MONEY Careers

How to Answer the Job Interview Question “How Much Do You Make Now?”

Responding to salary questions the right way will maximize your offer and keep you in the running.

Answering “What are you looking for in terms of salary?” is a tricky question to answer, especially early on in the interview process. Dodging the question by asking “I’d actually like to talk a little more about the job responsibilities” is a good way to deflect. Try to prepare yourself by using tools like PayScale and Glassdoor to find out what other people earn for similar jobs at the company. It’s important to remember there’s more to your income than your salary; you can feel comfortable including your benefits, 401(k) matching, and bonuses when talking about your current compensation.

Read next: The Secret Formula that Will Set You Apart in a Salary Negotiation

MONEY Workplace

The 3 People It Pays to Befriend at Work

You'll obviously make friends at your new job, but these are three people you should absolutely befriend.

At the very least try to make these folks friendly acquaintances.

Someone in human resources will likely already have an ear to the ground when it comes to layoffs or new job opportunities within the company. This person can also be a good sounding board for salary and personnel issues.

You should also try to befriend your boss’s assistant, the gatekeeper to your boss. He or she can get you on the boss’s schedule and alert you to the boss’s mood.

Finally, reach out to the office rockstar. You know who that one is: the person who just kills it day in and day out.

MONEY retirement savings

Women Are Better Retirement Savers Than Men, but Still Have a Lot Less Money

woman's coin purse and men's billfold
iStock; Getty Images

It's all about the difference in wages.

Income inequality doesn’t end when you quit working. A report out Tuesday finds that women lag far behind men in retirement savings, even though women save at higher rates and take fewer risks with their investments.

According to Vanguard’s How America Saves report, women are more likely than men to be in a 401(k) plan: 73% of women vs. 66% of men. The difference is even larger at higher income levels. Last year, 81% of women earning $50,000 to $75,000 a year participated in their 401(k) vs. 62% of men. Among people earning $75,000 to $100,000, 86% of women put away money in a 401(k) vs. 70% of men.

Women also save at higher rates than men: Women put away 7% to 16% more of their income than men. And women are less likely to engage in risky investment behavior, such as frequent trading.

Despite those good habits, women are significantly behind men in the amount they have put away. Men have average account balances that are 50% higher than women’s. The average account balance for a man last year: $123, 262, compared with $79,572 for women.

“Women are better savers, but the difference in account balances comes down to the difference in wages,” says Jean Young, senior research analyst at the Vanguard Center for Retirement Research and the lead author on the report. “It’s not surprising. Women typically earn less than men do.”

Still, Young says, the Vanguard report revealed a lot of positive trends among retirement savers.

Among the findings:

  • More people are enrolled in 401(k)s. One-third of companies have auto-enrollment programs that automatically put new employees into 401(k)s unless they choose to opt out. That’s up from 5% a decade ago. Among large companies, 60% have auto enrollment. More companies are doing this not just for new hires but about 50% of plans with auto enrollment are also “sweeping” existing employees into plans during open enrollment, with a choice to opt out. Auto-enrollment has been criticized for enrolling people at very conservative deferral rates, typically 3%. That’s changing slowly: 70% of companies that have auto enrollment also automatically increase contributions annually, typically 1% a year. And, while 49% of plans default people to a 3% deferral rate, 39% default to 4% or more vs. 28% in 2010.
  • More retirement savers are leaving it to professionals. Thanks to the rise in target date funds and automatic enrollment (which typically defaults people to target date funds), 45% of people in Vanguard plans have professionally managed accounts vs. 25% in 2009. The number of people in such accounts is expected to surpass 50% this year, and that’s a good thing, says Young. According to Vanguard, people in professional managed accounts have more diversified portfolios than those who make their own investment decisions.“A professional helps you find the appropriate asset allocation, rebalance, and adjust the portfolio to your life stage,” says Young.
  • The bull market continues to deliver. The median total one-year return for people in Vanguard 401(k) plans was 7.2% in 2014. Over the past five years, 401(k) participants returns averaged 9.9% a year.
  • Few people max out. Only 10% of 401(k) participants saved the maximum $17,500 allowed in 2014. But the number rises with higher earners: One-third of people who earn $100,000 or more a year max out.
  • Savers are doing better than you think. Most financial planners recommend putting away 12% to 15% of annual income to save enough for a comfortable retirement. While the average 401(k) deferral rate is just 6.9%, combined with employer contributions, it’s 10.4%, close to that mark.

