Smart Money Podcast: More Money Hot Takes, and Leaving Your Job

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.

This week’s episode starts with a round of Money Hot Takes.

Then we pivot to this week’s money question from Sean:

"Hey folks,

Huge fan of the podcast. I have been listening for years, but this is, I think, the first time I'm submitting a question and it's a complicated one.

I currently work as an engineer for a municipal utility. As an engineer, I have some ability for job mobility. While I do like my job, I have thought about what it would take to draw me away from my job, and I have had trouble figuring out what a 'godfather offer' would need to be.

As a civil servant, I have great healthcare, a pension, job security and overtime if I work beyond my scheduled 40-hour workweek. In the private sector, I have more income potential, but I would lose a lot of these benefits and end up working a lot more hours. I've had some trouble figuring out how to evaluate some of these benefits, particularly the pension.

Thank you,

Sean"

Check out this episode on either of these platforms:

• Apple Podcasts

• Spotify

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Episode transcript

Sean Pyles: Hey, Liz, if you had a job that offered you a pension, would you still leave just because you were bored?

Liz Weston: Well, pensions are sweet, but I do like being challenged, so maybe.

Sean Pyles: All right, I'm going to say I wanted a yes or no answer, but I think that that's OK. I just hope that you would at least stick around until you're fully vested.

Liz Weston: Well, of course.

Sean Pyles: Yes. But in this episode, we answer a listener's question who's considering bailing on a pension.

Welcome to the NerdWallet Smart Money podcast, where you send us your money questions and we answer them with the help of our genius Nerds. I'm Sean Pyles.

Liz Weston: And I'm Liz Weston. Listeners, remember to send us your money questions. Maybe you're wondering if now is a good time to buy up a bunch of gold or you're wondering how far in advance you should book an international vacation. Whatever your questions, send it our way. Leave us a voicemail or text us on the Nerd hotline at 901-730-6373; that's 901-730-N-E-R-D. You can also email us at [email protected].

Sean Pyles: In this episode, our co-host Sara Rathner and I answer a listener's question about how to leave a job. But first, Liz and I are going to get mad because it's time for another round of Money Hot Takes. This is our occasional segment where we rail against something that we just don't like in the personal finance space. The goal is for us personally to blow off a little bit of steam and hopefully help our listeners make smarter decisions in a world full of scammers, fraudsters and phonies or sometimes just plain old misconceptions that can cost you money.

Liz Weston: Oh, I love this. This is going to be fun. OK, Sean, what do you have for us?

Sean Pyles: Today, I'm calling out the online, quote, unquote, "courses" that some influencers peddle to their followers. A lot of these classes aren't providing you any information that you can't get on your own for free, and the folks teaching them are often, shall we say, not exactly qualified. And a shoutout to Rebecca Jennings from Vox who wrote an article that so well articulates my feelings and concerns around these courses. We'll have a link to that article in the show notes.

Liz Weston: So what's in these courses, Sean?

Sean Pyles: Kind of everything that you can imagine you might want to improve upon. There are classes in things like how to use Excel. There are classes in how to get started investing or budgeting. There are even classes on how to make your own class to sell to people, which is a little meta.

Liz Weston: Of course, of course.

Sean Pyles: And the prices vary greatly. Some are under a hundred dollars; others are over a thousand dollars, maybe $2,000.

Liz Weston: Ooh, well, I think I know the answer to this question, but tell us why you don't like them.

Sean Pyles: Well, as I mentioned at the outset, a lot of people are paying for information that they can get elsewhere for free. And again, many of these people have very questionable credentials. Sometimes the people who are teaching these classes are not actually experienced or qualified in what they're telling you to do. And in fact, they're just really good at marketing themselves, which I always have an issue with. People who seem just overly into marketing their own personality for the sake of getting money and attention on the internet.

Liz Weston: Yeah. And I imagine that could cause people not to go to good sources to get their information or leave them with a patchwork of incomplete information.

