American workers commonly understand that financial security for retirement takes commitment, planning and a healthy understanding of saving and investing money for the future.
Former NBC Today Show financial editor and HerMoney founder Jean Chatzky explains some self-critical thoughts on ways she could have handled the task more strategically — and relates her own experience to how others can achieve a comfortable retirement themselves.
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People are typically advised on some basic tactics to begin their financial retirement planning. That said, the U.S. Department of Labor reports that only about half of U.S. workers have calculated the total amount the believe they will need to save for retirement.
One retirement planning approach people take is contributing as much as they can — and getting started as early as possible — to employer-sponsored plans such as 401(k)s, especially those that offer matching contributions.
Making use of tax-advantaged accounts such as Individual Retirement Accounts (IRAs) is a highly recommended strategy. Roth IRAs and Roth 401(k)s are of particular importance because they allow workers to defer taxes until they are retired.
Related: Tony Robbins warns U.S. workers on 401(k)s, IRAs, future taxes
A vital way for one to keep disciplined while saving is to be sure one is using automated contributions to retirement accounts for consistency.
Regularly monitoring and adjusting savings and investments based on changes in a worker's financial situation and goals is also advised. Simply put, during periods when a person is doing well financially, they should be putting more away for retirement. During challenging times, scaling back is recommended to meet pressing money needs.
Taking these and other considerations into account in an exclusive interview with The Street, Chatzky explained the advice she might give her younger self if she had the opportunity to go back in time.
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Former NBC Today Show financial editor Jean Chatzky discusses retirement, Gen X and 401(k)s
Asked by TheStreet host Conway Gittens about the number one piece of advice she thinks everyone should know, Chatzky said people need to take personal responsibility for their retirement savings.
"Retirement, more than any previous generation is on you," Chatzky said. "Gen X is the first generation really not to have access to pensions in a major way, which makes the savings that we put aside for ourselves the most important bucket of money. So you want to do whatever you can to max out your ability to put away money for retirement."
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Chatzky explained her early level of understanding about retirement savings and 401(k)s. She also talked self-critically about the need to begin planning at a younger age.
"Start investing sooner is, I think, the advice that people would most often give themselves," she said. "I got a 401(k) at the advent of 401(k)s. I didn't understand it. I was not really covering personal finance at the time. I didn't really get what this account was."
She explained a mistake she believes she made earlier in her career.
"When I left that first job, I pulled the [401(k)] money out and I went shopping, which I was delighted," she said. "I needed some new clothes for my next job, but, huge mistake. If I had left that money in there, allowed it to continue to do its work, it would be worth a small bundle of money right now."
"I didn't really become an active investor until I was covering personal finance full on, and that was in my 30s," Chatzky added.
Related: Dave Ramsey warns Americans on Medicare major mistake to avoid
Jean Chatzky explains a surprisingly common retirement myth
Chatzky addressed a prevailing myth she sees people allowing themselves to believe about retirement savings.
"The biggest retirement myth, I think, is that people know what they want from their retirement," she said. "What I see — and I do a lot of work in the retirement space — is that many people get very close to retirement. They don't know when they want to retire, they don't know where they want to retire. They certainly do not know how much retirement is going to cost."
"And it's why, 10 years out from retirement, I think it's really important to do a pre-retirement checkup to make sure that you're on track," she recommended.
The financial editor added a few more thoughts she feels people need to understand regarding planning and saving for their retirement years.
"Once you get to retirement, we need to have a whole different conversation about how to make that money last," Chatzky said. "And it's an area where people need a lot of education and a lot of different tools."
"But for now, save as much as you can for as long as you can and make sure that money is invested."
Related: Veteran fund manager issues dire S&P 500 warning for 2025
