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What if you could hang out with successful women lawyers, ask them about growing their firms, managing resources like time, team and systems, mastering money issues, and more; then take an insight or two to help you build a wealth-generating law firm? That’s what we do each week on the Wealthy Woman Lawyer podcast. Hosted by Davina Frederick, founder and CEO of Wealthy Woman Lawyer –– every episode is an in-depth look at how to think like a CEO, attract clients who you love to serve (and will pay you on time), and create a profitable, sustainable firm you love. The goal is to give you the information you need to scale your law firm business from 6 to 7 figures in gross annual revenue so you can fully fund, and still have time to enjoy, the lifestyle of your dreams.
That segues nicely into my next question is, what do you think are some of the challenges that attorneys have that maybe other, professionals or or, you know, people don't have in their financial planning? There's a few.
Niraj:It's not to say that attorneys are the only one that experienced these challenges, but, you know, most of the time, attorneys are starting their legal career with significantly more student loan debt than other professionals are. As soon as they graduate law school, they have potentially 2, $300,000 worth of debt. They're automatically in a higher tax bracket than other professionals because of their higher salaries. They're automatically phased out of certain retirement vehicles such as a Roth IRA because they make too much money. Now they're trying to figure out, should I put the money towards my student loans or should I put it towards my 401 k?
Intro:Welcome to the Wealthy Woman Lawyer podcast. What if you could hang out with successful women lawyers? Ask them about growing their firms, managing resources like time, team, and systems, mastering money issues, and more. Then take an insight or 2 to help you build a wealth generating law firm. Each week, your host, Devina Frederick, takes an in-depth look at how to think like a CEO, attract clients who you love to serve and will pay you on time, and create a profitable, sustainable firm you love.
Intro:Devina is founder and CEO of Wealthy Woman Lawyer, and her goal is to give you the information you need to scale your law firm business from 6 to 7 figures in gross annual revenue so you can fully fund and still have time to enjoy the lifestyle of your dreams. Now here's Devina.
Davina:Hi, everyone, and welcome back to the Wealthy Woman Lawyer podcast. I'm your host, Devina Frederick, and my guest today is Neeraj Chhabra. Neeraj is the managing director of Sidebar Advisors, a financial planning company for attorneys. Niraj received his MBA of finance at Rutgers University in 2015. Prior to that, he attended Montclair State University and graduated in 2005 with a bachelor's in business administration, management, and marketing.
Davina:Prior to launching Sidebar Advisors in 2022, he was an advisor for Ameriprise Financial since 2,005, concentrating on clients in the legal profession. His central focus includes family finances, tax and estate strategies, retirement, and financial planning for small business. He aims to help attorneys, particularly women lawyers, to navigate their unique tax challenges and modify their financial plans as their careers evolve, which he does by offering attorneys holistic financial planning and complimentary educational workshops. So please join me in welcoming Neeraj Chopra to the Wealthy Woman Lawyer podcast. Hi, Neeraj.
Davina:It's so good to see you. How are you doing today?
Niraj:I'm doing well. How about yourself?
Davina:Great. Great. I'm glad to have you. I have shared your credentials and all the fundamentals of what you do and who you are, but I'd like for you to tell us a little bit more about you and your business.
Niraj:Sure. So we run sidebar advisors. We are a financial planning firm that works primarily with attorneys. We help them with their personal financial planning. We've been doing that for about 15 years.
Niraj:But we try to be a professional resource as well. So we host CLE programs for different bar associations and law firms. In, I'm based out of New Jersey and in New York and New Jersey, there's DEI requirements as part of their continuing ed. We're able to offer a course on financial empowerment for women in law. That's, that's extremely popular.
Niraj:But we also try to help, you know, attorneys grow their practice. So we have monthly attorney networking events that we host virtually as well as quarterly events that we do in person so that, attorneys could continue to build relationships with other folks that we know and, grow their practice.
Davina:Wonderful. So I want to know how because you and I have talked, prior to this, and you have you really sort of focus on helping lawyers and in particular, women lawyers. I know you're cultivating this sort of, focus on women lawyers. So tell me, when you worked at Ameriprise, you worked kind of in the with lawyers, attorneys, law firms, legal people in the legal space. Tell me why that's compelling for you or what it is that you like about working with attorneys and how you think that's valuable.
Davina:Yeah.
Niraj:I think there's a little bit of synergy that kinda grew into a lot of synergy. So when I, you know, first started working with lawyers, I went to a networking event. I was invited by a friend who took me to a young lawyer's networking event. And, you know, afterwards, she followed up with me and said, you know, what you think of the event? And I said, you know, everybody was super friendly.
