Wendy Green [00:00:34]:

Welcome to Boomer Banter, the show where we have real talk about aging well. My name is Wendy Green, and I am your host, and this podcast is about supplying you with knowledge that informs you, inspires you, and motivates you to take action on the things that will help you age well. And part of aging well is feeling financially secure. If you're like me, the subject of money and finances has never been my favorite topic. My father always told us, pay yourself first, which was great advice and not always easy to follow when you're busy raising kids and living life. Fortunately, I did save, and now at 70, the question is, have I saved enough? We all have Social Security, and it's a safety net. And for most of us, though, that's not enough to live on if we want to continue living the lifestyle we've gotten accustomed to. We also have Medicare, and both of these programs seem to be under threat, according to the news these days.

Wendy Green [00:01:48]:

We've also all heard about the devastating costs of providing long term care, nursing home care, or memory care. In my discussion today with Richard Eisenberg, the former managing editor and money and work channel editor of Next Avenue and one of the podcast hosts of Friends Talk Money. We'll talk about how to think about and manage our money in the second half of life. Understanding our money better and taking action from what we learned today will help us age well into our sixties, seventies, eighties, and beyond. So we have a lot to learn, a lot to unpack. So stand by. We're going to get to it in just a minute, as soon as I share these couple of announcements. The first is that not everyone is able to listen to our show live.

Wendy Green [00:02:47]:

And believe it or not, many people in our age group are still not familiar with podcasts. So you know that the information that we have to share is so important to aging well. And you can do your part passing on the way people can connect with our show and share the knowledge. So if you will point people to Heyboomer.biz, the homepage, and there they will find the connect with us button and that will get them subscribed. All they have to do is enter their name, email address, they'll get the newsletter, they'll know about the upcoming shows, and they will thank you for this. The other thing is, I want to remind you about the great global giveaway that Road Scholar is offering. It's to celebrate their 50th anniversary of providing outstanding educational trips all around the world and in all 50 states. So what you need to do is go to rascholar.org/heyboomer, and subscribe to their newsletter.

Wendy Green [00:04:00]:

You will then be entered to win one of seven amazing trips to different destinations around the world. It also includes air travel from select airports. It's a fabulous opportunity. If you don't see the pop up that says great global giveaway, just put that in their search bar and you will get to the pop up that way. So one of the advantages of doing the show live, and one of the reasons I still do the show live, is because it allows you to participate, to say hello, to ask questions, to give feedback to things that you hear. And if you're thinking about it, other people are thinking about it. So be sure to continue to participate in the chat through Facebook, through YouTube, through LinkedIn, and let us know what your questions are and what you're thinking. If we're unable to answer them live, we will be sure to get back to you after the show.

Wendy Green [00:05:03]:

So let's bring Richard on. Hello, Richard.

Richard Eisenberg [00:05:06]:

Hi, Wendy. How are you?

Wendy Green [00:05:08]:

I'm wonderful, and I'm so grateful that you are willing to join us today.

Richard Eisenberg [00:05:12]:

We're happy to be here. Thank you.

Wendy Green [00:05:14]:

Yeah. So, you know, you define yourself as an unretired freelance writer. What does unretired mean to you, Richard?

Richard Eisenberg [00:05:24]:

Well, as you mentioned, I had been the managing editor for the PBS website next Avenue until 2022. I'd been there ten years. I was part of the launch team. And after being there ten years and turning 65, I felt like I was ready to step away from a full time job and give myself a chance to try some things that I hadn't gotten to do before. So I call myself unretired. And by that, I mean I'm writing freelance articles for next Avenue, for market watch for Fortune. I do the podcast you mentioned, friends talk money. I also get to do some mentoring and teaching at NYU every summer.

Richard Eisenberg [00:06:05]:

And I have a chance to do some things that I didn't get a chance to do before. So that's my definition. Everybody has their own.

Wendy Green [00:06:13]:

Yeah. So you're feeling motivated and energized by able to do some of the things you wanted to do?

Richard Eisenberg [00:06:20]:

Yes, absolutely.

Wendy Green [00:06:22]:

So I have a question, Richard. Well, I have a lot of questions, but this first one I was surprised to read. The employee Benefit Research institute said that three, four of retirees are confident about their ability to have their money last.

Richard Eisenberg [00:06:37]:

Yes.

Wendy Green [00:06:38]:

And on the other hand, we also read that at least 50% of boomers have not saved enough to last them through retirement.

Richard Eisenberg [00:06:47]:

Right.

Wendy Green [00:06:48]:

How do we reconcile that discrepancy?

