in those days, the theory was if you left journalism you could never get back into journalism, but things just started to change about then. For all the job interviews I couldn’t get coming from a little unknown commodity news service, suddenly as I was leaving the prestigious president’s commission on Three Mile Island. I was getting interviews with the Wall Street Journal, and the Washington Post, and the Washington Star, and United Press International, and I took one of those jobs and I got to cover Congress for 10 years, and it was an honor, it was a challenge, it was a learning experience, and it was really hard work because at one point I started having children. 

I had a child in 1984 and again nobody had ever really done job-sharing back then, but I said to my bosses, “Hey nobody’s ever on the Hill on Mondays and Fridays, how about I just work Tuesday, Wednesday, and Thursday and you pay me three-fifths of a salary?” And they said, “That’s a great idea.” And then UPI went into bankruptcy and we took a 25 percent pay cut on top of my reduced salary of three-fifths. So by the time I paid the babysitter, I think she took home more money than I did. But it created a bookmark for my career where I was able to have a child, take a maternity leave, come back on three-fifths of a salary and a work schedule. Then I had another child, and what you can do with one, you can’t so much do with two. So I remember saying to my au pair girl who I brought over from Germany, “This is real simple: You’re fired; I quit,” and I decided to stay home and start a freelancing career, and this was in the late 80s. Let me tell you I had a syndicated newspaper column that was carried in 200 newspapers nationwide writing about older people, things like retirement, and Medicare, and Social Security, and long-term care insurance and things, and this was literally back in the days where I still went to the library to do research.

08:09.65

Doria:

Yeah, that’s what we did. We had no Google!

08:14.10

Mary Beth:

Right. I would write my columns and download them on –– remember this –– a floppy disc and mail it to my New York Times syndicate. That lasted for about 10 years, and during that time I took on other jobs writing for magazines. I wrote healthcare issues for the Washington Post, and wrote about interesting women for the Chicago Tribune, and wrote for various magazines. Then I had an opportunity to go work for Kiplinger’s Personal Finance magazine. I thought, “Great, a full time job. I can work less, this is wonderful.” So I did that for about 13 years and again learned wonderful things, had great editors, and the key thing I learned at Kiplinger’s was never make your reader do the math whenever you’re writing about finance. Always include an example because if you make them do the math in their head they may turn the page and go to the next article. 

09:11.88

Doria:

So let me just reflect back on what I’ve taken in thus far. Commodities are not a sexy topic, not particularly easy to understand, but you decided that was what you wanted to do and you went after it. So it’s a matter of being open to the opportunities that present themselves to you to keep your eye on the bigger picture even though none of us when we’re going through it really know what that is, right?

09:47.98

Mary Beth:

Absolutely because I don’t think anyone’s life is a straight path. You are presented with these forks in the road throughout your career and who knows, it’s like the movie Sliding Doors or the book The Midnight Library, you never know what the path not taken may have done to your life. But I have been intrigued and fortunate and very satisfied with the various paths I chose to take at various ventures.

10:15.98

Doria:

The other thing that you touched upon so beautifully is motherhood. I am also a mother of two children and, unlike you, I was interested in newspaper journalism when I graduated but I thought to myself, “I don’t think I can do that. I don’t think I can handle the rigor of a 24/7 type of environment and raise my children.” You found a way to do it, so it goes to show, and I ended up working at cushy women’s magazines, which I’ve left behind, but you show that, again, with a will there’s a way.

10:57.61

Mary Beth:

Really if you say, “I want to do this and I can do this but the current confines don’t allow me,” let’s see if we can change those rules. I have been very fortunate every step of the way for a variety of reasons. When I said to UPI, “Hi, if I work less you can pay me less,” that appealed to “Hey, we’re going bankrupt anyway, why not?”

11:27.70

Doria:

Right, little did you know. So you have the perspective of more than four decades in the media, and as we’ve kind of alluded to it’s an industry that has been radically transformed by, in part, technology. But the tenets I think of quality journalism –– independence, lack of bias, protecting and checking sources –– remain the same. From your vantage point, what do you think is one positive and one negative or challenge in the industry as it’s evolved today?

