Many Americans are unprepared for retirement, and they may think it’s their fault they haven’t saved enough. This new podcast begs to differ.
Typical personal finance advice suggests you put 10-15% of your salary in a retirement account, or that you cut out discretionary expenses like a daily to-go coffee, trips to the movies or buying lunch so you can save enough for your future. But the burden of having enough stashed away for retirement shouldn’t just fall on the shoulders of Americans, says Teresa Ghilarducci, a labor economist and director of The New School’s Schwartz Center for Economic Policy Analysis and the Retirement Equity Lab. The retirement system as a whole — shared by individuals, the financial services industry and the government — is broken, and it’s hurting Americans’ future security.
Ghilarducci is the voice of her center’s new podcast, “Reset Retirement,” which invites economists, retirement experts as well as everyday Americans to talk about how much they’ve saved, their confidence about Social Security and the shame associated with not having enough for their futures. Some interviewees are millennials, decades away from retirement, and some are longtime retirees sharing what they’ve learned so far. The podcast’s message is simple: Americans alone aren’t to blame for a messed up retirement system.
Podcasts are yet another way to hear about the news, listen to other perspectives and gather tips and tricks to accomplishing a goal. There are a handful of retirement podcasts already out, about saving and investing, the nonfinancial considerations to make before retiring and how to achieve early retirement. “Reset Retirement” is the newest of these podcasts, but it takes a different approach — providing context and real people’s experiences, troubles and concerns in regards to a future or current retirement, as well as why Americans may be harder on themselves than they need be. The first season ended with five episodes this week, and the center plans to release its second season in November.
Ghilarducci and Bridget Fisher, associate director of the Schwartz Center for Economic Policy Analysis, spoke with MarketWatch about their new podcast, and what they hope Americans learn from it.
See: This may be why Americans are so bad at saving for retirement
MarketWatch: Why did you decide to do this podcast on retirement? What did you hope would come of it?
Bridget Fisher: We wanted to share a different message from other podcasts, which are largely focused on the personal finance angle. We found in our work and in our research that a lot of people don’t feel that advice relates to them because they have different struggles to work with in what we consider a broken retirement system. We wanted to reflect real experiences we had learned and share them with others — they have a lot of struggles, and they’re trying to save in a system they’re in. We want to let them know they’re not alone.
Teresa Ghilarducci: Most of the personal finance advice, I’d say all of it, from Suze Orman, Rick Edelman, the Motley Fool, focuses on the individual and the individual is told you’re not prepared for retirement — it is your fault and you have a broken way of making decisions of spending money. Our message is different. It is a broken system that is causing people not to have enough funds.
MW: How do these messages impact people’s savings?
Fisher: What we’ve heard from people is that they feel a lot of shame. The message is if you can’t save enough, blame the individual, but it’s the system people are working in that is flawed. We have heard over and over again about a feeling of disempowerment.
Ghilarducci: Shame has a very bad effect on the individual and the system. When people feel ashamed, they curl up in the fetal position and blame themselves, which shuts down their actions. We instead show people that they have a number of ways to lever their power. They have power as a consumer. So the message that you shouldn’t spend things you can’t afford isn’t a bad message… it is important to be a wise consumer, but also to be a wise worker. Know if you have low income that you need to join a union or do what you can to get a higher wage, and you need to be smart as an investor and avoid predators. You have power as a saver, you can automatically set up savings accounts. You have power as a voter and a civic person. We want to help activate all those powers of a person. When you see you have that power, you don’t have room for self-blame and shame.
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MW: You research these topics for a living, but have you learned anything new since beginning the podcast?
Ghilarducci: I’ve learned a lot. People hide their shame with a lot of magical thinking. They feel they got to this point, and especially in their 50s and 60s, think they’ll get a break by working longer or starting a coaching or independent business, or that their kids getting fabulous scholarships will somehow save them. As they get older, such as in their 80s, they don’t have that magical thinking and it becomes a feeling of resignation and depression. Those feelings don’t come up in the data. We see they’re downwardly mobile and don’t have money to make a basic standard of living, but the data doesn’t show the feeling and psychology of that.