Niraj:There was a lot to chat about. You know, there's a lot of overlap between financial planning in certain areas of law, whether it's family law and estate planning. And, you know, she kind of put it in my head that I should teach CLEs on some of that overlap. So it got my wheels turning a little bit, and we figured out how to get accredited in our state and just started going to different law firms. And we were getting invited to different bar associations to teach them about financial planning and the integration between that and the law.
Niraj:And it kinda took on a life of its own from there. So that's really how we got into working with lawyers. And since then, you know, we've brought on somebody at our office who's a certified student loan professional. So he's able to help the attorneys from the younger profe from the earlier stages in their career and help them navigate their challenges. So we've really, you know, built a practice that allows us to, run the gamut in terms of the types of attorneys we're able to help.
Davina:That segues nicely to my next question is, what do you think are some of the challenges that attorneys have that maybe other, professionals or or, you know, people don't have in their financial planning? Okay. There's a few.
Niraj:It's not to say that attorneys are the only one that experienced these challenges, but, you know, most of the time, attorneys are starting their legal career with significantly more student loan debt than other professionals are. As soon as they graduate law school, they have potentially 2, $300,000 worth of debt. They're automatically in a higher tax bracket than other professionals because of their higher salaries. They're automatically phased out of certain retirement vehicles, such as a Roth IRA, because they make too much money. Now they're trying to figure out, should I put the money towards my student loans, or should I put it towards my 401 k?
Niraj:Everybody's telling me to put it towards my 401 k, but I just want this monkey off my back. Then it comes down to raising their own families. Their kids aren't gonna qualify for financial aid the way that they may have been able to take out loans and, you know, get some grants and things of that nature. So, now they gotta figure out, well, what do I do? Do I want to pay for my kids' education and help them alleviate some of the burdens that I went through at potentially the expense of my own retirement?
Niraj:Or do I say, no. You know what? I put myself through college. They'll figure it out also. If you're up for, you know, equity partner at your firm, we gotta figure out how are we balancing that among all the other stuff that you've got going on in your life.
Niraj:So there's a lot of unique features, that come up with with regards to financial planning as it pertains to lawyers that may not come up in other occupations.
Davina:Right. Right. Right. I and I agree with you. I mean, I've I've helped coach so many, lawyers, and it's not uncommon to have 6 figure student loan debt.
Davina:I think the highest that I ever heard was around 600,000.
Niraj:Woah. Okay. My record was about 3.50. Yeah.
Davina:But then to I have and then quite a number in the 2.50, 300 range. So it's, it is it is a big issue. And a lot of people, unless you I think it's a disservice to law students because I think a lot of us don't understand the ramifications of the loans and how it will take, you know, left foot to 300 to pay them off. Like, we don't really understand that effect of that interest rate. And, and then we get out and we're like because we're not finance majors.
Davina:This is why we went to law school is because we didn't we wanted to avoid math. And then we get out and we go, oh my gosh. I will take me, you know, my whole life, my whole career to pay this off. So I do think it's a huge consideration in financial planning. Can you tell us, like, I know you can't get into specific advice and that kind of thing, but maybe just generally some of the things that you educate people on around student loans and, and preparing for their future.
Davina:Sure.
Niraj:Yeah. And, you know, full disclosure, I typically will rely on our in house expert for any type of student loan conversation. But some of the stuff that we do encounter are gonna be whether or not the individual should stick with, federal loans or potentially refinance to private loans. You know? Are we going to qualify for student loan forgiveness, you know, under any program?
Niraj:Obviously, a lot of this is in flux with what's going on in Washington at the moment, but that's another consideration. Should we consider refinancing? If we're not going to, be able to qualify for student loan forgiveness, should we pay down our loans more aggressively, or should we just kinda let them sit? A lot of the times, you know, as a young lawyer, you're trying to yes, pay down your debt, but you're also trying to start your life. You may have a wedding to plan for an engagement ring, a house, all these other things that are important goals.
Niraj:So you can't have it all. You know, you might have to make some tough choices. So a lot of the times when we're sitting down with clients at the earlier stages of their legal profession, you know, they they they oftentimes have to make some difficult decisions and we try to help them understand not just what those choices are, but what some of the outcomes are gonna look like, you know, 5, 10, 15, 20 years to unwind. Right.
Davina:Right. So our audience is made up, largely of women law firm owners. And I think there's 2 layers that get added on top of that. You know, in addition to the attorney layer. And one is the business owner aspect, which business owners require a completely different type of financial plan than people who work a 9 to 5 and get a paycheck.
