For many Americans, preparing for retirement means carefully evaluating key financial milestones tied to different stages of life in order to maintain financial security and preserve the quality of life they hope to enjoy.
Everyday costs — such as groceries, utilities, mobile services, and transportation — play a major role in shaping workers’ financial priorities and determining how much they can put toward savings and investments.
Jean Chatzky, former financial editor for NBC’s “Today Show” and now with AARP, recognizes these challenges. She works to guide people through smart strategies for boosting their Social Security benefits and making the most of employer-sponsored 401(k) plans.
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Assessing one’s future income sources — including Social Security and personal retirement accounts such as 401(k)s — is a key part of building a secure retirement plan.
Chatzky encourages Americans to think strategically about when to begin collecting Social Security, as claiming early can significantly shrink monthly payments.
For those who anticipate a longer lifespan, she suggests holding off until age 70 to receive the maximum possible benefit.
When it comes to married couples, Chatzky advises that the spouse with the higher earnings history delay tapping into benefits — especially if the other partner is likely to live longer — helping to ensure greater long-term financial support.
She also highlights the upside of continuing to work while drawing Social Security, whether one does so for financial reasons or to stay active and connected during retirement.
Related: Tony Robbins sends strong message to Americans on 401(k)s
Beyond Social Security, Chatzky highlights both the opportunities and potential pitfalls tied to retirement accounts such as 401(k)s.
She underscores the fact that many Americans are at real risk of depleting their savings during retirement.
To help combat this, Chatzky shares practical approaches aimed at stretching retirement dollars further and minimizing the chance of financial shortfalls later in life.
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Jean Chatzky explains a strong strategy for maximizing 401(k) contributions
Chatzky emphasizes her belief that regularly setting aside money is essential for making more room in one’s budget to invest in a 401(k) plan.
“This is why saving in a 401(k) plan works,” Chatzky explained in “Money Rules,” a book she authored that offers solutions to personal finance challenges. “The money is swiped out of your pay before it ever lands in your checking account so you never see it. It’s invisible, which makes it safe, for out-of-sight means you can’t pull it out of the ATM.”
“If you can’t see it and you can’t touch it, you won’t spend it,” Chatzky wrote.
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Chatzky advises people that there is no need to limit this philosophy to one’s 401(k) contributions.
“Have money swiped out of your checking account as soon as you get paid,” she wrote. “Barricade it by parking it in places that penalize you for early withdrawal like 529 college savings accounts, IRAs, and certificates of deposit.”
“Even putting the money in an Internet savings account that doesn’t come with an ATM card can do the trick surprisingly well,” Chatzky continued.
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Jean Chatzky explains 401(k)s and financial security maps
Chatzky explains one way to look at retirement savings tasks such as boosting 401(k) values to achieve goals: as financial security maps.
“The only way to find financial security is to draw yourself a map,” Chatzky wrote. “Folks who have specific financial plans that detail what they want — say, retirement at 67 with a paid-off mortgage, membership at the local golf club, and enough money to take two trips to the Caribbean a year — save more than people who don’t have specific financial plans.”
Chatzky points out that people tend to get sidetracked by everyday distractions, which is why having a clear financial plan is essential. Without a direction, it’s difficult to make meaningful progress toward retirement goals.Â
Of course, she acknowledges that plans can — and should — evolve. One day, she explains, you might realize you no longer see yourself retiring in your current home and instead imagine starting a new chapter somewhere more adventurous or serene.Â
When that moment comes, the solution isn’t to abandon planning altogether — it’s to create a new roadmap that reflects your updated vision.Â
To Chatzky, regularly refining one’s goals is far more effective than drifting without any at all.
Related: Dave Ramsey sends strong message to Americans on Medicare