Richard Eisenberg [00:06:51]:

I had that same question myself, and I've asked the people at EbRi about that, and they're a little puzzled about it, too. I think what's happening is a lot of us want to believe that we're going to have enough money to last our lives. Of course, nobody knows how long our lives are going to be, so we're optimistic. Sometimes we're not realistic, and I think it's a little easier to say, well, I feel okay right now, and I think things will work out because they always have, or they often have. And I hope that for those people that they are right. But I am concerned that there are a lot of people who haven't saved very much for their own retirement. People are living longer, often healthier lives. And so that means having more years to make your money less.

Richard Eisenberg [00:07:33]:

So I hope people aren't overly confident. I'm glad they feel good right now, but I think they could all take a little more serious look at how they're doing. Maybe meet with a financial advisor, maybe try, try some of those great retirement calculators online just to see if they are as comfortable as they think they are.

Wendy Green [00:07:53]:

That's a really good point. And your words about we live longer on one of your shows, on one of the friends talk money shows, I heard you speaking with somebody about the longevity fluency. What is it? Literacy. Longevity literacy, yeah. And that was fascinating conversation. So can you explain that for the audience?

Richard Eisenberg [00:08:15]:

Yeah. Well, the problem is there are a lot of people who don't really understand how long people are living these days. And so you ask them, how long do you think you will live? And they answer, with what the age that their parents live to? And, you know, often these days, people are living longer than their parents did. So these days, you know, if you are 65, there's a pretty good chance you're going to live to 85. There's no guarantee, of course, some people live to 95 or longer, but a lot of people think, well, you know, I probably won't, you know, I won't be living to 95. I may not be limited to 85. And so they, they basically plan, because they plan accordingly, but inappropriately. And so they're not thinking about, well, what if I do live to 85? Will my money last? Or should I be putting my money in different places in order to make that happen? Should I be thinking about an annuity? Am I thinking about claiming Social Security the right time in the right way? You know, so many people claim Social Security at 62.

Richard Eisenberg [00:09:17]:

Many of them need to do that because they need the money. Some people do it just because they, they're allowed to do it. And a lot of financial advisors say if you can afford to delay until at least your full retirement age with these days is somewhere between 66 and 67, depending on when you were born, you will get a bigger benefit for the rest of your life if you can wait to 70 to start claiming, which very few people can. But if you could, you will get an even bigger benefit from that point on through the rest of your life. So, you know, I would tell people, if you can afford to hold off claim Social Security, it'll help you financially, but I certainly understand why many people can't do that and don't do that.

Wendy Green [00:09:57]:

Yeah. So the financial literacy is one aspect, you know, to understand when you should take Social Security and how much money you need to save and all of that. And the longevity literacy, it adds a complexity to it, I think, you know, like, okay, so I have no idea how long I'm going to live. And then you throw in these, and you talked about this on the show, you throw in these questions of, well, life is short, so live it while I can. Right. Go on vacation while I still can. Well, yeah, but then what if you live another 2030 years? Is your money going to last you if you go on vacation? You know, so, I mean, I think that's one of the reasons money is not one of my favorite topics.

Richard Eisenberg [00:10:44]:

Well, no, I don't, I don't think people should deprive themselves and say, well, I can't ever take a trip because, you know, I might live too long and I don't want my money to run out. I mean, I think people need to be sort of open to possibilities and, you know, life doesn't stop at 60 or 65. And you should, if you can afford to do it, and if you are healthy enough to do it, you should get to travel and see places you haven't been and do things you haven't done before. But don't overdo it. Just, you know, be realistic and set a budget and say, well, if I were to spend x thousands of dollars on a trip this year to a great place I've never been before, what would that mean to my budget and to my savings? And how often can I afford to do it? And, you know, they answer, maybe once a year or once every few years and maybe not three or four times a year. So everybody has to look at it on their own. It also depends on how healthy you are and, you know, the longevity in your family and their health experience, too. There are some people who, you know, sadly, you know, can't do things that they would like to do because their health won't allow them to do that.

Richard Eisenberg [00:11:52]:

And you just need to be realistic about what's possible, I would say financially and every other way.

Wendy Green [00:11:59]:

Yeah, it's a, it's a guessing game in a lot of ways.

Richard Eisenberg [00:12:04]:

Yeah.

Wendy Green [00:12:06]:

So let me pivot a little bit. I fortunately got long term care when I was 50.

Richard Eisenberg [00:12:12]:

Good.

Wendy Green [00:12:13]:

But a lot of people in our age group that don't have it, it's too late, it's too expensive for them to get it.

Richard Eisenberg [00:12:19]:

Now you're talking about an insurance policy.

