It’s hard to believe it’s November already. This fall is the first time many of our kids have truly been back in a physical school or learning space since the pandemic began, and to say that it “hasn’t been easy” on moms and caregivers would be the understatement of the decade. Nearly half of all caregivers say they just could not handle another year like 2021, according to a new study from Fidelity Investments, and 42% of caregivers with children said that if school life doesn’t fully return to normal soon, they feel like they will “fall apart.” Almost that same number — 43% — of working caregivers said that they may be forced to choose between job and caregiving responsibilities in the coming year.
And of course all of you out there with young kids at home know exactly what we’re talking about, all too well. 79% of caregivers said that the decision to give their time and energies in such a way has set them back on a variety of fronts, including financial goals, social life, mental health and career. Which is why in this week’s episode we’re working towards really, truly getting to that “better place” we’ve been hearing about for so long. And we’re not just going to cross our fingers and hope for the best — we’re going to talk about the active, concrete strategies that we can employ for the rest of 2021 and into 2022 that can help us get to where we need to go.
We’re doing it all with the help of Meredith Stoddard, Vice President of Life Events Planning at Fidelity Investments. In her role, Meredith’s focus is on helping people through the most important events in their life including things like a job loss, a new baby, caring for an aging loved one, or going through a divorce. Meredith joined Fidelity in 2004, she is a graduate of Boston University and she is pursuing a graduate degree in sustainability at Harvard Extension.
Listen in as Meredith breaks down some of the most challenging things that women are facing as caregivers, whether they’re caring for children, adult parents or both. (Meredith pulls from her experience logging caregiving experience on both sides of the coin, and shares some of the hardest choices she’s had to make.) She also shares study data from Fidelity on the state of the American caregiver, and how things have evolved.
Of course we also discuss how the caregiving responsibility often places an uneven weight on women, who all too often shoulder the brunt of family caregiving duties. We break down concrete strategies, one by one, on how we can take steps to lessen the burden. (And yes, we talk about budget-friendly options too! Because we’re just as tired as you are of hearing the advice to “just hire someone to help you.”)
We also dive into career, because many women’s careers have had to take a backseat during the pandemic, which has been costly in terms of career advancement, salary growth, retirement contribution opportunities and so much more. Meredith shares her best strategies for juggling caregiver responsibilities alongside your career, and talks about ways we can prepare ourselves in future if we know we’re going to take a break from the workforce.
In Mailbag, we hear from a listener who is looking to contribute to her nieces’ college educations and make them the beneficiaries of her estate. We also break down the term “deed upon death” and whether or not you need one, and we discuss benchmark retirement milestones, and whether those are net or gross income. In Thrive, the new rules of allowances for kids.
When it comes to caring for aging loved ones, Fidelity.com/caregiving can help people understand the emotional, logistical and financial consequences of taking on care for a loved one.
Also, Fidelity recently introduced a calculator designed to gauge the cost of leaving the workforce, to provide a clearer picture of the impact on one’s earning potential, including the loss to one’s workplace retirement savings plan and Social Security.
This podcast is proudly supported by Edelman Financial Engines. Let our modern wealth management advice raise your financial potential. Get the full story at EdelmanFinancialEngines.com. Sponsored by Edelman Financial Engines – Modern wealth planning. All advisory services offered through Financial Engines Advisors L.L.C. (FEA), a federally registered investment advisor. Results are not guaranteed. AM1969416
Meredith Stoddard: (00:03)
While it has been really hard at times, there is a certain confidence that comes from making it through the hard times. There’s sort of this feeling of hope for the best and prepare for the worst, which speaks to the resiliency and adaptability of the human spirit.
Jean Chatzky: (00:20)
HerMoney is supported by Fidelity Investments, whether you’re celebrating a milestone or adjusting to the unexpected Fidelity is there to help you navigate life’s important moments with confidence. Visit Fidelity.com/HerMoney to learn more. Hey everyone. I’m Jean Chatzky. Thanks so much for joining me today on HerMoney. I cannot believe it’s November already. We are already well into fall complete with some chilly weather and football games and plenty of beautiful leaves in the park. It is also finally the first time that many of our kids have truly been back in physical school or in a physical learning space since the pandemic began. And to say that it hasn’t been easy on moms or on caregivers. I think Meredith Stoddard would be the understatement of the decade. Nearly half of all caregivers say they could just not handle another year, like 2021, according to a new study from Fidelity. And 42% of caregivers with kids say that if the school life doesn’t fully return to normal soon, they feel like they will fall apart.