Davina:And then the second layer of that or third layer of that on there is women have different financial needs than men. So I wanna talk about and not everybody believes that, but we're gonna dive into a little bit of that. But one of the things that we're talking about first is the business owner aspect. What do you find in working with sort of small law firm owners, are some of their challenges that you help them with?
Niraj:There's a number. You know, there's obviously overlap between your business finances and your personal finances. So that's the first thing. You know? When people are oftentimes starting off their law firm, one one of the things that I always tell them is that you need to have about 1 to 3 years worth of expenses set aside in cash to cover your business needs.
Niraj:We do this for a few reasons. Number 1, you know, it could be a couple months before you start to, you know, get yourself out there and start to get new clients. And even when you get new clients, even the best attorney business owners or best law firm owners, they struggle with, receivables from time to time, getting clients to pay and things of that nature. And what we were finding is that without this safety net in place, a lot of attorneys were discounting their rates, you know, just to get the business out of desperation, or they were taking on cases that they had no business taking on. So we typically encourage them to have this cushion that just makes them a more competent attorney and helps them, you know, get their business off the ground a little bit faster.
Niraj:So that's one of the first things that we typically, you know, make sure that we talk to them about. The second thing that we oftentimes see is that they they don't know what they don't know. You know, attorneys are very good at running their business. They're very good at, their particular practice area. But when it comes to, you know, things like what retirement plan makes sense, they typically go with the default.
Niraj:You know, when you're working for a firm, you probably have a 401 ks and you have access to to that as that's the only game in town. So what happens? You start your own firm, you sit down with your accountant, and they say, you really should put money into a SEP IRA. You know? So that's what they do.
Niraj:But as they continue to grow their firm, maybe they have outgrown a SEP IRA or have to grow to simple IRA. You know, maybe they should be looking into a 401 k plan. Oftentimes, attorneys don't realize that there's other vehicles out there that will literally allow you to shelter 100 of 1,000 of dollars of income, you know, perfectly legally, perfectly, you know, compliant with the IRS. But they're just unaware of it. And if you have the disposable income to do so, which everybody wants to get to that point, it could literally save you 100 of 1,000 of dollars in taxes.
Niraj:So it's a matter of just educating them on how their options are gonna evolve as their practice continues to grow.
Davina:Right.
Niraj:There are other nuances too. For example, you know, when you work as a w two employee at a law firm, maybe you have disability coverage through work, and it's gonna cover you for a certain percentage of your salary. Well, guess what? As a small business owner, you're the one responsible for providing that benefit. And that benefit is gonna be directly tied to whatever you declared in taxes the year before.
Niraj:So you have to be strategic and you have to make sure that you're protecting your most valuable asset, which is your ability to earn an income.
Davina:Right. Right. So it's complex. There are a lot of factors that go into it. So everybody's answers are gonna be a little bit different based on their personal circumstances.
Davina:Spouses can affect that too. I know I know one of the advantages when I started my firm is that I was married and we had no children. And so I could rely on him to put a roof over our head and pay the bills while I grew my firm. So I didn't need as big of a nest egg to start as some people do. Right?
Davina:So there a lot of things are very individualized and also around people's goals. What are their goals in what they're trying to accomplish and and all of that? Tell us how tell us how women may have a different experience than men in sort of this future planning. What are some of the needs that you think women have, that are different from the needs that men have? So and we're talking generally typically, we're not talking obviously, these are generalities.
Davina:So there are some people who have certain circumstances that are different, but tell me some of in general, some of the needs that you see.
Niraj:Yeah. Absolutely. And yes, to your point, we are speaking general. There's always exceptions and and things of that nature. But, before commit to the, you know, issue that people, let's talk about, you know, what these concerns are, what is different.
Niraj:So the first thing is going to be income disparity, and I think most people are unfortunately aware of the fact that women are still getting paid about 80¢ on the dollar compared to men. It less of an issue in the legal industry for a couple different reasons. Number 1 is, you know, there's more pay transparency, at least at these bigger law firms. You know? They they typically will put their salaries out there for everybody to see, so it's not a major concern.
Niraj:And there's more you know, it's more front and center. So you have these firms that they have a women's initiative, and their their whole purpose is to make sure that there is, you know, income, income parity and things of that nature. So still exist, unfortunately, even within the legal space, but to a lesser degree than you might see it in other areas. That one's a little bit more obvious. Some of those stuff that's less obvious in terms of differences is gonna be, what are some of the consequences of longevity?
