NerdWallet's Smart Money Podcast - Build a Forever Paycheck with Jean Chatzky of HerMoney

Episode Date: October 1, 2026

Learn how to turn your retirement savings into a steady retirement paycheck and how grocery stores may use your data to set prices. How do you turn decades of retirement savings into income you can count on for the rest of your life? Hosts Sean Pyles, CFP®, and Elizabeth Ayoola talk with Jean Chatzky, host of the HerMoney podcast and author of “The Forever Paycheck: The New Retirement Strategy to Spend More, Worry Less, and Never Run Out of Money,” about why spending down your savings in retirement can be so hard, both in the math and in your head. They discuss where the 4% rule could fall short, the difference between buying a paycheck with an annuity and building one with investments, and when to start planning. They also answer listener questions about whether a pension means you can ease off on 403(b) contributions, what two years out of the workforce could cost a stay-at-home parent, and whether to consolidate old retirement accounts. Then, is your grocery store charging you more than the shopper next to you for the same items? Senior news writer Anna Helhoski talks with fellow Nerd Amanda Barroso about surveillance pricing, where retailers use data from loyalty programs, apps and even how fast you type to set prices based on what they think you’re willing to pay. They discuss how it differs from dynamic pricing, the signs it could be happening to you, what states and the FTC are doing about it, and how adding a little friction to your shopping could help. Please help us improve the show by taking our listener survey! Your responses directly impact what you hear on the show: https://docs.google.com/forms/d/e/1FAIpQLSettbeI0yDf8tLt_Q772StVJoWs_Gm-pWa-gSn2fdWEc0XcOw/viewform For more information on the topics discussed in this episode, check out these resources: Retirement Calculator: https://www.nerdwallet.com/investing/calculators/retirement-calculator HerMoney with Jean Chatzky:  https://www.youtube.com/hermoney The Forever Paycheck by Jean Chatzky: https://www.penguinrandomhouse.com/books/805286/the-forever-paycheck-by-jean-chatzky/ my Social Security: https://www.ssa.gov/myaccount/ Why the Box of Cereal in My Cart Might Cost Less Than Yours: https://www.nerdwallet.com/finance/news/surveillance-pricing Federal Trade Commission’s Proposed Enforcement Policy Statement Regarding Personalized Pricing: https://www.ftc.gov/system/files/ftc_gov/pdf/p034101-ftc-enforcement-policy-statement-re-personalized-pricing-proposed-for-public-comment.pdf Subscribe to our podcast’s free email newsletter for bonus content and more from our hosts at https://smartmoney-nerdwallet.beehiiv.com/ Want us to review your budget? Fill out this form — completely anonymously if you want — and we might feature your budget in a future segment! https://docs.google.com/forms/d/e/1FAIpQLScK53yAufsc4v5UpghhVfxtk2MoyooHzlSIRBnRxUPl3hKBig/viewform?usp=header Smart Money’s YouTube Channel: https://youtube.com/@nerdwalletsmartmoney To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend. The show notes were created with the assistance of AI. They have been reviewed by our editorial team for accuracy and quality. Learn more about your ad choices. Visit megaphone.fm/adchoices

My name is Siyaya, and I live in the most beautiful place on Earth. Seven months ago, I blew up my life, and a lot has shifted since then. Everyone is moving forward. I'm still working on that. And that's me. Welcome to Ice Cove. Where are the penguins? That's Antarctica. We're the other one. North of North, stream all episodes, available on CBC Gem. If you stay for retirement the right way, you might just guarantee yourself a paycheck for life.

But accomplishing that goal is not easy. Today, we've got some tips. Welcome to Nerd Wallet's Smart Money Podcast, where you send us your money questions, and we answer them with the help of our genius nerds. I'm Sean Piles. And I'm Elizabeth Ayola. Now, this episode we are joined by the fabulous Gene Chatsky, host of her money podcast, and also the author of the new book, The Forever Paycheck,

the new retirement strategy to spend more, worry less, and never run out of money. That sounds like a dream, Jean. How do we achieve this dream? Well, it's a step-by-step process, and I am happy to take you through it. But I just want to tell you that a lot of people are not getting there. Because what we're finding is that although we've kind of gotten with the program when it comes to accumulating money for retirement, saving it, investing, invests, it, the flip side of the equation, which is called decumulation, turns out to be a really

messy puzzle, both in math, but also in emotion. Can you break out two of those challenges there? So obviously, you know, we hear about the 4% rule. You might be able to take 4% of your savings annually and continue to have enough to last you as long as you might live. But that emotional part, too, of going from accumulating for decades to actually spending it down can be a really scary experience. Yeah, the 4% rule, 4-ish percent rule, however you want to come at it, has made a lot of headlines in recent years because it hasn't held up as well as expected. And there are a lot of factors involved in that, the volatility of the market, inflation, interest rates. Bottom line, if you hit a bear market anywhere in the 10-year window before or after you retire, the chance.

that the 4% rules serve you as well as you hope are not really good enough, at least not good enough for me. Plus, by the time you get to retirement, you likely have money in a whole array of accounts. You've got your tax deferred retirement accounts and maybe you've got a Roth where you don't have to pay any more taxes and you might have a taxable brokerage account. The struggle to figure out where to get money from in a way that minimizes the chances of bumping you up into the next tax bracket and doesn't subject you to really pricey Medicare penalties is difficult. So that's the math problem. The emotional problem I think is even more interesting. And it's that we have gotten so used to or we get so used to putting money into our accounts over 30.