12:06.20

Mary Beth:

Well I think the positive is we have more platforms to reach readers or listeners, where before I wrote for a wire service and my stories appeared in various newspapers around the country was one way to deliver it. I would never have envisioned 40 years later having my own podcast, being a public speaker in person, doing various videos, appearing on television programs from PBS’ WealthTrack to Good Morning America and the Today show. The technology has allowed us to reach more people in different ways — however they choose to receive the message. That’s the positive. There was also a lot of downside to this constant 24/7 information era. I’m afraid there’s shortcuts. The revenue models that used to support good journalism, the classic advertising, the classic subscription. Journalism is expensive to do it right. You need the time to investigate a story, you need a good editor that’s going to question everything you write, you’re going to need good copy editors to make sure it’s grammatically correct and it reads well. A lot of those mid-level jobs have been eliminated, which is unfortunate. And there’s this constant pressure to publish as soon as you get it and I also think what’s missing is because of the availability of anyone going online ––Twitter, Facebook, whatever –– they can express their opinion, but we have generations of people who don’t know the concept of fact checking or getting two different sources that you name, all these unnamed sources it’s a very slippery slope. That has created the beginning of this era of disinformation on the news provider parts, and then we’re all equally guilty of saying, “Well I’m going to choose what information comes into my personal inbox,” “I’m going to listen to CNN,” “I’m going to listen to Fox News,” or whatever. So we just reinforce our own biases and we don’t hear the other side so when we do hear the other side we say, “That’s crazy, I’ve never heard that before.”

14:38.31

Doria:

You’re so on target with the younger generation. My 14-year-old gets her news from TikTok and some of the things that she says to me are so incredibly outlandish and I’ve asked her, “What source?” That’s what I’ve started to do, “What source did you get that from?” Just trying to get her to think about what is the agenda behind the information that’s being presented to her.

15:10.49

Mary Beth:

Exactly and I think that’s a real challenge for our school systems. We always thought of college as something where you learned critical thinking, but it’s so important to expose younger students in their earliest years to the idea of critical thinking and question: What is the source and what’s the motivation behind the source?

15:34.50

Doria:

Absolutely. Before we get into your amazing financial tips, I just wanted to touch on your most current pivot, which is that you were a very established journalist yet you decided about 10 years ago or so to study for the Certified Financial Planner exam. So I just wanted you to tell us briefly about that and what you’re doing today.

16:06.56

Mary Beth:

Yes, at the time I was at Kiplinger’s Personal Finance magazine, yet another company I seem to have put out of business, there’s been a string of them, the graveyard of media companies. At the time, I was focusing on retirement issues, and I noticed that whenever I was interviewing financial planners it seemed to me that the ones that were Certified Financial Planners seemed to be the sharpest tools in the box and I admired that. And I also thought as I interviewed other people, “Wow, I know as much or more than that person on this given topic but I don’t have any credentials,” and I thought, “I want to try this.” I was in my late 50s at the time when I decided, “All right, let’s go for this. Let me go through the Certified Financial Planning credentialing procedure,” which involves seven college-level courses followed by, at the time, a two-day written exam that was a bit like the bar exam with only a 50 percent passage rate. And then an experience requirement. 

I started that procedure while I was at Kiplinger’s magazine and I finished it once I had left Kiplinger’s and had gone on to Investment News, which is a publication for financial advisors. What was interesting was I was able to do the university courses, I was able to sit for the exam, and did pass it the first time, which I was extremely proud of, but I knew my experience did not meet the traditional two years face-to-face working with clients or three years backroom in a support sort of thing. I was a journalist. So I said to the CFP Board, “I understand this is not your traditional experience, but I answer about 100 questions a week from consumers and financial advisors on things like financial planning, financial literacy, Social Security, Medicare, I’m going to blind copy you on every response, and you tell me if I don’t have the experience.” After a couple months they contacted me and said, “Okay, stop sending us those blind copies and be patient and work with us.” To their credit, Kevin Keller who’s the CEO of the Certified Financial Plan Board of Standards, put his neck out for me and other financial journalists. And they made the decision that, on a case-by-case basis, financial journalists, who had successfully completed the college courses and passed the exam, would be considered under new experience requirements. I was the first person to win my experience under those new rules, and I have proudly been a CFP ever since.