Niraj:You know, women live on average 5 to 7 years longer than men, depending on which study you look at. So what does this mean? Women earned less, which means they probably had the opportunity to put less money into their retirement accounts, but they're gonna live longer, which means we need more money to fund a longer retirement. It also means that we need more money for things like long term care. So let's hypothetically say we have a husband and wife.
Niraj:I'm sure you know people that, you know, it wasn't uncommon for back in the day for husbands to have been almost 10 years older than their spouses. So you couple that with the fact that women oftentimes live 5 years longer. What happens? You know? Husband gets frail and needs care.
Niraj:Wife is there to support him. Husband passes away. Who's there to take care of the wife? You know? And she might be in a position where she's gonna live longer, but, again, has less resources.
Niraj:And maybe we depleted some of the resources taking care of the husband. You know? So that's another thing. An under considered area is, you know, the different roles and responsibilities that women play. You know?
Niraj:I'm sure your audience, a lot of the people on this, on this this podcast or listening to this podcast are probably the primary red winner in their household. But they're probably also the one that packed their kids' lunches in the morning. You know? No. I'm not.
Niraj:So they're responsible for more of the child rearing, you know, making sure that they keep of when their kids outgrow their shoes and their homework's getting done. But they also get it on the other side. 70% of caregivers in this country are women, not men. You know? And we talked about exceptions.
Niraj:You know, I'm an exception. I take care of my mom. You know? We were talking earlier, and I had to help her run some errands today. So there are absolutely exceptions.
Niraj:But, you know, statistically speaking, you know, women are the ones that are gonna carry more of that load. So they're they're more in that sandwich generation than men are. And this unfortunately transcends 3 different generations. So mom needs care. You know?
Niraj:That's impacting her. She's got a son and a daughter. Statistically speaking, it's gonna impact women more than it's gonna impact men. So the daughter's gonna be the one that's gonna be, you know, more than likely to take care of mom. It's not cheap being a caregiver.
Niraj:On average, it costs, like, $7 a year out of pocket, plus time off of work and all the other stuff that you need to do. Brian, $7 less that she has to put towards her daughter's education. So, again, it's gonna transcend 3 different generations. And attorneys have a double whammy. You know, it's we hear it often where, our women attorney clients, you know, it's not uncommon to say, well, you know, you're an attorney.
Niraj:You could afford to take care of mom. You know? So now automatically, the the burden's on you to do it. And I'm gonna use the word burden, you know, on on because for a lack of a better word, I'm using the word burden. But the responsibility of taking care of mom falls on you simply for your occupation.
Davina:You know? Yeah. Financial burden, Certainly. Financial burden. Absolutely.
Niraj:And then physical burden. Emotional burden or not. I wanna
Davina:dig into each of these a little bit deeper because there's there's a lot here to sort of, unpack. The first one you talk about, what's the first one you mentioned now? I'm trying to go back in order of them. The first thing you mentioned
Niraj:was The income disparity.
Davina:The income disparity. So one of the things about income disparity is I even see it. So we see income disparity in in where we're working for someone else. But when we're looking at business owners, I noticed as long as I've worked with women law firm owners, how many women law firm owners charge less than men do? How many hire fewer people to help them early in the stages of their business.
Davina:Women, I think a lot of times also, but be our culture sort of has trained us to expect less, to worry that we have to give more, and we're not charging enough. And to that example, I recently, was my husband was searching around for a lawyer to help with some estate planning. And he was quoted $750 by a male. And when I put that out to my community of women law firm owners, they were all shocked because I'm there telling them just like you need to increase your rates, increase your rate. Like you're at and they're saying, well, I have to justify and give a reason why I go up from 325 to 350 or 375 or 400, or I have to have some meaning behind why I'm doing this for it to be justified.
Davina:And meanwhile, we're seeing not everyone, but a lot of men out there who are putting out these high rates and they're getting it. They're you you can't book them for weeks out because they're getting it. Right? So I think even from an income disparity, we tend to look at and go, you know, society creates this, but also we need to look at ourselves and we own our own business. This is where we have an opportunity to even out that disparity and sort of make that difference for ourselves by saying, you know, I'm doing the math and saying, this is what it requires to run this business and to provide for myself and my family and my employees.
Davina:So, that's that's an advantage that I think as women law firm owners that we have, if we will get the confidence to do it. So that's some place as your I I think the why this conversation is so important for me to have and why I invited Niraj on here is because I see it over and over again, talking with women in their sort of thirties and forties who aren't really getting clarity on how much money is needed. So one little simple piece of math that I often do with people, and I'm sure you're as a financial advisor, you're gonna like rip this apart. But I look at it and I just say, like, if you retire at 65 and you live to 95, you've got 30 years that you have to support yourself. And it's if you live on $50,000 a year for 30 years.
