American workers facing the challenge of paying day-to-day bills and saving for retirement have a large number of worries.
Jean Chatzky, the former NBC Today Show financial editor and founder of HerMoney, has some stark words to share with people who are preparing for retirement.
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Social Security monthly benefits are not meant to be a person's sole source of income in their retirement years. The average monthly benefit is around $1,900, which amounts to about $23,000 annually.
For most people, that is not the dream of a comfortable retirement lifestyle.
Related: Jean Chatzky warns Americans on a slick Roth IRA retirement move
People often plan for retirement by saving and investing in 401(k)s offered by their employer with matching funds. Chatzky also emphasizes the need to invest in a tax-advantaged Roth IRA.
Contributions to a Traditional IRA are made tax-free, but those taxes are paid in retirement when one withdraws funds. In contrast, a Roth IRA involves contributions that are taxed upfront. And the money withdrawals are tax-free when a person retires.
Chatzky now explains a few points about how Americans can plan for Social Security and Roth IRAs.
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Jean Chatzky bluntly addresses Social Security and Roth IRAs
Acknowledging that Social Security is not enough money to rely on in retirement, Chatzky outlines a few things to know about investing in Roth IRAs.
The Internal Revenue Service (IRS) reports that one can contribute up to a limit of $7,000 to a Roth IRA in 2025. Those who are 50 years old or more can add a catch-up contribution of $1,000 more, totalling $8,000.
There is not a limit on the amount of income one can make yearly to a Traditional IRA. Roth IRAs, on the other hand, allow only for full contributions by single taxpayers who make less than $150,000. Americans who are married filing jointly can make contributions if their income is less than $236,000.
More on personal finance:
- Tony Robbins has blunt words on IRAs, 401(k)s and a tax fact
- Scott Galloway warns U.S. workers on Social Security, retirement flaw
- Dave Ramsey explains a Roth IRA, 401(k) blunt truth
Taking all of this into account, Chatzky sends a strong message about retirement and when a person should plan to claim Social Security.
Related: Jean Chatzky has blunt words on a 401(k) and retirement mistake to avoid
Jean Chatzky has important words on Social Security and retirement
Chatzky explained her opinion on a major question that many Americans ask themselves about Social Security and retirement savings: "When should I take the leap on claiming Social Security benefits?"
"When it comes to social security, 80 is the magic number," Chatzky said in an AARP video.
The HerMoney founder added some thoughts on how one should handle the task depending on whether they are single or married.
"If you're single, as long as you believe you'll live that long, you should delay taking distributions as long as possible and to age 70 if you possibly can," she said. "If you're part of a couple, the higher earner should delay taking distributions as long as you believe one of you will live that long."
Chatzky also discusses the fact that many people work while collecting Social Security benefits. She explains that there are those that continue to work because they need the money.
Others, Chatzky explains, keep working because they appreciate keeping engaged. It allows for them to remain social, and that makes them happy.
Another important thing is for people to figure out how to grow their money and close the gap between what they have saved already for future retirement goals and what they realize they will need.
It's an important step in the process. Chatzky's stated goal of imagining living until 80 is similar to other financial experts' advice who take into account increasing life expectancy data.
It's a good thing to think about that people are likely to live 15 or 20 years into retirement, but it adds a bit of a burden for which to plan.
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