NerdWallet's Smart Money Podcast - How to Negotiate a Raise in a Tough Economy (w/ Brown Ambition’s Mandi Money)

Episode Date: June 9, 2025

Learn how to negotiate higher pay and choose between Roth vs. traditional retirement accounts with confidence. How can you negotiate for a raise in an uncertain economy? Should you invest in a Roth or traditional retirement account? Hosts Sean Pyles and Elizabeth Ayoola discuss career strategies and retirement planning to help you maximize your earning potential and long-term savings. Joined by Mandi Woodruff-Santos, career coach and host of the Brown Ambition podcast, they begin with a discussion of salary negotiations, with tips and tricks on understanding your market value, making a strong case to your manager, and building a powerful professional network. Then, Sean and Elizabeth discuss how to balance contributions between Roth and traditional retirement accounts in a Q&A with listener Mitch. They cover how your tax bracket impacts retirement planning, the pros and cons of Roth 403(b)s vs. IRAs, and why tax diversification can give you more flexibility in retirement. They also explore the strategies behind reaching Mitch’s financial goals, like early retirement and family financial protection. In their conversation, the Nerds discuss: how to negotiate salary, Roth vs traditional 403b, Roth 403b vs Roth IRA, retirement savings strategy, salary negotiation tips, career change strategy, how to ask for a raise, Roth IRA contribution limits, high income retirement planning, 403b Roth vs traditional Roth, tax diversification retirement, FIRE movement tips, early retirement accounts, high income Roth IRA eligibility, job market 2025, negotiating compensation without a job offer, professional networking tips, LinkedIn career growth, career storytelling, raise during midyear review, 401k vs Roth IRA, no 401k match strategy, high income investing, saving for retirement as a nurse, dual income retirement planning, maximizing 403b contributions, 529 plan strategy, how to build an emergency fund, term life insurance for parents, trust setup for families, how to grow your salary over time, and career moves for higher pay. 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. Learn more about your ad choices. Visit megaphone.fm/adchoices

Whether it's a family member, friend or furry companion joining your summer road trip, enjoy the peace of mind that comes with Volvo's legendary safety. During Volvo Discover Days, enjoy limited time savings as you make plans to cruise through Muskoka or down Toronto's bustling streets. From now until June 30th, lease a 2025 Volvo XC60 from 1.74% and save up to $4,000. Conditions apply. Visit your GTA Volvo retailer or go to volvocars.ca for full details. Sean, if you could pay yourself any amount of money

based on what you think you're worth, how much would it be? This is probably not the answer you want, but the limit does not exist. I tend to think that people are worth more than a dollar amount can capture. So I would say an infinite amount of money, Elizabeth. Well, you could save that for yourself because I would like to be paid $50,000 a month. Just kidding, NerdWallet.

That's fair. All right. So today we're discussing compensation negotiations and also career strategies for an uncertain market. Welcome to NerdWallet's Smart Money Podcast. for an uncertain market. Welcome to NerdWallet'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.

This episode, we're speaking with a listener about whether they should prioritize contributing to Roth or traditional retirement accounts. But before then, we're going to chat with Mandy Woodruff Santos from the Brown Ambition podcast about career strategies for an uncertain market and salary negotiations. Now I have to tee Mandy up and let y'all know that she's an award winning career coach, personal finance expert, speaker and writer. Mandy, welcome to Smart Money.

Can I call myself a nerd now? You're an honorary nerd now, yes. I'm so excited. No, you don't understand. Personal finance reporter since 2010. Like, I feel like me and nerd wallet have just, like, come up together. Yes. It's about time we have you on the podcast.

How perfect. Right? Honestly, I've been waiting 15 years is a long time to make a girl wait. It's fine. So Mandy, we're going to start with a little icebreaker here, so we can all familiarize ourselves. Okay, sure. If you had to describe the first six months of the year,

now we're entering June, in one word, technically five, I guess, what would it be? The first six words of this year? Yes. I can't curse. Um... BOTH LAUGH Ah, joy. Chosen joy. Chosen joy.