30 or 40 years. And watching those balances go up and up and up and up. Painful. Spending is painful. Spending turns out to be highly uncomfortable. And so as a result, what we're seeing is that retirees just aren't doing it. One survey that I pulled of retirees 20 years into retirement showed that they had spent only 12% of their money, which to me says they are leaving an awful lot of joy and an awful lot of life on the table. That speaks to the behavioral bias of loss aversion and how it can feel so much more painful to, quote unquote, lose money, even though you're spending the hard earned money you've been accumulating for decades, it just feels bad to actually see that number go down when, to your point, Gene, that is actually lost joy.

That's lost opportunity. There's a big opportunity cost to not enjoy what you've been spending or saving for all those years. You're totally right. It feels like a loss. And And so people just grab on to that number that they had when they retired. And they go to great lengths so that the number stays where it is, even if they're not super concerned about leaving money for their kids or their charities or other things. Jean, this reminds me of a listener that we had on kind of Reese earlier this year named Paulo. And his issue was that he had achieved fire and he was struggling to spend it down.

And it was a huge emotional issue as we're talking about here. So my question is, how can people start emotionally preparing, whether they're 30 years away from retirements, five years for spending that money down? How can they get rid of that emotional block and maybe the guilt that they feel? Honestly, I think that getting rid of the emotional block is really difficult. And so what my suggestion is and the solution that I lay out in the forever paycheck is that you take a chunk of your money, certainly not all of the money in your retirement accounts, but a chunk, 20 to 30 percent in most cases, and you use it to buy yourself or build yourself a paycheck. You make that decision one time, you set it up,

you know that that paycheck is going to continue to come, and then you take the rest of your money and you invest it. You put it in stocks. You can actually invest it more aggressively because you know that your paycheck, when combined with Social Security, will cover those things that you absolutely need, but also those things that you really don't want to do without. Once you've got that locked in, you've got a lot more freedom on the other side. And setting up this paycheck, I imagine, is different than investing in an annuity, where you're actually getting a specific financial product. This is you kind of setting it up on your own terms. Yes and no. There are two ways to set up a paycheck. You can buy you.

yourself a paycheck using an annuity, or you can build one using various investments that are more suitable for these purposes. You can look at things like building a tips ladder or a bucketed portfolio where you've got a certain component that you know will spill off each year. But they come with different pros and cons. And the way that you should choose to craft your own paycheck really is dependent on your personality. If you are somebody who doesn't like risk, who's not super comfortable with it, and who wants to know without a doubt that those needs and wants are going to be covered, then I think you go the annuity route. If you're somebody who has a lot of formal and you believe that if more of your money is not in the markets,

you're going to be really regretful if the markets go on a tear in a good way, then you go the investment route. But there's a lot that can be done with insurance, with annuities, in terms of providing for the sort of increased longevity that we are seeing these days. Yeah, some people are like 20 in our audience, Gene, maybe 20, maybe even 30 years away from retirement. So when should they start planning? for creating this paycheck. Is it something you do closer to retirement or is it something people can start planning out now? Because like we said earlier, some people are already saving in their Roths and their 401ks and in all of these investment vehicles, but then retirement comes and they have

no idea how to spend the money down. I think this is something you start looking at 15, 20 years before retirement. So the older millennials in your audience should be thinking about these things and how they're going to create an income. And then when you are 10 years out is when you can really begin shopping in earnest. For your much, much younger listeners, the good news is that some of these solutions are going to make their way into their work-based retirement plans. We can see them coming. They're not quite there yet. They're not fully baked, but they're definitely on the way.

they're going to be available in a way that for those of us who are slightly older, they're not. And we actually have to do this for ourselves. Well, we want to get to a couple of questions from our listeners and talk with you about them around retirement savings. But before we do that, I'm wondering if you could just leave one final nugget of wisdom from your book with folks listening. What would that be? The accumulation process, the act of saving for retirement, has been made much, much easier because we've got a lot of behavioral tools in the mix now that help us out. We've got auto enrollment. We've got auto escalation.