19:20.15

Doria:

I am so glad that you shared this story because I too have looked at becoming a CFP and the practical requirement was what concerned me. I don’t know what amount of financial journalism experience one would have to have, but it’s good for listeners to know that if they are somewhere with a decade or two decades of really substantial experience that that is something that they may consider.

19:49.98

Mary Beth:

And also in exchange because, as I said, they took a lot of grief for taking that stand, there were a lot of people who had said to me, “Well just because you can write about brain surgery doesn’t mean you can perform it.” I understand that but I feel like I have really earned this and I said to the CFP Board, “Thank you for being flexible in this. What can I do in exchange?” I have been a member of their Women’s Initiative, which the CFP Board founded back in 2013, to get more women and people of color into the ranks of Certified Financial Planning professionals, a profession that in the past has been known as old, male, and pale. Which worked for the profession in the past because that’s what their clients look like. But going forward, you’re going to have more women controlling lots of wealth, and businesses, and inheriting money from parents and spouses, and people of color. And in many cases they want to work with an advisor that looks and sounds like they do.

20:59.52

Doria:

Yes, of course, which makes perfect sense because why wouldn’t you? I love that and I love that you’re doing that advocacy work. I hope to see, and I think I have seen, more women financial planners and more people of color, though I think there’s still a long way to go, as far as that goes. 

I am very passionate about educating women about money, and one area that concerns me is what’s referred to as the retirement gap. Before our podcast, I was looking at a Brookings Institute report that cited that because women are typically a source of unwaged labor at some point in their life, be it that they raise children, or elder care, or both and the fact that women are earning 81 cents to every dollar that a man earns, women of color even less. That creates an overall problem when it comes to retirement and I’m stating these things as facts. One study found that a woman with one child, this is again from Brookings, earns 28 percent less on average over her career than a woman without children and that’s a sharp contrast. Typically men don’t take time off, although that is changing I understand. Can you talk to listeners a little bit about your view of the retirement gap and whether you agree or disagree?

22:43.32

Mary Beth:

You’re absolutely right. We talk about a wage gap — the numbers are roughly for every dollar a man earns a woman earns about 80 cents. But when you get to retirement, that wage gap becomes a retirement chasm and it’s because, as you mentioned, women tend to work less, they tend to take time out of the workforce for either child care, or elder care, or both, they tend to live longer, if they’re married they tend to outlive their spouses, increasingly women find themselves single in retirement due to divorce, widowhood, or never being married. So here they have this conundrum where they earn less over their lifetimes and yet they spend more years alone in retirement and they have to make do with less.

One of the things I talk to women about is how critical Social Security is to women. When we look, women now represent slightly more than half of the U.S. population but they represent about two-thirds of the Social Security beneficiaries, many of those, the oldest olds, the people 85 plus, they’re often living alone. Social Security is one of the few sources of guaranteed income for every month for the rest of your life no matter how long you live and it’s adjusted for inflation. In this era of virtually disappearing pensions, unless you are a school teacher that has some sort of pension, or government worker either federal or some of the state workers, you don’t have what they call a Defined Benefit Pension that is going to pay you every month for the rest of your life but you do have Social Security. 

So one of my missions has been to educate people on how to optimize their Social Security benefits for their personal situation. In some cases, that means waiting as long as possible up until age 70 to get the biggest benefit possible. In other cases, in a married couple, it may make sense for one spouse to wait as long as age 70 but then maybe the other spouse may want to claim early because it brings cash into the household while allowing the other spouse with a bigger benefit to wait. Because what many people don’t realize is that one one spouse dies the bigger Social Security benefit of the two continues as the survivor benefit and the smaller benefit goes away. So I tell married women, particularly, you should be making your decision of when to claim Social Security as a household decision, not just two individual decisions.

