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Saving for a More Secure Retirement

Bob Edwards is joined by AARP's Bob Love as they discuss protecting your retirement savings

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Bob Edwards: Hello. I'm Bob Edwards with an AARP Take on Today. On this week's show, we take a look at Raise Your Voice, AARP's custom voice app for Alexa and Google Home, which helps consumers have their voice heard with the unprecedented convenience and simplicity of smart speaker technology. It even connects users directly to representatives based on where they live. Also, retired FBI and CIA Director, William Webster, knows a thing or two about fighting fraud. After all, that was part of his job as the country's top cop over the course of three administrations. He has also been the victim of it.

But first, we take an exclusive look at The First Word, a live audio broadcast, created uniquely for new AARP members. Host, Bob Love, Editor in Chief of AARP, The Magazine, and AARP Bulletin, joins a guest expert who answers questions submitted by AARP members. This week, Bob Love joins us to discuss his conversation with Jean Chatzky, Financial Editor of NBC Today and AARP Financial Ambassador, on how to plan for a more secure retirement. Welcome to the show.

Bob Love: Thank you, Bob.

Bob Edwards: Tell me a little about your work at AARP.

Bob Love: Well, I've been here now for about six years, and I am the Editor in Chief of the two print publications, which keeps me busy pretty much night and day. I love the work and I get to work with terrific people. So, I've been around the block in publishing. I worked at Rolling Stone, Playboy, Reader's Digest, Men's Health, The Week, for people who know that, a publication which is very popular with its readership, and I've been a writer, an editor. I wrote a book on the history of yoga in America, not from the point of view of being a yogi, but from the point of view of being a sort of amateur historian.

Bob Edwards: So, what can readers expect in the next few issues of AARP, The Magazine and The Bulletin?

Bob Love: Well, we've got a lot of great stuff coming. The Bulletin, we're going to be writing about the people in Washington, the insiders who run the departments that matter the most to people 50 and older, whether it's in Social Security, Medicare, Centers for Disease Control, all of these folks that have impact on the lives of our audience, people over 50 in America.

Bob Edwards: You recently launched The First Word. What exactly is that?

Bob Love: Well, The First Word is, it's great fun for me to be able to have conversation with some of our experts. And, we offer it to our members in podcasts, live. It's a half an hour conversation in which we sort of hit all the high points that people might want to know about, finance, or fraud security, or in the coming one, travel, how to travel frugally, I guess is the word. Frugally, yes. So, that's what we're talking about here, Bob.

Bob Edwards: Why did you decide to interview Jean Chatzky in one of the first episodes?

Bob Love: Well, Jean Chatzky is sort of a key member of our smart finance team, our money and jobs team. She's been with us for years and she writes in a clear, concise, and friendly way. She often speaks very well, straight to women who have money problems that are slightly different than men's, but she addresses the subject in a way, with such confidence that whatever she says, you sort of understand it. She takes you along and gives you the guidance of her expertise. That's her genius, I think.

Bob Edwards: What were the most important take aways from your conversation with Jean?

Bob Love: The most important take aways are the ones that you might expect. If you can retire your debt, don't carry your mortgage into your retirement years if possible, and to understand the value of saving and investing and compound interest. Those things applied, at any point in your financial journey, will make you a better, happier person when you're working and when you're not working.

Bob Edwards: Anything surprise you?

Bob Love: You know what surprises me, is the way that Jean packs it in so pithily, to say a word that probably doesn't go so well on the radio, pithily. That's really the secret here, is that the stuff, the wisdom is out there in the financial sphere, but Jean shows us, she breaks it down for us, unpacks it, makes it understandable.

Bob Edwards: How about the caller questions, anything standout for you?

Bob Love: The questions were fairly typical, but they were very personal. People were asking about how they do it, which is a very difficult question to answer. How do you get out of debt? How do you save more? There are certain tips one can give, but a lot of it then comes down to a certain amount of self-discipline.

Bob Edwards: Thanks for chatting with us, Bob.

Bob Love: You bet.

Bob Edwards: Let's listen in.

Bob Love: A new member, Azalea, has sent us a question. Welcome, Azalea. She's 53. She works 50 hours a week. She doesn't have any savings, makes enough to cover her and her child's expenses. "Is there a retirement plan for people like her?" she wonders.

Jean Chatzky: Yeah, there is, and it's called an IRA or a Roth IRA. I understand, Azalea, there are many, many people who are living like you are and feeling like there is no money left to save. I would encourage you to do two things. First of all to start small. Open an IRA or a Roth IRA, put some money in it every single time you get paid. You can start with $25, you can start with $50, start with something. But, transfer the money automatically and set it up so that it gets transferred every single time your paycheck lands. What will happen is, more often than not, you won't miss that money, and you'll start to see the balance in that account adding up. That will inspire you to do a little bit more. If you've chosen a traditional IRA, you'll get a tax benefit for making that contribution, so it won't feel as if you're taking as much money out of your own hands at the end of each tax year. And then, don't just put the money in the account, but put the money to work.

One thing we see, particularly where women are concerned, is that we don't invest the money aggressively enough. Put it into a broad portfolio of index funds or into something called target date retirement fund, which can be managed, which will be managed by the brokerage firm toward the date when you are planning to retire. It will keep you in a mix of stocks and bonds that's age appropriate for where you are in your work-life curve.

Bob Love: I'm going to read a question from Falacki, a new member. She asks how to get started investing in stocks and bonds. I mean, we know that many of our members are little bit leery about stocks, especially having lived through two downturns, if you are our age. How do you pick investments to put into retirement, say to use for your retirement savings portfolio?