Davina:I can't remember now the math on that, but it was like, if you want a 100,000, then you're gonna have like $2,500,000 to do to to live for a certain period of time. So do the math. If I want $50,000 a year for 30 years, how much money does that do you have to have? Not looking at interest, not looking at inflation, not looking at any of those things, just rough numbers. I'd say, do I have anywhere close to that?
Davina:Do I have a $1,000,000? A $1,000,000 is not what it used to be for people. So as a woman, if you if you're going plan to retire at a certain age and a lot of people are very cavalier and they say, I wanna retire when I'm 50. I wanna retire when I'm 40. But they have no that's 10 years from now, and they have no plan in place, nor do they have a realistic view of how much money that is if you retire at 50 or retire at 40 and you live to 80.
Davina:How many years and how much money are you gonna need to live on for those years? If you're elderly, you might not need as much, but if you're retiring at 50, you're still gonna get a lot of money to live every year because you're still gonna have
Niraj:all these other ancillary expenses that come up, you know, with getting old. You know? They just it's not as cheap as people think. So
Davina:Right. Exactly. So I think there's a there's a a a looking do you find that when you're meeting with people that they sort of don't really think about how much money is required to invest. Because one of the things that I read a lot about investing and things like that, and so many financial advisors say, if you're 20 and you save a $100 a month, you'll be a millionaire by this age. And they never address the really hard topic, which is you're 40 and you haven't saved anything or invest anything.
Davina:You have no emergency fund. You have debt. You have credit card debt. You have student loan debt. You wanna buy a house, so now you gotta clean up the student loan thing a little bit to see if you can qualify for a house.
Davina:These are the kinds of messy things that I see. Do you see those kinds of messy things when you're talking to people?
Niraj:100%. You know, you were talking about, you know, in terms of women discounting themselves and kind of being their own worst enemy to a certain degree. I don't remember the exact stats, but, you know, women negotiate less than men do, you know, with regards to, salary. And it doesn't have to just be salary. It could be flex time and things of that nature.
Niraj:So, you know, even if you're, in your example, 7.50 for an estate plan, you know, women are more likely to I'm guessing
Davina:this an hour was what he was charging. It was 7.50 an hour to be clear.
Niraj:Hour compared to 3 to keep. Yeah. So I was gonna so I was thinking to myself, that's a cheap estate plan. But
Davina:No. No. He said he charged 70 7.50 an hour for consultation and around estate planning and everything. Whereas most women will say, well, I charge 300 an hour. I charge 2.50 or I charge 400.
Davina:Nope. Nobody's out there charging 7.50. But anyway, to your to your point. Yeah. So The other thing
Niraj:that we see is that, you know, for a long time when I was, at my prior company, we were trained to think that, you know, women were more conservative investors because that's what the data showed. You know? And it was probably true. But as our companies spend they they spend a lot of money on this research. You know?
Niraj:So we were always trained. Okay. When you're, you know, sitting down in front of women clients, you know, you wanna kind of maybe give them some more conservative options just to to make sure it's within their comfort zone. But it wasn't the whole story. As they spent more money on this research, it turns out women were comfortable taking on the same amount of risk as men.
Niraj:In fact, women are the actually, the better investors according to I think it was Forbes that did a study. They actually found out that women invest more appropriately, given their time frame, given their age and all the other stuff, than men do once they feel comfortable. So women just wanna spend more time, you know, doing their research compared to men before making investment choices. Here's the challenge. When do these women have time to do the research when they're packing their kids' lunches and running their own practice and taking care of mom?
Niraj:They have to be present at the office. You know, there's just not as much time. So what ends up happening is that women naturally invest a little bit more conservatively. They'll go with the default option, whatever that 401 ks provider set them up with. And over time, it creates a delta between the balances of, male and female 401 ks balances.
Niraj:And we, we talked about this. Women actually need more money at retirement, not less. Mhmm. You couple that with the fact that, you know, whenever you're watching or doing any research on investing,
Davina:it doesn't take
Niraj:gender into equality, into into consideration. You know? It just tells you, okay. Based on your age, based on your time frame, this is how much money you should have in stocks. This is the percentage you should have in bonds.
Niraj:Well, given everything we talked about, shouldn't women be investing more aggressively than our general rules of thumb, not less? But we don't really see that out that often.