Jean Chatzky: (01:40)
Almost the same number 43% of working caregivers said they may be forced to choose between their job and caregiving responsibilities in the coming year. That is scary stuff. And I know that all of you out there with young kids at home are probably just nodding right along with me right now. But I suspect that many of you are probably also surprised that we are still here. So late in 2021, I feel like we’ve had so many false starts to the end of this, but I do truly believe that 2022 is going to get better for women. And for all of us who have been caregiving for children, for aging parents, for a spouse, for a sibling for another loved one, by the way, it just has to get better. 79% of caregivers said the decision to give their time and energies in such a way has set them back on a variety of fronts: financial, social, mental health, and their career – which is why today we are going to work towards really getting to that better place that we’ve been hearing about for so long.
Jean Chatzky: (02:53)
And we’re not just going to cross our fingers and hope for the best. We are going to talk about active concrete strategies that we can employ for the rest of this year and into next year and beyond to help us get where we need to go. I’m so excited to be joined by Meredith Stoddard, Vice President of life events, planning at Fidelity in her role. Meredith’s focus is helping people through the most important events in their lives, including things like job loss or a new baby or caring for an aging loved one, or going through a divorce. I’m just checking them off as I’m reading because I’ve been through every single one. Meredith joined Fidelity in 2004. She graduated from Boston University and, this is impressive, she is pursuing a graduate degree in Sustainability at Harvard Extension. Meredith, welcome.
Meredith Stoddard: (03:48)
Thank you for having me, Jean.
Jean Chatzky: (03:50)
Thanks for being here. Your job is so fascinating to me because you talk to women every day who’ve been navigating so many of these inflection like decisions, including these difficult caregiving decisions for the last couple of years, what are you hearing from them? What are the most challenging things that they’re facing?
Meredith Stoddard: (04:14)
It’s really not been one singular thing. It’s just been the relentlessness and the intensity of all of it combined. There’s also a wide variability in terms of those who have family who can help and those who don’t, those who have partners who share or truly share caregiving duties and some have a really balanced dynamic and others, not so much. In addition, some cities and towns and school districts have infrastructure that’s really better designed to help people balance it all. And others have structures that assume a full-time caregiver who’s always available to help manage it all, which is not the case for most families in the U.S.
Jean Chatzky: (04:48)
No, definitely not. I’ve heard from a lot of working parents during COVID, how they’ve realized that their school system is just not set up for working parents or for households that have two working parents. And for me, it just recalled the frustration, and it was such a small frustration, but a meaningful frustration when my kids were younger and the school insisted on having the principals tea or the principal’s coffee at 11:00 AM in the morning. Right. And I was just like, okay, so this is definitely not for me. It’s not for anybody who has two working parents and it’s it’s collusionary. And that is such a tiny event of what so many people are experiencing on a massive scale over the last couple of years. You all just fielded a study, it looked at both parents who provide care for their children, as well as caregivers who look after older adults or parents. I know that you have logged caregiving experience on both sides of the equation. How does your personal experience influence the way that you approach this subject?
Meredith Stoddard: (06:04)
I’d say, it clearly gives me a deep empathy for what everybody’s going through. And while all the situations are a little bit different, you know, it helps to know, what thread to pull and what questions to ask. And for me, survival has been about accepting good enough in some areas and really letting go of other people’s expectations. For example, staying on top of all my emails perfectly, like I did before having kids, just requires way too much sacrifice of family time. So I’ve just had to accept that perfection isn’t attainable right now. Or it could mean letting my junior kindergarten or go to school with two different shoes on his feet and skipping the power struggle on a given morning. And on the personal side, my partner does most of the laundry, but he does not do it quite how I would do it. So it’s worth it to me to let go and let him do it his way. Because the reality is I have had a couple of shirts shrunk and mixed in with the wrong colors, but his owning that task saves me so many hours each week. And when you add that up over the course of a few years, that’s a game-changer.