Rebellious joy. BOTH LAUGH I started a community garden with my neighbors earlier than we probably should have. We live in New York. Stuff freezes. There's frost. It's cold. Mm-hmm.

Even in May. And we made this little hodgepodge garden that has just kept growing. And every day I just get to put my hands in dirt and no matter what is happening, I have the garden and it's just so therapeutic. So yeah, rebellious joy is what that feels like. Well, you know, I'm a big gardener. I talk about it a lot on the podcast and it's so important to have a space where you can relax, get your hands a little dirty and focus on something bigger than

yourself, which is your community, your garden, a little dirty, and focus on something bigger than yourself, which is your community, your garden, what you're creating and growing in your everyday life. Or if you're a newbie gardener like me, it's often smaller than yourself and will remain smaller and might die. It's all about the process. It's a garden with a lowercase g, is what I like to call it. Well, Mandy, you are a career and money expert.

Talk with us about how you got to where you are today. Oh, my goodness. Well, Brown Ambition, my baby, I started this podcast when I was coming up as a financial journalist. I was a reporter at Business Insider. I was the personal finance editor at Business Insider. And then I moved over to Yahoo Finance, and I just could not create enough content

about personal finances for millennials. And I'm a black woman in the business journalism space. And I thought BI was bad in terms of like the number of BI bros that I had to contend with. BI meaning business insider? Business insider, yes. I didn't realize it at the time. I thought something was wrong with me. I was like, I don't speak this language.

I don't feel like I have a voice that anyone cares to hear. You know, I'm just going to sit over here and write my stories and not speak up. And by the time I got to Yahoo Finance, I was gaining more confidence about my financial knowledge and all of that. And then what I'm realizing is it's not that something is wrong with me. It's just that the default voice and the default tone and style and personality is just something that as a black girl from Georgia, like I just was not bringing. And I came up with the idea to do Brown Ambition and thank goodness, Yahoo said no, we can't make any money off that.

So I started it on my own and Brown Ambition became my side hustle. That is now my main focus and I'm really privileged and honored to get to serve this audience of women of color and really put us centered in every conversation about finances and because I quit six times in 10 years and I 10x'd my salary from 30k to 300k over that time, I had a lot of tips to share. Matthew 10 I'd like to hear a little more about that specific moment where you said, I'm going off on my own. I'm starting Brown Ambition. I'm making this my full-time job. It's a choice every day. Brown Ambition, because I'm my own boss,

it doesn't have to be my focus. I could be doing other things. I'm working on my first book. I just submitted my manuscript. A couple of grabs. Congratulations. Girl. Hi.

What a joy. For me, it's not so much about, I'm going to make Brown Ambition my focus. It's just, I am so excited to do Brown Ambition. I'll just keep doing it until the wheels fall off. And the beauty of this platform is that, yes, ad revenue is great and it's nice to be able to pay my bills with that. But it is another pathway to more opportunities that can also bring in revenue. It's very impressive how you said you were able

to 10X your salary, is that right? Yeah, 10X. Not at one job, I had to work really hard. I had to quit my way rich, which I came up with that expression and it is really hard to say. Four years later, quit my way rich. No, but I mean, it wasn't like a big master plan I had

that said, okay, I'm just going to keep quitting and moving to new jobs, but I mean, it wasn't something, it wasn't like a big master plan I had that said, okay, I'm just going to keep quitting and moving to new jobs. But I quickly realized I thought I was playing the game well, and I still didn't get the raise that I asked for. When I didn't get the raise, I was like, well, can I ask them equity, please, sir? And it was a no. And I got a really great piece of advice from a mentor of mine. His name is Ray Matoyer. He gave me one of the best pieces of advice ever,

which is that as you are killing it in your current job, always be looking and keeping an eye out for other opportunities. Sometimes you need that additional leverage to get them to give you what you deserve. And so I talk a lot about how I didn't just negotiate to get from 30K up to 300K across six different roles. I also put myself in a position where I never

had to apply for those roles. People came to me with opportunities and that's the secret sauce that I want more and more of us to understand so we can start getting that back. Well, I'm going to ask you Mandy, specifically for people who like nugget size takeaways, how should people navigate compensation negotiations, especially in this economic climate? I think that the economy is always going to be doing whatever the economy is doing. I know that AI is not even an existential, it's like a real crisis right now and they're coming for our jobs. I get that.

