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Brian Lehrer: Brian Lehrer, on WNYC. For this membership drive week, in addition to the news and issue conversations we have every day, like the one we just had, about improving democracy by reforming Congress, we're doing a few special series, including one we'll continue right now, with Washington Post personal finance columnist Michelle Singletary, who has a great series called Michelle Singletar's Money Milestones for Every Age. She goes decade by decade, and we are going there with her.

As [unintelligible 00:00:40] Bridger just referenced, this is an example of how we're doing multi-generational programming on the show. Today, it's money milestones for people in your 40s, as we keep going up the ladder. We did 20s on Monday, 30s yesterday. Michelle is also the author of books on personal finance, including her latest, which came out last year, called What to Do With Your Money When Crisis Hits: A Survival Guide. Michelle, these first two days have been great for people in their 20s and 30s, so let's keep going.

Michelle Singletary: Yes, definitely, loving the conversation.

Brian Lehrer: Listeners, we can take some money management questions relevant to people in your 40s, for yourself, if you're in your 40s, or anyone else you're interested in. 212-433-WNYC. That's our on-air line, not our pledge line. We're not going to ask you to donate to the station on the air. 212-433-9692, for your Michelle Singletary questions, 212-433-9692. Let's begin today, Michelle, with something that's also in the headlines today-- Student Loans.

As you know, the Supreme Court heard arguments yesterday, on the constitutionality of President Biden's debt forgiveness program. You have a column in this series called What to Do if You're Having Trouble Making your Student Loan Payments. I guess the answer is not sit around and hope the Supreme Court smiles on you.

Michelle Singletary: That's exactly right. Based on some of the questions from yesterday, in front of the Supreme Court, it doesn't look like it's going to go through, but anything could happen. Let's just say it doesn't, and all those student loans that were paused because of pandemic are now going to start kicking in. If you are in a situation where you don't have a lot of money, maybe you lost your job during the pandemic, or maybe you lost your job, found a job, and now you're making your way back into financial safety.

You should look into, if you haven't already, income-driven payment plans, which allows you to make your loan payments based on your income and family size. For some people, if they have no income, their payment could be zero. Now, recognize interest is going to be growing, but at least it'll give you a reprieve. There are some things that you can do if the payments are not manageable.

During these last three years, because it's been three years of paused payments, I have been encouraging people to go ahead and make those payments if they could afford to do so, because that's interest-free. All that money's going right to the principal. Many people, and I know this for a fact, because I've worked with them, have been able to get out of debt during this time, because of the pause.

Brian Lehrer: What do you think the implications are for the country? By the way, this is not a personal finance question, but I'm going to digress for one minute with you. Not just for individuals of this loan forgiveness program, if it survives, people say it's even a win for racial justice.

Michelle Singletary: This case really represents how divided our country is, on so many issues. On the one side, people who went to college thinking, "This is my way up that economic ladder," they took on debt, because that's what they were told. That's how you make it in America. Took on too much, can't pay it, and are suffering. Many of them have the debt and no degree, and a subset of that are African Americans and minorities who didn't have a lot of money to begin with, in their family.

On the other side, there's people saying, "Oh, wait up. I went to school, paid back my loans. How is this fair that all this other group of people get this loan forgiveness and I didn't?" This is teeing up what is-- You and I both know where our country is. We're so divided, and I'm on the fence, I have to tell you. I think that there are lots of people who are going to get loan forgiveness, who don't need it, who can pay back their loans, and should, because when they don't, the rest of us have to pay for that.

I also know that there's some people who were talked into getting loans that they couldn't afford, and they deserve some relief. I would like to see it more targeted to people who are absolutely in desperation, and need the relief.

Brian Lehrer: This reminds me of one of the pieces of advice you gave yesterday, on one of the questions we focused on for people in their 30s. Is it a good idea? Is it worth it, financially, to go to grad school? You were talking about how, of course, it depends on the program and depends what profession you're in, but one of the things to be wary of is that the people who we may consider stately academics in this case become salespeople and try to talk you into graduate degrees that, in some cases, just get you into debt for no significant payoff.

I hear what you're saying, and listeners, your questions for Michelle's Singletary. Again, to be clear, we're not going to debate the student loan forgiveness program. This is your personal finance questions. If you're in your 40s, 212-433-WNYC, 212-433-9692, or a tweet, @BrianLehrer. It can be about how to manage your student loan debt, or anything else related to what you're looking at. Here's a tweet that just came in. It says, "I'm in my early 40s and I need a financial advisor. How do I find one? What question should I ask to find someone who's right for me?"