25:35.61

Doria:

That’s great information and tells listeners how Social Security is calculated. I don’t want to assume people know that it’s the last 10 years.

25:46.12

Mary Beth:

Right. Let’s go to the basics and you’re absolutely right, few people understand this. Social Security benefits are based on your top 35 years of earnings and they index them so they reflect what the $30,000 a year you earned, maybe 30 years ago, what the equivalent would be today. So they take your top 35 years, they add them up, they divide by 35, divide by 12, and then come up with your average index monthly earnings, they apply a formula to that. So that’s a piece of what you’re potentially going to get. But the big issue is your age at the time you claim them. You can claim benefits as early as 62 but if you do those benefits are permanently reduced for the rest of your life. If you wait till your full retirement age to claim them, which depending on your birth year is any time between 66 and 67, then you get 100 percent of those benefits that you have worked so hard for and paid so much for in the form of your payroll taxes also known as FICA contributions. Or if you’re willing to wait up until age 70, you get this huge bonus. For every year you postpone claiming your benefits beyond your full retirement age up until age 70, you get an extra 8 percent a year. The difference between claiming as soon as possible at age 62 or as late as possible at age 70 could mean a 76 percent increase in your monthly Social Security benefits for the rest of your life.

27:27.10

Doria:

Incredible and I don’t know the answer to this, if you’re 70 can you decide to keep postponing it or do you have to take it at 70?

27:35.77

Mary Beth:

It makes no sense to postpone it beyond 70 because those delayed retirement credits of 8 percent a year stop at age 70. This is really important for women. I talked about how your benefits are based on your top 35 years of earnings. What happens if you’ve been in and out of the workforce and have fewer than 35 years of earnings? Let’s say you had 20 years of earnings. Well guess what Social Security is still going to divide by 35, you’re just going to have a lot of years of zero earnings and when they divide that you are going to end up with a smaller retirement benefit. But the good news is if you continue to work, even on a part-time basis, regardless of your age you could already be at your full retirement age, you could already be collecting Social Security benefits, but each year that you continue to work it continues to add to your earnings record. If you had fewer than 35 years, it’s going to replace some of those zero earning years. If you have already had 35 years, if your current earnings are higher than one of those years that was used to calculate your benefit, your future benefits could increase.

28:51.74

Doria:

This is great information. Thank you. One thing that I did think about is my mother, who is now 87, but is a CPA just not certified anymore. I remember she was claiming Social Security benefits but she was also grading the CPA exam twice a year. At the time, and I don’t know if this has been changed, she could only earn a certain amount before it actually worked against her to earn money because it was taxed at such a high rate. Is that still something that people have to be concerned about?

29:33.35

Mary Beth:

Yes, and there’s actually two different things you’re talking about. One is called the Earnings Test. You have to remember that Social Security was designed as a retirement benefit and yes, you can claim it early, say it’s 62, but not only is your benefit reduced because you’ve claimed it early but now if you have earnings from a job and you earn too much money, which is roughly about $20,000 a year, you’re going to start losing some or even all of your Social Security benefits temporarily. Because once you get to your full retirement age, those earnings restrictions go away. So I say to people, if you plan to keep working it generally does not make sense to claim benefits early. Now, if you’re in a situation where you’re not working, you need the money, go ahead and take it early, that’s what it’s there for. But if you plan to continue having earnings from a job, whether it’s as an employee or even self-employed, it may not make sense to claim Social Security benefits before your full retirement age. But once you do reach that full retirement age, you can work and make as much money as you want; it will not affect your Social Security benefits.

30:51.76

Doria:

Thank you for clarifying that for me and for our listeners. I wanted to go through just a few groups of women that I know listened to the podcast and was hoping that you could talk briefly about, in addition to Social Security, what kind of vehicles are out there for them to help save for their retirement. The first are gig workers and there are two categories, one is the solopreneur and the other one is the small business owner. How can they save?

