Most of our HerMoney listeners would probably agree that we are a nation — and a world — that needs change. And in so many ways, it feels like we are on the precipice of that change. More people are learning that Black Lives Matter. More companies are taking measures to eradicate the gender wage gap. More schools are taking steps to support children who are transitioning, and the United States Congress is more heavily female today than it has been at any point in history.
I could go on, highlighting all the ways that change is here, yes, in spite of the people who have tried to prevent it, but mostly because of some incredible leaders in our country who are spearheading it, and marshaling the charge for diversity and inclusion in all its forms.
We couldn’t think of a better guest to sit down with this Pride month than Megan Smith. You may already know her as the Chief Technology Officer of the United States under President Obama. She was also a Vice President at Google for 11 years, she served as the CEO of LGBTQ media company PlanetOut, and in the early days of the internet, she worked on smartphone technologies at Apple Japan. And as if all that weren’t enough, she also co-founded the Malala Fund.
Today, Megan is the CEO and Founder of Shift7, a company that’s working to find solutions to systemic social, environmental, and economic problems by empowering women, people of color, youth, and all people who have been marginalized. Among many other things, Shift7 scouts promising solution-makers for world problems, and connects them with resources, partners and mentors. (Also, cool fact: If you hit Shift +7 on your keyboard, it makes the “&” symbol.)
Listen in as Megan shares why her company’s tagline is “Solution making through inclusion” and shares what inclusion really means for her — when we have inclusion, ALL people are able to bring forward their greatest self, and not “stomp on others.”
Megan and Jean talk about how to support innovators from all walks of life, and Megan discusses the programs her company runs within Native American communities, with tech innovators in the lesbian community, and how her company is using software tools to help prevent media bias. That’s right — technology is now able to show us our biases — we can analyze movies and television shows and look at instances in which women or people of color have fewer speaking lines, or less time on screen, for example.
Megan also walks us through her career journey, and shares some of her best tips for success and favorite life philosophies. She touches on her upbringing and how thankful she is to have been brought up in a supportive family. On that note, we talk about the importance of “being there” for LGBTQ youth, who often do not have gay parents, which can exacerbate their feeling like outsiders in their own family. The pair also break down what we can all do to be better allies for the LGBTQ community. The short answer is:
Speak up, ask questions, ask how to help, and become more conscious of things that might not always have been obvious.
In Mailbag, special guest Marcia Mantell, author of “What’s The Deal With Social Security For Women,” and founder of Mantell Retirement Consulting, joins us to answer an important question on Social Security for freelancers. (Listen to her full episode with us here!) Specifically, she dives into whether your freelance income counts toward your Social Security earnings, and we also dive into how Social Security works for people who have side gigs.
We also take a question from a Navy veteran who is curious about moving his investments to a new firm, and who is also looking to set up IRA accounts for his nieces, but is unsure how to go about it. Lastly, we hear from another listener who’s curious if she should keep all her assets at one investment firm, or if there are risks having them together.
In Thrive, Jean dives into the topic of all the things you need to consider before you file early for Social Security — it could mean you lock in permanently reduced income (to the tune of about 30%) for your entire retirement.
Megan Smith: (00:02)
One of the things about being an LGBTQ person is typically if you’re a gay kid, you’re not often in a family that has gay parents or whatever. So with a lot of groups that are underrepresented or minority groups, you’re in the same minority as your family. And so you have a haven to go home to that doesn’t always happen for everybody. And so it’s important to notice that we need to be there for LGBTQ youth. We always need to be there for them and helping them.
Jean Chatzky: (00:39)
HerMoney is brought to you by Fidelity Investments. Fidelity is committed to helping clients through any market conditions, with financial planning and advice when you need it most. Learn more at Fidelity.com.
Jean Chatzky: (01:00)
Hey everybody. I’m Jean Chatzky. Thank you so much for joining me today on HerMoney. So I am feeling more confident than ever that every one of you listening today would probably agree with me that we are a nation, we are a world that needs change. And it feels like in so many ways, we are finally getting there with more people, leaning into the fact that Black Lives Matter, more companies taking measures to eradicate the gender wage gap, more schools taking steps to support children who are transitioning and the US Congress more female today than at any point in it’s history. I could go on highlighting all the different ways that change finally seems to be here, but we have to acknowledge that it is mostly happening because of some incredible leaders in our country who are spearheading that change, who are marshaling for diversity and inclusion in all forms. And today I am sitting down, virtually of course, with one of those leaders whose name you may already know. Megan Smith was the Chief Technology Officer of the United States under President Obama. She was a vice president at Google for over a decade. She served as the CEO of the LGBTQ media company PlanetOut. And in the early years of the internet, she worked on smartphone technologies at Apple. She also co-founded the Malala Fund. Today Megan is the CEO and Founder of her own company. It’s called Shift7 and it is working, she is working, to find solutions to systemic social, environmental, and economic problems by empowering women, people of color, indigenous peoples, youth, and all people who have been marginalized. Megan, it is so nice to have you here.
Megan Smith: (03:11)
Thanks, Jean. It’s great to be talking to you. Thanks for having me on.