At the same time, you can only control what you can control, right? One of the best nuggets I can give y'all right now is knowledge. You have to know your market value in order to go out and assert your value, right? So by that, I mean you need to be always looking for new opportunities, taking those calls, if you're lucky enough to get them from hiring managers and recruiters and asking them upfront, what is the salary range for this position? Even if you don't want the role, you should still be having that conversation. Another way to get knowledge is to talk to your peers. I made a pact with one of my college pals that we were always going to share what we were earning,

what negotiations were like, and help each other. And I made that pact with a few other colleagues and peers over the same period of time. And it just takes away all of that BS. We get scared to talk about compensation with people. You have to like tiptoe around it. You desperately want to know, but you don't ask the question. And once that's sort of taken away and you just have an understanding, like, oh, at this

table we're going to be transparent. It is so helpful because that knowledge is what's going to give you that confidence to go in and ask for what you're worth. Now the next part is how do you get a job that's actually going to pay you what you're worth? Because knowing it is not the same as earning it. I was just coaching someone earlier today. She is someone who has not been earning her value for three years now.

She's making 50k when she should probably be making 150k because she had to take a step back. She was let go. And I had to tell her like you're a rare case where I don't think you're going to find your next opportunity by applying and going through an interview process. I said, in your case, going out and creating your own project, your own entrepreneurial endeavor and creating that using every skill set that you're going to bring to the table for the role that you want and actually demonstrating that in like a market sample, like a proof

of work, is actually gonna give you the edge because it's gonna give you an excuse to connect with people and tell them what you're working on. It's gonna give you a reason to share what you're working on. And it's just so much more likely that you're going to be found and that people who have opportunities

but are not publishing them will come to you because they think of you first. I think we know that throwing out a bunch of job applications online is often not very fruitful. You mentioned how you have been approached by a lot of folks over your career and have found good jobs in that way. For people who maybe aren't getting those calls all the time, how do you think they

can begin to drum some of them up? Is it posting on LinkedIn? Is it Instagram? What do you recommend? LinkedIn is great, but I think everyone's got the LinkedIn tip now. What can you do beyond LinkedIn? Don't get me wrong, there's plenty of y'all who I know know about LinkedIn. When you're on LinkedIn, what are you sharing?

You don't need to be sharing what you had for lunch that day. Shout out a teammate, someone on your team who's done something cool. Shout out a company initiative that you had a part of. Of course, shout out if you win an award or if you get a promotion. But day to day, what are you excited about spotlighting in terms of your skills? The next thing is get off the internet. People are outside now. We're outside. I don't think everyone's got the memo since post-COVID.

We are outside. We are meeting in person. I signed up for my first National Association of Black Journalists convention in six years. I think putting yourself in those spaces, we have to get back out there. I don't care if you're an introvert, but you have to be putting yourselves into a room where you can bump into someone, where you can strike up a conversation, leave an impression, and you just can't get that from the internet. Mandi, some people may not actually be looking for a new job. They may actually like the

job they're at, but just want to be paid more. So for people who are comfortable where they're at, but want higher pay, what are some ways that they can negotiate their salary? And then second part is if their employer says, no, we're not giving you that extra $10,000 more, are there other things that they can negotiate? Oh, absolutely. I mean, we're at the mid-year point, right?