Jean Chatzky: (07:00)
It’s a game-changer. I am so grateful that my husband does the laundry and I’m with you, my white t-shirts, I can replace them. I don’t care that they’re a little smaller than they used to be. Maybe it’s just that I’m a little bigger than I used to be. And I don’t want to acknowledge that. And I agree with you on the good enough. I think sometimes I came to this with my kids when they were really young and I was struggling with getting them to eat what I thought was a balanced diet at every meal, you know, that they needed a little vegetable and they needed a little protein and they needed a little carb. And my brilliant mother just said, you got to give that up. And if they have vegetables over the course of a week and protein over the course of a week, you are doing just fine. With school back in session and the holidays coming at us full bore. What are you hearing from working caregivers about how they’re viewing this stage of the pandemic?
Meredith Stoddard: (08:02)
Yeah, my observation right now is that most people are viewing it with a little mixture of anxiety and optimism. You can see it in the numbers that you cited from our caregivers study nearly half say they couldn’t handle another year like the last one, and 42% of those caring for children say they might fall apart if school or professional childcare doesn’t return to full normalcy soon, but at the same time, nearly two thirds say they feel appreciated for their efforts. And the time spent has brought them closer to loved ones. And 68% of all caregivers claim to be ready for whatever challenges may arise when it comes to caregiving. So while it has been really hard at times, there is this certain confidence that comes from making it through the hard times. There’s sort of this feeling of hope for the best and prepare for the worst, which speaks to the resiliency and adaptability of the human spirit. Like Bob Marley said, you never know how strong you are until being strong is the only choice you have. People feel different emotions and anxiety when stressful situations arise and persist. But when push comes to shove, everything passes in due time. And we often find that we are stronger than we think.
Jean Chatzky: (09:06)
Okay, first person ever to quote Bob Marley on this show. I love that. Thank you. Thank you for bringing him into our universe. I totally appreciate that. I know that you guys have done caregiving surveys in the past, right? So you get a longitudinal perspective. You get a look at how things are evolving from year to year. Can you see in the numbers optimism, can you see in the numbers that things are getting better? And I’m thinking about this in the scheme of the great resignation. I had a conversation with a good friend of mine. She’s a teacher just the other day. And she said, you know, if we go back, if we take a step backward, I mean, she said, I may just have to quit. She’s been a teacher since my kids were little. I’ve never heard that from her. And it was a wake up call.
Meredith Stoddard: (10:00)
Yeah. I think the real differences is that it’s always been hard to be a caregiver. And it’s always been hard to be a caregiver in this country. I think the pandemic has pushed people past their breaking point and they’re setting boundaries and saying enough, I can’t do this. I won’t do this. I need help. And it’s pushing people to their edge, which is an awful feeling in the moment, but it’s causing them to make bigger choices and causing them to get themselves out of the situation instead of waiting for it to end. They’re just kind of waiting it out, which ultimately has led some people to a better place. But the reality is that pandemic or no pandemic, a lot of the challenges have been pretty consistent over the years.
Jean Chatzky: (10:37)
So we’ve talked a lot on this show about how much women take on, particularly when it comes to housework, that when we’re out in the workplace, we’ve got caregiving responsibilities on our own shoulders. We just take on more and more and more. Is there anything that you can suggest that can be done to lessen this overall burden?
Meredith Stoddard: (11:04)
Um, that is certainly true. In fact, our study supported the findings from the Institute of Aging that indicate that upwards of 75% of all caregivers are female and may spend as much as 50% more of time providing care than males. In addition, women were more likely than men to report caregiving taking a toll on their mental health. Age is a factor too, by the way, stress over lack of work, flexibility impacts three times more younger caregivers than those aged 36+. While there is some momentum building to create more large scale structural support for caregiving that really doesn’t help everyone in the now it’s worth noting that in some states, communities and workplaces do have more resources than others to support caregivers. So it is worth taking a few minutes to look into your options in your area. As part of this study, we ask caregivers what advice they have for other caregivers.
Meredith Stoddard: (11:54)
One thing we heard loud and clear whenever possible, make it a family affair and don’t take it on all yourself. So back to your point, Jean, some of it is women feeling this pressure to kind of be what they always envisioned goodness was. And the reality is it comes back to what we talked about earlier, which is sometimes you have to let go of that. My partner and I switched gender roles a lot. And thank goodness because if I tried to do all of that myself and work and everything else, I would be setting myself up for failure. And I recognize that, you know, equality is been aspirational for generations in some areas, but it is changing. And we are seeing men getting more involved. And sometimes it’s a matter of asking and asserting yourself and saying, I have to set a limit here. Some other advice from caregivers was making time for self care, asking for help when you need it and find emotional and social support involving family members and friends.