Jean Chatzky: (03:15)
For sure. And where are we finding you?
Megan Smith: (03:19)
I’m currently in Western New York. I grew up in Buffalo, New York. And when I was a kid, we used to come to this place called Chautauqua, which is on a lake down here.
Jean Chatzky: (03:28)
Megan Smith: (03:28)
And so we’re down here with the kids so that they can have some space. My cousins have a house here that doesn’t have a whole lot of people as we’re social distancing.
Jean Chatzky: (03:36)
Yeah. It sounds amazing. I grew up in Wisconsin and we spent a lot of time on lakes.
Megan Smith: (03:41)
Yeah. Great Lakes people. So, you know, and it’s interesting to notice, you’re talking about change in the country. I grew up, I remember during the seventies, the environmental movement, the LGBTQ movement at the time, the women’s movement, civil rights movements. So many things that we got to be part of as young people. And certainly the Great Lakes were in a lot of trouble environmentally. And as we transitioned rust belt worlds that we grew up in, and watching our elders, you know, those who were the adults and what they were doing to try to solve problems, very hard, complex problems at the time, through protest, through getting into city hall and through elective process, through policy, through science and engineering. We were lucky in my school, we had mandatory science fair. And so I did in Buffalo, all solar and wind and all kinds of green energy projects. Jimmy Carter was putting solar panels on the White House. We had the energy crisis. And so there was a similar complex feeling of both the daunting challenges and the sadness that comes from sort of becoming more awake to how heavy these problems are and how they’ve been with us for centuries. But also the possibilities and the teamwork that comes from community.
Jean Chatzky: (04:57)
Megan Smith: (04:57)
You know, we call it collective genius. How do you unlock collective genius, which isn’t some kind of kumbaya everyone doing the same thing, but it’s really seeing around you, all the teammates and seeing in yourself, or seeing in your friends and others who you don’t know. The talent and ability and ideas that they already have, what they’re passionate about solving and coming together to make those things happen together, to transition, places and systems and inclusion.
Jean Chatzky: (05:25)
I think you have such a great point about thinking back. I was born in the early sixties and I was able to see my mother for the first time since social distancing started during the past weekend. I got to spend an hour or so with her. And she was reminding me that we were in Detroit in 1967 for the riots, living on Eight Mile Road. And went from there to Madison, Wisconsin, where my father was and the bomb that went off woke us all up in the middle of the night. And I hadn’t really, I mean I was so young, I don’t have incredible memories of those times, but she does. And just listening to her talk about the change that came after and the hope that what we’re going through right now, and the fact that it seems that we are really at an inflection point – that this will finally bring along some much needed change across the country and across the world.
Megan Smith: (06:34)
Yeah, very much so. And if you look at the US Archives, where some of our fundamental documents are, chiseled in the stone there, it says, “Eternal vigilance is the price of liberty.” And I often think about that because whether it’s the times when you and I were much younger and we were learning from and participating with, for change or today, or much earlier. You know, the place I mentioned, places from a time, like the 1870s when people were thinking about, you know, it was the second industrial revolution and a lot was going on and a lot, we’ve come a long way from there, but really haven’t in many other ways. And so, you know, people try at all times and that’s part of our responsibility. And even though it feels very complicated, it’s not dissimilar from the past and we just have to step up together and lift each other. in these times.
Jean Chatzky: (07:32)
What does inclusion mean to you?
Megan Smith: (07:35)
You know, there’s a quote from Gloria Steinem linked, we’re linked, not ranked. And it’s a hard thing to figure out to do because of how we’re raised and how we’re socialized. And it’s one of the most important things to figure out. You know, not stack ranking, there’s not a hierarchy. There’s an ecosystem. And how inclusion is that people were able to bring forward their greatest self and not sort of stop on others. That’s how I sorta think about it. And in Shift7, one of our taglines is “Solution making through inclusion.” And already like one of the things we do a lot is look for extraordinary people and try to listen for what they’re trying to do and help them. And that probably comes out of a Silicon Valley tradition or the tradition I have. You mentioned, I was at Apple, Japan. There was a spin out from Apple called General Magic. That’s where the smartphone work happened. There’s actually a movie on iTunes. It became the number one movie on iTunes, about this failed company, about beginning of smartphones. It’s about failure and about vision and solving things. But, I think in a lot of ways, we learned apprentice journey mastery, or I was able to learn that around technology and innovation. General Magic was a company that even though it didn’t work, you know, nobody had email when we were trying to make this smartphone thing. So people were like, why would I want to carry, no texting, why would I want to carry something around all the time? Like that sounds annoying, but this ability to learn how to ship a product or how to put something together, how to be in a team, you know, the way guilds were, I guess, that’s something that if everybody had access and an equal footing, we could bring forward a lot more solutions. So at Shift7, we’ve been working on, we always work in partnerships. We’re a small team, but Shift7 means “and” if you look at your keyboard. So we’ve teamed up with the UN on the United Nations Solution Summit, which we’ll do it differently this year I would imagine, because of how our challenging times. But five years, we just put up a webpage with the UN, “Who’s already fixing the sustainable development goals?”. And so you get inbound, first year we got 800 submissions. This year, this past year, 1400 submissions from 141 countries in three weeks, of people already fixing justice and climate and infrastructure and economic inclusion, and like on and on and on. You know, the sustainable development goals is such a wonderful agenda, the global goals. And some of those were people who wanted to volunteer in the participatory selection process. So you can make a open participatory selection process. My co-founder, Susan Alzner generated that at the UN when she led public engagement and bring that architecture forward. And so if we could actually hear all those people, that’s inclusion, and help them fix and work on the many projects that they’re doing, more things, it’s like surface area of solutions.