We've got target date funds. None of that exists for decumulation, for the flip side. And so you have to get used to the fact that you're going to have to plan for this phase of your life as much as you planned for the run-up. That's right. And people have a lot of agency and options more than they may actually be able. aware of, so I encourage folks to check out your book to learn more about that. Thank you. Let's get to some questions from our listeners about saving for retirement because we know there are so many different paths to do this and they're often not very straightforward. So

here's our first question from Michael and Sacramento. They wrote, greetings nerds. I have a question about contributing to retirement accounts when you already are vested in a pension plan. Recently, my wife and I decided to invest more aggressively for our retirement. For her, it seemed like the obvious next step was to max out her 403B. We did that. However, for me, things are different. I work for the University of California system and invested in our pension. About 7% of my paycheck goes to our pension every month. I always assumed that was enough. However, I recently realized I can also invest in retirement accounts through my work. I assumed it was one or the other. This makes me worry I've been following behind. It seems like a good rule of thumb for relatively high earners is to max out

your 401k or 403B. However, does that change for someone with a pension? Is there any type of framework or rule of thumb for us pension people? Is it overkill to strive to max out my 403B? Or is that like saving double for retirement? I don't need to be an all-star saver. I just want to feel like I'm doing what I should be doing. Thank you for your help, Michael from Sacramento. Michael is absolutely right that the math is different when you have a pension. And those people with a pension, should consider themselves very lucky, but 7% of your salary may not be enough. And so there's a series of benchmarks that I have used for years, and they are aimed at making sure that you are accumulating enough for retirement.

They were developed originally by the folks at Fidelity, and essentially they say that by the time you hit your 30s, you should have one times your annual income. put away for retirement at 43 times, at 56 times, at 68 times, and by the time that you retire, 10 times the amount of your current income, which at that point will be higher, put away for retirement. And the goal of that money is to provide you with a stream of income that will cover about 80% of your pre-retirement expenses in retirement. If you've got to, a pension, you don't have to hit the 10x benchmark. You can figure out what your pension will replace as far as that income and then back it out. In general, being on a trajectory of saving a

total of 15% of your income a year is going to get you to those places. So for this listener, I would add up what you're putting away, what your wife is putting away, what the matching contributions are kicking in and see how close you're getting to that 15% level and back out from there. When I talk with clients at my planning firm who have pensions, they get really confused about knowing how much they might even have coming in. There's a formula based on years of service and a certain percentage of salary. And so they try to wedge that into the percentage that they're saving, getting close to 15%. And just the numbers can be hard to grapple with. But I find that when people actually dig in, often working with a planner who has some software and some math on their side to

understand what exactly they might be able to have in retirement and how that compares to their potential expenses. Just that kind of clarity from knowing numbers can bring a lot of relief. I think that's totally true. And it's not just the numbers on how much you're going to have spilling off. It's what you're going to need or want to spend. And your cost of life now is probably a good indication of what your cost of life is is going to be down the road. You should know that it generally goes up in your 50s because that's when your biggest expenses hit and those years right around retirement are really expensive because we do the bucket list things. But then things start to tail off a little bit until at the end of life health care expenses kick them

back up. I'm lucky enough that that I have a pension. I have a small pension from my years working on the Today Show. And I was able to call the provider of that pension and ask them to run some numbers for me as well. And that was really helpful in looking at even though I'm not at retirement yet, what I might be able to expect. Michael mentioned that maxing out there, 403B may be overkill. And I find sometimes when people don't know how much they're saving towards or what their number is, it can feel like am I saving too much for retirement? But also, to your point, Gene, as you age, sometimes your health care costs go up,

your cost of living goes up, and you don't have that consistent income coming in anymore through an employer, and you might run out of money. So is there a such thing as saving too much for retirement? And at what point can you say, okay, I'm going to slow down on saving and live for now? I think there's absolutely that sort of thing. Interestingly, I had this conversation with my stepson,

and his wife, who have been maxing out for years. I mean, going above and beyond to the point where their take home was difficult to live on, right? They were definitely over-saving. And we sat down and looked at what that amount of money was likely to continue to grow to. And they said, yes, but we need to save now, because we're coders and the job opportunity with AI for coders is uncertain. And so we really feel as if we need to get as much as we can get done today so that we don't have to worry tomorrow. And I thought that that was such a good point and such a great individual example of how you really have to think about your own life. You have to think about the kind of work you do. You have to think about, all right, if I have children, when are they likely to go to college?

How much of that college do I want to pay for? Do I have older parents that I'm going to need to kick in for at some point? Rules of them are great, but they're only great as far as they can take you. And then, Sean, there's a reason we work with planners. I've got a planner. I've had a planner for years. I have a planner because my life is individual. and I want another set of eyes on the numbers so that I make sure I get the numbers right.

Yeah, a lot of folks really want those rules of thumb, and Michael mentions that in their question. And the one rule of thumb that I think is consistent across everyone is to find balance. And whatever that means for you is so individual. And so in your example of your stepson, yes, it's very important to find that way to stay for retirement, given that they're in a potentially precarious industry. We don't know how actually their jobs could be really well positioned in this new landscape. There could be a lot of things that they haven't thought of yet or haven't even been created yet. However, I wonder about balance in terms of even like an emergency fund.