31:27.51

Mary Beth:

Well I encourage people to save for retirement as soon as possible with your first job if possible. If you are an employee of a firm, with any luck that firm has a 401(k) plan or if you’re in the nonprofit sector it might be a 403(b) plan. In many of these cases, you put your contribution in and often the employer matches it. I say to people in that situation, “Try to contribute at least up to the employer match because if you don’t you are walking away from free money.” A typical match is for every dollar I put in, my employer might put in 50 cents, or if I’m lucky might match my dollar contribution up to a certain amount, maybe the first 10 percent of my paycheck. Well in that case, absolutely put your 10 percent in to capture that. 

Now people who work in more of a gig situation may not have that option. But anyone who has earnings from self-employment or a job with an employer has the opportunity of funding an Individual Retirement Account. I highly encourage that. Now there are two different types of retirement accounts. One I put money in and it’s not taxed, I get a tax break for funding my retirement plan with the idea that when I retire in the future and I take that money out, that money will be taxable. There’s a different type of retirement plan that I encourage a lot of young people, young workers to use called a Roth IRA or, in some cases, a Roth 401(k). I get no upfront tax break but when I’m young I’m often in a lower tax bracket anyway, so it doesn’t matter. But it means when I take that money out that has grown over the decades, all the money I take out is tax-free, and I truly believe that is going to be such a big, important source of retirement income in the future. Because when we look at the amount of federal spending we have done during the pandemic and beyond, that’s all going to have to be paid for in the future, funded through some sort of tax revenues. One could only assume that tax rates in the future will be higher than they are now.

33:56.70

Doria:

Higher than they are now? And do you worry about Social Security benefits decreasing?

34:03.20

Mary Beth:

People have to be aware that Social Security benefits are funded by their own earmark source of revenue. Those FICA taxes, those payroll taxes that we and our employers pay with each paycheck, are what fund Social Security benefits. It doesn’t come out of general tax revenue. So in that sense, it’s a protected source of revenue to fund Social Security benefits but Social Security, due mainly to demographics, does face some long-term financing challenges, which I firmly believe Congress can fix over the next decade. It is not a math problem; it is a political problem. They just need to get the political will to do it. And frankly, we have more than 70 million people collecting Social Security benefits right now, and it’s going to be more in the future. Do you really think Congress wants to tick off that many voters? I don’t think so. 

But let me give you just a little background of why we’re facing this long-term financing problem. So as I said, it’s the FICA taxes, the revenues from our payroll taxes that fund Social Security. Back, nearly 40 years ago, 1983 Social Security was really in danger of not being able to pay all the promised benefits. Back then I was a very young Capitol Hill reporter for UPI covering the Social Security Commission. They did a lot of smart things back then, but one of the things they did was “Let’s raise more taxes now in the 80s and 90s and 2000s than we need and stockpile them to pay future benefits when the huge Baby Boomer generations start to retire.” And they did that and that’s what we call the trust funds. And over the last 35 plus years, these trust funds have continued to grow. 

Now, originally the plan was that money was going to be in a lockbox, Congress, the government couldn’t touch it. Unfortunately, that didn’t quite pan out. So the federal government does borrow from these trust funds but they do pay them back with interest. So right around 2010 when the first of the Baby Boomers started retiring, there was not enough money from those payroll taxes alone to pay all the promised benefits so they started tapping the interest payments on the trust funds to help augment the FICA taxes to pay all the promised benefits. And that worked great until about last year, 2021, we’ve been through the pandemic, we had 20 million people who lost their jobs and who were not paying FICA taxes and neither were their employers. 

So for the first time last year, the funding for Social Security benefits were the FICA taxes, the interest on the trust funds, and for the first time we started drawing down on the trust funds themselves. That is why the trust funds are expected to be exhausted sometime around 2034 if Congress does nothing in between. Now, worst case scenario, if those trust funds run dry, which I do not think will happen, there would still be enough ongoing day-to-day FICA tax revenue to pay about 75 percent of promised Social Security benefits. Now, no one is going to be satisfied with 75 percent of promised benefits. What could Congress do? Lots of things. They could raise the tax rate that we pay, they could raise the amount of wages that are taxed because right now it’s only up to a certain level. 