Davina:Right. Right. Right. And the next point you made was about the difference in women living longer than men. Women often marrying people men who are older.
Davina:Now, obviously, I'm talking about heterosexual relationships. The same kind of circumstances can happen in same gender relationships. It might be it might be different based on how women are. Who knows? Right?
Davina:But Yeah.
Niraj:It's actually more expensive for, for same sex relationship because you're both probably gonna live a little bit longer. You know? Yeah. Yeah. Both gonna have additional long term care needs and, you know, well, long term care, assisted living, all those other things.
Niraj:So, yeah, it's actually more expensive.
Davina:Yeah. Yeah. And I I I also think there's a lot. I know when I was younger, I had a belief that I was going to get married and it was gonna last forever. And I wound up divorced my first marriage.
Davina:And I talked with a lot of people who started to have this idea that it will have never happened to them. I'm now of the age where, and my husband is of the age where men die of heart attacks. Now, thank goodness. My husband is, you know, stays fit and in shape and eats well and all that. Thank goodness.
Davina:Right? But we happen to be very close in age. But this is a real statistical reality that women in their fifties lose their lose their spouses, More than men in their fifties. Right? And so these are real life events that happen and you don't think they're gonna happen to you, but they may happen.
Davina:Right? And these are the things, I look at my own parents. My parents are celebrating their 66th anniversary today. They've been married 66 years. And but we have recently sat and talked with them about their finances.
Davina:And one of the things we know is that my dad has more of an income both in a pension in a retirement, in his social security. And when he passes, my mother has some of those things. But when he passes, a big chunk of that is going to be gone because she worked for a shorter period of time and a different kind of career for a different government agency. And so has not got nearly as much and she didn't make nearly as much as he did. And so these things are going to be real if he passes away before she does.
Davina:He's a little bit older just by a few years. But very real dis you know, disparities. Right? And I have a a mother-in-law who lives with me whose husband was 20 years older and he passed away years ago. And now she's at a point where, you know, she didn't have the same benefit that she did when she was he was alive.
Davina:Right? So and we tend to think, well, this is parents and grandparents living in a different time, and we live in this a day and age where we're breadwinners. But you're yeah. And you're shaking your head. No.
Davina:Exactly. Tell me a little bit more about kind of what you see in that front.
Niraj:Yeah. I mean, you kinda have to rewind the clock to a certain degree. What was happening? You know? Unfortunately, women were the ones typically taking off of work to raise a family.
Niraj:And one of the things you know, we had somebody that was on maternity leave not that long ago, and my advice to her was just do me a favor. Do not have any gaps on your resume. I don't care if you take off of time take time off of work and work less hours, but do not have gaps on your resume. Because when you try to go back into the workforce, what kind of salary are you gonna get after a 10 year gap or a 10 year hiatus? You know?
Niraj:But that's what was happening. You know? Women were oftentimes taking the backs.
Davina:It's still happening because women wanna do it. Women wanna do that today, understandably. Percent.
Niraj:So what ends up happening is that you have less money going into your wallet, first off, but you've contributing less into your 401 k. So naturally, you're not gonna have as much of a balance. You're contributing less into social security. You know, your spouse might be going out into the workforce, collecting a pension, collecting a social security, growing their social security. And now let's assume you are, you know, happily retired as a couple.
Niraj:Yeah. We see it all the time. You know, you're in a position where you have to make a pension choice. Do you take the bigger pension, but know that it's only all for one life expectancy? Or do you potentially take a smaller pension that could be a 1,000, $2,000 less per month, but it lasts up for both of your lifetime.
Niraj:You know, oftentimes women are in a very vulnerable spot because of those circumstances, and we see it all the time. They go for the bigger option thinking they need the money and not thinking what happens later down the line. Oh, by the way, when one person passes away, a social security goes away. You know? So now we have a double win.
Niraj:We lost part of the pension or all of the pension, and we had to survive off of 1 social security. You know? We oftentimes encourage people, especially if they're in a couple that well, women more so than than men to potentially delay Social Security. Everybody tries to take it as early as possible, but you really wanna try to grow that thing as much as possible. Because let's assume in that scenario, the working spouse delayed social security, even until age 70, you know, the non working spouse will continue to receive that benefit.
Niraj:And that benefit's gonna grow with inflation, with the cost of living adjustment off of the higher amount rather than the reduced amount. So, you know, you're doing your spouse a favor by potentially, delaying it. And there's a lot of variables. You know, there's health factors, there's age disparity. What are their sources of income do we have?