Jean Chatzky: (10:27)
So what I understand about Shift7 is that you’re basically connectors, right? I mean, you look for these people who are making progress, who have promise in terms of these solutions that they’re dreaming up or working on, and you connect them with resources and partners and mentors. Am I getting it right?
Megan Smith: (10:49)
Sure. One part of our work is really finding these solution makers, innovators. One of the programs, we currently have four of them and they ebb and flow. You know, we’re a small team, again. So we’re not necessarily doing all this stuff all the time, but we do it in partnership. So, like with MIT, there’s a program called Solve that we helped with the architecture of and I’m an advisor on the MIT board. And so MIT Solve is really the team asking on different topics. Coastal solutions, precision medicine preschool, whatever innovations could be out there. Same idea like asking, who’s already working on this. And then the solver teams from around the world are able to be networked through this MIT program, connected not only to the MIT community, but to each other and to the community that’s formed around this. Venture capitalists, innovators, others, funders, those who help. We were able to catalyze with them, the MIT Solve Indigenous Communities Fellowship, which is now in its third year. The first it was focused on Oceti Sakowin. The Standing Rock community had won an award at MIT and they co-catalyzed that. That’s the Lakota communities in Northern South Dakota. And so the people there, like Henry Red Cloud, already a genius solar innovator. Rose Frazier, a genius agriculture innovator. But often these innovators are living in some of the poorer counties in our country. On reservations, other places. How do you support them with their incredible innovative work the way that an Elon Musk or Jeff Bezos gets the kind of support and attention and media and funding. You know, there’s innovators everywhere. So this is working with indigenous leadership innovators all across the country. They added Navajo and Hopi last year, and now are going across the whole US with any innovators from the native American communities, native Hawaiian, native Alaskans and others. So, that’s a program we’ve worked on. We’ve also done some work on, we did a tech jobs tour. The team from Lesbians Who Tech put that together. So we went to 25 different cities and it was really getting neighbors to meet each other. And there’s already tech innovators. You know the tool meetup.com?
Jean Chatzky: (12:57)
Megan Smith: (12:59)
There are tech meetups all over the country everywhere. Right? Sure. So not everyone knows about them. And sometimes they have a bias or a stereotyping about who comes or what topics are discussed. But tech is for anything. So, you know, Boise, Idaho has 17 tech meetups. One of them has 800 people in it. So how do you get this. I call it the Wakanda layer, like all these doers who are acting a certain way, open source, open systems, venture capital innovation, teamwork, to open the doors and add welcome neighbors who are working, who are just as talented, but working on other topics. Maybe social justice, environmental, other kinds of topics, and use all the methods of the universe. So tech jobs too is really about looking at some of the future of work in a community organizing way. And welcoming neighbors into programs that are already available in cities, and helping the municipal leaders see that and accelerate that. So it just depends. We did some work called Islands of Innovation with the Polynesian Voyaging Society, Green Growth, which is the local 2030 program in Honolulu, Hawaii. And it’s again, same move. Ask who’s already solving island, agriculture, climate, other solutions. Lift up those innovators as part of the gathering with acceleration partners to support them and help with media and storytelling to have more people know about the solutions that are available.
Jean Chatzky: (14:22)
You raise the topic of media and storytelling. I understand one of the things you’re working on is better onscreen representation for women and people of color and movies and TV. Why did you decide to go in that direction?
Megan Smith: (14:35)
Yeah, I didn’t really realize a lot about how bias, watching things over and over again that are in a certain way, changes our confidence. So, I was lucky to be appointed to, at the beginning of UN Women, I was a public delegate for the US, together Geena Davis, the incredible actress who really has spearheaded her work with the Geena Davis Institute on gender and media, looking at this. And she had funded some early data work and done this with some of the USC folks and others, counting onscreen, like looking physically on screen, who gets to do what, and it turned out it was three to one boys lines to girls lines in children’s and family TV. That the professions represented, you know there’s a lot of princessing and cleaning, which is a good profession and there’s other professions. And why do the boys always do the STEM job? And why did the girls always do this job? Why do the people of color always have shorter lines, and the other group gets to make a speech. So just looking at the bias in that. And one of the things I suggested to Geena was, I was asking her how they were doing the research, and they were doing it with graduate students, kind of watching and cataloging on the social science side. And I said, let’s blend in some computer science. And so we were able to get some grants out of the google.org team and support Geena and bring in fabulous Professor Shri at the University of Southern California in the USC Viterbi Engineering School, and start using the same kind of technologies that you see with Siri and Alexa or self-driving cars and face recognition. These kinds of technologies, to actually measure what you’re seeing in the media. Who gets to speak? What do they talk about? What’s the natural language processing? Who’s face forward on screen? You think about the movie, The Soprano’s. The Soprano’s, you know, Tony Soprano in the middle and everybody else on the sides. A lot of media looks like that when you really analyze it. And so can we, who have grown up with that media so we don’t even notice it. Even the filmmakers themselves. Can we use software tools to help ourselves with media bias so that when we run the dailies or we write a script, was this our creative intent, that this character barely speaks, or was that an accident of bias so that we can really change it before we make it?