37:46.80

Doria:

Yes, you’re so right about that, which has never made sense to me.

38:02.27

Mary Beth:

Well I’ll talk about that in one second because that’s a really important thing. They could gradually raise the full retirement age, which is currently going to be 67 for people born in 1960 or later. So let’s say let’s gradually raise it to 70. Don’t freak out, I’m talking about today’s 2-year-olds, they’re probably going to live to 120; they’ll get used to it. There are other things they could do: They can change the benefit formulas, they can decide who gets full benefits and who doesn’t. But here’s a really important part: Back in 1983 the Social Security Commission said that as long as 90 percent of U.S. wages are taxed for FICA Payroll Tax purposes, Social Security was good in perpetuity; it would never run out of money. The problem is there is such a wage inequality. Right now in 2022, the first $147,000 of your wages you pay your share of FICA taxes and so does your employer. Anybody who makes more than $147,000 does not pay any FICA tax to support Social Security, they pay a little piece for Medicare but not Social Security. As a result, only 83 percent of U.S. wages are now being taxed for FICA purposes.

If we gradually let that float back up to 90 percent of U.S. wages, it would be about $250,000 a year. That would pretty much solve the problem but then you hear from people, “Well I run a small business, I can’t afford to do that.” I usually say, “How many small business employees do you have making more than $147,000 a year, unless you’re a law firm or a medical practice?” There’s lots of controversy there. It’s got to be balanced, you can’t just solve this on tax revenue alone, you can’t just solve it by changing benefits. But the bigger challenge for Congress when they finally decide to tackle this will be not just how we continue to fund Social Security for generations in the future, but whether we need to reform it to reflect a 21st century workforce and family structure. Because it was created in 1935 where there was traditionally one breadwinner in a family supporting a spouse and children. That is not today’s economy. We have people taking time out of the workforce for caregiving. Some people think they should be getting Social Security credits in exchange for that caregiving so that they will have larger benefits in the future. You mentioned the gig economy. We have to make sure that these people who are not in traditional work environments can still earn Social Security credits towards their future. So Congress will have to tackle it and it’s more than just how do we fund it: It’s how do we reform it?

40:50.40

Doria:

I’m speechless because listening to you and knowing that what you’re saying is so intelligent and correct is refreshing. Thank you. Women who decide to stay at home, as we’ve mentioned, that’s a big concern because of how things are set up today. What can any women who are stay-at-home moms think about doing to help their situation today given the state of affairs as they are today?

41:24.84

Mary Beth:

I encourage women to really learn about finances. I know for a lot of people this seems intimidating but it shouldn’t. You’re a stay at-home mom, in most cases, you are running your household, you’re paying the bills, you’re making sure that the money comes in and there’s enough to go out. Well you know what that budgeting is? Fast-forward 20 or 30 years, that’s retirement planning. It’s a budget for 20 or 30 years from now. You can do this. The other thing is you know how to be a good consumer, you know how to shop at the grocery store or wherever you’re outfitting your family for goods and services. You can do the same thing with investing. There is no shortage of opportunities to learn about money. Women get this bad reputation of being risk averse they’re afraid of investing. They’re not; they’re risk aware. The difference is a man will tend to invest and will say, in the old days, to his stockbroker or financial advisor, “I want to beat the index, I want the best returns possible.” A woman is more likely to say, “Am I going to be okay? Can I send my kids to college? Can I afford that house? Can I help my grandchildren?” They tend to be goal oriented. What can that money do to help me meet that goal? But yes, you do have to embrace a certain amount of risk. The key is timeline. If I need money in the next five years, I’m not putting that money in the stock market. I’m going to make sure I have cash or some sort of short-term reliable investment that’s going to give me the cash I need, the emergency fund I have, and very importantly for women in a family situation you want to make sure your husband has adequate life insurance if he dies prematurely and so do you. Because if something happens to you, those kids aren’t going to raise themselves, the house is not going to get taken care of, your husband’s going to need to hire help.