Jean Chatzky: (12:46)
Can I just ask, and I hope this isn’t getting too personal, but when you and your husband, you said you switched gender roles a lot. How did you start doing that? How did you negotiate this?
Meredith Stoddard: (12:59)
Honest answer? I was married before and I made a lot of those mistakes the first time. And I realized that I was kind of doing it to myself. Like I remember making an apple pie when I was married and thinking like, isn’t this great? And then I was like, why am I spending all my time making an apple pie? Like, it’s not even, I just felt like I should. And I, there was a bunch of realizations. I remember with that relationship, I took on all the laundry and I was like, why am I doing all the laundry? Like, why am I making this my responsibility? And when I tried to negotiate it in that relationship, it was sort of the beginning of the end. So I went into this partnership with a very different mindset. He’s also a little bit younger and I think his family has kind of set him up for success.
Meredith Stoddard: (13:36)
So we talk about it a lot. You know, we’ve gotten out of balance before. Sometimes he takes on more and I get too consumed by work and school. And sometimes I take on more and, you know, he works at a golf course, so, you know, his hours, a little unpredictable and it, there are other times it feels unbalanced. So honestly I’m really thankful for the do-over and having a chance to start again and just tackling those conversations again and again, um, it doesn’t have to be this big knockdown. It can be just a little small tweak on a given day or communicating, Hey, you got dropped off this morning. Like I did this morning to say, Hey, I want to prep for my podcast. So it’s sometimes the little things and it’s sometimes taking a step back and having those bigger conversations
Jean Chatzky: (14:15)
Sometimes give the advice or hear the advice, oh, just hire somebody to do that. You know, just outsource that. And you know, and I’ve gone through the formula and helped people figure out what their time is worth per hour. But if you’re on a tight budget or if you have other priorities that hiring help is not always possible. Are there any budget friendly strategies that you particularly like?
Meredith Stoddard: (14:45)
No, I totally agree. I do think it’s a little unfair to do this sweeping we’ll hire a babysitter. Cause I remember when both of my kids were in childcare. I mean, it was close to $60,000 a year. Like a babysitter was not on the table. I could barely make daycare work and some people have far tougher situations, just it’s a privilege to be able to afford daycare. So, you know, I totally agree. It’s really important to acknowledge that not everyone has family nearby or financial resources to pay for the support. They need some examples of low and no cost options are something as simple as arranging for a walk or a meetup with someone in a similar situation. Even if it means bringing the person or people you’re caregiving for, it can seem so hard to pull off at times, but you’re usually really going to be glad you made the effort.
Meredith Stoddard: (15:27)
For example, I met up with a couple of other local moms the other night and I think all of us were like, oh, did, why did we agree to this? And then we got there and we were so glad we did just because it’s nourishing to your soul. The other advice is looking at community resources. They vary by town, state, and region, but they’re often our children’s or other programming at libraries, senior centers, nature, preserves, or nonprofits that can offer a variety relief and perspective. I live in a city that’s very Eagleton area and they kind of support two working families. And they have a lot of support groups for families of color, for caregivers, for different people in order to help them through challenging situations. The other thing I’ll mention is if you or your partner work full time, remember to check your workplace, to see if they offer any benefits such as backup daycare, mental health support or care coordination. In those early years, I can tell you, I used all 20 backup Judy care years, and I couldn’t believe how many coworkers were like, wait, what? We have backup daycare. It was a game changer just because of my partner’s unpredictable schedule and this peak golf season. So while not everyone offers it, some do. And we found that a lot of people weren’t aware of what was offered.
Jean Chatzky: (16:32)
Yeah. I used it too. When I worked at Money Magazine, there was a backup daycare center, Bright Horizons. My kids liked going there so much more than they liked going to their regular school or nursery school. And so I would occasionally have to explain that they couldn’t go there every day. I think they liked it because I would pick them up and I would take them to McDonald’s for lunch. Don’t judge me
Meredith Stoddard: (16:54)
No judgment at all.