Michelle Singletary: Oh, I love this. I think when it comes to financial advice-- My husband and I have used financial advisors, and I think it's a great way for you to take a measure of where you are. How do you find one? Start with your friends, family, and coworkers. Are any of them using a financial advisor? What's been their experience? You'll get a list of those folks, and you interview them, or if you go online, the National Association of Personal Financial Advisors, it's a website of fee-only financial advisors.

If you go online, there's a place where you could put your ZIP Code and then you'll have a list of advisors in your area. You should interview at least three, then just take copious notes, and if they are listening to you more, that's how you test whether or not they're going to really craft a plan based on your needs and wants, and not try to sell you something. Now, we've had a number of financial advisors. One guy, it was a disaster. He just basically put us in the same funds that we already had.

I'm still mad about that, 20-something years later, but the one financial advisor that we sat down with, she looked at everything, our retirement plans. At that time, we had one kid, how are we going to send our kids to college? She looked at our insurance needs, everything was a comprehensive plan. We followed everything that she said on that plan. My husband and I are better off financially because of that. I tell you, actually, her birthday is 9/11, and I send her a text just about every birthday, to say, "Thank you for what you did for my family."

Brian Lehrer: Is there a better fee structure and a worse fee structure? If a financial advisor charges you by the hour, if they charge you based on how your portfolio grows, or if they charge you per transaction? Is there a best?

Michelle Singletary: No, it depends. I like the fee-only structure because you pay them a fee, they're independent, they're looking at your plan. Commission-- They shouldn't, but it could be that they are doing things more in their interests. There's something called a fiduciary. If you're looking for a plan, you want to ask them, "Are you a fiduciary?" Basically, that means that they have to do things that are in your best interests. It sounds crazy. Why wouldn't they already do that? It's a higher standard.

With fee-only, you pay a flat fee or an hourly fee, and you get-- Just like with any other professional. If you're a pretty good investor, you just want someone to look at your plan and make sure you're on track. I love fee-only. Depending on where you live, it could be anywhere from $1,000 to maybe $2,000 for a comprehensive plan, to look at everything. If that's like, "Ugh, I don't have that," then commission might be the way. With commission, they earn some money, or they charge you based on assets under management.

That fee ranges anywhere from 1% to 2%, 2% being pretty high, and remember, all the fees that you pay impact your return. You want to pay particular attention to how much the planner is making, because that's a direct impact on the return that you're going to get. Especially in this situation, where it's assets under management.

Brian Lehrer: Phill in Washington Heights, you're on WNYC, with Michelle Singletary. Hi, Phill.

Phill: Hey, Brian. Hey, Michelle. Can you hear me?

Michelle Singletary: Yes.

Brian Lehrer: Yes.

Phill: Hey, thanks for having me. My wife and I love the show. Donated this week. Thank you for having us.

Brian Lehrer: Thank you.

Phill: This is my question. I'm in my early, mid-40s. My question is-- What percentage of your, I would say, net assets would you say you should have in your retirement 401K plan, if you're in your early to mid-40s? What percentage?

Michelle Singletary: That's a good question, and it depends on a whole lot of things. Phill, what I would say is Fidelity Investments, which has the largest portfolio of workplace plans, does it this way. You should be saving about 15% of your gross income into your retirement account, and that 15% will include your contributions in whatever your company is matching. That's a test to see how you are doing. There's all kinds of things you should have, this amount, by age 40--

I don't know if those are really helpful, because those numbers tend to be so large that you're thinking, "Oh, I can never save enough." Phill, I would look at whether or not you guys have pensions, when you're going to start collecting Social Security, and then, based on how much you have in your 401K, or your workplace plan, and you're going to take maybe 3% to 4% a year. Will that, in a combination with social security and any pension, be enough for you to live year by year? Does that make sense?

Phill: It does. If there's time, Brian, I'd to ask a follow-up question to that.

Brian Lehrer: Go ahead.

Phill: I did start doing that where I said to myself, "Okay, if we retire when I turn 65, then I can start drawing out funds from my 401K tax-free, and work backwards there." I guess the unknown-- I know you don't have a crystal ball either, what would be considered livable in 16, 20 years from now? How much is enough? I can do the math and say, "Okay, well, I have this much in my 401k," and assuming the returns are, being very conservative, a couple of percent, 4%, 5% every year, for the next 20 years, "This is the final amount I'll have in when I'm 65."

Then, I just draw it out the next 40 years, assuming I'll live, hopefully, to 100.

Brian Lehrer: It's the ultimate uncertainty question, Michelle.