Wendy Green [00:12:22]:

Yeah. Yeah. So I'm curious if there are other vehicles or other ways you would recommend people prepare in case they do suddenly have a long term illness.

Richard Eisenberg [00:12:37]:

Yeah. So what people need to understand about long term care is Medicare typically does not cover it. By and large, it does not cover it for most people. For most needs, Medicaid does cover long term care, but you will only qualify for Medicaid if you're low income. There's some other cases where you might, but basically the vast majority of the middle class does not have a federal program that will help them with long term care. And so it's up to them. And so you can, you know, pay for that out of pocket if you have enough savings to do that. Most people don't, but some people do.

Richard Eisenberg [00:13:17]:

Or you could buy a long term care insurance policy. Now as you said, it makes more sense to buy that in your fifties or early sixties because it's less expensive and you're more likely to be able to qualify for it than if you were to wait to your late sixties or seventies. At that point, not only will it cost you more, there's a better chance that the insurance company will say, sorry, we're not going to write this policy for you at any cost because we don't want to take the chance. We think you may, you know, need this too soon. So I would say if you are thinking about it and can do it, you want to try to buy one in your fifties or sixties. The other thing I would say is the long term care insurance policies have changed a lot in the past few years. Now, some of them come as hybrid policies where it's a combination of long term care and life insurance. And the reason they've done that is because some people felt, well, I don't know that I want to buy a long term care insurance policy because what if I never use it? I'll just be throwing money down the drain.

Richard Eisenberg [00:14:14]:

And for no reason. But with a hybrid policy, if you never need long term care and you pass away, your beneficiaries will be able to get a death benefit. So somebody will get something from the money that you've been putting in. So people may want to consider that as an option.

Wendy Green [00:14:31]:

That's interesting. So is it still as costly, if we're 65, 70, then that a long term care would be as a hybrid policy would be?

Richard Eisenberg [00:14:43]:

You know, every company's going to have its own premiums and charges and rules and that sort of thing? I would say I don't, I wouldn't look at it as a way to save money, necessarily. I would look at it as more as a way of kind of ensuring that the money that you're putting in is going to be used in some way, whether it's for you or for your beneficiaries later on.

Wendy Green [00:15:04]:

Yeah. So you also mentioned annuities. And I had heard my mother, my father left an annuity for her, and she, you know, is very grateful for that. She lives on that. But I've heard that annuities nowadays are not good investments. So what are your thoughts around that?

Richard Eisenberg [00:15:26]:

Well, so an annuity is basically a product that you buy through an insurance company that says they're going to pay you a certain amount of money for the rest of your life or for a period of time. If you buy a ten year or 15 year annuity, and sometimes they start immediately, and sometimes you can say, I don't want to start until I'm at age 80, it's going to be less expensive when you buy it, if you delay when it starts. It does give you a lot of peace of mind to know that money is going to be coming in every month. But I will say that they tend to be expensive. They tend to be complicated, and that's why a lot of people don't sign up for them, because they feel like they can't understand them or they can't afford to buy them. But I would say if you would like the idea of knowing that there's going to be a steady income coming in, in addition to Social Security, and if you're lucky enough to get a pension, you might want to look at an annuity, just understand what you're getting yourself into. And if you can do it with help from a financial advisor who's objective, a fee only financial advisor, that would be helpful, because it's very easy to get confused by the way these policies work. They are very complicated.

Wendy Green [00:16:36]:

Yeah, I was going to ask you about that if that should be part of your financial plan that you talk through with your financial advisor.

Richard Eisenberg [00:16:43]:

Yeah, but, you know, it's scary when you leave a full time job and a paycheck and suddenly you don't have one at all and you're wondering, well, how am I going to pay the bills and where's this money going to come from? And even if you have some savings, it's still a little scary not to have income coming in every month. The annuity can help you do that, but you can also create your own annuity by taking them the money you put aside in savings and turning that into a monthly income that you've created. So you can say, okay, I'm going to take out x dollars every month. The financial advisors tend to say the rule of thumb is you want to withdraw no more than three to 4% of your retirement savings a year to try to help it last your whole life. So try to use that as sort of a ballpark, although everybody's going to be different.

Wendy Green [00:17:32]:

That's a good idea. Or create your own annuity. I like that. So talk to me about the state of Social Security and Medicare. I know, right? It's like nothing but bad news and it is an election season, so. Right. That's probably a lot of it, but help me understand what's going on there.