Sean Pyles: Exactly. They think that they're getting everything they need to know about how to get started investing from one online class when in fact it might just be a small piece of the picture. Also, they can seem a little scammy to me. This is especially the case with classes around investing. Some will teach you how to invest and then maybe try to get you set up with investing during the class, and they'll get you set up through a platform that also pays the influencer and affiliate commission, which seems like quite the conflict of interest there. And also, never mind the platform the influencer is peddling might not be the right one for you. So this person is getting money from you signing up for their class, and they're also getting money from the company that they're pushing on you as well, which I just don't like.

Liz Weston: Now, I will say I like online courses in some cases because they help me get up to date or catch up on something I should have learned earlier, like Excel. The Excel courses were very helpful, but they're not all bad. So how do you determine which are the better ones?

Sean Pyles: I'm with you, Liz. I am not an absolutist. In pretty much anything, there are plenty of great online classes. I'm a huge fan of Masterclass, for example. Not paid to say that; I just use their stuff a lot, but they are very well vetted. I think it's important to vet your sources and to be selective about the type of information that you're getting. Maybe a language course from someone who lives abroad and has learned a different language is something that you can more easily get into versus a class that's about the secret to getting rich. Also, maybe don't have this online course be the only source of information on the subject.

Liz Weston: Yes, maybe you could even come to a site, I don't know, NerdWallet.

Sean Pyles: Yeah, we are a great alternative. And you know what? I think some folks might be thinking, "Hey, how is NerdWallet different from these online personal finance influencers or courses?" And to that, I have two words to say: journalistic rigor. Our content is deeply reported, edited, fact-checked, not to mention editorially independent, to ensure that the information that we're giving is as accurate and consumer-first as possible.

Liz Weston: And if you need more personalized help with your money, there are plenty of professionals who can help you. Financial coaches can help you get a grip on your budget and financial goals. Accredited financial counselors can offer tools to wrangle your debt, and fee-only fiduciary financial planners are a solid choice if you need guidance on building your wealth.

Sean Pyles: Very well said, Liz. So that is my rant, and Liz, now you're up.

Liz Weston: OK. This is really nerdy, Sean, but I am annoyed that people don't understand how life expectancy works.

Sean Pyles: OK, you're right. That is really nerdy. I'm going to need you to elaborate on what that even means and why it's making you so mad.

Liz Weston: OK. This is important because understanding life expectancy is key to so many things about retirement planning, which is basically how long your retirement will last, right? So you need to know roughly your life expectancy so you can figure out when to take Social Security, and it probably can help you better understand all the debates about raising the retirement age. Remember when I was in Paris and they were setting fire to the garbage over there?

Sean Pyles: Yes.

Liz Weston: Yeah, that's this debate. So I just read a New York Times article about the best age to retire, and it used the wrong number. It said the average life expectancy was 76 years.

Sean Pyles: OK, so you're out here dragging the Gray Lady for being wrong, is that right?

Liz Weston: Sorry, hats off to The New York Times, lots of great reporting, but that's the average U.S. life expectancy from birth. That factors in infant mortality and all the people who die young or young-ish from accidents or disease or whatever. That number is 76, by the way, because largely of all the COVID deaths, which is the reason that life expectancy has dropped a bit. But that number is pretty much irrelevant for retirement planning because the longer you survive, the longer you're likely to survive. What matters is how much life you're likely to have left when you get to retirement age. And at 62, which is the earliest age you can claim Social Security, the average man can expect to live until almost 81 and the average woman till 84. If you make it to 65, both men and women are likely to make it to their mid-80s. Now, your mileage may vary. Obviously, lifestyle, genetics, other factors come into play. Unfortunately, Black people tend to have shorter life expectancies. But the more income and education you have, the more years you can probably add to your life expectancy.

Sean Pyles: And I imagine this really matters when it comes to claiming Social Security.