Yes, they're stocking away money for longer term, but what about in six months or nine months from now if a layoff does happen? Do they have that set aside? So they're getting some balance for security today as well as looking down the road. Yeah. Oh, they've got all of it. Great. Love to hear that. They've got it all.

Our next question comes from Kendall. I'm a stay-at-home dad to our two children, age of the children. one and four. I left my job in August of 2025 and planned to return to work around September 27 when our oldest child is in a full day school program and our youngest is in a daycare. This has been a great opportunity for me and my partner and I'm thrilled that I can spend so much time with our children, but I want to make sure I'm doing the right things to maximize our short term and retirement savings for our lower household income. My take home income would have almost exactly covered child care costs for our two children. So even though our household

income is lower, our expenses are lower by about the same amount. However, I'm no longer contributing to retirement accounts or Social Security for these two years. My questions. I have three retirement accounts from previous jobs that total around $48,000, and my wife has three accounts that total around the same amount. My wife has continued contributing to her retirement account in the same amount. Am I missing out on substantial compounding interest by not contributing anything to my retirement account for two years? Is it worthwhile to close and combine these accounts into a different type of account? To be honest, I don't know what fees I'm being charged in each account. Are there other benefits to combining multiple retirement accounts? When I return to work, is there anything I can do

to minimize the miscontribution years in my retirement account? Thank you, Kendall. That was a long question, and that were lots of questions in the question, Kendall. So, Gene, where would we like to start? Maybe we should take it one by one. Well, let's take the missed years first. You don't have to miss the years. If you've got a spouse in the workforce, you can make a contribution to a spousal IRA.

And if you've got enough income to do that, I think that that is a terrific idea. That way you don't have to worry that you're missing out on both any tax savings. go the traditional route as well as letting the money compound in the markets, depending on what the markets do. So you can make a full IRA contribution. If that's something that's in your budget, if not, you can make a partial contribution. But doing something might make you feel a little bit better about this. Before I move on to combining the accounts, Sean, did you want to

jump in? Well, I think that that's really, really smart advice because when I heard the amount that they had saved, I went back to the benchmarks that you mentioned earlier, Gene, and I'm beginning to wonder whether they actually are at that benchmark amount, because say they have about $100,000 save between the two of them. We don't know their ages, but I just, I wonder whether that would be enough looking down the road. So I would really encourage them to do everything they can to take advantage of different accounts available. A lot of folks aren't aware of that spousal IRA option, which is a phenomenal tool. So please explore every way to save because, yeah, worrying about two lost years can be significant.

They don't have to be lost. So please use the time that you have because when we invest time is our greatest asset, right? Yeah, yeah, 100%. As far as combining accounts, I like combining accounts simply because it's easier. I like being able to sign on to a single screen and see what I've got and see if it is where I think it is, how the money is invested, if I need to do any sort of rebalancing, that becomes much more difficult when you've got a landscape of accounts. And when you consider the fact that the average adults is going to have 12 jobs over the course

of their career, if they leave a 401k or another retirement account every time they change jobs, which you're allowed to do, all of a sudden you've got a mess. So I think combining is a good idea. You should look at what you've got and what you're being charged. I mean, the reason to stay in a 401k or another work-based plan that you, where you have left the employer, is simply you like the options and you're not being charged a lot of money for them. And inertia. It's very easy just to leave it there. No, but it's also very, very easy to roll into an iron.

because any brokerage firm wants your money. And so they will, if you pick up the phone and you call them and you say, I've got these retirement accounts here, here, and here, can you roll them all up for me? They'll do the work. They want your money. And so- You don't need to get some big, scary check in the mail and worry about 60 days from the IRS

to put into a new account, all of that. They will really handle it for you because, again, they want to make it easy. but I would encourage them to look at all the fees. They don't know what fees they're being charged. Sometimes former employers will charge you a higher fee by leading your money in that older account. So I think that's a really smart idea too. Yeah, absolutely. I also want to ask you, Gene, because there are lots of parents out there right now who are doing the tradeoff of saying,

hey, daycare is too expensive, or I just want to stay at home and spend time with my kids. And maybe the household income is too small for them to contribute to a spouse or IRA, for example. So how do you kind of minimize that guilt that you might feel because you're not able to save as much? And as the listener said, maybe you have some lost time and you're instead staying at home with your kids, which is also intangible and valuable. It's such a personal choice. I think you're right. It is intangible and it's valuable. But sometimes I try to think about these decisions that we make to step out of the workforce in a variety of ways before,

making the decision. Whether you are thinking of taking a step back to care for your kids or to care for older parents, realize that it's not just the salary tradeoff. It's the benefits tradeoff. It's the contributions to the retirement account, maybe the contributions toward health care. It's seniority that you may be losing networks that may be fading, social security credits, that you may not be getting. There's a large cost, and I often hear the same math that Kendall essentially laid out in his letter, which is, well, child care costs the same as my salary. Not exactly, right? And it's important to widen the lens a little bit and think about what you're actually losing, which is not to say that you shouldn't take this time at home with your children.