Richard Eisenberg [00:17:55]:

Yeah, so, well, the reality is there's, every year the Social Security trustees come out with a report that says, looking over the next 75 years, here's what we think the future looks like for the solvency of Social Security and for Medicare. And what they said recently is that Social Security's trust fund will start having solvency problems in 2033, in nine years, and Medicare in 2036 in twelve years. That does not mean that they're going to stop paying benefits in 2033 or that Medicare is going to go broke in 2036. What it means is that if nothing changes, Social Security will not be able to pay 100% of benefits to people that were told they were going to get them starting in 2033. Now, the last time this happened was in the 1980s under Ronald Reagan. And at the last minute, the congressional representatives and the president came up with a plan to extend the solvency for a while. And what they did was they basically raised the retirement age. It used to be 65.

Richard Eisenberg [00:18:56]:

Now it's our graduate graduated scale that goes to 66 67. My expectation is they're going to do something like that again. I don't know whether it's going to mean raising the retirement age or changing the way the benefits are calculated or trimming benefits. I don't think the program is going to go away. I think the people who are most risk are people in Gen X and younger, Gen X, Gen Y, Gen Z, not so much the boomers, because I don't think, and everybody I've talked to about this has said to me they don't think that Congress and the administration would make any changes that would affect current beneficiaries of Social Security or even people who are very close to retirement age of Social Security, 62, 65, 66. But it's for people who are in their fifties and younger who are probably going to see a different program than the one we have today. Exactly how it's going to be different, nobody knows. And we will find out sometime between now and 2033.

Richard Eisenberg [00:19:55]:

My guess is probably in 2032 or maybe in 2033. And the same goes for Medicare there. It's more complicated. It's the, it's the part a trust fund which is part of Medicare, but it's not part b. And that's where the solvency problems are going to be. And again, what I think is going to happen is the people who run Medicare and, and Congress are going to come up with some solutions between now and 2036 to figure out a way to stave off any solvency issues. Now that said, these are all just estimates and predictions. And every year the trustees report comes out and it has a different year than it had the year before.

Richard Eisenberg [00:20:35]:

Sometimes it's more optimistic than year before. Sometimes it's less pessimistic. A lot of it depends on how the economy is doing. If people are working and paying in taxes, that's better for Social Security and Medicare because those programs are partly paid by those taxes. If more people are out of work and not paying taxes, that's bad for Social Security and Medicare. So, you know, I wouldn't take those years as fact because they aren't, they are just predictions that they're what the experts think it's going to happen. But things can change.

Wendy Green [00:21:07]:

And so what? So what happens? Like a lot of us, like you, as an unretired person, unlike me, we're still working and earning some and paying into Social Security then as we're still working, does that affect our benefits or does that help the solvency to have us work longer?

Richard Eisenberg [00:21:29]:

Well, it certainly helps the solvency to have us work longer because the more of us who are paying taxes in, the more money Social Security has to pay benefits out. The biggest problem is demographics, is that there are more and more and more older people and fewer and fewer younger people paying into the system to pay the money in that will be going towards the benefits for the people who are going to need them. And those are long term trends that, at this point, don't look like they're going to be changing anytime soon. From our standpoint, the main factor there is that how much you earn in your late sixties and seventies might affect how much taxes you're going to pay on your Social Security benefits and maybe how much of your benefits you get after taxes. It's a little complicated. There's what's called the earnings test. You can find out all about it on the Social Security website if you want to. So I would say mostly it's a net gain for Social Security that you and I are working and people are working part time in retirement.

Richard Eisenberg [00:22:32]:

And it also means maybe we can hold off claiming Social Security a little bit longer if we have money coming in than if we weren't working and we didn't have money coming in.

Wendy Green [00:22:42]:

Yeah. Doris has a question. She says, what are the arguments for not having people at higher incomes. Continue to pay into Social Security? I guess there's a cutoff point, right?

Richard Eisenberg [00:22:54]:

Yeah, there's an earnings cap right now, and one of the solutions that a lot of experts talk about to try to fix the solvency problems is to either raise or eliminate that cap. Because the. Some people say, well, why should the very wealthiest not be paying the same percentage of their income into Social Security as people who have lower incomes? And that would actually help save Social Security. Others would say, well, you know, that's the way the system was created. And, you know, you know, it's fine to have that sort of a cap. I have a feeling that that cap is going to get lifted. I don't know that it'll get removed altogether. But I do think probably people with higher incomes in the future will be paying into Social Security than they are today.

Richard Eisenberg [00:23:39]:

And I think that probably makes sense for the system.

Wendy Green [00:23:42]:

Yeah, probably does make sense. Philip had a question, too. He said, I guess this is, you don't advise clients, but if you were talking to people in their sixties or seventies, would you suggest that they still focus on growth stocks?