Jean Chatzky: (16:56)
This is a good time to remind everyone that HerMoney is proudly sponsored by Fidelity Investments. Some of life’s important moments are planned for way in advance others. We don’t see coming and then we’d go to McDonald’s. But as always, Fidelity is here to help you navigate both the joyous and the unexpected events with confidence, their resources, guides, and tools can help guide you through important financial decisions when you need it. Most visit fidelity.com/HerMoney to learn more. I’m talking with Meredith Stoddard, Vice President of life events, planning at Fidelity Investments. I want to keep going with strategies here, Meredith and I want to dive into career because we know that a lot of the careers of many of our listeners have had to take a back seat during the pandemic. You know, if you are forced into a position where you have to make a choice between the person earning more and the person earning less, most of the times still frustratingly the person earning less is the woman. And if you’ve taken a step back, that can be costly in terms of salary growth and career advancement and retirement contributions and social security credits. And so much more, any advice for juggling your career with your caregiving and getting your career back on.
Meredith Stoddard: (18:20)
Yeah, this is a really difficult issue. And it’s part of the reason that more than four out of 10 of working caregivers are considering leaving the workforce entirely. It’s just a tough situation. I know we discussed some workplace considerations earlier, but another one to look into is whether your employer offers some flexibility or support, even if it’s not offered formally by policy. Sometimes having a conversation with your manager can help them to be more supportive. There’s a lot of fear around showing this vulnerability or not being able to handle it. But the reality is that many managers do want to keep you on their team and we’ll work with people to come up with win-win scenarios that work for everyone, for those who are still working at home, that sort of dread of change. Like, can I handle the commute again? Can I handle these other things again are really important.
Meredith Stoddard: (19:04)
And to your point on the kind of hidden costs of caregiving, we did build out a calculator. We recognize that sometimes no matter what the math is, if you promised your mom, you would care for her in her old years, you’re going to honor your commitment because that’s, what’s in your heart. But I think what we found was that people would look back after they had been out of the workforce for a while, and then it hit them just how much they gave up. So we did build a calculator to try to help you with that math part of the equation. Yeah.
Jean Chatzky: (19:32)
Two points on what you just said. First of all, I think you’re totally right in asking for flexibility, even if it’s not an official part of the program. AARP did a study earlier in the pandemic and many, many employers responded. It was a large scale survey of employers and many of them responded that yeah, we would go for this. And I have to imagine that the numbers are probably even greater now because hiring has become so much more difficult. The other thing that brought up for me, there’s a really funny and fabulous. And I think true story in the wall street journal recently about how these managers in their late thirties are actually bowing to the demands of the Gen Z that are entering the workplace. And I think we all have a lot to learn from these members of Gen Z who know what they need for their own mental health who know what they need for their work-life balance and who aren’t afraid to ask for it. Right. We all need to just channel them a little bit. And if you’re not sure how ask for it, ask your kids or ask a niece or a nephew, like what they think is reasonable. Cause I do think people in my generation, we have kind of a skewed perspective.
Meredith Stoddard: (20:57)
I totally agree. And I’ve observed the same thing. One of the interesting things that the study mentioned was that not only do a lot of people are eligible for benefits or flexibility, don’t ask their employer. Interestingly men were better about asking about flexibility. I think back to earlier in my career, I asked my manager, it was almost all men in the office and I asked my manager, can I take such and such a day off? And he pulled me aside and he said, can I just tell you something, all the guys just tell me I’m taking the week off. He said, you don’t need to ask my permission. And I was like, thank you for coaching me on that. It was such a mindset shift for me because it was like, gosh, I earned this vacation. Why am I like begging for it when everybody else is like, yeah, I won’t be in next week. And, and they just shrugged their shoulders. So I think there is something to be learned from that.
Jean Chatzky: (21:41)
Yeah, really good. Really good advice. If you are just entering the realm of caregivers or, you know, it’s coming up for you, maybe you’re going to have a child, maybe a parent is getting older. Maybe there’s somebody else in your life that you know that you’re going to be more responsible for you suggest creating a caregiving roadmap. What is that? And how does that make a difference?
Meredith Stoddard: (22:07)
I hesitate to use the word plan because some people go, oh gosh, I don’t have time to do this. You know, sometimes a plan is just having a plan to have somebody back you up on a Saturday for two hours. Sometimes a plan is running your retirement numbers to see if you can shift a part time. The important part is, is whenever you have the opportunity, think it through and have those difficult conversations. It’s a really game-changing step in our survey. Respondents reinforced having that plan in place really helps you feel confident. It helps you feel like you’re equipped, whatever comes your way and understand what to expect, what questions to ask, what kind of support you have or don’t have and make you feel much more confident as you go into this. I’ve recognized that there are times where planning is not an option. Like if a parent falls or has a car accident and you just have to jump into action. But when you do have the chance, don’t let inertia stand in your way and set up that plan. We do provide a lot of resources and checklists to help you with the difficult conversations, things to think about and financial resources as well.