Jean Chatzky: (17:01)
Is it having an impact?
Megan Smith: (17:03)
Yeah. It’s the beginnings of that work and sort of measuring that and sharing that. It was interesting to talk to the Star Wars team about how little speaking from women or people of color in the early movies, and to see where it has moved some. And they even looking at the graphics are like, wow, I thought we did better. And so people have the intention to be more inclusive, but we have a very stereotype world that we need tools to help ourselves. Reminds me of some work that some of the Presidential Innovation Fellows did when we were in government. There was a new dataset from the Department of Commerce about income data and aggregate. And so they created “Hack the Pay Gap.” You know, we have hackathons on certain topics, why not have a hackathon for equality, right? And so hundreds of data scientists looked at and came up apps and solutions that would help managers and other leaders and individuals generate less pay gap out of unconscious or conscious bias that exists, so that you can see it better and solve it. Ida B. Wells, I says “the best way to right a wrong is shine a light of the truth upon it.”
Jean Chatzky: (18:06)
No question that she’s absolutely right about that. You know, we want to shine a light on Pride Month. And I want to hear a little bit about your roadmap and how you have carved a path through the years. Before we do that, though, let me just remind everybody that HerMoney is supported by Fidelity Investments. For more than 70 years, investors have relied on Fidelity to help plan for their financial futures. And as always when the unexpected happens, and we’ve seen a lot of that lately, Fidelity is there to help you work through it with financial planning and advice for what you need today and tomorrow. Helping to make it all clear. To see how Fidelity can help you and your family on the path forward, visit Fidelity.com.
Jean Chatzky: (18:55)
So you are an outspoken member of the lesbian community. How has that impacted your career path and how are things changing or are they not?
Megan Smith: (19:08)
I think things are changing. You know, again, we just have to, at every moment, just push for quality together. There’s just so much structural bias, unconscious bias, just all around us. I was lucky in that I grew up in a pretty open-minded family and didn’t need to suffer in the same way that many people do. One of the things about being an LGBTQ person is typically, if you’re a gay kid, you’re not often in a family that has gay parents or whatever. So with a lot of groups that are underrepresented or minority groups, you’re in the same minority as your family. And so you have a haven to go home to that doesn’t always happen for everybody. And so it’s important to notice that we need to be there for LGBTQ youth. We always need to be there for them and helping them. One of the things, when we were running PlanetOut, Jenny Olson had created an extraordinary resource called Popcorn Q, which was some of the first LGBTQ material on the internet. It was 1996. So think of a postage stamp. If YouTube came in a postage stamp, the size of videos, but so many people were able to access media and we were just talking about how important, you know, images matter. It matters to be able to see yourself on screen. And so that has really changed over the last several decades and continues to change. Obviously not in every country and in every media place. But, I’ve encouraged people. There’s an older piece called “The Celluloid Closet,” which was created by Vito Russo and others, that chronicles the imagery of LGBTQ people in media, through Hollywood and through that. And it’s pretty amazing to see, and it’ll really open your eyes to see that. But for me personally, I was so focused on what I was doing. I didn’t really figure out that I was gay until I was in college, really. So I didn’t have as hard a time I think as some young people do, who are suffering in the closet. And I came up through the eighties, as the world was changing. Silicon Valley is a pretty welcoming place for the gay community. A lot of young LGBTQ folks either fight back and kind of go certain directions or they overachieve and kind of come that way. So often you’ll find a lot of LGBTQ folks in Silicon Valley world. But I think it’s very important for us to continue to measure representation and be inclusive, certainly for our trans colleagues. Being there for them.
Jean Chatzky: (21:49)
Megan Smith: (21:49)
I just saw this morning, the first trans representative was elected in West Virginia. It’s really exciting. So the world is changing. But we have lots of work to do. And I just encourage people to just, Grace Hopper who invented coding languages. She had a great line, which is “don’t let them tell you you’re wrong if you’re not.” And so people need to stand in their confidence. Both their confidence around who they are and be themselves, and also their confidence in their inspiring ideas for how to make the world a better place. You know, it’s complicated, very much as a technology person, I gave the MIT commencement and I said technology in its best form is about love. Because it’s about both science and STEM and obsession and curiosity. Like how does the universe work? How does physics work? What is this, you know, biology like that deep curiosity that humans have innately from when we’re born. It’s about service, engineering, ingenuity, solving things, building things. And it’s about teamwork and collaboration in whatever forms that the community of innovation come together. And it’s not for some people. It’s for everybody. And we have to expand how we teach and how we welcome and how we understand what it’s for. Like data science and big data for pay gap not for fake news. And let’s reduce the amount of, you know, the Russian bots attacking our elections. Let’s reduce technology for bad and bring technology for good. It’s inanimate. It can be used for very terrible things and very great things. And so let’s lift the people of all kinds who have genius ideas. And certainly LGBTQ folks have so much to bring, especially because growing up in closeted places, there’s a suffering there that then can be transformed to empathy for others. That’s very important to bring forward.