That doesn’t mean that most people are all set for retirement. Vanguard reports little change in account balances: The average 401(k) balance is $102,682, while the median is $29,603. The typical working household nearing retirement with a 401(k) and an IRA has a median $111,000 combined, which would yield less than $400 a month in retirement, according to a recent report by the Boston College’s Center for Retirement Research. But those who have access to a 401(k) and contribute regularly are in much better shape, regardless of whether you are a man or a woman.

MONEY Social Security

Same-Sex Marriage Rights Can Boost Social Security Benefits By Up to $250,000

150609_FF_SameSexSSBenefits
David Paul Morris—Bloomberg via Getty Images Sandy Stier, left, and Kris Perry wave to supporters after being married in City Hall in San Francisco, California, U.S., on Friday, June 28, 2013.

According to an analysis by investment advisory firm Financial Engines

Allowing same-sex couples to legally marry and enjoy all the Social Security benefits granted to heterosexual spouses will provide many couples hundreds of thousands of dollars more than they can get as single filers, according to a recent analysis by Financial Engines, an investment advisory firm.

Same-sex marriage already is legal in 75% of the states and today’s Supreme Court ruling now guarantees the right for same-sex couples to marry nationwide.

Financial Engines recently issued a case study showing exactly how much a same-sex couple stands to gain by taking advantage of spousal and survivor benefits that would not be available to them if they had to file for Social Security as single persons. The study does not include other benefits that also could be available to such couples, including child, disability, and divorce benefits.

“Social Security is complex but for same-sex couples, there are a lot more opportunities to earn greater lifetime benefits when they have the right to marry,” says Christopher Jones, chief financial officer.

The company estimates that the right to marry can yield an additional $20,000 to $250,000 in lifetime benefits. The value of spousal and survivor benefits is even larger for heterosexual couples, he notes, because there tends to be a greater age range among spouses in opposite-sex marriages. These age differences increase the potential values of marriage benefits, especially survivor benefits, Jones says. Women outlive men, and spend more than 11 years on average as widows, he says, so survivor benefits are enormously important to them.

The claiming scenario in the Financial Engines white paper involves a fictional couple, Henry and Logan, who are approaching their 64th and 62nd birthdays. Henry earns $80,000 a year and will be entitled to a full Social Security benefit at age 66 (full retirement age) of $2,500 a month. Logan has earned much less, and his age-66 benefit will be only $1,100 a month. What neither man can know, but Financial Engines’ storytellers do, is that Henry will die at age 84 and Logan at age 90.

At present, both men plan to begin claiming Social Security at their upcoming birthdays—Henry at 64 and Logan at 62. By claiming before their full retirement ages, both men will be hit with early claiming reductions. As single filers, over the course of their lives, they will receive a total of $797,280 in 2015-value benefits—$520,080 for Henry and $277,200 for Logan.

If they were legally married, however, this total would grow by $140,832, or 18%, to $938,112. As the higher earner, Henry’s lifetime benefits would still be $520,080. But by taking advantage of spousal and survivor’s benefits, Logan would receive a 50% jump in his benefits, to $418,032.

To further optimize benefits, Financial Engines next considered what would happen if both men deferred their claiming dates. Such deferrals, the firm notes, are available to all married couples, and could help many people add substantial amounts to their lifetime Social Security benefit totals.

In this example, Henry waits until 68 and then “files and suspends” his benefits so that when Logan, his spouse, turns 66, he can file for spousal benefits based on Henry’s much larger retirement benefit.

By filing a restricted application, Logan will not trigger filing for his own retirement benefits, which will increase 8% a year from age 66 until age 70, when they will be larger than his spousal benefit and worth claiming. Henry will also wait until 70 to claim his own retirement benefit. It will have risen to $3,300 a month by then, and this larger amount will also become Logan’s survivor benefit for eight years after Henry passes away.

