Money expert Jean Chatzky on how Americans should save for retirement and what you’re getting wrong about the FIRE movement

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Americans are undersaving for retirement, and there are plenty of terrible reasons why — but there are also a few physical and mental ways to fix that, says personal finance guru Jean Chatzky.

Chatzky, who is the financial editor of NBC’s TODAY show, has written 11 personal finance books, including ones on women and their money, outliving your savings in old age and wealth-building. She is the founder of personal finance website, as well as the podcast of the same name. Her site offers loan calculators and budget spreadsheets to help anybody get better with their finances.

Many people need to improve their financial situations — and some know it. So many Americans are working without having a proper retirement account through their employer, at times because of the company’s lack of this benefit and other times because they can’t afford it or don’t know about the plans. There are ways to turn this negative into a positive, though, Chatzky said, and that includes learning about the various investing tools available and a new perspective on saving.

See: Maria Bartiromo talks artificial intelligence, the dot-com crash and why she’ll never retire

Chatzky spoke with MarketWatch about what Americans can do to save for retirement and what people in general are getting wrong about various strategies to get there.

MarketWatch: How would you describe the current state of affairs for retirement?

Jean Chatzky: If you look at the research — and I look at a lot of research — there’s a consensus that Americans are not saving enough. The 401(k) plans and other defined contribution plans have taken the place of the most important vehicle and as we head toward retirement, many people are just not putting as much as they should be in those accounts every year. The end result is interesting when you look at how it’s turning out when people hit retirement. Average earners, who earn $50,000 to $60,000 a year, they aren’t doing so badly because many of their expenses won’t grow in retirement. It’s the high earner — the people who are not considered wealthy but who earn more than the average person — who has not saved enough to cover their expenses in retirement.

The retirement landscape has evolved. We have more opportunities to save. It’s not just 401(k) plans and individual retirement accounts. We have seen work and state programs emerge, like in Illinois and Oregon, that help people who work for smaller employers make contributions. That’s really, really important. And we have seen the emergence of Health Savings Accounts for people to grow money tax-free and to use as a supplemental account for retirement.

MW: How can younger people be encouraged or persuaded to save more for retirement?

Chatzky: I think employers do a nice job with the incentives that are offered. I am encouraged by the student loan benefits that I’m seeing some employers roll out for what is no doubt a really difficult burden for a lot of people. But I also think that when you’re looking at a huge amount of debt and student loan balances they’re carrying, sometimes we feel we absolutely have to deal with that before we can deal with anything else.

Instead, I think we should try to reduce our interest rates on student loan debt as much as possible and compartmentalize and pay them off on a 10-year schedule (or longer sometimes for people who get income-based repayments). Then use the excess capacity that provides you to save and invest for other goals and do things like 401(k) contributions that get matched and putting money in an HSA.

Read: WeWork is beginning to offer its employees a 401(k) match — but don’t ask if it’s a good one

MW: What about for those who haven’t saved enough but are closer to retirement? What can they do?

Chatzky: Many people underestimate that working an extra six months or a year or two can have a really dramatic impact on your fortunes because it allows the money in your retirement plans to continue to grow, allows you to continue to make contributions to those plans, and means that you can start withdrawing later, which is a benefit. It means you can put off taking Social Security, and the combined impact is really great. We see people continue to work into retirement, either part-time or full-time, in a profession they feel more favorable toward.

MW: Is there one big obstacle keeping people from saving enough for retirement?

Chatzky: Underearning prevents people from saving, but so does student debt, consumer debt, medical debt, adult children who are remaining on the payroll longer than expected, older parents who need help, too. There are so many different people under so many different financial stresses.

MW: What about mental obstacles? Do you think some of it could be psychological?

Chatzky: People know they should be saving. It is very clear to people that if you want to turn your financial life around, you should spend less. I also think that people who want to lose weight know they should eat less and exercise more and yet both of these things are very hard to do and they’re difficult because we are human, and humans are wired to prefer immediate gratification to delayed gratification. It is biological, and although it seems old school but people should go through the exercise of tracking spending to see where your money is going. I’ve done this helping people get their financial lives in order and it is always eye-opening, and it makes you feel more powerful and more in control of your money. For anyone who wants to increase the amount they’re saving, it is a worthwhile exercise.

Then to capture the good work and make it sustainable, it is really important to automate savings. You can’t expect people to go into their checking accounts and every single month do the work of transferring money.

Also see: Behavioral finance experts say these 5 things can make you richer in your old age

MW: Is there any one common piece of advice you think is exaggerated or perhaps not very helpful?

Chatzky: The emphasis on lattes is exaggerated. I wrote a column for called “Newsflash: The f***-ing latte is a f***-ing metaphor.” The most important thing you can do when it comes to spending is to be conscious of where your money is going. Money is a limited resource for all of us and that means making choices of where we’re spending it. And if it’s coffee or Uber that is high on your list of things that makes your life better, I’m not going to tell you not to buy that because you’re not going to listen to me but secondly, because that’s not the point. The point is that you should figure out what choices you want to make that will be most beneficial to you.

MW: Some people do subscribe to that type of advice, especially when they’re trying to be especially frugal to retire early in the FIRE movement (short for “Financial Independence, Retire Early”). Do you think could be the next wave of retirement?

Chatzky: There’s a lot to learn from the FI in FIRE — the and there are proponents of the FIRE movement who have been able to really increase their savings rate. If you pay attention, they save 30% to 50% or more of the money they’re earning, and that buys a lot of freedom in the years to come.

But the other thing to understand, and I’ve interviewed people who blog and have podcasts and talk about this a lot — they’re still earning money while they are “independent.” The bloggers are blogging, the podcasters are podcasting and a lot of people are speaking. And even people not in the media and not preaching about FIRE — many of them have found their ways into work that they find more important to them. I think if you’re not going to have another income from the time you’re 40 years old… if that is the picture you’re getting from the movement, then you’re getting the wrong picture.

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