Jean Chatzky: (23:46)
Yeah, absolutely true. As we have been taping shows, particularly over the past couple of weeks, we’ve been asking the question a lot. What can we do to be a better ally, to be more supportive of our Black friends and Black colleagues and neighbors. In terms of the LBGTQ landscape, What can we do as individuals?
Megan Smith: (24:12)
I think it’s about making sure people have voice. It’s about when you see things that are not fair, not right, speaking up. Doing something about them. Asking questions, you know, asking how to help. Just becoming more conscious of things that might not have been obvious that are there. It’s interesting. I often see a lot of times people, let’s take the National Academy of Engineering. There’s a list of the grand challenges of engineering. And like I was just saying, engineerings for anything. Social science. Arts. All the tools in the universe are for any topic that people are trying to work on. The universe doesn’t divide up silos, like math is for this and these people. And so it was interesting to me look at the grand challenge list because the group who had kind of crowdsourced that, they chose certain topics. But it didn’t have justice as a grand challenge. Equality as a grand challenge. But, you know, Ida B. Wells, who just won the Pulitzer Prize posthumous, a hundred years after her extraordinary data science journalism work around the inequalities and lynching and the challenges in our country in the late 18 hundreds, that was profound data work. And so I think that there’s a lot of systemic bias, whether conscious or unconscious in the systems of what we prioritize fixing, that creates real lopsidedness in funding and solution making. And the one that was really present, this past month was our incredible partnership with NASA and the SpaceX team. My friend, astronaut Katie Coleman, was doing some media work and we did a really fun program with Amy Poehler, Smart Girls, as they were docking. We were mentioning that at the Apollo 11 launch, Ralph Abernathy went with 500 people who were part of the March on Washington in 68, this is 69 in the summer, to protest at the Apollo 11 launch. Not to say we’re not proud Americans of what’s happening here in terms of this, that we’re going to the moon. That’s very exciting. You know, he had just this incredible quote, just sharing that. He said “a great nation ought to be able to take care of those who are less fortunate, as well as undertake space or exploration.” And so back to kind of the sustainable development goals, why don’t we our capacity. And in fact, the NASA administrator came and met with them. And he said, if not pushing the button to go to the moon could solve poverty. I’d do that. And I guess our challenge adjusts to let’s go to the moon and let’s work on poverty. Let’s prioritize these things and let’s throw all of our energy and talents at that, and really listen to each other. So that we understand the challenges. And we also understand who already has solutions. Not just the group who always gets funded for solution making, but everybody.
Jean Chatzky: (27:17)
Megan Smith, thank you so much. This has been an incredibly eye-opening conversation. I think I could listen to you talk all day. Where can our listeners go to learn more about Shift7 and the incredible work that you’re doing?
Megan Smith: (27:29)
Sure. You can go our website, Shift7.com, has a lot of information. Also Amy Poehler’s Smart Girls is a partner of ours. And that’s amysmartgirls.com. There’s a whole set up there called 20 for 2020. And so it’s 20 stories of extraordinary accomplishments by women that are from all different perspectives. Some are STEM, some are arts. There’s a woman who wrote 850 songs. She wrote for Elvis and Aretha. And it’s unbelievable what she did. She was fabulous. And the Wright brothers, mother, Susan Wright and Kathryn Wright’s mother, was a mechanical genius and taught design thinking to her voice. So knowing that all of us have always been badass, everybody has always been contributing throughout history, is important thing to know. Because the further back you can look, the farther forward you will see. So for 2020 with the vote, which of course we know only came to some people in 2020, and it wasn’t until the sixties that more of the laws came through. Native Americans also were not allowed to vote until later after 2020. But I would note that the very first extended protest of the White House, as we protest, was the women, intersectional, Mary Church Terrell was on the fence protesting for two and a half years. Standing in front of the White House, the Silent Sentinels. So those stories need to be known. And so go check out the 20 for 2020. There’s an extended story of Ida B. Wells there, who I mentioned earlier.
Jean Chatzky: (28:54)
I am. I’m going there this afternoon. Absolutely. Thank you so much. This has been great.
Megan Smith: (29:00)
Okay. Thanks so much.
Jean Chatzky: (29:01)
Absolutely. And we’ll be right back with Kathryn and your mailbag.
Jean Chatzky: (29:12)
Boy, what an amazing woman. I mean, I don’t know how she pulled all of those quotes out of her head so quickly. But I was kind of spellbound. I mean, we’re recording this, I couldn’t see her. We’re, we’re recording this on a new technology where we get better audio, but no video. But just listening to her. I mean, what an amazing thought process and incredible wisdom.
