Suze Orman outlines two major money moves for Americans in 2027

Most retirement strategies assume a steady career and reliable income. Suze Orman does not base her advice on that assumption.

In a message on her website, Orman highlighted two actions for 2027 and three situations she says can throw retirement savings plans off track for workers who expect more working years than they ultimately get.

The first step is to lift your 401(k) contribution rate by one or two percentage points before the new year starts. The second is to fully fund a Roth IRA if you are eligible.

Orman said the setbacks that can undermine retirement planning often catch people off guard. All three typically happen during the years when workers still have the most opportunity for their money to grow through compounding.

She said the chance to save aggressively while fully employed is a window that closes faster than many people realize. Her two recommended moves are meant to make the most of that window while it remains open.

Caregiving, children and career disruptions can reshape retirement plans

According to AARP research, family caregivers spend more than $7,200 a year out of pocket on caregiving. That includes direct expenses like transportation, medical supplies and home care.

Many caregivers also cut back their hours or leave the workforce altogether during that period. Lower earned income reduces what is available for retirement saving at the same time expenses are rising.

Orman is equally blunt about helping adult children. “I will never condone helping an adult child if it puts your retirement at risk,” she wrote. When parents divert retirement contributions to pay a child’s bills, the missed savings can mean years of compounding they can never recover.

A career path also may not unfold as expected. Orman wrote that staying employed well into the 60s is never guaranteed. Job losses, shifts in an industry or illness can all bring careers to an earlier end than planned.

Someone who expected to retire at 67 but leaves work at 55 suddenly faces 12 years of expenses without wage income to cover them. People with larger savings at that point have more choices.

These three situations can arise at any stage of a career. Workers who build a bigger balance before they encounter them tend to have greater financial flexibility during and after the interruption.

Those who delay the extra saving usually have fewer options later. Reaching that stronger balance takes years of steady contributions. That is why Orman is urging people to act before 2027 begins.

What a 1 or 2 percentage-point increase in your 401(k) can do

Raising your contribution rate by 1% or 2% is a minor change in any single paycheck. Most workers would barely notice the difference in take-home pay from a 1-point increase.

Money contributed at age 30 has about 35 years to compound before a typical retirement age. The same contributions started at 45 have roughly 20 years. Beginning earlier can lead to a much larger final balance.

Orman wants the increase made before the year starts, not sometime later during the year. Every month of delay means less compounding on those additional contributions. A change made in January gets the full 12 months of benefit for 2027. A change made in July only gets six months.

Check whether your employer plan includes automatic annual escalation. That feature raises your contribution rate by a set amount each year without any further action from you. If your plan offers it, turn it on when you make this change. Your rate will keep climbing on its own.

Plans without automatic escalation require a manual update each year. Log in to the benefits portal and raise the rate before the first payroll cycle of 2027. The update takes only a few minutes. Set a reminder now so it does not get overlooked.

Why the Roth IRA deserves its own spot in the plan

A Roth IRA works differently from a traditional retirement account when it comes to taxes. Contributions are made with money you have already paid tax on. Qualified withdrawals in retirement are generally tax-free, so you do not owe income tax on that money when you take it out.

The contribution limit for the latest year is $7,500 for savers under 50. Those 50 and older can contribute up to $8,600. The IRS has not yet announced the next year’s limits. These totals apply across all IRAs you own, not to each account separately.

Not everyone is allowed to contribute directly to a Roth IRA. The IRS sets income limits tied to filing status.

Use your adjusted gross income to determine whether you fall within the eligible range. Single filers and married filers have different thresholds, and the IRS adjusts those figures each year.

Consider what a tax-free account can mean during a caregiving stretch or a year without wage income. Roth withdrawals do not count toward taxable income. Withdrawals from a traditional IRA or 401(k) do.

That tax difference becomes especially important in a low-income year. Early retirees, in particular, can benefit from having at least one tax-free account to draw from.

What to do before the year begins

Before the first payroll cycle of the year, log in to your employer’s benefits portal and raise your 401(k) contribution rate by one or two percentage points. While you are there, check whether automatic annual escalation is available and switch it on. That feature increases your rate automatically every year.

For the Roth IRA, first review your adjusted gross income to see whether you qualify to contribute directly. The deadline to fund the prior year’s Roth IRA is April 15. The annual limit is $7,500 for savers under 50 and $8,600 for those 50 and older. Contributions for that year are allowed until the filing deadline.

Set up automatic monthly contributions for the year ahead while you are already in the account. That removes the need to make the funding decision again each month. Both the 401(k) change and the Roth setup can be completed in less than an hour. Get them done before the end of December.