Under this set of claiming decision’s Henry’s lifetime benefits, stated in current 2015 dollars, will rise modestly, from $520,080 to $554,400. Logan’s benefits, however, will soar to $585,888, due to four years of spousal benefits ($60,000), 12 years of his own retirement benefit ($209,088) and eight years of survivor benefits ($316,800). As a couple, their lifetime benefits would be $1,140,288—nearly 22% larger than their initial claiming scenario as a couple, and 43% larger than their initial filing plans as individuals.

Read next: What the Same-Sex Marriage Ruling Means for Couples’ Finances

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

MONEY mortgages

When a Reverse Mortgage Is Too Big a Risk

Q: Can I take out a reverse mortgage and invest that money in an account that would pay a decent rate of return? My home is paid off and the equity is just sitting there drawing no return. If repay the loan in 10 or 20 years with the money I invested, would I come out ahead? – Stan Larrison

A: In theory it sounds good, but to get the kind of return you’d need to make it worth doing, you’d have to take on a fair amount of risk. “You don’t want to gamble with your home equity,” says Tom Mingone, founder and managing partner of Capital Management Group of New York.

First, a little background on how reverse mortgages work. A reverse mortgage is a loan that allows you to convert your home equity into cash. Based on the amount you borrow, you’ll get a payment every month. You can also take the money as a lump sum or an equity line of credit. The proceeds of the loan are tax-free.

You have to be at least 62 and own the home as your primary residence. How much you’ll get depends on your age, home equity, and current loan rates. The amount you can borrow is capped, typically less than 60% of your home equity. For example, if you are 70, your spouse is 68, and you own a $255,000 house with no mortgage, you could get a $139,000 loan in the New York area, Mingone says. You can use a calculator to figure out how much you would qualify for where you live.

You don’t have to repay the loan as long as you live in the house. Once you do leave it, say when you pass away or move out to assisted living, the house gets sold and the proceeds go toward paying off the loan, as well as any interest or fees that have accrued. Keep in mind that the longer you have the loan, the more you will owe. And depending on the type of loan, the rates may be variable.

If the house sells for more than the loan balance, you or your heirs get the difference. If the house sells for less, you aren’t on the hook; the bank just takes a loss.

Now here’s why it would be hard to come out ahead by investing money from a reverse mortgage. First, reverse mortgages are costly loans to pay back compared with traditional loans. Reverse mortgage rates are currently about 5%, versus about 4% for a typical 30-year fixed rate loan. Closing costs are typically higher too.

You also need to factor in taxes. “If the money is invested in anything that has capital gains or interest income, you’ll owe taxes on that,” says Mingone. So you’ll need to aim for a 7% to 8% return to cover taxes and interest. To find an investment that would give you that kind of return, you’d have to take on more risk.

Still, there are some situations where a reverse mortgage makes sense, especially for retirees who are cash-poor and house rich, Mingone says.

If money is tight, the payments from a reverse mortgage can give you a new stream of income. If you have a mortgage on your current home and it’s hurting your cash flow, you can pay off your conventional loan with a reverse mortgage and eliminate that expense.

It could also be used to pay off high rate credit card debt, fund major home repairs, or cover big medical bills. Check out the AARP Reverse Mortgage Education Project for more information that can help you decide if a reverse mortgage is right for you. If you do go ahead, the federal government requires you to meet with a counselor before taking out the loan. You can find a counselor at the Department of Housing and Urban Development’s web site.

“There are definitely times when using a reverse mortgage is a smart move, but investing the money isn’t one of them,” says Mingone.

MONEY Workplace

Should You Give Someone a Bad Job Reference?

Donna Rosato, MONEY's Careerist, addresses the question of whether you should give someone a negative reference.

What happens when someone asks you to be a job reference, but you don’t have anything nice to say about him or her? The best thing you can do is say you don’t feel comfortable being a reference for them. Some companies even have policies against giving people negative job references because it could come back to haunt them—and you. Check with your company’s human resources department; if they say no, that’s an easy out.

MONEY Ask the Expert

Why a High Income Can Make It Harder to Save for Retirement

Ask the Expert Retirement illustration
Robert A. Di Ieso, Jr.

Q: My employer’s 401(k) plan considers me a “highly compensated” employee and caps my contribution at a measly 5%. I know I am not saving enough for retirement. What are the best options to maximize my retirement savings? I earn $135,000 a year and my wife makes $53,000. – E.O., Long Island, NY

A: It’s great to have a six-figure income. But, ironically, under IRS rules, being a highly compensated worker can make it harder to save in your 401(k).