Jean Chatzky: (23:08)
Last question for you, top three things or top three steps that you would give caregivers just to take a little off their plate, just to reduce their stress a little bit.
Meredith Stoddard: (23:21)
Yeah. My top three tips are, give what you can give and be willing to accept “good enough,” like we discussed. Number two is don’t lose yourself in the journey. Your needs matter and you matter, and it’s not only okay to prioritize what you need. It’s often a critical Keystone in making it through the long haul and the time will pass you by no matter what steps you do or don’t take, take charge of what’s in your control. Whether it’s tackling a conversation needs to happen or taking a few moments when you need it, prioritize some of those things that will nudge the trajectory of your life, at least slightly better towards a direction you feel good about no matter what that step is.
Jean Chatzky: (23:56)
Amazing. Meredith Stoddard, thank you so much. Where can our listeners go for more information for those tips and those tools and those resources that you talked about?
Meredith Stoddard: (24:07)
Yeah, for Caregiving for Aging Loved One, fidelity.com/caregiving. We also have a lot of other life events like having a baby, changing jobs, but we put together resources, tools, third-party resources, Fidelity resources, conversation guides, in order to help you navigate all of these difficult topics.
Jean Chatzky: (24:24)
Meredith Stoddard. Thank you so much. Thank you. And we’ll be right back with Kathryn and your Mailbag And her monies. Kathryn Tuggle joins me now for our Mailbag, Kathryn. Hey
Kathryn Tuggle: (24:44)
Jean, you didn’t all
Jean Chatzky: (24:44)
Right. I’m doing fine. I’m doing okay. I enjoyed that conversation. I really liked listening to Meredith and I think she’s just smart. You know, she’s sort of picked up a lot of stuff from her own life along the way and was willing to share. I was grateful for that.
Kathryn Tuggle: (25:00)
Absolutely. I feel like she’s the kind of person who is helping women find solutions that have been helpful to her. She has been there. She’s done that. She’s got the t-shirt and she is helping other women with that insider level knowledge, which is such an amazing thing. I was saying
Jean Chatzky: (25:21)
About what she said when she was talking strategies at the end about, you know, sometimes you don’t need a full blown plan. Sometimes you need a couple of hours on a weekend. And I think that’s important to keep in mind. You know, we lost my stepfather recently and my brothers and I have been trying to make sure that, you know, people are around to keep my mom company so that she’s not finding herself wandering through her apartment and alone. And she keeps pointing out. She’s good at being alone because she was alone after my dad died for a number of years, but we’re still just cognizant of this at this point. And I’m here in Philadelphia, I’m nearby, but I have a wedding to go to and I just called my brother in New York and I was like, you’re in this weekend, you’re coming in this weekend. He was like, yeah, that’s fine. I’ll come in on a Friday. I’ll just work from there. I’ll hang out. It was a very easy phone call to make. It was very easy ask. We didn’t solve all the world’s problems. We just were like, okay, somebody’s going, gonna go to dinner with her this weekend. Yeah.
Kathryn Tuggle: (26:31)
I mean, I think that being able to ask for what you want and say it clearly and say it unapologetically is so important. And I think that this is the root of so many family fights and spats and levels of discomfort is just comes from people not being able to articulate what they want and what they need because people are not mind readers. I feel like most people are not even particularly insightful. So if you don’t ask for it, you are not going to get it.
Jean Chatzky: (27:00)
That is so true. Well, we have people who’ve asked us some very specific things, so let’s see if we can give them what they need.
Kathryn Tuggle: (27:10)
Yes. Our very always insightful HerMoney, listeners that’s questions. Our first question comes to us from auntie L. She writes hygiene and Kathryn I’m a longtime listener and absolutely loved the podcast. I’ve been following Jean since her appearances on Oprah and the today show. Here are my questions. I’m in my mid forties, single with no children. I have two nieces, age, six and 11, who I would love to provide for and contribute to their futures. What would be the best for me to set aside money for them, whether they go to college or not in the future? I’m not sure if a 5 29 is the answer. My second question is, since I don’t have children, how can I make them my beneficiaries upon my death? They’re too young to be the direct beneficiaries due to their ages, right? I really want to set them up on the right track for their futures. What should I do? Thank you for your time and all that you do.
