As financial pressures mount due to rising costs in housing, groceries, and fuel, many American workers are focusing on managing their daily expenses.
Growing concerns about market instability and a potential economic downturn have made it increasingly difficult for individuals to balance short-term financial obligations with long-term savings goals.
Jean Chatzky, the well-known financial expert and former NBC Today Show editor, has surprising words for workers about common pitfalls in retirement planning, especially when it comes to 401(k) plans.
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She emphasizes the widespread issue of inadequate savings, encouraging individuals to take a more proactive approach.
Despite immediate financial challenges, retirement planning remains a priority. Workers are actively contributing to 401(k) plans and Individual Retirement Accounts (IRAs) to safeguard their future financial security.
Employer-sponsored 401(k) plans provide a reliable avenue for retirement savings, particularly with matching contributions that enhance savings potential. Automatic paycheck deductions further streamline the process, ensuring consistent contributions without requiring extra effort.
Related: Jean Chatzky warns Americans on Social Security, retirement money
For 2025, the maximum contribution limit for 401(k) plans has increased to $23,500, compared to $23,000 in 2024. Catch-up contributions for workers aged 60 to 63 now reach $11,250, significantly higher than the $7,500 limit for those aged 50 to 59.
IRAs, on the other hand, offer access to a broader range of investment opportunities not available in 401(k) plans. But IRAs require a more hands-on approach, as individuals must set up their accounts and arrange automatic contributions themselves — something that can deter some from taking full advantage of their benefits.
The contribution limit for IRAs remains at $7,000 in 2025, with an additional $1,000 catch-up contribution available for those 50 and older.
With economic uncertainty lingering, Chatzky’s surprising thoughts about retirement planning are particularly relevant.
A retired couple is seen holding hands and walking on a beach. Former NBC Today Show financial editor Jean Chatzky discusses the importance of saving as a key to free up money for 401(k) plan contributions.
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Jean Chatzky has surprising words on saving and 401(k) values
Chatzky offers advice that might surprise some about how saving money is more important to people’s investments and 401(k) plans than may be obvious.
“The amount of money you manage to sock away is much more important than the return on that money,” she wrote in her book, Money Rules: A Simple Path to Lifelong Security.
Chatzky wrote that readers can take her word for it, or take a look at an “eye-opening” example that has major implications.
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If you set aside $250 each month and invest it, likely in a 401(k), your savings will grow, Chatzky explained. After a year, with a 6 percent return, you’d accumulate $3,267. If the return is 10%, your total would rise to $3,311 — an additional $44.
However, delaying your savings by a single month would reduce your total 401(k) contribution, even at the higher 10% return, to $3,052 — meaning you’d have $215 less.
Similarly, if you opted to save only $200 per month instead of $250, your balance after a year at a 10% return would be $2,649 — a difference of $618.
These numbers highlight how consistency and early action can significantly impact one’s long-term financial growth.
“As your nest-egg grows and gets into the six figure range, the return on investment starts to matter more,” Chatzky wrote. “But you can’t get to that level if you don’t start to save now. Right now.”
Related: Shark Tank’s Kevin O’Leary sends strong message on Social Security
Jean Chatzky offers another word about prioritizing 401(k)s and retirement
Chatzky makes an additional point about the importance of 401(k)s and a person’s retirement savings and investments, particularly for those who have children and are making every effort to help them in any way they can — and even save for their kids’ college education.
“You know when you’re on an airplane and they always tell you to put your oxygen mask on first before assisting a child?” she asks. “Saving for long-term financial needs is the same. If you don’t save for your own future first, you won’t be able to help your children when they need it.”
“Worse, they may be forced to help you just when they’re trying to put their own kids through school,” she added.
“There is no financial aid for retirement. There is plenty of financial aid for college. Don’t feel guilty about this.”
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