Jean Chatzky sends strong message to Americans on Social Security

Nearly all Americans understand that retirement signals the start of receiving Social Security benefits. Yet, many remain curious about the finer details of making their claims, which often vary based on individual circumstances.

Jean Chatzky, once the financial editor on NBC’s Today Show and now an AARP (American Association of Retired Persons) ambassador, offers practical guidance on managing Social Security and some important words for Americans regarding other income for retirement.

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Based on data from the Social Security Administration, the typical monthly benefit is about $1,976, which totals roughly $23,712 a year. This amount falls short of providing the financial security that many retirees hope to attain.

Long-term viability is even more alarming. Without new legislative measures, it’s projected that Social Security’s trust funds will be drained by 2033. In this scenario, the monthly benefits could fall to about 80% of what people currently expect.

Related: Jean Chatzky warns Americans on Social Security, 401(k)s

Because of these facts, employees have even more incentive to invest in their future by regularly funding 401(k) plans and IRAs (Individual Retirement Accounts), aiming to secure long-term financial stability.

Employer-sponsored 401(k) plans serve as a dependable mechanism for accumulating retirement savings, especially when matching contributions boost the overall growth of their funds.

Chatzky has a few more important words of advice to add about Social Security and retirement savings.

Jean Chatzky suggests the best age to claim Social Security

Chatzky advises Americans that if they are single and confident in a long life, they should consider delaying Social Security benefits as long as possible — ideally until around age 70. 

For couples, she suggests that the partner with the higher income should postpone benefits, provided that at least one of the two is expected to have a long life.

She also notes that many people continue working while receiving Social Security. For some, this is driven by financial necessity, while for others, the motivation is to stay engaged and enjoy the social aspects of work.

More on retirement:

• Dave Ramsey sounds alarm for Americans on Social Security
• Scott Galloway warns Americans on 401(k), US economy threat
• Shark Tank’s Kevin O’Leary has message on Social Security, 401(k)s

Chatzky emphasizes the importance of finding strategies to increase savings, including in 401(k)s and IRAs, ensuring that the gap between current resources and future retirement needs is effectively bridged. 

She recommends planning with the assumption of living until at least 80 — a strategy that aligns with the consensus among experts in light of rising life expectancies. 

Although preparing for a retirement period of 15 to 20 years may introduce additional complexities, it is viewed as essential for securing long-term financial stability.

Related: Dave Ramsey sends major message to Americans on IRAs, Roth IRAs

Jean Chatzky explains one key to retirement income beyond Social Security

In her book, “Money Rules,” Chatzky explains a major factor that makes saving and investing for retirement difficult for many: debt.

The more debt one has, the more difficult it is to sock money away for future retirement income; those interest payments on credit cards, for example, eat up a large chunk of one’s paycheck.

“If you look at the averages, chances are those people down the block (you know, the ones you envy) probably aren’t doing as well as you think,” Chatzky wrote. “In the US. alone an estimated 115 million people have credit card debt. Of them, the average household is carrying $15,799.” 

The Consumer Financial Protection Bureau (CFPB) reports that a significant percentage of Americans are unable to cover an emergency expense of around $2,000 without taking on additional debt or selling assets.

Chatzky offers more advice about debt and retirement savings that she refers to as a “bottom line.”

“Unless you’ve taken a look at the books, don’t assume to know anyone’s financial situation except your own,” she wrote. 

“Make your lifestyle and purchasing decisions based on what you can afford, not what your peers are buying, and instead of coveting thy neighbor’s car, try to feel smug about your fat retirement account, your zero credit card balances, and the car you own free and clear.”

Related: Shark Tank’s Kevin O’Leary makes bold prediction on U.S. economy