We're six months into the year. If you have a mid-year check-in, this is the time. And what I like to say about the mid-year check-in is for a lot of hiring managers, they're not fully into it. It's not like the end of your check-in. However, I would be planting the seeds of, I want that promotion, I want that raise right now. I think you need to adjust your expectations for how quickly that can happen. I think the mid-year check-in is a great time think you need to adjust your expectations for how quickly that can happen. I think the mid-year check-in's a great time to say, to let your hiring, your manager know,

like, I want this, I'm gonna be annoying about it, I'm gonna ask again. So by the time they're in Q4 of this year, which is when a lot of managers are thinking about what job wrecks they're gonna be asking for, what budget they're gonna be asking for, for promotions, for bonuses, for new talent. That's kind of happening toward the end of the year. And if they remember you back in June, being that squeaky wheel and asking

for more, please, they're just more likely to think of you then. So I think it's important to make your case, go in there and say, hey, my market value based on my own research is actually 20% more. What can we do to get me closer to that market rate? I love what I'm doing here. I don't want to go anywhere. Like, let's make this happen. I want to be sure I'm getting paid commensurate with my market value. That's like the bare minimum of what you can do even better is to have a competing

offer and that is the ultimate leverage. Of course, you don't want to go into that conversation without thinking about the what ifs. What if they say no? Do I really want to walk away and take this opportunity? Hopefully yeah, because loyalty doesn't pay. Loyalty feels good, but it doesn't pay. Something I've been hearing from your advice so far is that it's really important to know

your narrative, understand the skills that you bring to the table, where you want to go in the story that you're creating, and then also know how to pitch it, whether you're pitching it to someone that you meet at a networking event or your own hiring team. Would you say that's accurate and is there anything else that I'm missing there? Storytelling is essential.

People wanna root for someone whose journey they can understand. And I think what trips up, or not think, because I talk to women almost every day about this, we've got to own our story. And I don't mean own and embellish. Don't embellish anything. Just give them the raw, the real, the gritty. You know, tell them where you've been, why you made the choices you did to a certain extent and own it. And I don't care if that means owning a career break for mental health challenges. If it means owning the fact that you took a step back because you were caretaking, like

own that. All of a sudden, the other person on the side of the table is like, I want you to win. And it doesn't matter so much about that gap in your resume. Mandy, what is one key takeaway for everyone listening who's like the economy is killing me. I need more money and I need to ask for more money, whether it's through a new job or my current job. What is the one tip that you have? There's no rules. I don't have to just do one.

Okay. But the big one is the economy will be shifting and will be changing. And at the end of the day, you have to believe that you have everything that you need exactly where you are and that there is no version of events where you don't find an opportunity that works for you. The story just maybe hasn't played out all the way yet. And there may be some chapters you didn't expect to read. There may be some little side quests you have to go on, but it's all part of the journey. And along the way, community will be the thing

that is going to separate people who are really struggling from those who are able to bounce back a lot quicker from the side quests that have gone awry. BOWEN In some ways, that's worth more than a single raise that you're getting, because that'll pay dividend throughout your career. SHANNON Money's good too, Sean, but yeah. BOWEN That's true. You're right.

I am pro-money as host of this Money podcast, yes. SHANNON Everything all at once. BOWEN Mandy Woodruff--money as host of this Money Podcast. Yes. Everything all at once. Mandy Woodruff Santos, host of the Brown Ambition Podcast. Thank you so much for coming on and talking with us about your journey and your compensation negotiations. Thank you for having me. We're about to get to this episode's Money Question segment, where we talk with a listener about how to decide between putting money

in traditional and Roth retirement accounts. But before we get into that, listener, I've got a question for you. What is your money question? That financial thing that keeps you up at night or that goal you just can't seem to make progress on? Maybe you have some follow-up questions for us about how you can get the raise you desire. Or you want to level up your investing strategy but aren't sure just how to go about it. Whatever your money question, we nerds are here to help. Leave us a voicemail or text us on the nerd hotline at 901-730-6373. That's 901-730-NERD.