Fisher: What I’ve heard in the podcast from our stories are the people who felt they had any kind of retirement security attributed it to luck. A lot of people who talked to us said every time they did have something or felt confident said “I was lucky — I was part of this system in the ‘60s and ‘70s” or “I was lucky with a union that provided a pension.” And then you see the other side of the spectrum, and they feel they haven’t gotten enough and they’re internalizing this message. If you look from the 30,000-foot view, the system people are dealing with is indiscriminate and you hear it in their voices.
Ghilarducci: And that’s so paradoxical. The people not in good shape blame themselves, and the people who are in good shape say they’re lucky. It is the system that needs to change.
MW: How has what you’ve been discussing with your interviewees fit with your research on retirement?
Ghilarducci: The feelings make perfect sense. There had to be some psychological adjustments to the downward mobility. And there has to be some psychological adjustment for the next coming recession, which is going to really reduce the money that people have even though they followed the right advice. We see in our data a lot of trap doors and missteps because of the market people are in, so it makes sense they feel resigned or that their good intentions are being destroyed.
MW: One of your guests said Americans are being brainwashed to think Social Security is in trouble or not worth putting into our calculations, so that when it is reduced or taken away they can say “oh well, it wasn’t working anyway.” What do you think about that?
Ghilarducci: There’s one book that does put Social Security into the calculations and that book says, you have a lot of financial partners in your life and the government is one of the most important ones. Social Security gives you around $250,000-$300,000 in wealth and Medicare another $600,000. But no adviser makes money on Social Security, they make money telling you it won’t be there for you and that you need to trust them. There is a vested interest to ignore and belittle Social Security. The other group with a vested interest in knocking Social Security are political ideologues. They want a smaller government for ideological reasons and they know one of the best and most successful government programs is Social Security.
Ghilarducci: That is a campaign. One of the most important, explanatory variables for people believing that is what the political elite say about Social Security. So when presidents Obama and Clinton say we will do everything we can to secure Social Security and deemed the support methods to shore up the revenue, the young people’s confidence goes up. But when you have Bush or Trump say that we can’t trust the government or Social Security won’t be there, then you see young people’s attitudes fall.
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MW: There were recent reports that President Trump’s administration was considering a payroll tax cut. How would that have effected retirement security? [Editor’s note: A day after saying he was looking at a payroll tax cut, Trump reversed his position and said he was no longer considering it, citing the “strong economy.”]
Ghilarducci: The president is saying two things: one, the economy is fine, and two, we should do something drastic to save the economy. So the plan to help boost the economy is what we did in 2009 in the midst of the Great Recession and that was to stop deducting Social Security taxes from medium- and low-income workers’ paychecks, with the idea that putting money in their pockets very, very quickly would help the economy. Two years later, the payroll tax was restored but during that time the government paid the workers’ portion of Social Security through general revenue, and filled in the gap. President Trump is proposing we put more in the government debt to put more money in the pockets of workers to spend to help him through the election. It is cynical because we’re not in a recession. It is a desperate act we should only use when we are in a deep recession, and it could hurt people’s retirements because it takes money away from Medicare and Medicaid. It is not free, and can be very dangerous.
Fisher: The next series we want to focus on is empowering messages to help with consumer protection, and I think this issue is one of education. There is a lot out there about saving more and investing money, but this is how people are being affected by daily changes in the system.
Ghilarducci: If people listened to our podcast and heard President Trump wanted to cut the payroll tax they would be worried because the podcast and people’s stories on the podcast tell us that we need more money in Social Security and Medicare. When he proposes less money into the system, that should worry people.
MW: One of the messages of your podcast is to be more educated about the retirement system and the world around us affecting retirement, but how else can we do that? This is a societal problem, so how can we get people to do more to protect themselves?
Ghilarducci: Voters really do care about retirement security, but they may not articulate it that way. They say, I may not get a job when I’m older, or I’m afraid of health care costs going up, or of student debt in my 50s. But they’re expressing retirement security worries, so it is really important that the 2020 presidential campaigns have the retirement issues front and center.
Fisher: One of the focuses of the podcast is to overcome silencing of shame. Our message is, make noise. We’re not telling people what to say, but make noise, be heard, tell your stories, share your concerns. We’re in the middle of the run-up to the next presidential election and retirement has barely come up. It is a huge signal to the fact that there is a lot of shame in the undercurrents. We know the anxiety is there and we want our voices to be heard.