Richard Eisenberg [00:24:04]:

You know, everybody has to think about their own risk tolerance. There's some people who would lose sleep if they had any money in the stock market. And for those people, they shouldn't be in the stock market, whether it's in their 401K or their ira or on their own, and that may mean giving up a little in investment returns. Because of it, but they will feel more comfortable. Other people are much more comfortable with the idea of taking some risk. I would say, typically, as you get older, it's smart to have a smaller percentage of your portfolio in stocks because they are riskier than putting it into cash and bonds. The stock market, of course, has been great the past couple of years. 2022 was terrible, but also in 2022, bonds were terrible, and that's very unusual.

Richard Eisenberg [00:24:50]:

Usually it's one or the other, but that year, everything was lousy. Right now, the stock market's very good. The income that people are getting on their bank cds is higher than it was before because the Federal Reserve has raised interest rates. People getting income from bonds are getting higher income levels than they did before. But when in, when interest rates go up, bond prices go down, so it's not a great time to be selling bonds. So overall, I would say I'd be more conservative about investing in the stock market as I get older, into my late sixties and seventies than before. If you are going to invest in the stock market, I would say do it in a diversified way. That is either a standard 500 index fund that buys all the big stocks that are sold or something along those lines.

Richard Eisenberg [00:25:38]:

I would not be putting a lot of money into one or two or three stocks because you just don't know what's going to happen with those companies.

Wendy Green [00:25:46]:

So let's talk about making our money last. I've been reading about the idea of converting your IRA to a Roth IRA, and I'm curious about that. And does it make sense when it would make sense and. Yeah, just what are your thoughts on that?

Richard Eisenberg [00:26:09]:

Yeah, well, that's something that I think you probably want to talk to a tax advisor about. If you've been putting money into what's called a traditional IRA over the years, um, you. It's possible that as you get into work or in retirement, you may want to convert some of that money into what's called a Roth IRA. The main difference is when the money is going to be taxed on that. And so for some people, converting some money can be a smart idea to save you taxes. For other people, it's not a good idea, because if you take too much out through your conversion, that may put you into a much higher tax bracket than you were in, and suddenly you're going to be paying higher tax rate on all of your income than you would have before. So I would say there is no one easy answer. I would say it's something you want to probably talk to your tax advisor and say, well, you know, can you show me the pros and cons of converting my traditional IRA, or at least some of it, into a Roth Ira? And, you know, when should I do it and how should I do it or should I not do it? Personally, I've not done it myself, but I know a lot of people have.

Wendy Green [00:27:13]:

So I didn't realize you could do just part of it. You don't have to do the whole thing.

Richard Eisenberg [00:27:18]:

That's right.

Wendy Green [00:27:18]:

And after a certain age, we cannot contribute to our IRa anymore. Is that right?

Richard Eisenberg [00:27:23]:

Well, you can keep contributing as long as you have earned income. What you have to do is start taking money out. Once you hit what's called the retirement minimum distribution age, which Congress just raised recently, so it's now 73, is when you have to start taking money out, not all of it, but a portion of it. And the IR's has a formula that basically figures out actuarially how much you should be taking out each year based on how long they expect you to live. So you just need to know that, you know, once you hit that age, you're going to need to take some money out of that Ira. But, you know, I always tell people, you know, you save retirement so that you have money in retirement. A lot of people are so nervous about ever taking money out, fearing that they're going to need it, that that money is just sitting there. And I feel like, you know, you saved it, you're retired, you should be using it, at least some of it.

Richard Eisenberg [00:28:13]:

So don't be too shy about that.

Wendy Green [00:28:15]:

So you take it out, but you, but you can then reinvest it into something else, right?

Richard Eisenberg [00:28:21]:

Absolutely. Absolutely. And including a trip. Yeah, you could be for a trip, could be back in the same kind of investments you had it in before, or it could be in something else. You know, it's all up to you. But you'll be paying taxes on that money when you take the money out, and then you'll decide what to do with that money.

Wendy Green [00:28:39]:

Yeah, and hopefully our tax brackets are lower at that point when we start taking it out.

Richard Eisenberg [00:28:45]:

That's usually the case. Not always the case. It kind of depends on how much, if you have a pension and how much that is and if you're claiming Social Security and if you're working. You know, it's possible for some people they might be in a higher tax bracket in retirement if they have all those things coming in. Most people are not in that position. Most people find themselves in a lower tax bracket because they have less money coming in they don't have their employment earnings, they may not have a pension or it may be small. They might not be claiming Social Security yet. So it's important to run the numbers before you're in retirement and then each year to figure out what is my tax bracket.