You can also email us at podcast at nerdwallet.com. Alrighty, let's get to this episode's money question segment. That's up next. Stay with us. We're back and answering your money questions to help you make smarter financial decisions. This episode, we're joined by Mitch, a listener from California with some questions about how to balance contributions to Roth and traditional retirement accounts. Hey, Mitch, welcome to Smart Money. Hey, guys, how you doing? Great

Good to have you on let's start by hearing a little bit about your finances Can you talk with us about how you feel things are going? What feels good? What maybe feels challenging overall? I feel pretty good. I've been interested in the personal finance space for a long time. So I feel like the basics I have Relatively covered the biggest thing now is I want to try and make sure that I'm optimizing my contributions to my retirement funds. And the biggest aspect within that is I have a 403B through my company and they give me the option within the 403B to contribute to a Roth or just a traditional 403B. So that's where I'm getting a little confused as far as what the advantages are on each different side

and what the disadvantages might be. Where do you work, Mitch? Because I know 403Bs are usually designated for nonprofits, right? I work at a medical center called City of Hope in Southern California. So we deal mainly with cancers. I deal with leukemia, lymphoma, anything like that.

So we do different types of transplants and chemotherapy. So you're a hero, basically. No, no, no, no, no, no. Don't be thrusting that on me. I want to hear a little more about your household finances. What's your family situation like? It's my wife and I, and then we have two relatively newborn twins. They are seven months old now.

Congratulations. Thank you so much. They're finally calming down a little bit. So that's where I'm able to jump back in and make sure that we're all set up and everything like that. So my wife and I both work. We're both full-time employees. She has her 401k and then I have my 403b. The individual finances and spending obviously has gone up a tiny bit introducing two little family members. But I think that's where the aspect is making sure that we're as set up for the future

as we can be so that that way our kids don't have to worry about us and we can kind of focus on them. And has becoming a parent changed the way that you and your wife talk about money or how you think about it personally? Yeah, I definitely think that it was a little bit easier prior to kids, because I think that it was like,

I love finances, I'll just handle it. Like it's fine. But now if anything were to happen to me, I need to make sure that like she's as prepared as she can be in order to be able to kind of not take out with the finances, but like just kind of understand how the system that like I have works. So it's definitely created a lot more intentional conversations around money and making sure that we kind of

understand what's going on, what the goals are. And then if anything were to happen to either of us, our intentional conversations around money and making sure that we kind of understand what's going on, what the goals are, and then if anything were to happen to either of us, how we're protected and how it kind of goes from there. I love that you and your wife are now thinking about ways to protect your family financially now that you have two little bundles of joy. So what kind of protections have you been thinking about? We know that you're trying to contribute to retirement accounts. Are there any other kind of financial investments or safeguards that you're putting in place?

We both have term life insurance. So we both have it as like the casual one-time salary that's like free through our workplaces. And then I put supplemental on both of ours through my company so that we're covered up to, I think that like I'm up to like a mil and then she's like 750,000. So if either of us pass, like it immediately pays off our mortgage and then we kind of have that aspect. So that's one way and then we've started 529 and then we just set up our trust as well. So I think we're relatively covered, but I'm not, you know,

I'm not sure that you need us, Mitch. It sounds like you're doing all the things. No, no, no. I need somebody to tell me I'm doing it. Okay. That's like my big thing. You're doing amazing. Thank you. So much of money conversations and financial planning are just getting that gut check and the perspective of someone else. So we're happy to provide that, but it does seem like you are doing things pretty well overall.

One last area I wanna hear about is emergency savings. Where are you there? I probably need to get it up a tiny bit more. My workplace is really stable from like the standpoint of being let go or anything like that. I'm a nurse, so it's very difficult for that to happen. I'm also unionized, so it's even extra more difficult for that to happen.

Nice. So we kind of have a, I would say a four to five month emergency fund just sitting in our high yield. That way, if my wife wasn't able to work anymore, if we just kind of need to take a break and go down to one income for a minute, we have that option, at least in the short term, to kind of figure that out. A general guideline is that if you are in a two income household, you can probably get away with a three-month emergency fund. The fact that you think that your wife might stop working for a period of time makes me think that you might be okay where you are. But if you are a one-income household, you might want to get that up to closer to six

months just so you have a better cushion. So think about that as you and your wife are talking about whether she might want to pull back from work and then you might want to save a little bit more if you can. Perfect. She's in a tech field so who knows kind of where that's heading. Well let's get into some of your specific questions around balancing raw versus traditional with your 403B. How have you been saving for retirement thus far? What's been your approach? I have the automatic contributions set up through my workplace so I've been kind of hovering between

while we were pregnant with the babies, I was down like 8% just so that we had a little bit more cash on hand. And I'm slowly working back up to trying to get both of us back up to 15%. It's not maxing, which is my next goal, I think is to max those accounts. But yeah, and then I split pretty evenly between the Roth side and then the traditional side. So that's kind of been my approach so far. I didn't get enough information about it. And it just kind of seemed something