Liz Weston: Oh, it's so true. If you file early at 62, you are settling for a permanently reduced check. You're giving up a lot of money because you're likely to live well past the age when the larger checks that you would've gotten for waiting more than make up for the smaller checks you bypassed in the meantime. We talked to Nerd Tina Orem, and her calculator can show you your break-even age. And what's more, if you're the higher earner in a married couple, you've really done your spouse a disservice if you file early. And that's because your benefit determines what your spouse gets to live on after you're gone. So starting early means you've permanently reduced the survivor check that your spouse will have to live on for the rest of their lives.

Sean Pyles: Got it. OK. And that's especially important for men to think about because women tend to outlive men.

Liz Weston: Yeah. And if you are a same-sex couple, again, it's the higher earner that matters. So it's something to keep in mind. The higher earner should delay as long as possible. And also, it can really help to use a calculator to estimate your own life expectancy. And there's a really good one at livingto100.com.

Sean Pyles: Well, I think that we both feel a little bit better getting that out of our system. I don't know about you, Liz.

Liz Weston: Yes, thank you. I do.

Sean Pyles: Great. Now let's get on to this episode's money question segment with co-host Sara Rathner.

Sara Rathner: This episode's money question comes from the excellently named Sean, who sent us an email. "Hey folks, huge fan of the podcast." Thank you. "I've been listening for years, but this is, I think, the first time I'm submitting a question and it's a complicated one. I currently work as an engineer for a municipal utility. As an engineer, I have some ability for job mobility. While I do like my job, I have thought about what it would take to draw me away from my job. And I've had trouble figuring out what a, quote, unquote, 'Godfather offer' would need to be. As a civil servant, I have great healthcare, a pension, job security, and overtime if I work beyond my scheduled 40-hour work week. In the private sector, I have more income potential but I would lose a lot of these benefits and end up working a lot more hours. I've had some trouble figuring out how to evaluate some of these benefits, particularly the pension. Thank you, Sean."

To help us answer Sean's question, on this episode we're joined by NerdWallet data writer Liz Renter. Welcome back to Smart Money, Liz.

Liz Renter: Thanks, Sara. I'm excited to be here.

Sean Pyles: So first, I think folks should understand the total value of work benefits because it extends well beyond the cash that you get. According to March 2023 data from the Bureau of Labor Statistics, for government workers, benefits represent about 38% of compensation, compared with just under 30% for private-sector workers. As our listener knows, the benefits of government jobs are pretty cushy, and that can be really hard to give up.

Sara Rathner: That 30% to 38% figure might come as a surprise to you because I think when people are evaluating a job opportunity, there's so much of a focus on the salary and maybe a bonus if that's part of the deal. But if you're thinking of leaving your current job, it is worth it to work to understand your total compensation, not just wages, but benefits as well. So listing out your benefits, like paid time off, access to resources like financial advisors or even discounted legal assistance, maybe some cold brew coffee on tap in the office kitchen.

Each of these has a specific value, but it can be pretty tedious to add it all up. Another big thing to think about are taxes. This is a bigger deal if you're thinking of becoming a freelancer or a contract worker where you'd be on the hook for sorting out your own tax obligation. Based on what you figure out, you might decide whether or not you want to go down the freelancer or contractor route at all, or would you prefer to be a full-time employee at a company? Another big one, this is a really big one: health care.

Liz Renter: Huge.

Sara Rathner: Huge and so expensive. Definitely contact HR during the interview process, or when you have the offer and you have some time to think it over, to get the health care plan options and their pricing.

Liz Renter: Yeah. And I just want to interject, Sara, that's a good point. If you're talking to a potential employer or even your current employer about what the health care costs look like, how much they're covering, keep in mind that employers get a heck of a discount on premiums. They get a group discount because they're paying for multiple policies at once or helping to pay for multiple policies at once. So if self-employment is under consideration or a job that may not offer health insurance at all, your premiums are going to be much, much higher than what your employer would be paying in the situation where they're helping to cover those costs.

Sara Rathner: Yes. And I have been in both boats and …

Liz Renter: Same.

