401(k) – Live Laugh Love Do

Jean Chatzky sends key message on Social Security, 401(k)s, IRAs

admin — Thu, 07 Aug 2025 04:46:47 +0000

[ad_1]

As retirement approaches, Americans face a critical challenge: aligning their lifestyle goals with long-term financial stability.

It’s not just about saving — it’s about building a dependable income strategy for the years ahead.

That strategy often starts with identifying future sources of income, which typically include Social Security, personal savings, and retirement accounts such as IRAs and 401(k)s.

Financial advisors often urge people to calculate their projected Social Security benefits and review their workplace retirement plans to ensure they’re on course for sustainable income.

Jean Chatzky, financial journalist and former editor for NBC’s Today Show, has some important observations and recommendations about Social Security in the future.

Don’t miss the move: Subscribe to TheStreet’s free daily newsletter

She highlights the fact that the average monthly Social Security check — around $2,000 in 2025 — already falls short for many retirees, especially as inflation continues to outpace cost-of-living adjustments.

More troubling is the looming threat to the Social Security trust funds. Without legislative action, they could be depleted by 2033, potentially slashing benefits by 20% or more for future retirees — a gap that could derail many retirement plans.

Chatzky, now leading the HerMoney website, encourages people to consider delaying benefit withdrawals until age 70 to maximize monthly payouts.

For couples, she advises weighing who should postpone claiming based on life expectancy, which can strengthen household finances over time.

Ultimately, preparing for retirement isn’t just about numbers — it’s about consistency and planning. Staying informed and proactive can make all the difference.

Jean Chatzky explains why 401(k) plans work

Jean Chatzky underscores the importance of automating savings as a foundational strategy for building retirement wealth.

She advocates for setting aside money consistently, especially through mechanisms like 401(k) plans, which deduct contributions directly from paychecks before the funds ever reach a person’s bank account.

This approach helps individuals avoid the temptation to spend what they never see, making it easier to stay committed to long-term financial goals.

Her philosophy extends beyond workplace retirement plans. Chatzky encourages people to apply the same principle to other savings vehicles by arranging automatic transfers from checking accounts immediately after payday.

By placing funds in accounts that discourage early withdrawals — such as IRAs, 529 college savings plans, or certificates of deposit — individuals can create a financial buffer that supports discipline and reduces impulsive spending.

Even simple steps, such as using an online savings account without ATM access, can reinforce this strategy. The goal is to make saving effortless and spending less accessible, turning financial inertia into a powerful tool for building security over time.

Jean Chatzky explains the importance of delaying receiving Social Security benefits until age 70 as one financial step toward a fulfilling retirement.

Image source: Shutterstock

Jean Chatzky discusses the crucial role of IRAs

In a HerMoney newsletter, Chatzky highlighted a significant statistic about retirement savings: 44% of U.S. households are actively contributing to Individual Retirement Accounts (IRAs).

These accounts collectively hold more than $16 trillion and represent nearly 40% of the nation’s total retirement assets, according to data from the Investment Company Institute.

More on personal finance:

Chatzky pointed out that IRAs play a crucial role in helping people bridge the retirement savings divide.

For those who haven’t yet opened one, she emphasized that IRAs can be a powerful tool for building long-term financial security and narrowing the gap in retirement preparedness.

Jean Chatzky explains her 401(k) investing strategy

Chatzky shared her philosophy on contributing to retirement accounts, even when markets are turbulent.

Her strategy centers on consistency — she continues to invest regularly in her 401(k), brokerage accounts, and other retirement vehicles, following a steady and disciplined approach that reflects the mindset of a long-term investor.

Rather than focusing on individual stocks, Chatzky typically opts for diversified investments like mutual funds.

While she occasionally explores stock-picking for personal interest, her core method relies on broad exposure and patience, avoiding the risks that come with chasing short-term gains.

She’s also discussed techniques that can help investors stay grounded during market downturns.

These strategies are designed to encourage resilience and prevent emotional decision-making when stock prices fluctuate, reinforcing the importance of maintaining a stable financial plan through all market conditions.