I wanted to dig into a little bit more. Do you get a match from your employer? Kind of so they do it a little weird. I have a 401 a as well, where they contribute to it regardless of what I put in. So right now it's 2% when I hit, I think six years of service, it will move up to 6%. As you're calculating the percentage of your income that you're contributing towards retirement accounts include that 2% match that you're getting as you work toward 15% or maxing it

out whatever you would like to have as your goal. Okay, perfect. That's good to know. So now let's dig into how you can split your money from Roth versus traditional. I guess one question behind this is what are your goals behind splitting it between these two different accounts? Just because you think it might be a good idea or do you have any motivating factors specifically? I think it might be a good idea. And then also I know that like Roths are kind of like a powerful tool. And so that's where I just don't understand if they are different between the Roth IRA and the Roth 403B.

I know that kind of when it comes to retirement, what I've been told at least is to have different buckets that I can pull from between taxes with the traditional being take the taxes then, Roth being take the taxes now. And so trying to separate it to where I have a relatively even amount between all of those different buckets

that I can pull from in retirement. So the main difference between a Roth IRA and a 403B is in the contribution amount. So with a 403B or 401K, you can contribute a lot more than you can usually to a regular Roth IRA account and also in the investment option. So with the former, you tend to have more investment options, whereas with the latter, you might have fewer. Gotcha. That's what it seems like it comes down to is like the investment options. That's like the main aspect of my question is my Roth 403 B I can contribute. I think it's

like 20 something thousand compared to a Roth IRA, which is around 7000. I think I have pretty good selections when it comes to my workplace. I have the target date retirement funds. So I feel like it's like a decent idea. And then I just don't know if I, before I max, should I even contribute to a Roth IRA? Is there any aspect of that? Am I missing out on something if I don't finish? And then when can I withdraw from a Roth IRA

compared to my retirement accounts within my employer? So like my 403B, for example. So in general, you can pull from your retirement accounts, Roth IRA tax and penalty free when you're 59 and a half. There are rules around 403Bs and 401Ks where if you retire from that employer, you can withdraw from their account at 55. So it's a little bit more flexible in that regard. But I want to talk about contributing to a Roth IRA specifically for you, because a

lot of people who are high earners can face some limits on what you can contribute if you can at all. So you're a nurse, you said that your wife works in tech, I'm gathering that you guys are probably high earners. What's your household income? We're at about 230,000 between the two of us. So for those who are married filing jointly, the phase out range for contributing to a Roth IRA in 2025 is between 236,000 and 246,000. So you're a little close to that, but you're not at it yet.

Do you anticipate that you might have any other income coming your way this year? I think that this year I just got my raise and so it might push me above that. Thank you. I'm an hourly employee and so is my wife. Like she works very exact hours compared to mine, which I work variable,

depending if I need to stay over or not. So it can fluctuate more higher than lower. I feel like I'm going to be flirting with that line. Like you were talking about. That's where it gets a little complicated, I think, too. Unless you are really unhappy with the investment options in the Roth 403B, that might be the safer bet for you because you're still getting the after-tax

contributions and then you have a diversified fund to pull from in terms of retirement accounts in retirement. So I caution people when they are close to that edge just to maybe not play with fire because you don't want to have to do something later on come tax season where you have to pull back the amount that you took out in the Roth IRA or convert it. It just gets to be a little bit messy. But I would like to talk through a little more about how much to put into a Roth account versus a traditional account.