43:34.82

Doria:

You brought up exactly what I was going to say next, which is that with Sallie Krawcheck, it’s not just her but with elv, I hear a lot about what you’re talking about. It’s been said so much that women are afraid of investing, they’re risk averse, and thank you for busting that myth because I don’t think it’s true, but I do think that there is a lack of financial education and confidence.

44:17.17

Mary Beth:

And as part of this Certified Financial Planning Board’s Women’s Initiative, we’re working not just to get more women as Certified Financial Planners but to make the profession aware of how important it is to bring women into these financial planning conversations whether they’re part of a married couple or on their own and to meet them where they are. Stop throwing investment jargon at people. Sit down and listen to their goals and their concerns, and then help educate them in a way that they are comfortable investing their money.

44:57.55

Doria:

If there is one action women can take today to change the course of their future, what would you say that it would be, understanding, of course, the time horizon? So if you’re more comfortable answering it as a 30 year old, 40 year old, 50, 60 year old, however you want to tackle that one.

45:14.92

Mary Beth:

I think you can do this by decades. As soon as you get a job, most people now are going to be automatically enrolled in their 401(k) plan at work, that is terrific. They are often also automatically enrolled in an investment option, usually what we call a Target Date Fund. It basically says, “Hey you’re not going to retire till 2070, we’re going to put you in this future fund, we’re going to do all the investing for you, all you have to do is fund it.” That is a great way to start investing in sort of a “set it and forget it” kind of way, the professional investment managers take care of it. But don’t stop there. Make sure you have an emergency fund because if your car breaks down it’s a whole lot better if you can pay for it out of your funds rather than running up a credit card bill and paying that interest. Learn about life insurance. There are situations, particularly when you have children, you have a mortgage, you want to make sure you are protected in the event something happens to you or your spouse. Really get control of your day-to-day budget and then allow yourself a chance to dream. What would you like to be able to do in the future? And in most cases it takes money to make those dreams come true, whether it’s a vacation home or college education for your kids or just a trip someday after COVID that you’d like to take. And then commit to doing it, to fund it, whether it’s a small portion every week. I usually find that any sort of direct transfer from your paycheck into your emergency fund, into your savings account, into your retirement account, is the best way to fund future goals because if it’s not in your hot little hands, you can’t spend it.

47:09.76

Doria:

What about women who are 50 today and are saying, “Oh my goodness, I am looking at retirement, I haven’t prepared in the way that I think I should have.” What advice do you have for them?

47:23.35

Mary Beth:

Well again through a company retirement plan, there’s something called catch-up contributions. Once you get to age 50, you are actually allowed to contribute more than the average worker to your retirement plan. Now certainly it’s a matter of money in, money out. If you don’t have the money to fund that, end of conversation. But maybe you need to relook at your budget and see what you’re spending your money on and to find extra dollars to fund that retirement plan. Now, say you’re 50, that still gives you 15 years or more to fund that future retirement at a higher level.

48:04.82

Doria:

This has been such a great conversation. Where can readers learn more about your work, and are there any resources that you think are particularly strong on the topics that we discussed today?

48:18.55

Mary Beth:

There’s so much available on women in finance, I would Google that to start. There’s lots of free resources, there’s podcasts, there’s videos. I just made a recent appearance on the PBS WealthTrack program with Consuelo Mack talking about retirement security, Social Security, Medicare. Just Google Mary Beth Franklin plus WealthTrack. Generally, if you just Google my name, my latest stories on Investment News will come up, and they’re very readable and approachable for consumers. I also have an ebook, which is really targeted toward your older listeners, nearer retirement. MaximizingSocialSecurityBenefits.com you can buy that ebook there.

49:03.69

Doria:

Thank you so much for coming on and sharing a wealth of information with our listeners.

49:10.61

Mary Beth:

Well, this was lots of fun, Doria. Thank you so much for inviting me to be your guest.