Kathryn Tuggle: (29:40)
Yeah, I totally agree. I could have just talked to her all day. Just to listen to her thoughts. You know, they say that like the most talented executives and leaders in the world, they just read like crazy and they have this incredible, these incredible brains that help them absorb information. And I feel like I got that from her. That she’s just this incredible wealth of knowledge.
Jean Chatzky: (30:04)
Yeah. But what she said about computers being able to, or technology. She didn’t say computers. Technology being able to show us our biases, I think is fascinating. I was having a conversation with Dayana Yochim, who writes for HerMoney, and she’s researching a piece for Pride Month, that’ll go up on HerMoney shortly, and found a survey that showed that transgender women who transitioned from male to female, saw their wages fall by nearly a third. Transgender men however, made slightly more after transitioning from female to male. And so if you didn’t think that the gender pay gap was real, if you didn’t think that there was that kind of bias in society. I mean, this is as clear as could be.
Kathryn Tuggle: (30:59)
It’s shocking. It’s just unbelievable.
Jean Chatzky: (31:02)
And so I think Megan is right. I think we all have to just hold ourselves accountable and that this is an inflection point. But it certainly can’t be a flash in the pan. It has to be something that we continue to pay attention to. And I know that I’m counting on you. I’m counting on the HerMoney community and I’m counting on my team to hold me accountable if I fail to do that myself.
Kathryn Tuggle: (31:31)
Yep. We’re all learning together.
Jean Chatzky: (31:33)
Yeah, no question. No question. All right. Let’s dig into our mailbag. I know we’ve got a bunch of questions. In fact, the first question we called in Marcia Mantell to help us answer because it came in after the social security episode on which she was such a wonderful guest. So Kathryn, why don’t you read us the question and then we’ll get, Marcia’s take.
Kathryn Tuggle: (31:57)
Yup. Our first note it is from Megan and she writes, the interview with Marcia Mantell on social security was a real eye-opener. Thank you for the great episode. I learned so much from her. I’m curious, where does freelancing fit into work history and social security payout? I’ve switched between full-time employment and full-time freelancing and have freelanced while employed, full time over the years. It’s all on the books. I have an EIN number and have filed a 1099 MISC every year. But is freelance income included in any social security calculations? Is the 1099 payment the employer contribution to my employee social security fund. Thanks so much.
Marcia Mantell: (32:36)
Hi Jean. Hi Kathryn. Thanks for inviting me back. What a great question.
Jean Chatzky: (32:40)
Absolutely. So what do you think?
Marcia Mantell: (32:40)
Well, this presents such an interesting dilemma and situation for so many women, what she’s describing, right? Sometimes you’re working full time for an employer. Sometimes you’re freelancing. Sometimes you do a little of both. It’s such a typical journey for a woman. But here’s the situation. What’s important to know is that “income,” and I’ll use that in quotes. “Income” is subject to federal taxes, state taxes, sometimes local and FICA. And that’s FICA what she’s looking for information around her social security. While she’s working, or any of us are working for an employer, a covered employer, and we get W-2 wages, the employer takes care of paying all those taxes on our behalf. We don’t have to worry about it. But when you’re a freelancer or any kind of self-employed person, and in this case, she’s saying she gets this 1099 miscellaneous, which says, this is income I’m getting, but I’m not an employee. She therefore has to file other types of tax return forms. And it’s funny. There’s, non-farm reporting on schedule C and farmers report on schedule F. But then you use an additional form, the schedule SE, and these are IRS forms, where you determine what’s called your self-employment tax or your self-employment FICA. And she’s tapping on it correctly, that there’s an employer side to FICA and an employee side. Well since she’s the freelancer, on any income she’s making as a freelancer, she has to self report on these tax forms and calculate her FICA tax and pay it herself because she’s both the employer and the employee. So she’s in this situation, which is very common again, especially for women, that you’re doing both sides and you’re paying it at the point when you’re filing your tax returns. So usually in April this year, you can go out to July. And what’s important for her to keep in mind is, social security is a pay in, in order to get a pay out kind of system. So you have to pay your own self employment taxes. Otherwise, you’d be in violation of tax law and you wouldn’t get social security income in retirement. But from her question, it sounds like she’s doing everything right. She’s got her EIN, that’s her employee number. So she files as a self employed person. And the schedules that she’s required to file, help her calculate how much goes into social security and importantly, she should see that on her statement. So if she pulls down her statement, you go to my social security on the social security website, set up your own account, and you’ll see your statement there. And she should see her self-employment earnings over the years. Some years, you know, sounds like she bounces around with her income. Some years she’ll have higher income, some year lower. Some years it will be all self-employment income that she reported. Sometimes it will be wage earnings from a covered employer. So she’s got an interesting statement. I think if we got to take a look at it.
Jean Chatzky: (35:53)
And that’s something that you find at socialsecurity.gov.
Marcia Mantell: (35:56)
That’s correct. Yes.
Jean Chatzky: (35:58)
Let me ask a follow-up question on this. For people who have a side gig, right, where you have a regular job where they pay the social security taxes and FICA is deducted. Is it possible that you’ll max out through that primary employer, how much you have to pay and then you won’t owe anything on your own?