And there are some questions that can help you decide what might be best for you. So one main one is, do you expect to earn more and be in a higher tax bracket later in your career or in retirement? Would that be my individual career or my wife and I combined? Combined and individual, but for now, since you're filing jointly, consider. I'd probably say post like 4045, I feel like she'll probably stop working.

Like our goal is to send her into early retirement, kind of as soon as we can. So I feel like we'll drop off then. But for the time being, we're only going up. Like I said, I'm unionized. So I have set increases every year. So I can kind of map that out generally for the next career path. So it sounds like you might be in what people call your peak earning years. I'd probably define it like that. Okay, so in general, if you think that you might be earning more later or you'll have a higher tax bracket

in retirement, contributing to a Roth now or prioritizing that can be a good idea because you pay income tax on the amount that you put into a Roth IRA at the front. So you would be paying a lower tax rate on the contributions now versus what you would pay later. So then a traditional is often better when you are in your peak earning years, because if you are earning the most that you may ever earn, you're also likely being taxed at the highest rate you may ever be taxed at.

So in that case, saving for retirement in pre-tax accounts like a traditional 403B or traditional IRA or 401K can be a better option because that helps you lower your taxable income. You really just are getting a better tax break from those pre-tax contributions. And that is a big thing to consider. That definitely makes sense. Would it be worth it still to break it up a tiny bit? It seems like the traditional might be the best option for me as what we are describing as like my highest earning years now from a financial combined income perspective. Would it be worth it still to maybe change the split like 75-25?

That's about how I do it myself. Because I am what people may consider is in my peak earning years too, but I want to have tax diversification. And that is what contributing to a Roth and traditional gives you as well. So how exactly you split that is up to you and there isn't a precise one size fits all formula. I do about 75% traditional, 25% Roth, and that just helps me hedge against future tax increases because historically tax rates are pretty low right now,

and we have quite the blooming national deficit. We may need to raise taxes later on to cover this. So contributing to a Roth while you're also doing traditional can help you sort of hedge your retirement bets in a way. Gotcha. I also split mine. So I have some going to a Roth and some going to a traditional. And I think as much as the numbers matter,

it also maybe matters when you want to pay your taxes. And I know that when I am sipping margaritas, when I'm retired, I don't want to have to worry about paying Uncle Sam any taxes. So I like Roth's for that reason, but it's a personal preference. And then Elizabeth, I have a kind of a question for you. I think that you're more, I don't know if you would define yourself into the fire movement, but I know that it's in. And so like, that's definitely something I've calculated in theory my fire number. How can I best set myself up knowing that it might be before 59 and a half?

Like is that where a different type of account would come in to where I'm not taking penalties and stuff like that? So obviously I can't tell you what to do, but I can just share my own personal experience. And while I don't think I'm necessarily on track to retire early yet, it's an ambitious goal that I do have. And some things that I'm doing that anyone can do to diversify is first of all, I have a brokerage account I save in as well. I also try to live a little frugally,

I say a little because I like to shop on Zara. But I do try to keep my expenses way lower than my income and just cut out unnecessary expenses. So essentially, those are the main things that I do. Diversify my investments and also the pots that I'm putting my investments in and saving aggressively. I think those are like the fundamentals of FIRE really. Perfect.

Appreciate it. Thank you. Are you contributing to a brokerage account right now, Mitch? I was, and it was mainly for a new down payment for a house is kind of the idea. I stopped because it's hard to know where we're at with our next house and the down payment. So I pulled out of it and just put it into the high yield savings account for now. Didn't take out the contributions, but I did just change where I'm contributing. So I'm just saving in cash right now to the high yield. That's the only brokerage account that I have set up for now. But it might be worth looking into for the future. Yeah, well, if you are interested in the fire movement, that is a way to save and invest

without having to deal with a lot of the red tape that comes with these tax advantage accounts like Roth IRAs and 403 Bs. They just have a lot of very particular rules that you don't want to get on the wrong side of. So paying capital gains on what you have in a brokerage account is a lot of folks who are going to fire out primary way beyond, you know, the other standard retirement accounts. That's perfect. And some people like I hope to do because I don't want to be doing absolutely nothing will still work part time, right?