If this is something that you want to do that you feel strongly about that you and your spouse are on the same page, then by all means. But make sure that you know what the real tradeoffs are that you're making. Are there any ways, Gene? Let's say that people decide to take that time off and go back into the workforce. How can they catch up? Obviously, you can't go back in time and get all that compound interest you lost, but what are some ways they can fast track their savings? You can simply save more. You can make sure that you're maxing out in your workplace plans. If you have the ability to fund a Roth IRA beyond your workplace plan, if you qualify for that, you can try to do that as well. You can put some money into a discretionary brokerage account. I mean, saving more solves a lot of problems no matter when you do it.

But you can also look at your timeline. There's a piece of research that I've held on to for a very long time that shows that, that working an extra six months to a year at the end of your career is the equivalent of adding 1% to your retirement savings for 30 years. Wow. Right. Now, that math works, again, because there are a lot of other factors in the mix, but also because the amount that you're likely earning at the end of the career is probably higher than at the earlier stages in your career.

But there are different levers that you can pull. And when you are taking care of your children, it doesn't mean that you need to be earning nothing, right? There are different ways to side gig it a little bit, bring in a little bit of an income, and maybe that money goes to fund some sort of a retirement account. Yeah, I've seen a couple of friends do exactly that, where they maybe took a year off after their,

kids were born. And then both of these friends, I'm thinking of they got a job where they can leverage the skills that they studied hard for and earned degrees in, but they can do it from home on a part-time basis. So they're staying in the job market. They're reestablishing those connections, ensuring them up, and importantly bringing in money and continuing to have access to a workplace retirement account. Yeah, absolutely. And I think since COVID, the opportunities to be remote, to be part-time have just gone up. Okay. Well, let's hop into our third question, which is fortunately a shorter one. Here we go. Hello, nerds. I just opened a self 401k, and I was wondering how I should contribute to the employer 401k and employee

contribution. Should I contribute an equal amount as an employee and employer to maximize the benefits? If not, what ratio would you recommend? I have been in both of these seats, and I've tried to max out both because that way you get the most amount of money in the plan. Contributing more as an employer than as an employee helps the business. Contributing more as an employee rather than an employer helps you on your personal tax returns. So if you've got an accountant, if you've got a CPA or even if you've got a good piece of tax software, I'd run it both ways and I'd see how it shakes out for you at the end of the year. Yeah, one of the benefits of contributing as an employer is that the contribution limit is just simply much higher. So that's really appealing. When I first

read this, I actually misread it and thought that they had their own business and then another employer that was contributing or offering them a 401K, which isn't exactly the case. But one thing on that, because people are in that situation too, people need to know that even if they have multiple 401Ks across different employers, there is a pooled contribution limit. So it's not like you can contribute, you know, $23, $24,000 max to one and then also that same amount to another, if you are lucky enough to have all of that money lying around. It's all connected. So just keep that in mind, too, for those who do have access to multiple 401ks. But if you've got some self-employment income, in addition to your 401k, you can also go ahead and fund one of the

plans for the self-employed, which is a nice way to just if you have some additional money laying around that you want to put to work in a tax-advantaged way, that can be helpful. And the same applies to steps, right? Jean, step-is raise as well. Exactly. Yeah. Yeah. So, Elizabeth, just for folks you don't know, you contribute to your 401k through NERWOLA,

and then you have your own retirement account through your small business. So you can contribute to multiple at the same time. And those contribution amounts are not pooled, which is really nice. Yeah. So you can save more for retirement. Exactly. And I've always figured, if you have years where you can save. more for retirement, you probably should save more for retirement because it allows you to take

your foot off the gas in those years where maybe a medical emergency hits or you have a big expense. And then you don't have to feel bad about that. So, June, we've run through a few different areas of retirement savings. One thing we didn't totally get to is what you mentioned way at the beginning, which is how to begin to build that forever paycheck when you're in your early working years. You mentioned that there's a process or steps to follow for this. Can you outline those? Sure. First, you want to figure out what size of paycheck you're looking to fund.

And that really means taking a look at those things you need to pay for and the ones you really, really want to pay for. There are certain things that are discretionary, but not really discretionary. Like, I'm not giving up my gym. I'm going to pay for that no matter, pretty much no matter what. And so I want to know that my forever paycheck is going to cover that. The second vacation, that's more discretionary, right? If I don't get that this year, I'm nothing, you know, I might be a little disappointed, but nothing bad is going to happen. At least you're getting one vacation, though.