Sara Rathner: … real expensive to be self-employed when it comes to health insurance coverage. And that was one of my reasons for not pursuing that for the remainder of my career if I can help it. But you know, you do you. And then also, here's another one. There are all these extra benefits that really add up. Things like a monthly gym stipend or a cell phone stipend. A lot of remote workers get a home internet stipend as well. And the cost of these things can really offset the price of some of the things you might have been paying for out of pocket if you were previously at a job that didn't provide this as a benefit.

Liz Renter: Right. And I think those things are far less likely in, like the listener wrote in about, a municipal job or a state government job. Unlikely you're going to have a keg of cold brew in the kitchen unless you're in a really affluent city and tax rates are pretty high. But you're right, some of those things that you take for granted, the snacks and the catered lunches at private industry, really do add up. You can spend a lot of money on those yourself if you're having to pay for them.

Sara Rathner: Yeah, you definitely see a lot of those benefits in the tech industry because they are just falling all over themselves to make these companies more attractive to job applicants than the tech company down the street. Literally down the street, depending on what city you're in. And so if that's an industry where you are weighing some job offers, then yeah, you're going to see some pretty wild benefits that have a dollar value to them.

Sean Pyles: Well, that said, there is one benefit that you will maybe get at a municipality that a tech company is not really going to be offering you. And that is the pension benefit that our listener wrote in about. And I want to give a quick rundown of how pensions work because they're pretty incredible and they're unfortunately not very common. So pensions are typically employer funded. That means the employer is putting in money, which is great. So the amount folks get in retirement depends on wages earned and how long they worked for the company or, in this case for our listener, a municipality.

Then upon retirement, someone who has access to a pension, they get payouts, typically for life. You generally do have to work at an organization for a set amount of time to get full access to the payouts. That's called being fully vested. But once you're fully vested, you can leave that job and still get access to the pension benefits upon retirement. So, so cool. I really wish I had a pension. Now, like I mentioned, pensions are really rare nowadays. So again, pensions are a very sweet benefit to have, and I would think very hard about losing that, especially if you're not fully vested.

Liz Renter: Yeah, absolutely, Sean. And the listener wrote in about putting a dollar figure on their pension. So I just want to know that that's an extremely difficult thing to do without a lot of details, and a lot of time, and a big spreadsheet and a calculator. Anyways, when you're thinking about how long you've been at a job, how much your employer's putting in, what the specifics are about vesting and if you decide to leave that government job, to leave your pension, and what would it take to create something comparable yourself? So there's a lot of numbers involved, a lot of time frames, a lot of assumptions. So this is one instance where we would say, "If you really want to get precise on that measurement, it might make sense to consult with a certified financial planner who can put the dollar amount on those things."

Sean Pyles: You'd likely want to talk with a CFP who maybe has some gray in their hair and who has done this before since figuring out pensions can be so complicated.

Liz Renter: Right. Yeah, exactly.

Sara Rathner: And honestly, if you have a financial planner that you already have a working relationship with, I mean, job hunting is an excellent time to have a check-in with them in general, and they might even help you wade through competing job offers or even just the comparison of a job offer to what you're currently working in. And they can help you work through all the financial considerations of those options. And so that is a great way to utilize their assistance.

So let's get to the other part of a listener's question. The mushier stuff that folks should consider if they find themselves itching to leave a job. To start, they should ask themselves, what's behind this urge? Are they bored, unhappy, unfulfilled? Are they upset because there's no cold brew in the break room and they really want that?

Liz Renter: Yeah, this is key, Sara. I think there's so many considerations when you're thinking about a career move. And I had two really major career changes in my younger years. It's over the past 20 years, but they were really pretty close together when I was in my late 20s. One when I moved from state government to private industry, and then a few years later, I went from private industry to self-employment. So those are pretty big changes. And in each of those changes, I was weighing different motivations. In one case, it was more about the money and advancement, and in the other case, it was more about what's really going to make me happy long term? And so I think really diving into why and what your motivations are for leaving or staying, and getting clear on those before you start weighing your options, is a good place to start.