I don't mind working it. I like the option of not having to do it if I don't want to be doing absolutely nothing, we'll still work part-time, right? I don't mind working it. I like the option of not having to do it if I don't want to. Now we're besties, Mitch. Now we're besties because we get it. The barista fire. Look at you listening to the show. Exactly. I had to do my research. Come on. I love it.

Mitch, I'd like to hear a little more about how your wife is saving, how she's thinking about this. Is she similar to you or does she have a different approach? She's wife is saving, how she's thinking about this. Is she similar to you or does she have a different approach? She's similar to me because I set it up for her. It's basically identical, but now we'll be able to have a discussion as far as what she wants to do and have a little bit of a better idea as far as what might be best going forward. She doesn't have a contribution match anymore.

They took that away. And so I don't know really what to do with that. If I should continue to invest within the 401k, like I want to invest. It's just where and if it should be with the company or not. With your wife's 401k? Yeah, yeah, yeah. Again, you're getting a great tax advantage by reducing your taxable income by putting money into it. So even if you aren't getting a match, it's still really helpful to be using this account that you have access to. Many people who don't have that opportunity are really struggling to save enough for retirement.

Because as you mentioned before, the contribution amount is I believe in 2025, it's $23,500 that you can put in on your own that is much higher, um, than the 7,000 that you can put into a Roth IRA. And those are both the limits for those who are under 50. So think about how you can maximize the amount that you're putting in, given what's available to you. Makes sense. One last thing I wanted to throw in as it relates to your wife's retirement contributions amount as she thinks about different accounts that are available to her since she doesn't

have an employee match. Some financial advisors will suggest that folks contribute to their employer retirement account enough to get that match. Obviously, it's not an option for your wife. Then go to contributing to an IRA enough to max it out. And then go to an HSA if they have access to that and then return to their employer's plan and then work on maxing that out. Do you guys have HSAs that you're contributing to? We just did her elections.

And so it starts in June and my son has a procedure on June 3rd. So I wanted to play it safe and we didn't know how much with a high deductible plan that would cost. So next year our plan, it does have the option to drop down to where we do have the eligibility for an HSA, but we won't do that until next year, unfortunately. Well, there are trade-offs that come with having a high have the eligibility for an HSA. But we won't do that until next year, unfortunately.

Well, there are trade-offs that come with having a high deductible healthcare plan and an HSA. So consider all of the health expenses that you and your family might have and see what might be most advantageous to you. Well, Mitch, we've run through a lot around retirement savings and different options that you have. How are you feeling now and what do you think you might do next? I feel good.

I think it's always nice to get a little bit of reassurance is definitely my big thing. And then just with the aspect of potentially changing my split from 50 50 between traditional and Roth and potentially moving it a little bit more towards traditional and understanding why that would benefit me compared to just like shooting in the dark and just kind of not fully understanding. Well, thanks for coming on and chatting with us, sharing your story a bit.

We're really excited for you and your young family. Keep us updated on how things go for you. Thank you so much. I appreciate you guys' time. And that's all we have for this episode. Remember, listener, that we're here to answer your money questions. So turn to the nerds and call or text us your questions at 901-730-6373.

That's 901-730-NERD. You can also send us an email at podcast at nerdwallet.com. Join us next time to hear about how you can get your credit back on track after some missteps. Follow Smart Money on your favorite podcast app, including Spotify, Apple Podcasts, and iHeart Radio to automatically download new episodes. And if you're listening on Spotify, drop us a comment right on the platform. SHANNON COFFEY And here's our brief disclaimer.

We are not your financial or investment advisors. This nerdy information is provided for general, educational, and entertainment purposes, and it may not apply to your specific circumstances. BOWEN This episode was produced by Tess Vigeland, Hilary Georgi, Helpless Editing, Nick Charisame, Mixer Audio, and a big thank you to NerdWallet's editors for all their help. And with that said, until next time, turn to the nerds.