Exactly. So you figure out what size paycheck you're looking to cover. Go to my social security.gov. look at the amount of social security you expect to receive when you intend to claim it and figure out how much of your paycheck will be covered by social security, then isolate the gap. That's the amount that you want to cover with the forever paycheck that you build yourself. The next step, as we talked about, is figure out how you want to pay for that paycheck. Do you want to use insurance or an annuity? Do you, do you, you want to use investments, tips, dividend paying stocks, other things? You go ahead and you make that purchase or you isolate those accounts and then you decide when essentially you're going to turn on the income. And it's really that simple. It's much more of a mind shift than it is anything else. And as I said, this is not a solution for all of your money. It's a solution for a portion of your money,

generally 25, 30%, the rest of it you'll invest for stocks, in stocks, and other investments that will provide growth because that is necessary for longevity, for legacy, and for all of your future needs down the road. That last point is really important because I think some people may have this idea that once you hit retirement, you are done investing and you're out of the market, but in fact, you do need to keep your money growing in order to have enough in all the way. likelihood. So people should be aware of that and look at what sort of investment mix might make sense for their retirement years. A hundred percent. And we're always talking about this calculator,

but for anyone out there who hasn't used it yet and who wants to know their retirement numbers and maybe isn't ready to go see a CFP or finance professional, head over to our website. We have a calculator that you can use a retirement calculator just to give you a benchmark and a ballpark figure of what you're working towards because trust me, knowing your number makes working towards that forever paycheck. As Jean has a. explained a lot easier. And we'll have a link to that in the episode description of this episode. Well, Gene Chatsky, host of the Her Money podcast, thank you so much for coming on and talking with us today. Thank you so much for having me.

Coming up, we've got this week's money news, and we're looking at how your grocery store is spying on you to extract even more money from your wallet. But before we get into the news, I need you to get your phone out and send us some money questions. Maybe you're wondering about how to make progress on your generational wealth building goals or how to deal with money trauma or maybe you have questions about financial planning for 2027. Whatever your questions are,

send them to us, you can leave a voicemail, you can text us, you can karma on Spotify, YouTube. Look at all the options we gave you. Even email. You didn't even mention that podcast at nerdwalloc.com. Whatever your money question, send it our way. More smart money in a moment. Stay with us. Okay, let's get to our weekly money news roundup.

We're breaking down the latest in the world of finance to help you be smarter with your money as usual. When is the last time you went to the grocery store, Sean? Wait, wait, wait. Before you answer that, I feel like you're a by-daily grocery store goler. Oh, absolutely not. I want to go to the grocery store as infrequently as possible unless I'm like vacationing in Europe or something. But I do a weekly pickup curbside where I don't even step foot in the grocery store for the most part if I can avoid it. I've become an almost everyday grocery store going. It's annoying. But anyways, while we're talking about grocery store shopping, did you know that they're tracking on every

move, Sean? Yeah, unfortunately, I did, and it seems like everywhere we go, we're being surveilled and our prices are changing accordingly. But let's get to some details and headed over to our newsmaven, Anna Helhowski. She interviewed our colleague Amanda Barroso, a personal finance writer, about how retailers are now using surveillance pricing to mark up what you pay for all kinds of things. Welcome to Smart Money, Amanda. Hi, Anna, it's always nice to be here. So, first off, can you explain what dynamic pricing is? Dynamic pricing is when prices change in real time based on supply and demand. So the cost goes up for everyone shopping at that moment.

You see this in action at like grocery stores or other retailers that have those like little digital price tags. You know, it makes it easier for stores to change their prices quickly. But that's what we're talking about generally when we talk about dynamic pricing. And that's in store and online, right? Right. You can see it sometimes too with like surge pricing. So like let's say you go to a concert and you want to take a lift and like all the prices in that area are jacked up 25 bucks or whatever.

That's like a version of that. Right. But it's happening like for everyone in that particular moment. Right. Now how about surveillance pricing? What's the difference there? Surveillance pricing is more tailored to individual consumer habits and preferences. So even things like personal demographics, your browsing habits,

How fast you search for an item and a store app. This is all data that retailers are capturing about us through, like, loyalty programs that we're members of, internet cookies, location monitoring, and, you know, smartphone apps in general. That's the surveillance piece, right? The pricing piece is that they're now using this data to serve us individualized prices based on what they think we are willing to pay. Now, you've definitely seen this out in the wild. Can you talk a little bit about your experiences there? So back in August, I wrote this story about my,

experience buying cereal for my toddler. He needed iron. So the pediatrician was like, hey, Cheerios, right? So, okay, I'm going to go buy Cheerios. I go buy my family size box of Cheerios. And a week later, when I went to go restock, the price was higher. And I was like, okay, I didn't buy it that week. Next week I go, I get a coupon. Okay, buy it again. In this example, what the retailer was learning or testing was what my threshold was or what I was unwilling to pay. and then when it found that number, it served me the coupon to bring me back in. And how's this different from a normal cycle of cereal,

for example, going on sale? The key difference here is that consumers are being offered coupons and discounts based on their personal data rather than, say, a paper coupon that you get when you enter the store. You remember those old circulars, right? Where you, like, get the coupons out. Those are virtually non-existent anymore.