Jean Chatzky: (28:04)
Well, thank you so much for writing auntie Elle. I just love, I just, I’m going to call you auntie TL, although you’re not my auntie, but I like that. That’s how you’ve signed your letter. I agree with you of me. My answer to this question about where to put money for young children for their future is usually a 5 29 because often people are thinking that’s where they’d like to funnel the money because the cost of college has just gotten so expensive. And if you think maybe college is not in the future for them, then that may not be the right account. You could just open, what’s called an [inaudible] account or an [inaudible] account. It’s a uniform gift to minors account. It is a way to give money to them. The tax treatment is different than in a 5 29. The difference is that money in a 5 29 grows tax free.
Jean Chatzky: (29:05)
And when you pull it out and you use it for qualified educational expenses, no additional taxes are owed. That is not true of UGMA accounts. The money is taxed. It’s taxed typically at a lower rate. Although there is a bit of a scale that you would have to look at and get used to, and once they hit adulthood, the money is there. And you have to decide how you feel about that. As I’ve often heard, said, they can decide with the money in an account that they’d rather buy a Harley, then use it for Harvard. That’s true. Right? So you have to think about how comfortable you feel with that. The alternative is setting up trusts. You’re allowed to just gift money every year to any person, but you can also put it into trust, which is basically giving a sort of gift with strings attached, where they don’t have the ability to access that money until an age that you stipulate and you would need a lawyer to set up those trusts.
Jean Chatzky: (30:15)
I don’t want you to take away from this, that I am against using an account because I’m not. I just think if you do it, you’re going to want to have conversations along the way with your nieces about the money itself and about making sure that they are prepared to receive it and that they’ll be responsible with it. And I think those are the kinds of conversations that you can have with them all along the way. It depends on the kids. It depends on their personality. It depends on your relationship with them on the last part of your question, how to make them your beneficiaries upon death. You just need a well, they can be your beneficiaries, even if they’re young, but in this situation, you probably do want to talk with a lawyer about trusts so that they don’t get their hands on too much money too soon off and trusts are set up so that kids get money at different ages. Sometimes they’re set up so that there is a trustee in place who can just helpfully manage the flows of funds so that they don’t blow it. They’re not incredibly complex legal documents, but they are legal documents. And you’ll want to talk to an estate planning attorney about having them create it for you.
Kathryn Tuggle: (31:41)
Thanks so much Jean. And what a great and Ellie you are.
Jean Chatzky: (31:45)
Kathryn Tuggle: (31:46)
Our next question comes to us from Denise. She writes, hello, Jean and Kathryn. I so appreciate your podcast. It is the highlight of my day on Wednesdays. Thank you for such wonderful practical information for personal finance. I’ve grown in my financial literacy just by listening my question. I’m still scratching my head over learning that my close friend’s father had her sign a deed upon death for her house. And she’s quite ill and struggling with some medical treatments. Her dad explained that if something happens, this avoids probate and stated that a person’s will handles property, but the deed handles real estate. Is this just another term for a living revocable trust? I don’t think so, but this is a new money term for me, deed upon death, my spouse, and I just did our will and healthcare directive last year. And our house information is within our will.
Kathryn Tuggle: (32:36)
Do you know if we also need to do a deed upon death, along with our will for reference we’re in Minnesota, we have no children and are almost paid for condo is gifted to the university of Minnesota, upon our passing for a little chuckle. We know we live way beneath our means maybe on 20% of our income. So now that we’re donors to the university, we keep receiving flower arrangements that are enormous and take up our whole condo. My spouse reminds me that it would fit perfectly in an $800,000 home. I now take them to my practice. So my clients and staff can appreciate them regarding your suggestion of bench milestones or those net or gross income. I just hit 50 last week. And I think I have a solid 3.5 times my salary based on my gross, but if it’s net, then I have six times. I’m not factoring in my spouse’s retirement to this as hers is much higher and she turns 60 next month.