Niraj:There's a lot that goes into determining whether you should take Social Security early or not. But, you know, given the fact that women typically live longer, it's probably gonna Security early or not. But, you know, given the fact that women typically live longer, it's probably gonna make sense to delay where if we can.
Davina:Yeah. Yeah. For sure. And the last thing that you mentioned of the you mentioned the, disparity in income and the age. And the last thing was?
Niraj:Multiple roles. You know? More likely to be
Davina:roles of the caregiver, parents. Yeah. Something I'm experiencing right now, we have 3 I have 2 sisters. We have our parents who are in their eighties, mid eighties. And my mother-in-law, is surviving.
Davina:My husband's surviving parent was with us. And so it's something where we're in the role of, of caregiving. And and it's a huge, I'm looking into the future at the amount of time it is going to require to maybe stop and fly and go and take care of and do things. Fortunately, I have a sister who lives close, who's doing a lot of that, but I can also see where I might be needed in other ways to balance out the time that she's putting in there. So there's a significant, impact.
Davina:Certainly having, my mother-in-law live with us is a significant impact. We have to look at balance out her needs and also our needs. And we have to look at our financial needs for future because we don't have children. So there is no buddy we can live with when we get older. Right?
Davina:There's a lot of factors that come into play that people also aren't thinking about because they don't think about their parents' situation. And they don't have those hard conversations with their parents. And our parents were all in the silent generation. And believe me, when they take that literally, none of them wanna talk about their finances. None of this, none of your business.
Davina:And so we've had to have a lot of hard conversations to try to find out certain things, right? To be able to to be able to plan for ourselves and think about the impact of their needs on our lives as well, which is something they don't think about because they're just living their life, you know? So I think that is that is a an acute problem. And and the and the taking off to raise children. I still see, you know, modern women who want to take off and raise their children, which is very understandable.
Davina:But the I think there needs to be some real conversations about the spouse, about how do we even this out? Because a lot of the women I talked to say, well, you know, my husband's got money in his 401 k. I only have this amount, but he's got this amount. Thinking that this is going to be support us both throughout all of our lives and not realizing that things can happen that could change that picture.
Niraj:Absolutely. Yeah. No. It's, something that we see all the time.
Davina:So let's talk about because you mentioned one other thing that I thought was really great, and that is lawyers, myself included, always think we're smarter than the average bear. And if we just had enough time, that we could figure out anything. So if we just had enough time, we could figure out this retirement thing. We could figure out this investing thing. We could figure out, you know, how to, you know, be a marketing professional for our business and how to design websites.
Davina:And we could figure it all out if we just had enough time. That's how most of us think. And you mentioned, you said, and I think this is true, is that we don't have the time. And so therefore, since we don't have the time, we're kind of skimming skimming off the top what we read or hear and sort of making choices in a vacuum. Because quite frankly, the financial world, like the legal world has its own language, its own jargon, its own, levels of understanding, its own practice areas, right, that require different and we don't really think about it like that.
Davina:We tend to think of it we know the law is vast and detailed, and we are not can't be a walking, talking encyclopedia on legal on every legal practice area out there. But somehow we look at the financial industry and go 401 ks. Sure. No reserve number. Policies, 401 ks.
Davina:You know, and then that's kind of like where we stop thinking about it. So tell me kind of how you as you and your team as financial advisors help with that and help educate and help help people make time for that kind of discussion. I'll give you a good example.
Niraj:We had a call earlier today with a husband and wife that were both attorneys. And, you know, we were it turns out that, you know, in the past, I typically recommended that one of the spouses contribute to the Roth portion of their 401 k. And for those that are unfamiliar, you know, you're not getting a tax deduction for it. So if you make $300,000 and you're contributing 10% of your salary to the Roth, you're still paying tax on $300,000 The difference is that that $30,000 contribution grows to a 100 hypothetically, you get to take that all tax free. So it made sense for them to do that.
Niraj:But guess what? You know, the other spouse had a good year, and now their adjusted gross income went higher. They're no longer in the 24% tax bracket. Now they're in the 32% tax bracket. So now we have to kind of revise what we're doing, you know, and kind of say, you know what?
Niraj:Maybe we shouldn't be considering the Roth. Maybe we should consider the pre tax option that's gonna offer you a tax deduction today because your circumstances changed. If you think about this, there's a lot of things at play. Number 1, people typically get their advice not from their financial adviser, but what the person at the desk next to them is doing. You know?
Niraj:And my mom's a great example. You know? She'll listen to the advice of her colleagues even though I'm the financial adviser. You know?
Davina:I see you're paying. My my parents seek no legal advice for me.