Marcia Mantell: (36:21)
Yes, it is. That that’s a really good piece of additional information, Jean. But it is for high earners. So this year in 2020, you would have to earn from your covered employer, your corporate job, $137,700. That’s the maximum income where social security taxes are withheld. So if you make $150,000 on your main job, you’re capped at 137,700, pay FICA taxes on that. But that side gig that you have, you know, maybe you’re an artist on the side, or you do flower arranging or something creative to offset your corporate job. In that case, you would not be subject to any self-employment FICA, withholdings, because you’ve already maxed out with the corporate side of your earnings history and your income.
Jean Chatzky: (37:16)
Okay. All right. Is opening an account or starting an account on ssa.gov? Something that everybody should do?
Marcia Mantell: (37:24)
Yes, absolutely. I could not agree more. We all need to have our account. It’s super easy to set up. It’s at ssa.gov, as you mentioned. There’s an icon right on the homepage that says My Social Security. Here’s where you get your account. And you get to see your statement, your most current statement. And also once you attach yourself, your name and social security number, with your information, you help protect your social security number from any of the bad stuff that goes out in the cyber world. So it’s really, really important that we all set this up.
Jean Chatzky: (37:59)
Fantastic. It’s so nice to have a social security expert on speed dial.
Marcia Mantell: (38:04)
Jean Chatzky: (38:06)
Marcia. Thank you so much for calling in. We appreciate it.
Marcia Mantell: (38:09)
I really appreciate the call back. Happy to help.
Jean Chatzky: (38:11)
Thanks. And Kathryn, what else do we have in today’s mailbag?
Kathryn Tuggle: (38:15)
Our next note is from Papo Lopez. He writes, hi Jean. I’m a 65 year old male and a us Navy veteran and retiree from a New York City hospital. Elmhurst to be exact, where I worked for 39 years. I have a 403b Roth with Prudential, but now that I’m retired, I’m unsure if I should keep it there or transfer it elsewhere. What do you think also? I have two nieces who are 12 and 22 years old, and I really want to open IRAs for both of them so they can start saving early for retirement. Where should I look to open these and do they need to be involved? Lastly, is there any general rule about the best place to keep your liquid funds in checking or in savings? You are the best. And thank you so much for your advice.
Jean Chatzky: (38:56)
Thanks for writing Popo. We love hearing from our male listeners. We don’t hear from them all that often, but we know you’re out there. And so I appreciate it. And thank you so much for your service as well. You are right down the road from me. Let me just take your questions one by one. So that 403b that you have right now with Prudential, you’re right. You absolutely have the opportunity at this point to roll it into an IRA at some other institution. So I would say, take a look at a couple of things. Take a look at the fees that you are payingn now. Take a look at the investment choices that you have now. And ask yourself whether you can do better in either capacity. If you’re really happy with the investment choices, if they’ve been doing well for you and you think that the fees that you’re paying are in line with the fees in other places, it’s totally fine to keep your investments where they are. But if you’d like to have additional flexibility, if you feel that there is a financial advisor that you want to work with and they work through a different firm, then that’s a reason to look at moving that account. The other reason that people sometimes move accounts is to consolidate where things are once they get to retirement. You had a career that was a long time in one place, but should you have other accounts that are across the landscape of financial services institutions, bringing them together makes life a little bit easier administratively, because you can sign on with a single log on and you can see all your stuff on a single page. As far as your nieces, the rule about opening an IRA is that they have to have earned income. They have to have as much earned income as you contribute for them. So if that 22 year old is working, that’s a pretty easy call. You should be able to open an IRA, but you should talk to her about what she’s got as far as other retirement accounts and make sure that it works together. With the 12 year old, it may not be possible unless they can prove that they have income. And in that case, you may want to open a savings account. You might want to open a college savings account, a 529. You might want to look at other alternatives. And I would talk to your niece, but I would also talk to your niece’s parents about what they think the best vehicle would be for her. Again, we look for institutions where fees are low. We look for places that are easy to access, because these are young people, I might look into, especially for the 22 year old. If you want her to take an active role in managing it, I might talk to her about the concept of a robo-advisor and whether or not she is interested in having an account with a robo-advisor. But what a great uncle you are, this is fabulous. And yes, absolutely involve them in all the conversations. This is the way we get the children in our lives, interested in money. We bring them along where money is concerned. Finally, liquid funds saving. Your spending funds. Your money that you are using on a monthly basis belongs in checking. But most of the time, you’re not going to get any interest on that account. If it’s your emergency savings, a stash of money that you’re not using, then I would put it into some sort of high interest rate savings account, a high-yield savings account. We’ve got a list of high-yield savings accounts on HerMoney.com. You’re not going to earn a ton of interest right now. The best I’m seeing is 1.3%ish. But it’s certainly better than earning a fraction of 1% or nothing at all, which is what you’re likely to get in checking. And thanks so much for listening.
Kathryn Tuggle: (43:13)
Thanks Jean. Great advice all around.