Sean Pyles: To what extent did you have that conversation with yourself or maybe with those around you around, "OK, if I leave this job, I might be making a little bit less, but I will be that much happier." Or, "If I go to this job, I'll be making a good amount more, but it's going to be a boring job." How did you think about those things?

Liz Renter: It's tough. I probably had limited discussions. So as a single mom, it was just me and my daughter at the time, who was probably 4 when I made the first job change, maybe 7 when I made the second job change. So there weren't a lot of people for me to toss these ideas around with. And I'm an extremely private person, but these were conversations I was having with myself. And in the first job going from state government to private industry, I realized in state government that, yes, the paycheck is steady, the benefits are nice, but I really love to work hard.

And in my experience, this government job, you were rewarded for how long you were there, not how well you were doing. And that was tough to deal with, and it really bred apathy among the people around me. I wanted to be somewhere where I could work hard and that would be recognized. So that's not to say that all government workers are taking naps at their desk. That definitely wasn't my experience, but personally, I wasn't being recognized for the hard work that I was doing, and that was really important to me.

Sean Pyles: Right. That makes sense.

Liz Renter: And so that one was really more about the professional rewards of working. And then the second one, it was more about the trade-offs. Am I willing to give up some of those professional rewards to really fulfill my personal life? So as I said, my daughter was really young at the time, I was dropping her off early in the morning, I was picking her up after work, sometimes 12 hours later. And the job was paying more than my state government job, but I definitely felt like I was punching a clock and I wasn't fulfilled, and I totally could not see myself doing that for years upon years. And I knew leaving that job meant I would absolutely take a decrease in pay, at least in the short term, as I got on my feet as a self-employed freelance writer. But when I balanced that against what was really important to me and what was going to make me happy and make me feel good about the way I was living my life, it was a no-brainer.

Sara Rathner: Yeah. I've known people who've switched jobs out of boredom and ended up regretting it, actually, because the reason they were bored at their previous job was they'd done it for a while and it became rote. But they realized leaving for a greater challenge meant giving up maybe some of the work-life balance and predictability that came with a job that was quote, unquote, "boring," and they had to make pretty big structural changes to how they operated at home with their household, with their family, to accommodate the new challenges of a new career.

Sean Pyles: Kind of goes back to the idea that it's not what decision you make, it's what you do with the decision that you make. If you do leave a job that you're bored at and you find that your next gig isn't quite what you wanted it to be, there are going to be other opportunities later on.

Sara Rathner: Yeah.

Liz Renter: I think that's a good point. When I went into freelancing and I knew I was going to take a pay cut and I was banking on turning that around in a year or two, I always had that in the back of my head like, "OK, worst-case scenario, I'll get a part-time job for when my daughter's in school," or, "Worst worst-case scenario, I'll go back to working full time." With a reassessment of maybe I find something that's closer to home so there's less of a commute, what have you. But I think knowing that, "OK, I've thought through why I want to do it. I know this is the move I want to make, but just in case, I have these outs and these would be perfectly acceptable if things didn't work out once I make this decision."

Sean Pyles: Yeah. And I think your experience demonstrates how important it is to think through various scenarios. What could you fall back on if you do need to make a change after this job switch maybe doesn't pan out how you thought it was going to.

Liz Renter: Right. I think if you're planning well enough in advance, if you're sitting around listening to this podcast thinking about, "Well, I've been thinking maybe I'm not happy where I am and maybe I should be considering this," now's a great time to make sure that, and I know we talk about this a lot on podcast, but make sure that your emergency fund is in place. Maybe cushion it a little bit more. You want to set these guardrails for, OK, sometimes we make decisions with what we think is all the right information and it turns not to work out the way we expected. So if you have those extra guardrails up, just in case, it can make you feel more secure moving forward with your decision when it's time.

