Tony Robbins issues major alert on Social Security, 401(k)s, IRAs

Americans are heading into retirement with a growing awareness that Social Security alone won't cover the full cost of their later years, prompting many workers to focus more intently on 401(k) plans, IRAs, and other savings tools while they're still earning.

Social Security's monthly benefits were never designed to serve as a sole income source, and rising longevity and living costs have magnified the problem.

As I've noted in my reporting over the years, this tension between limited guaranteed income and the need for disciplined personal saving continues to shape how Americans think about their retirement goals.

Motivational speaker and financial author Tony Robbins warns Americans about setting their expectations for Social Security.

"Failing to plan for retirement and just hoping Social Security will carry you through retirement is a recipe for disaster," Robbins wrote. "Social Security was never intended to become a replacement for retirement savings, especially considering the extended length of retirement we can anticipate with longer lifespans."

"Fifty years ago, the average retirement was 12 years," he added. "Today it's 20-plus years."

That's why it's vital for a worker to be sure their 401(k) plan is set up to earn the most money it can for retirement income, Robbins emphasizes.

Tony Robbins flags Roth 401(k) option

In his book, "Money: Master the Game," Robbins alerts Americans to the importance of smartly using 401(k) plans - and that starts with taking advantage of employer matches.

"The company is essentially covering the taxes for you," Robbins wrote.

If one's company offers a Roth 401(k) option, Robbins encourages employees to take advantage of it.

"Just to be clear, if you check the box to make your contributions Roth-eligible, you will still be investing in the same investment options (or list of funds), with the only difference being that you will pay taxes on the income today," Robbins wrote. "But your future nest egg will be completely tax free when you withdraw."

"This decision means you pay tax today, but you never pay tax again."

Financial services firm Fidelity Investments says the list of reasons not to use a Roth 401(k) is a short one, but missing out on tax deferral is an important consideration to examine on an individual basis.

"Encouraging people to save for retirement is important, and tax deferral has always been a key driver of savings," Fidelity wrote. "The financial justification for this has been that historically, people typically had lower tax rates in retirement than during their working years, and the math generally worked in their favor to have a lower adjusted gross income now and take taxable distributions in retirement."

"Then there is the impact on take-home pay," Fidelity added. "There are many reasons why a person might simply want more cash in their paychecks today."

Robbins encourages Americans to use Roth IRAs

When considering an Individual Retirement Account (IRA), Robbins also favors the Roth option.

In fact, Robbins believes people who already have a traditional IRA should consider converting them to a Roth IRA.

"Let's say you have an IRA with $10,000," Robbins wrote. "The government will allow you to pay the tax today (because it needs the money), and you will never have to pay tax again. This process is called a Roth conversion."

More on personal finance:

• Zillow forecasts big mortgage change for U.S. housing market
• AARP sounds alarm on major Social Security problem
• Dave Ramsey bluntly warns Americans on 401(k)s

"So if you are in the 40% bracket, you would pay $4,000 today, and your remaining $6,000 will grow without tax, and all withdrawals will be tax free," he added.

Robbins acknowledges that many people may be hesitant to make a move to pay taxes early, but advises that it's the best decision in the long term.

"Some people cringe at the idea of paying tax today because they view it as 'their' money. It's not! It's the government's," Robbins wrote. "By paying the tax today, you are giving Uncle Sam his money back earlier."

"And by doing so, you are protecting yourself and your nest egg from taxes being higher in the future."

IRS explains 3 ways to convert IRAs to Roth IRAs

Traditional IRAs can be converted to Roth IRAs in three ways, according to the IRS.

• Indirect rollover - You take a payout from your traditional IRA and then deposit that amount into a Roth IRA within 60 days, with the check made out to you personally.
• Direct trustee transfer - You instruct the firm holding your traditional IRA to send funds straight to the Roth IRA custodian at another institution, often by issuing a check payable to the receiving trustee.
• Same‑institution transfer - When both accounts are at the same financial company, you can simply request that the trustee move money from your traditional IRA into your Roth IRA internally.
  
  (Source: IRS)

Related: Dave Ramsey, AARP warn Americans on IRAs, Roth IRAs

The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.

This story was originally published May 11, 2026 at 8:03 PM.