Niraj:Oh, you do that? You know? I've only been doing this for 20 years. So Yeah. You know, but that's that's what happens.
Niraj:And, you know, as attorneys, you bill by the hour. You think you're, most of the time, they're not spending as much time doing the research. And, you know, it's oftentimes set it and forget it. You did this. You set it in a certain way, not taking into account that your circumstances probably changed.
Niraj:And maybe that means that your, approach needs to change as well. So that's a big thing that we see, you know, just needing to tweak or modify the financial plan as your your careers evolve.
Davina:Right. Right. I think that's I think that's huge. And I think that people need to re revisit it more frequently and have those sort of ongoing meetings. Because a lot can happen in a year.
Davina:I know every time I go to my my husband and I go to our accountant, which he's I inherited. It was his dad's account. No. He's our accountant. And, every time we go to him, he's like, okay.
Davina:What businesses did the Fredericks start this year? Like, we're always there's always things going on that are changing our circumstances and what we're doing. We sold a house last year, you know, all of these things. So I think having that relationship with a financial advisor is is really critical because you wanna know at every stage of your life if you're doing the right thing at that stage and things can happen and change in a year, very quickly. You can have a child.
Davina:You can, you know, wind up having mom move in and taking care of mom. I mean, there's all kinds of things that could affect your financial picture that if you have somebody who to advise you. And attorneys are kind of the worst because, you know, we don't understand why people don't proactively seek lawyers so that we can advise them and help them prevent, you know, issues in the future. And yet we're the worst about sort of doing that for ourselves. And I and I tend to in a lot of conversations I've had with women law firm owners, they often still defer even as even very feminist, very modern breadwinners still sort of defer to spouses oftentimes.
Davina:And there's this kind of assumption that maybe they know more because they're supposed to know more or something like that. And believe me, I've talked to a lot of men who don't. They think they do. They have a lot of confidence. But they don't.
Davina:And so I I just also think it's important to always, you know, like protect yourself because you don't know when you might not have a spouse. And of course, there are a lot of people listening to this podcast who are single. And you need to be looking out for yourself. And your circumstances may change one day, but you certainly want to make sure you're protecting yourself and your assets throughout your life. I just really think it's one of those things that we need to it's it's a place where we need to be selfish and really think about the things that could happen in our lives.
Davina:And we can't predict everything, but we can sort of know some things. We can know I'm gonna have children. You know, that is my plan, or I'm eventually gonna be the one responsible for taking care of my parents. I know I'm gonna retire or wanna retire early and travel the world. I'm going to want to never retire, but make travel throughout my whole life.
Davina:I mean, you could know some sort of things about yourself that you could talk to your financial advisor about, and they can offer the the actual advice and the doing. Right? Because that's another if you want it. So tell me about how financial advisors work. We know that lawyers, you have to be licensed in the state to work with people in that state.
Davina:Are there, financial financial advisors is the same thing? Can you work in multiple states? How does Sidebar Advisors work?
Niraj:Yeah. At Sidebar Advisors, we're able to work with clients across the country. It doesn't really matter what state they're located in. So we're able to help them. And, you know, we typically help them by offering a complimentary consultation, sit down with them and their spouse, and kinda go over their unique set of circumstances.
Niraj:Usually, what we do is we'll ask for some initial me, information for our first meeting and literally walk them through the exact same software process that our existing clients go through so they get get the full client experience. They'll be able to see, you know, do a screen share with us and really get to see what it's like to be a client. They'll learn about where they currently stand and where I think there's some opportunities. And then we typically discuss what pricing structures look like. Typically, we'll charge on a flat fee basis to give the client objective advice.
Niraj:Sidebar Advisors is a fiduciary, which means that we always have to act in the client's best interest, not whatever makes us the the most money. But if the client wants us to manage any of their investments, then, yes, we charge a separate fee for that. Or if insurance comes up as part of the conversation, yes, we get a commission for doing that just like anybody else would. But our area of specialty is really focusing on lawyers across the country.
Davina:Okay. Wonderful. Thank you. Dheeraj, thank you so much for being here and and having this fun conversation with me. Anybody who knows me knows I love to talk about money and wealth.
Davina:And I'm passionate, especially for women, because I see so many women get left behind and wind up past 50 in circumstances that you never could have predicted. And, so this is these are very important conversations, and I'm hoping that we're planting some seeds today among our listeners so that they, start asking those vital questions and meeting with people that that can help them. I appreciate it. Thanks so much for being here. I've enjoyed the conversation.
Niraj:Same here. Thank you for having me.
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