Finding coupons, accessing coupons is either through loyalty programs, downloading the apps for free. or coupon database websites, things like that. Because those are virtually non-existent, everything is personalized. In this sense, people shopping at the same store at the same time, buying the same items could be paying different prices. While surveillance pricing is more prevalent, and it's easier to document online for the folks who are doing the work

to try to get to the bottom of some of this stuff, it's not exclusive to online shopping. So it's used for in-store shoppers, again, through those loyalty programs and apps. I have a Kroger down the street. They have special deals. Even if I go to shop and store that I have to go into my app and click because I can't go to a cash register because everything is self-checkout. When I then go to check myself out, those deals are loaded automatically onto my card.

So even when you're shopping in store, you're being forced to those digital spaces. You have to interface with the app somehow. Now, recently I came across, you know, something on my algorithm, this interview. with this woman who wrote this book called Gouged. And she talked about how she dug into the patents that have been filed by some of these major retailers. And this one was filed by Walmart. They're working on smart carts

that allow you to, like, scan items before you put them into your cart. Sure. Might sound great, right? Yeah, I've seen them before. Right. In the future, though, these carts might let companies change the price of things

or charge people different amounts based on what's in your cart. So that might be hard to understand. Let's pretend like you're going through the store. You're going to make spaghetti. You throw some spaghetti noodles into your cart. The algorithm driving the pricing structure of the card is like, hey, by the way, hmm, I bet you she's making spaghetti. So when you go to the aisle with all the jarred marinara sauces, all of a sudden that Rayo's jar is a dollar more.

So it's having a different anticipation for what you might be buying based on what's already in your car. And changing the price of those ingredients. Right? In real time, in the moment, as you're shopping, again, these things are still like a futurity. They're something that's still, I guess, in development and the works. But like this kind of gives you a sense of where retailers' minds are at. So, Amanda, you've been writing about this, you've been tracking this sort of thing. Can you explain something that you wrote about in one article about the willingness to pay score? I think we all have a threshold where we stop and we think, nope, I'm not paying that. Sure, yeah. For me, I'm not paying six bucks for a box of series.

Like, I don't care how much my son loves it. I don't care how much iron is in that little box. I'm not paying six bucks for it. And retailers are noticing these moments and documenting them through our purchase history. So they use that data to calculate what's called our willingness to pay scores. And then they set prices for us before we even add something to our carts. And again, this is all happening behind the scenes. So I'll add that this is much more prevalent for folks who do their shopping online, like Instacart, you know, things like that.

I tend to stay away from those things. I'm an algae girl. but there are stores where I have to use the retailer apps too, and that's definitely having behind the scenes. Retailers are pushing shoppers to download their apps to access coupons and deals. We're about to be in pre-Black Friday season, which is October. We're already seeing prime big deal days and competing sales from Target and Walmart. They're driving you to download their app.

Become loyalty members, hey, it's free. Because the promise is that this is where the best and lowest prices are. Early access to sales. And as shoppers, we're just, we're trying to save a buck, right? You don't think twice about signing up. There's a lot of fine print. And most of us just say, I can't even understand what this is at. The terms and conditions, right, are you need a team of lawyers.

So you just click and move on with your day. And often what's in that fine print is the bit about data privacy here. So again, in that willingness to pay score, what's weighing most heavily? Companies are tracking your behavior, like, you know, what time of business? day you shop. Your brand preferences. Which locations you shop at the most. Even how quickly and accurately you type things into the search bar. Oh, so they're tracking your spelling as well. Absolutely. Even even the way that the phone moves in your hand. Wow. Wow. Now, everyone isn't subject to discounts when it comes to this type of pricing, right? So who tends to fall into the groups of people

who do and don't see lower prices in their cards? A lot of what I know about, about this comes from an interview that I had with Derek Kravitz, who's a reporter at Consumer Reports, and he's on the front lines of a lot of this surveillance pricing reporting. I learned so much from him, including some of the stuff that I mentioned about. The company is tracking us based on how we move our phone, how fast we type, things like that. And I asked him, I was like, okay, so can I shop using my desktop then? Is that going to get me around something? He's like, no, it's pretty ubiquitous. Right. Yeah. So what I learned from that interview is like, the other thing is like there's no way of knowing if you're in this control group or if you're

paying the full price. There's, you know, he's just like there's just no way of knowing. There's so much technology at play behind the scenes and a lot of it is so new that that it's not even being regulated yet. And I'm sure we'll probably touch on that later. Yeah. And I'm sure that nobody's like standing outside their grocery store polling everyone who comes in and out about what price they're actually seeing. Right. And that, but that would be what it would take essentially to figure out. So is there any way to confirm that you're being surveillance price? What are some signs to look for? I would just say assume it's happening to you. But the truth is it's really hard to prove, but it's important to pay attention to pattern. So here's some things that you can look for.