First, some background on what it means to be highly compensated. The general rule is that workers can put away $18,000 a year in pre-tax income in a 401(k) plan. But if you earn more than $120,000 a year, or own more than a 5% stake in your employer’s company, or are in the top 20% of earners at your firm, you are considered a “highly compensated employee” (HCE) by the IRS.

As an HCE, you’re in a different category. Uncle Sam doesn’t want the tax breaks offered by 401(k)s only to be enjoyed by top executives. So your contributions can be limited if not enough lower-paid workers contribute to the plan. The IRS conducts annual “non-discrimination” tests to make sure high earners aren’t contributing disproportionately more. In your case, it means you can put away only about $6,000 into your plan.

Granted, $120,000, or $135,00, is far from a CEO-level salary these days. And if you live in a high-cost area like New York City, your income is probably stretched. Being limited by your 401(k) only makes it more difficult to build financial security.

There are ways around your company’s plan limits, though neither is easy or, frankly, realistic, says Craig Eissler, a certified financial planner with Halbert Hargrove in Houston. Your company could set up what it known as a safe harbor plan, which would allow them to sidestep the IRS rules, but that would mean getting your employer to kick in more money for contributions. Or you could lobby your lower-paid co-workers to contribute more to the plan, which would allow higher-paid employees to save more too. Not too likely.

Better to focus on other options for pumping up your retirement savings, says Eissler. For starters, the highly compensated limits don’t apply to catch-up contributions, so if you are over 50, you can put another $6,000 a year in your 401(k). Also, if your wife is eligible for a 401(k) or other retirement savings plan through her employer, she should max it out. If she doesn’t have a 401(k), she can contribute to a deductible IRA and get a tax break—for 2015, she can contribute as much as $5,500, or $6,500 if she is over 50.

You can also contribute to an IRA, though you don’t qualify for a full tax deduction. That’s because you have a 401(k) and a combined income of $188,000. Couples who have more than $118,000 a year in modified adjusted gross income and at least one spouse with an employer retirement plan aren’t eligible for the tax break.

Instead, consider opting for a Roth IRA, says Eissler. In a Roth, you contribute after-tax dollars, but your money will grow tax-free; withdrawals will also be tax-free if the money is kept invested for five years (withdrawals of contributions are always tax-free). Unfortunately, you bump up against the income limits for contributing to a Roth. If you earn more than $183,000 as a married couple, you can’t contribute the entire $5,500. Your eligibility for how much you can contribute phases out up to $193,000, so you can make a partial contribution. The IRS has guidelines on how to calculate the reduced amount.

You can also make a nondeductible contribution to a traditional IRA, put it in cash, and then convert it to a Roth—a strategy commonly referred to as a “backdoor Roth.” This move would cost you little or nothing in taxes, if you have no other IRAs. But if you do, better think twice, since those assets would be counted as part of your tax bill. (For more details see here and here.) There are pros and cons to the conversion decision, and so it may be worthwhile to consult an accountant or adviser before making this move.

Another strategy for boosting savings is to put money into a Health Savings Account, if your company offers one. Tied to high-deductible health insurance plans, HSAs let you stash away money tax free—you can contribute up to $3,350 if you have individual health coverage or up to $6,650 if you’re on a family plan. The money grows tax-free, and the funds can be withdrawn tax-free for medical expenses. Just as with a 401(k), if you leave your company, you can take the money with you. “So many people are worried about paying for health care costs when they retire,” says Ross Langley, a certified public accountant at Halbert Hargrove. “This is a smart move.”

Once you exhaust your tax-friendly retirement options, you can save in a taxable brokerage account, says Langley. Focus on tax-efficient investments such as buy-and-hold stock funds or index funds—you’ll probably be taxed at a 15% capital gains rate, which will be lower than your income tax rate. Fixed-income investments, such as bonds, which throw off interest income, should stay in your 401(k) or IRA.

Do you have a personal finance question for our experts? Write to AskTheExpert@moneymail.com.

Read next: Why Regular Retirement Saving Can Improve Your Health

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