Jean Chatzky: (43:15)
Thank you. I love that. He’s doing that for his nieces. Don’t you Kathryn.
Kathryn Tuggle: (43:19)
Amazing. Such an amazing gift for them.
Jean Chatzky: (43:21)
We’ve got one more?
Kathryn Tuggle: (43:22)
Yes. Our last question comes to us from Joanie. She writes, hi Jean. I love listening to your podcasts and the women-centric focus you always have. I’ve been working from home over the past few months and this is enabled me to listen to your podcast while working, which was definitely not possible when I was in my office environment. I have a couple of questions I hope you can answer on the podcast. I’m going to retire soon and I have almost $1 million in my 401k. My husband and I also have about $1 million in retirement and other assets at one large investment firm while my 401k is managed by a different, large investment firm. Should I be concerned about rolling over my 401k to the same investment firm that holds my other non-401k investments, so everything is together? I just wonder if there’s a concern about having the bulk of my assets managed by a single firm. Of course, it will be easier to manage withdrawals and rebalancing if I had all my assets at a single firm, but what about the risks? Also, what should be my thought process in determining whether to keep my 401k money in the existing 401k account versus rolling it over to an IRA at the firm that holds all my non-401k investment assets. Thank you so much for all that you do.
Jean Chatzky: (44:33)
Thanks Joanie for writing. And your question is a lot like the question that we just took from Popo. You basically want to look at the same things. You want to look at fees and you want to look at your investment options. And you want to basically compare them and see where you have the biggest array of options that you might want to put your money into. You want to compare the cost of keeping your portfolio in these places and see if there is a big difference between the two. This question about having all of your assets with a single firm is a question that we dealt with a lot during the time of Bernie Madoff. But what I think you should realize is a couple of things. First of all, I would say, I would not be worried about this. You have SIPC protection, which is a form of insurance in case the firm should ever go under. Because you have different types of accounts and because there are two names on the accounts, it sounds as if you would be fully covered even if your institution doesn’t carry excess SIPC protection. But my guess is that your firm does carry that excess protection. It’s something that you would want to ask whoever the point person is that you deal with, whether they carry that much insurance. How much insurance they have. How covered you are. But it’s not as if they are the custodian of these assets. In many, many cases, the funds actually allow the underlying assets to be held in other places, which provides you an additional layer of protection. So I would go with the administrative ease of putting it all in one place once you make the decision about which place is better for you. The last thing to keep your eye on, again relating to that existing 401k account, is the fees that you pay once you’re no longer working there. Sometimes fees go up once you retire. And should that happen, the decision to roll over is often, much, much easier. Make sense, Kathryn.
Kathryn Tuggle: (47:00)
That’s great advice, Jean. Yeah, it totally makes sense. And I have all my assets with one major firm and I have to say it’s been so much easier.
Jean Chatzky: (47:08)
Yeah, I do as well. I didn’t for a long time. And then I put them together and I do just like having everything on one statement. I like having everything on one piece of paper. And when I talk to my advisor, it’s also easy to have a conversation about what is what. So, I’m for making life easy during this time when life is just not so easy in so many other ways. In today’s Thrive, we’re going to come back to the topic of social security. Before I do that, Kathryn, let me just say thanks for the mailbag as always.
Kathryn Tuggle: (47:43)
You are so welcome.
Jean Chatzky: (47:44)
Unemployment is up. Retirement portfolios are down. Well, they’re up and they’re down, depending on what day it is. But what you decide to do about social security in your sixties will impact your retirement security for decades. We are talking about having a lot less income in your eighties, nineties, even your 100th birthday. At hermoney.com, Marcia Mantell who you just heard today in our mailbag, also wrote an incredibly helpful piece, all about the things you need to consider before you file early. And I wanted to just quickly review a couple of them. For one, you need to know, you could sacrifice up to 30% per month in income if you claim at age 62. Is it worth it to claim early if you’re going to lock in permanently reduced income for your entire retirement? I don’t think so. You are always going to get more money from social security if you can wait to claim after your full retirement age. Also keep in mind, social security uses your highest 35 years of earnings to calculate your benefit. You want as many high earning years as possible, and they often come later in your career. This is just another reminder of why it’s so important to check your social security statement, to see your work history and estimated benefit amounts. And you’ll find those at ssa.gov. Finally, remember, if you do file early, it is challenging. It is costly to undo a claim. Things can get really, really messy. During the uncertainty of COVID-19, I know that the right decisions may seem difficult, particularly if you’re in a financial squeeze, but it’s important that we all just take a breath and make the best decisions we can for the near term, while still keeping an eye on the long term.
Jean Chatzky: (49:46)
Thanks so much to all of you for joining me today on HerMoney. Thanks to Megan Smith for a great conversation and for all the efforts that she is pursuing at Shift7. If you like what you hear, I hope you’ll subscribe to our show at Apple Podcasts. Leave us a review. We love hearing what you think. We want to thank our sponsor Fidelity. And as always, we are just so happy to be in your company. Thank you for reaching out to us via Facebook, on our mailbag and inspiring us to do what we do every day. Thanks so much for joining us. We’ll talk soon.