Richard Eisenberg [00:29:20]:

And also it may depend on where you're living because some states have state income taxes, others don't. You may retire to a state like Florida that has no income tax, where your tax rate may come down overall than it would have been where you were living before.

Wendy Green [00:29:36]:

So there are things that you can do, though, to lower your tax. Like if I contribute to a college savings plan for a grandchild or what else? If I give a gift, charitable gift.

Richard Eisenberg [00:29:53]:

Yep. Some people do that through what's called a donor advised fund. This is something that all the financial services companies have and basically allows you to decide where you want to put your money for charity. And you put it through this fund so that it becomes a tax benefit for you while going to the charity as well. So that may be something you might want to think about doing. But, yes, I would say, you know, look, look for ways that you can lower your taxes. One them is charity. It's harder and harder to be able to claim a medical expense deduction these days because the threshold is so high that, you know, most people are not anywhere close to that.

Richard Eisenberg [00:30:31]:

Most people, they can't itemize anymore. They used to do that, but now the standard deduction has gotten so high that it basically doesn't pay for them to try to itemize. So that's another thing you might want to look at. But then there are some, you know, tax breaks that anybody can take. Like if you're going to buy an electric car, you might qualify for a special tax credit for certain electric cars, hybrids and electric cars. That could save you some money on the cost of the car after, after taxes. So you might want to look into that, too.

Wendy Green [00:31:01]:

Is solar energy still giving people a break?

Richard Eisenberg [00:31:04]:

Yeah, there's still some energy credits there. They cut back on those over the years. It's not quite as good as it used to be, but it's possible. Yeah.

Wendy Green [00:31:13]:

Yeah. So what about, you know, I, I hear this from friends, you know, my kids wants to buy a house or my kid wants to buy a car, my kid wants to move back in. Right. How much of a risk are we, should we be thinking about taking, if we're giving money and continuing to support an adult child?

Richard Eisenberg [00:31:40]:

Well, it's an interesting question, and it's a hard question. You want to be kind and generous, particularly if your kids need help right now, but you also don't want to break your own bank at the same time. So I think you want to really sort of run the numbers and say, well, what can I afford to give my kids today? Whether that's a down payment on a house or maybe some money to help them buy a car or something that, or pay for medical expenses. And what would be better for you to leave as an inheritance later on? But increasingly, certainly, the cost of housing is so high these days, both with mortgage rates and the price of homes, that more and more parents are helping their kids to come with the down payment to do that. And it's a very kind thing to do. A lot of parents can't afford to do that, and a lot of younger people would like to buy homes and are just locked out because of that.

Wendy Green [00:32:35]:

Yeah. I mean, I remember when I was trying to help my kids get ready for college, and the advice was, you know, you want to put as much of your money into, like, an IRA or something where it's not looked at when you're looking for financial aid, because that's not money they can touch. And so they're saying, you know, don't hurt your retirement as you're helping them go through school, they have a longer threshold to pay that back.

Richard Eisenberg [00:33:04]:

Right. Well, one of the best things you can do for your child if they have a child is to put money into a 529 college savings fund for your grandchild. Because as we all know, the cost of college is hugely expensive for many families. And anything you can do to help your children and grandchildren with that cost would be greatly appreciated. And so that can be, you know, one check once a year, or it could be a check every month that goes into the money that goes into that fund. You decide how you want to do it. But that's something that really will pay off in the future. You know, 510, 1518 years from now, if you start early, I am lucky enough to have a new granddaughter.

Richard Eisenberg [00:33:45]:

And as soon as she was born, I started putting money into her 529 savings fund, and I'm glad I'm able to do that. And I think my, my kids are happy about that, too.

Wendy Green [00:33:54]:

Oh, yeah, she's a cutie, too. I've seen her picture. She is. Yeah. And my mother has done that for my kids. And then there's you, you guys haven't faced this yet. But then there's the whole, you know, who should own the 529? And, because, again, if you give it to the parents while their kids are applying for financial aid, then, of course, now it looks like they have all this extra money that they can afford, and, you know, so there's all these games that you end up playing on where the money is and who owns it so that you can best help.

Richard Eisenberg [00:34:28]:

Yeah. Although I would say that they just changed the rules to help grandparents so that if a grandparent is going to put money into 529, it is not going to hurt the financial aid for the grandchild when that grandchild is ready to go to college in the way it had until recently. So it's a little less of a problem than it was before.

Wendy Green [00:34:50]:

Okay, well, that's good to know. And is that a vehicle that you also talk to your financial advisor about, or you can just.