Michelle Singletary: That's right. Phill, you're doing the exact right thing. You're going to look at your retirement budget, and there are all kinds of inflation calculators. Inflation right now is crazy, but the Fed is trying to get their target rate between about 2%, so you're going to look at inflation at about 2% to 3%. That's how you determine, by the time you're 65, looking at inflation increasing, let's just get rid of these last 2 years, 2% to 3%, and then you look at what's your retirement budget.

I'm going to tell you, Phill, one of the things that'll help you stretch that money is making sure you don't drag a mortgage into retirement. Make sure you don't drag any debt into retirement. If you move that off of your books, you can live on a lot less than if you've got to pay for a mortgage. Now, if you're renting, that's okay too, but you got to calculate that in about 20% to 30% of your income, if you're going to be renting.

You look at all those numbers and you just got to work your own numbers to find out whether or not you are saving enough to take you through retirement. Obviously, you want to look at long-term care. Do you have enough in your budget to take care of yourself if something happens, that you can't do daily activities of life? It's a lot of number crunching, folks. I know it can seem so daunting, but just take a weekend, go through the numbers, and just make sure you're doing the best that you can. Don't take a lot of expenses into retirement.

Brian Lehrer: Phill, thanks a lot for some good questions. Michelle, before you go, and kind of related, you have a column called When is the right time to talk to my parents about their financial plans for retirement? Why should a younger adult bring that up with their parents at all, who might be reluctant to disclose their finances to their kids?

Michelle Singletary: Well, because we know that we are living in, particularly when you get to your 40s, a sandwich situation where you've got, maybe, children, and you've got to put them through college, to take care of them, and your parents, who may or may not have enough money for their retirement-- If they don't, that is going to impact your ability of when you retire, and how much money you going to use to help them, because most people-- You're going to help your parents.

You want to have that conversation now, when you are in your 40s, to get an idea of what you may be responsible for in terms of helping take care of your parents. A lot of elder adults don't want to have that conversation. They don't want to tell anybody their business. I know I've lived it. My grandmother was like, "You'll know everything when I die." I need to know this now. If they are reluctant, you just do the best you can to continue to have those conversations.

I know we'll maybe talk about this tomorrow, if you're older, in your 50s, 60s, 70s, you have got to tell your adult children what's going on with your finances. You may not need to tell them exactly what you have in the bank, but you need to say, "I'm going to need some help. For whatever reason, I don't have enough." That might mean they're going to come live with you. That may mean they got to sell the family home, and maybe you guys buy a house together.

Those conversations need to be having before you get to the crisis situation, and they're out there and you're taking care of kids, taking care of your house, and there's not enough money.

Brian Lehrer: In tomorrow's segment with you, we're going to do from age 50 to 65. Let me squeeze in one more caller for today.

Michelle Singletary: Sure.

Brian Lehrer: Rose in Brooklyn, you're on WNYC with Michelle Singletary. Hi, there.

Rose: Hi there. Thanks for taking my call. I have a question about the ethics of our investments. From my understanding, most 401Ks, most Roth IRAs are invested in really traditional stocks with high returns, such as big oil and other things that are contributing to the climate crisis. I feel a lot of anxiety around investing and wanting to invest in a future that's livable. Can you talk a little bit about smart ways to invest in alignment with your morals?

Michelle Singletary: There's lots of movement for people who want to do socially responsible investing, and there are actually some funds that you can invest in, that look at-- You can say, "I don't want to be in oil, I don't want to be in this." They will design, or they have funds designed to be that. Maybe you don't want to, say, have money invested in tobacco companies. Again, I'm not making a judgment on any of these. I'm just saying this might be where you are.

You should talk to the financial company that you are putting money in, maybe your workplace plan, or outside of your workplace plan. I think it's perfectly appropriate for you to invest based on your values, but you're going to have to do a little bit of research. It used to be-- Those type of funds were much more expensive than the traditional funds. That's not just the case right now. Most definitely look into that. I would just say, Rose, go online.

Investopedia.com is one of my favorite sites, and they actually have a lot of articles around socially responsible investing. I would say do some research on that and read some of those articles that will help guide you into how to invest in those funds that meet your values.

Brian Lehrer: Rose, thank you for a great question. Michelle Singletary, thank you for another great appearance today. Michelle Singletary's Money Milestones for Every Age is one of her features on the Washington Post website. She's a Washington Post columnist, and she'll complete this series with us at the same time tomorrow and Friday, as we continue to go up the age ladder with her. Michelle, talk to you tomorrow.

Michelle Singletary: Oh, great. Looking forward to it.

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