Jean Chatzky: I believe, and will continue to believe for the rest of my life that, I will make my best investment decisions by buying very broad, very diversified index funds that are low-cost because that is something that I can control. So, for me, if you are starting to invest for your retirement, you could put together a total stock market index fund and a total bond market index fund, take a 110 subtract your age, that's the amount that you want to put into stocks, put the rest in the total bond market index fund, that will be fine. That will fine to get you going, or you could put all of your money into what's called a target date retirement fund, we were talking about that before, where you are investing in a managed portfolio that is being managed based on the age or the year at which you think you will retire.

I don't think that most people need to stress out about, should I be putting my money into stock A, stock B, stock C. We know it takes at least a dozen and up to 20 stocks to build a diversified portfolio. That is a lot of work.

Bob Love: And, leave it there, too, right? I mean, buy those low-cost, broad funds and start to not think about the money.

Jean Chatzky: Yeah. Absolutely. And, add to them, by the way, every time you get paid. Add to them when the market is going up. Add to them when the market is going down. When the market is down, it gives the opportunity to buy more shares of those funds at a lower price, so that's really, really good. That's buying low. And then, yes, keep your emotions as far away from the equation as you can. When the markets are having a bad day, turn off the television because the people who are really, really unhappy about their investments, at this point, are the people who in 2008 and 2009, when everything cratered, sold because they got scared and then couldn't figure out where to get back in or when to get back in, so they sat on the sidelines. And, many continue to sit on the sidelines.

The markets are up almost 400%, maybe 300%, I haven't run the numbers in a little while, but up so much since they were at that point. We know that the markets are going to be rocky. We know that, short-term, you are going to see a curve that looks a lot like a rollercoaster. But, over time, historically, what we've seen is that those bumps start to fade into the background and the overall trajectory is one that goes up.

Bob Love: Women like Azalea earn much less over a career than male counterparts, according to studies, but also live five years longer than men. It adds up to women needing, I think, extra planning and resources for their retirement. Would you agree?

Jean Chatzky: Absolutely.

Bob Love: Let's say, what unique money advice would you give to women in their 50s?

Jean Chatzky: All right. I mean, it seems completely unfair. We have to save more and we have to make sure that we don't miss years of investing for retirement, even if we have taken a break from work to care for kids or care for parents. A lot of research lately has pointed to the fact that far too many women have money sitting in savings accounts and checking accounts that really isn't there for emergencies, but is there for the longterm. That money needs to be working because right now the average savings account in this country is paying about one-tenth of 1%, which is nothing, and less than nothing after you factor out taxes and inflation. You've got to get it into the markets. You've got to make sure that it is working for you as hard as you're working for yourself.

The other thing that I would say, and you want to be doing that automatically, the other thing that I would say is that if you are taking a break from work and you have a spouse in the workforce, understand, you still have the ability to make your own IRA contribution every single year. It's something called a spousal IRA. There's an IRA, there's also a Roth IRA option, and you can make a full IRA contribution, that's up to $6,000 for this year plus an additional $1,000 because we're all 50 and over.

Bob Love: Thank you, Jean. It's a good moment that Jean hosts a weekly podcast for women on behalf of AARP.

Bob Edwards: That was Bob Love, host of The First Word. Jean Chatzky is also the host of AARP's Closing the Savings Gap podcast series, which profiles women across the country who are paired with financial planners to solve challenges in financial and retirement planning. To listen, visit aarp.org/closingthegap.

Raise Your Voice, AARP's custom voice app for Alexa and Google Home, informs users on legislative efforts to lower prescription drug prices and allow them to take action by calling a member of Congress directly through their smart speakers. Raise Your Voice helps consumer have their voice heard with unprecedented convenience and simplicity of smart speaker technology. It even connects user directly to representatives based on where they live. To invoke the app, the user simply says their smart speaker's wake command, followed by, "Open Raise Your Voice." To learn more about adding to your smart speaker, visit aarp.org/raiseyourvoice.

In addition to keeping up to date on current issues that Congress is working on, you can listen to AARP's position on core issues that affect older Americans, like prescription drugs, Medicare, Social Security, family care giving, and age discrimination. With Raise Your Voice, speaking out is now as easy as speaking up.

Retired FBI and CIA Director, William Webster knows a thing or two about fighting fraud. After all, that was part of his job as the country's top cop over the course of three administrations. He has also been the victim of it, according to a Washington Post report. Talk about targeting the wrong guy. The failed scam artist, Keneil Thomas has been sentenced to six years in prison for trying to extort money from the now 95-yer-old lawman and his wife, Linda, using the Jamaican lottery scam in which victims are told they won a prize but must pay fees to receive it. What started off as a promise of riches, turned into a nightmare of demands. Thomas, at one point, told Linda Webster that she would die from a sniper's bullet if the couple didn't cough up thousands of dollars to collect a fake prize of 72 million dollars. The Websters were having none of it, and they happened to know just the right people to shut the operation down. It just goes to show that criminals don't discriminate. Fraud can happen to anyone. For more resources and tips to protect you and your family from scams, visit aarp.org/fraudwatchnetwork.

For more, visit aarp.org/podcast. Become a subscriber and be sure to rate our podcast on Apple Podcast, Google Play, Stitcher, and other podcast apps. Thanks for listening. I'm Bob Edwards.

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Bob Love, editor-in-chief of AARP The Magazine and AARP Bulletin, discusses his interview with Jean Chatzky, financial editor of NBC TODAY and AARP financial ambassador, on how to plan for a more secure retirement.

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