Richard Eisenberg [00:34:58]:

You can. I'm not. You don't need to. I mean, it never hurts to talk to financial advisors about anything having to do with money. But 509 plans are pretty straightforward. You know, every state offers them, every financial services firm lets you invest in them through them. There's not that much of a difference from one to another. Some states have special rules about whether, if you live in that state, you might be able to get a deduction for the money that you're putting into a 529.

Richard Eisenberg [00:35:27]:

Usually you can't, but you could in some places, so. And they usually let you invest, um, in any way, almost any way you want. Usually they have what's called kind of a lifestyle fund, where the money starts more heavily into the stock market, and as the child gets closer and closer to college, it gets more and more into bonds and less and less into stocks. But you can decide where you want that money to go. Um, I would, and there are a few websites out there that actually compare the various 529 plans and rate them. So if you want to do a little research on that, you can do that. But I would say these days, they're fairly similar and not that hard to figure out and pretty easy to use, I would say.

Wendy Green [00:36:10]:

So does it limit what schools the children can go to? Like, can they go to a tech school as a university?

Richard Eisenberg [00:36:18]:

Yeah. So the difference between a 529 plan and what's called a prepaid tuition plan is a 529 plan can be used at any college. And so you put it in. Into this fund, it grows, and then years from now, when your grandchild is ready to go to college or your child, they can use it for wherever they're going to go to school. There are also what are called prepaid tuition plans, and those are for particular schools, often in a particular state, and so often you can get a great discount on going to a state school, but who knows if that child is going to want to go to a state school and still be living in that state or not? So it's a little bit more of a gamble. But I would say that makes more sense when your child is closer to college age and you. And they have a pretty good idea that that's where they're going to want to go to school, assuming that they can get in. By and large, I prefer the 529s, because it gives you more flexibility.

Wendy Green [00:37:11]:

Yeah. And it does cover tech schools and, like, culinary schools and those kinds of things as well.

Richard Eisenberg [00:37:17]:

Yeah. Any kind of higher education. Yeah.

Wendy Green [00:37:20]:

Okay. And my final question before I ask you to summarize some stuff is, you know, is it better to give a gift now? You know, I think you can give, at least in South Carolina, I think you can give $10,000.

Richard Eisenberg [00:37:36]:

That's close to 14,000. Yeah.

Wendy Green [00:37:38]:

Okay.

Richard Eisenberg [00:37:39]:

Without avoiding a gift tax. Yeah.

Wendy Green [00:37:41]:

Okay. Is it better to do that now or to let your funds grow and then just leave them to your heirs when. When that time comes?

Richard Eisenberg [00:37:52]:

Well, you don't necessarily have to choose one or the other, although in some case, you may have to make a choice because you can't afford to do both. But I would say if it's possible to help your kids while you're alive, and they, and you can see them benefiting from it, that's good for you and good for them, because you can see that you're actually doing something that's useful. And I'll put a smile on your face and theirs as well. If you can't or, you know, prefer not to, you could certainly leave it as an inheritance in your will. So my feeling is, if it's at all possible to do it while you're alive, some money, you know, not, maybe not every year, but whenever you can, and also leave an inheritance that on, if that's possible, that would be really great. But not everybody can afford to do either of those or both of those. So it depends on the circumstances.

Wendy Green [00:38:42]:

Yeah. So much of this does, Richard. So I just want you to now leave us with two to three takeaways that you would recommend. So we, as we think about making our money last in our longevity, literacy, lifestyle.

Richard Eisenberg [00:38:59]:

Well, the first thing I would say is, don't just throw up your hands and say, well, I'm hoping it's all going to work out, even if you're a little nervous that I haven't saved enough and what's going to happen. It's better to be as prepared as possible and know how things really are. And then you may find some ways that you can help yourself. So you may find if you use some of these retirement calculators or talk to an advisor that you know, you either need to save more money or work longer, if you can afford to do that, or cut back on your spending either now or in the future, those are pretty much the three options that you're going to run into. And I would say the more knowledgeable you are about where you are and what the future looks like based on your projections, which nobody knows for sure, but as best you can guess, you know, the better off you're going to be and then you can, it may also put your mind at rest that maybe you're better off than you thought you were. Or it may say to you, you know what, I really need to do something now I have to stop putting my head in the sand. And, and, you know, particularly if you're in your fifties or sixties, there's still plenty of time to take some steps to deal with these possibilities. Now, when you get to your seventies or eighties, it's not too late.

Richard Eisenberg [00:40:16]:

It's just later, but it's never too late. I would say you can always make some adjustments. And as I've mentioned a few times, having a financial advisor can be really helpful because number one, this is all they do. They think about this all the time. A lot of us don't like to think about it at all or not much. And hopefully if you find a good one, they, they know more than you do. And so they can say, well, here's what you would want to think about. Or if you do this, here's what would happen, that sort of thing.