So maybe you notice that prices differ based on the browser that you're using or maybe you see one price when you Google an item, but see a different one once you log into a retailer's app and type in your loyalty information. That could be something to pay attention to. Sometimes prices might start creeping up after you make multiple searches for the same item. You might also start to get suspicious if a family member or a friend is seeing a different price for the same item that you're looking at. So like really paying attention to the fine details. And can you talk a little bit about the legal landscape right now?

Is there anything already on the books to prevent this in certain places or any movement happening to curb the practice? When I was talking to Derek Kravitz about this, he was really talking about the momentum here around legislation. And as you can imagine, it's a hard thing to legislate. two states Maryland and Connecticut are trying to make it harder for companies to use personalized pricing, but the laws

aren't perfect. And how about at the federal level? Is the FTC looking into it? So in August, the FTC released a statement about businesses that are using personalized data to set individual prices based on how much a consumer is willing to pay. So again, that willingness to pay score. And the

FTC noted that this runs contrary to consumers' reasonable expectation, that everyone sees the same price at the same time and the same place, right? That's kind of what we expect as a consumer, and this is running contrary to that. At the moment, though, Congress hasn't given the FTC any authority to ban personalized pricing outright, but the agency does say that it plans to aggressively enforce deceptive or unfair personalized pricing.

So we'll see. You know, holiday shopping season is upon us. So we'll see how this plays out in real time. And you mentioned that Kravitz said that a new browser isn't going to help. Is there anything that people can do to prevent being surveilled in their shopping habits? and with the prices that they pay. Like, I guess I'm thinking, does a VPN meaningfully change those prices?

He did say, like, if you're really serious about this, you can use a VPN to shop. Prices are partially determined by your location, so this would hide your location and might disrupt the algorithm in that way. But it's a huge lift, both in terms of technology knowledge, right, and the cost of buying a VPN. For him, he's just like,

I just think that this is beyond the reach for most Americans. But there are some things that you can try to disrupt the algorithm. Like, if you always shop, Sunday afternoon, try shopping on Tuesday morning if you can, shopping at stores like Aldi or Trader Joe's that don't require any app or loyalty program to get the best deals. There's not even a really any coupons that you can use there. So kind of changing up where you shop. I think at the end of the day, after having this conversation with Kravitz,

I got used to the idea of like friction. And we talk about this some. And I've been on the podcast to talk about it about we should just get used to like having a little more friction in our shopping experience. So companies don't want us to wait to purchase anything. But sometimes waiting can be a good thing. Either they'll send us a discount code over email. I'm sure if you've abandoned a cart anywhere on the internet, that retailer has sent you an email saying,

please come back. We saw you were looking at this. But that time and space could actually help you realize, well, I didn't really need this thing at all. So any way that you can put friction between yourself and purchasing that thing, I think will be a good thing in the long run. So loyalty programs must make it pretty hard to fully opt out since you're effectively attaching yourself to a retailer.

Did the discounts outweigh the risk of markup? Oh, Anna, this is like, oh, this is the question that I've been grappling with. As a budgeting writer here at NerdWallet, this is kind of the crux of it, right? Like, we're trying to help people save money. And often that means joining a store's loyalty program. Paper coupons, like I mentioned, are largely a thing of the past. Online shopping is how many Americans like to shop. So in many ways, this makes sense.

but the data privacy issue is concerning. And when businesses use your personal information to set personalized prices without telling you, that's unethical. Is there anything that you can recommend that people start doing that could make a real difference to how much that they're actually paying? Well, with the holidays approaching,

I know we're all thinking about managing costs trying to stick to our budgets. So when it comes to gifts, I've started setting price alerts on items I know I will want to buy as well as looking at their price history. So I'm already kind of getting a sense for what the average price is there. Amazon has a lot of flaws, but I will say this.

They make that piece of it, the price history, piece easy. They include a link next to the current price, so you can see if what you're paying now is higher or lower than usual. I've actually held off on some recent purchases because I looked at the price history and could see that the months ahead typically have lower prices for that item. Obviously, this is impossible for every shopping decision that you have to make, especially when it comes to gas, to groceries.

For me, I'm going to try to keep shopping at Aldi and Trader Joe's and Costco even as much as possible. My husband and I have given ourselves a $150 grocery budget each week. And when that's out, we're just like eating out of the pantry. We're also going to try to take advantage of our rewards credit cards. So there's new Q4 bonus categories that are rolling out. We want to take advantage of those. And this is like kind of cynical. But if we're going to get hit with personalized prices on the front end, at least we can get some cash back in return.

You know, maybe get some points for a flight for a vacation. I mean, at this point, trying to strategize in that way is the best we can do. Yeah, the best attitude to take. Amanda, thanks so much for impacting this. Thanks for having me, Anna. That's it for today. Don't forget, folks. We need your money questions.

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