[ad_2]

Dave Ramsey warns Americans on 401(k)s, stocks

admin — Sun, 08 Jun 2025 07:56:09 +0000

[ad_1]

With uncertainty surrounding stock market volatility and the possibility of a recession, many American workers are concerned about managing their everyday expenses — paying mortgages or rent, keeping up with rising grocery and fuel costs, and handling other financial obligations.

While addressing these immediate financial pressures, they also prioritize long-term stability by investing in 401(k) plans and IRAs (Individual Retirement Accounts), aiming to secure their retirement and navigate the unpredictable economic landscape.

Dave Ramsey, the personal finance bestselling author and radio host, warns Americans about the challenges of saving for retirement, investing in stocks and 401(k) plans, and building wealth amid market instability.

Enrolling in an employer-sponsored 401(k) plan remains a reliable method for growing retirement savings, particularly when companies offer matching contributions to enhance employees’ investments.

With automatic payroll deductions, this approach ensures consistent savings with minimal effort, making it both convenient and effective.

In 2025, the maximum contribution limit for 401(k) plans has risen to $23,500, up from $23,000 in 2024. Employees between the ages of 60 and 63 can benefit from higher catch-up contribution limits of $11,250, while those aged 50 to 59 have a cap of $7,500.

Ramsey outlines a few more vital facts about 401(k) plans and stocks that U.S. workers would be wise to consider.

Dave Ramsey speaks with TheStreet about personal finance issues. The radio host and author explains the importance for Americans of setting up their 401(k) plans smartly and with knowledge.

Image source: TheStreet

Dave Ramsey warns U.S. workers about 401(k) plan complexity

When people are at the beginning of the process of participating in their employer’s 401(k) plan, Ramsey explains, they are often presented with options that are difficult for an investing novice to understand, such as vesting, equities, risk choices and beneficiaries.

Ramsey shares a warning about the importance of being sure some basic 401(k) plan setup options are understood.

“Your ability to retire someday depends on you getting it right today,” Ramsey wrote. “But how can you make such major, long-term decisions when you don’t even understand what the choices are?”

More on retirement:

Ramsey explains his view on the very first place to start: A company’s plan document.

This document provides essential details about a company’s retirement plan, including employer matching contributions and the vesting schedule.

A vesting schedule determines when the money an employer adds to an employee’s 401(k) becomes fully theirs, Ramsey clarified. The funds contributed, along with any investment gains, are always the employee’s property, but many employers require a certain period of service before their contributions are entirely vested.

If one’s 401(k) includes an employer match, that’s a valuable benefit to accelerate retirement savings. Once a person is financially stable — debt-free with an emergency fund, as Ramsey describes it — one should invest enough to get the full match.

Some plans allow people to select investments for matched funds, while others offer company stock.

Dave Ramsey explains mutual funds and company stock

Mutual funds pool money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities. Experts manage these funds to help grow the money while reducing risk.

Ramsey cautions against target date funds, which many company retirement plans heavily promote. These funds adjust their investment mix based on an individual’s expected retirement date, starting with a balanced allocation of growth stock mutual funds.

However, as retirement nears, the portfolio shifts toward more conservative investments. Ramsey advises against relying on these funds because, by the time retirement arrives, most of the 401(k) assets will be placed in bonds and money market accounts.

These conservative investments may not generate the growth required to sustain retirees through three decades or more of financial needs. Instead, he encourages a strategy focused on maintaining strong investment growth, ensuring long-term financial stability throughout retirement.

If a person works for a publicly traded company, it may offer employees the chance to invest in its own stock, a choice about which Ramsey advises caution.

Employees may have the option to buy shares, sometimes through an Employee Stock Purchase Plan (ESPP), offered either upon hiring or after a certain period of employment. These plans often allow workers to acquire company stock at a discounted price through payroll deductions.

While a discount on stock might seem appealing, Ramsey warns against relying on it for retirement savings.

He emphasizes that company stock and ESPPs involve single stocks, which can be risky.

His approach is to avoid investing in individual stocks for long-term financial security, instead advocating for diversified investments that reduce risk and provide steadier growth over time.

“Putting all your eggs in one basket when it comes to the stock market is risky, even if that basket is the shiny new company you work for,” Ramsey wrote.

[ad_2]