Jean Chatzky: (33:29)
Thanks so much for the good questions. There are two questions. I’m just going to answer the second one. First, Denise it’s gross. And those milestones, which we often talk about that you should have one times your salary by age 33 times by age 46 times by age 58 times by 60 and 10 times. By the time you retire, they’re gross. And they’re gross because if you’ve got that money in a 401k, when you pull it out of that 401k, it’s still going to get taxed. So you gotta think about it in that way. Maybe your tax rate will be slightly different, but there still will be taxes owed. Don’t stress about that. You’ll definitely be able to catch up, but it’s just something to keep in mind. As far as this question about a deed upon death, I don’t think we’ve ever talked about a deed upon death on this show before, but basically it lets a property owner pass land or real estate to a designated beneficiary outside of the probate process.
Jean Chatzky: (34:38)
I understand why you are confused between that and a living trust because a living trust is often a document that is used in tandem with a will specifically to avoid probate. This sort of deed is actually simpler than a living trust. It is a less costly way to transfer real estate and avoid probate without having to go through the whole process of creating a living trust. That said, do you need one? I’m not sure that you need one only about half the states in the country allow these sorts of deeds on death. Your state Minnesota is one of them, but what will likely happen when one of you passes is that the other spouse will hold onto that real estate continuing to live there or not to live there, to sell it. If that is appropriate down the road, if that should happen, perhaps you’ll make some other bequests. But when you’re passing along this property to the university, probate may not be incredibly complicated. It may not be incredibly lengthy and it may not be incredibly expensive. And so it’s probably not something that you need to worry about my guess is that your friend or her father had some other specific reason for wanting to avoid probate. So I hope that that helps.
Kathryn Tuggle: (36:09)
Thanks Jean. Yeah. Estate planning stuff. I feel like it’s so scary because if you hear about somebody who has a trust and you think, oh, well I need a trust or all these new terms. I think it can be intimidating because everybody wants to ensure that their heirs are going to have the easiest, best, possible experience.
Jean Chatzky: (36:28)
Exactly. And sometimes in this effort to make it less intimidating, I think we over-complicate things, you know, parents and people who care about their assets and who care about what happens to either their children or their stuff need wills. And let’s just start there. And let’s everybody who needs a will, should have a will. I
Kathryn Tuggle: (36:51)
Agreed. Thank you so
Jean Chatzky: (36:52)
Much. Thanks Kathryn, in today’s Thrive. The new rules of allowances for kids. If there’s one silver lining to the pandemic, it is that parents are talking about money more often with their kids. That’s according to the 13th annual parents, kids and money survey from T Rowe price, which revealed that 43% of families are talking more frequently and 47% at least once a week, that’s up from 34% in prior years, besides talking though kids need practice with money and making decisions. And what’s the best tool for that. For many families, it’s an allowance that can let kids make their own decisions and their own mistakes with email@example.com. This week, we dive into all things allowance for your little ones. First, keep in mind, you can start younger than you think. Possibly by age four or five. When kids start school, the going rate tends to be about a dollar per year of age.
Jean Chatzky: (37:52)
But if that feels too generous, start with half. So $3 for a six year old. I am a big fan of the jar method where you have three jars, a save jar, a spend jar and a share jar. So let’s say you get $5 a week to your five-year-old that might divide up into a dollar, save a dollar share. And $3 spend the goal is to give kids enough spending money so that they have some purchasing power. They have room to make decisions, but they also develop regular habits of saving and giving. And the added benefit it takes you out of the driver’s seat. When you’re in the grocery store line, being hit with candy or other requests, let the kids decide it’s their money. And they will learn to be much more responsible with their own money. Then with yours also as old school, as it might sound, start by giving them cash so they can experience real bills and coins.
Jean Chatzky: (38:53)
And before they leave home and head off to college or out into the world, you can transition to debit cards so they can practice with frictionless payment methods. Thank you so much for joining me today on HerMoney. Thank you so much to Meredith Stoddard for all of her insight into caregiving and what we can do to find a path that works for us while still helping the ones we love most. We want you to know that HerMoney is here for you. And if there’s a show you’d like us to do, or a question you have for us, we’d love to hear from you. If you do like what you hear, we hope you’ll subscribe to our show at Apple Podcasts, leave us a review. We love hearing what you think we’d like to thank our sponsor fidelity. We produce this podcast out of CDM Sound Studios. Our music is provided by Video Helper and our show comes to you through Megaphone. Thanks for joining us. And we’ll talk soon.