Richard Eisenberg [00:40:43]:

And they can plot some numbers for you and say, well, based on what you've done, here's how we think your money is going to look when you're 80, 85, 90, 95, that sort of thing. So I would strongly encourage people to try to meet with one. Now, one thing about financial advisors, they tend to prefer wealthier people. And so a big problem is there are a lot of people who could really use a financial advisor and they have trouble finding a financial advisor who will talk to them. And I would say for people like that, it is possible there are financial advisors who charge either an hourly rate or a fee for a plan or particularly look for low and middle income people or even to take people on pro bono. So don't assume that if you're not wealthy that you can't get a financial advisor, I will say it's harder to get one, but it is possible to get one.

Wendy Green [00:41:36]:

And what about some of these other companies like Fidelity and Schwab? And will they give you advice if you invest with them?

Richard Eisenberg [00:41:45]:

Yeah, you know, they all have different sort of tiered programs, so there's. They all let anybody call their 800 number and ask a question. And usually that's about, like, what form do I need, or explain to me what this fund is and that sort of stuff. But that's not so much about giving you actual one on one personalized guidance. But they often have financial advisors who they work with that you. If you pay for them, you can work with them. Some people are using what are called robo advisors, which are essentially electronic financial advisors, where you give them money, you fill out a questionnaire, they know how old you are, you tell them about your risk tolerance, and they basically manage your money for you. You know, I think that can be great if you just want somebody to invest for you and you don't want to think about it.

Richard Eisenberg [00:42:33]:

What I don't like about them is they don't know anything else about you. And so they don't know that you need to pay long term care expenses for a parent or you have other issues in your financial life that they may not be familiar with. So, you know, just keep in mind what they do and don't know about you and what you want. I think human advisors are usually better for most people, but the robos are great if all you want is somebody to manage your investments for you, and it's less expensive that way, too.

Wendy Green [00:43:01]:

That makes me so nervous, having a robo advisor. I like talking to my person who.

Richard Eisenberg [00:43:09]:

Yeah, I like talking to people, too. But a lot of people are just happy to know that some, you know, some, if it's not a person, then somehow their money is being invested well for. For them. And, you know, you can always take your money out or make a change, but a lot of people just don't want to be bothered or they're nervous that they're going to make a mistake. And this way, they leave it to the professionals who said, well, for people of your age who feel this way about the stock market, you know the best places for you to have x percent and this and x percent that, and we will do that for you, and you can do it that way.

Wendy Green [00:43:44]:

All right, well, you're full of information, Richard. I so appreciate it. You can find Richard on his podcast Friends Talk Money. I really enjoy it. There's, he's on the show with two women who have really fascinating conversations and they ask all the questions I would want answered. So it's friends talk money. Yeah. And you can also read some of his columns in Market Watch, next Avenue, and fortune.

Wendy Green [00:44:14]:

And don't forget to refer your friends to sign up for the Boomer Banter newsletter and subscribe to the show. Send them to Heyboomer.biz and check out Road Scholar, my favorite way to travel, roadscholar.org/heyboomer and see what they have to offer. And sign up for that great global giveaway. I want to win one of those trips.

Richard Eisenberg [00:44:42]:

Me, too.

Wendy Green [00:44:43]:

Yeah, yeah. Go sign up. So next week, another important episode in our month of financial episodes. My guest will be Kathy Stokes. She's the director of fraud prevention programs with the AARP Fraud Watch network. Kathy leads AARP's social mission work to educate older adults on the risk that fraud represents to their financial security. Fraud is an epidemic that has wiped out the savings of many unsuspecting adults. You're not going to want to miss this.

Wendy Green [00:45:19]:

And as Richard said, knowledge is power. This episode of Boomer Banter provided us with knowledge that informed us about longevity literacy, gave us some ideas about preparing for unexpected health costs, provided insights around Social Security and Medicare, and gave us something to think about regarding Roth Iras, as well as helping the children and grandchildren in college and helping our adult children. The Boomer banter community is your community for support and inspiration around aging. Well, and we certainly got a lot of information today. Thank you, Richard.

Richard Eisenberg [00:45:58]:

Thank you. Thank you, Wendy.

Wendy Green [00:46:00]:

Boomer banter is produced by me, Wendy Green, and the music is written and performed by my grandson who is a student at the University of North Carolina school of the Arts.

Richard Eisenberg [00:46:12]:

That's great.

Wendy Green [00:46:13]:

I know. I love that. See you all next week. Bye.