Many American workers spend a lot of time and effort managing essential daily expenses, such as housing costs, groceries, transportation, and fuel.
As they navigate these immediate financial responsibilities, they also take time to think ahead, striving to prepare for retirement and secure a stable future.
Bestselling author and former NBC Today Show financial editor Jean Chatzky offers some intriguing words about retirement savings, particularly with regard to 401(k) plans and IRAs (Individual Retirement Accounts).
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Chatzky emphasizes the importance of reviewing available retirement accounts such as 401(k) and IRA options. She advises workers to establish goals and provides key insights into the current economic landscape and market conditions.
Related: Jean Chatzky warns Americans on a slick Roth IRA retirement move
The HerMoney founder advises prioritizing an employer-sponsored 401(k) — with company matching when available. Contributions are automatically deducted from paychecks, ensuring that the funds are set aside without requiring extra effort or decision-making, making it a simple and effective way to save.
Chatzky explains that an IRA can provide access to investment options unavailable in a 401(k), which some might find appealing.
However, managing an IRA requires more effort, as individuals need to set it up and automate payments themselves. This extra complexity may lead some people to neglect it.
Chatzky emphasizes prioritizing a 401(k), especially if employer matching is offered. Then, if extra funds are available, one ought to contribute to an IRA as well. Using both of these retirement savings tools is optimal.
She also offers some compelling thoughts about retirement savings accounts in the current financial environment.
A retired couple is seen walking along a beach. Personal finance author Jean Chatzky explains concerns about retirement planning, 401(k)s and IRAs in current economic conditions.
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Jean Chatzky shares strong words on 401(k)s, current financial emergency
In a HerMoney with Jean Chatzky podcast, she offered some thoughts on the current state of Americans’ 401(k) plans as related to current market volatility.
“So, my husband’s a big Bill Simmons listener and whenever something big happens with the Celtics, Bill Simmons does an emergency pod. So this is an emergency pod,” she said.
“I’m not going to sugarcoat it,” Chatzky added. “Things over the last few days have been bad. They have been ‘pour a heavy glass of wine and look at my 401(k) while holding my breath and keeping one eye closed’ kind of bad.”
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Chatzky explained that she was talking with a family member amid the current market volatility who asked her if she was buying right now.
“I’m always buying,” she said. “I think I’m very much the typical retirement investor. I put money into the markets in my 401(k) and other retirement accounts and brokerage accounts on a regular basis in a very methodical way.”
She clarified the fact that she does not, however, often invest in individual stocks.
“I’m much more of a funds investor,” she said. “And for me, the individual stocks are a little bit more fun, but I have felt like I’m just gonna hold my course at this point.”
Chatzky explained another strategy she believes helps people during periods when stocks are down.
“You should always try to have enough in bonds and cash that you could prevent yourself from having to sell when stocks are really down,” Chatzky said. “Other than that, I think we really can’t control these things.”
“We can control our spending,” Chatzky continued. “Maybe we can continue to work a little longer, although I know that for some people that’s not an option.”
Related: Jean Chatzky sends strong message on Medicare
Jean Chatzky explains traditional IRAs and Roth IRAs
Chatzky points out the importance of understanding some key differences between traditional IRAs and Roth IRAs when considering investing in them.
Traditional IRAs allow people to make pre-tax contributions, so taxes are paid when making withdrawals in retirement.
Roth IRAs require post-tax contributions, so no taxes are paid when withdrawing money after one retires.
It is important to note that there are annual contribution limits for IRAs in 2025. For people under 50 years of age, the limit is $7,000. For those 50 and older, an additional $1,000 can be used as a catch-up contribution.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