Sara Rathner: Yeah. And keep your professional network warm. Because it is a risk to take a new job, and sometimes you take a new job and hate it immediately, and you're like, "I'm just going to job hunt again." And so by keeping that network warm, by staying in touch with old co-workers or friends or relatives who maybe have some professional connections that would be helpful to you, you still also have an out. Not just financially, but also professionally where you're still open to hearing about opportunities. Because if the jump that you made ended up being a pretty bad bet, then you're still pursuing other places you could go and you haven't closed off all the doors to that.

Sean Pyles: Well, now I want to talk about the counterpoint. About when it actually might be a good idea to stick around at a job. Conventional wisdom, at least among millennials, is that you shouldn't stay at a job for too long because you'll probably be able to earn more money going to a different job after a couple years. But sometimes staying at a job for potentially several years can be the best choice for people. So let's discuss that. Liz, you've been at NerdWallet nine years, so what's kept you around and how do you think about that sort of equation?

Liz Renter: So it's interesting to think back at how this has changed over the generations because, definitely my grandparents to a certain extent and a little bit my parents as well, those generations you were rewarded for just staying where you were. You get a good job with good benefits and you don't leave for 50 years, and then they throw you this big party. And that's changed over the years where there's more mobility and we can experience different opportunities. And I think there's room for both of that. A little bit of each. So if you are the type that really wants to be loyal to a single company and wants that stability and you're happy with what you're getting paid, you don't have to keep chasing 5% salary increases at other companies. That's not a requirement. If you're good where you are, you like your work and you're working towards your long-term financial goals, that's totally acceptable. You don't have to get in on this hustle life.

Sean Pyles: That can also be a good way to approach things, given that the macroeconomic conditions right now are a little shaky. Many companies still have the policy of last in, first out when it comes to layoffs. So for this year in particular, it might not be a bad idea to stick around if you do like the job that you have.

Liz Renter: Right. People are still leaving their jobs at really high rates, but they're getting into new jobs at really high rates. The unemployment rate hasn't ticked up, which means people that are leaving their jobs aren't filing for unemployment, they're going elsewhere. So that's a positive sign if you do want to change jobs. But to your point, Sean, there is a lot of uncertainty, and if you're risk intolerant, it might make sense to sit tight for a while and see how things shake out.

Sean Pyles: Well, Liz, do you have any final thoughts for those who might be thinking about switching jobs right now?

Liz Renter: I would say, yes, it's as complicated as you think it is. I envision it as you've got all of these scales in front of you that you're trying to balance and you're trying to figure out, "OK, if I take away this much of my work-life balance, how much salary do I have to add to make it worthwhile?" Or, "If I take away the cold brew in the kitchen, how much of a cell phone stipend do I need to add to make it worthwhile?" So there's all these scales you're trying to balance here, and it's a lot to think about. So you just do the best you can, set up some guardrails just in case things don't go well.

Sean Pyles: And maybe take your time making a decision. Don't rush into anything too hastily. Otherwise, the scales may just collapse and go crazy.

Liz Renter: Yes, absolutely. That's perfect, Sean.

Sean Pyles: All right, well thank you so much for talking with us, Liz.

Liz Renter: Thanks for having me again.

Sean Pyles: All right, and with that, let's get into our takeaway tips. Sara, will you please start us off?

Sara Rathner: Sure. First, know what you're getting. Compensation can include a lot more than the cash you get. Understand your total compensation ahead of any job hunt.

Sean Pyles: Next up, go beyond the math. Jobs are about a lot more than the money. Consider things like personal fulfillment and work-life balance when weighing other job options.

Sara Rathner: Finally, there's nothing wrong with sticking around. If you're fulfilled and well compensated in your current position, staying put might be your best option.

Sean Pyles: And that is all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-N-E-R-D. You can also email us at [email protected]. Visit nerdwallet.com/podcast for more info on this episode. And remember to follow, rate and review us wherever you're getting this podcast.

Sara Rathner: And here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.