Amazing Retirement Advice Suze Orman Change
Suze Orman often shares “tough love” financial advice that focuses on avoiding debt, spending less than you make and working until you’re 70. He has held firm to much of the financial advice that fueled his career in the 1990s, but appears to be softening his stance on the need to work well into his 70s.
Here’s his advice to people planning their retirement.
Old rules
Orman previously advocated not retiring before age 70 to extend Social Security. Not only does the extra income allow their savings to grow while they don’t have to tap retirement accounts to cover expenses, but the benefit will be higher the longer you delay your Social Security start date.
Working for years without touching your investments and savings gives your portfolio more time to compound. Working until you’re 70 is still worthwhile, but it doesn’t make sense for everyone.
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Change by Suze Orman
It may be easy to think that you can work until you are 70 when you are in your 20s. But there are many factors — burnout and health problems among them — that can cause you to rethink that plan later in life. Working a job well into your 60s may limit how much time you spend with your children and grandchildren, or restrict you from your travel goals.
In response to concerns about not wanting to work until age 70, Orman’s blog now says “Nobody Says You Need To.” He adds that if you have other sources of savings or income, such as in 401(k)s or individual retirement accounts (IRAs), it makes sense to tap those savings at age 60 if it helps you delay starting Social Security. This is called the “bridge strategy.” The blog post adds that he encourages someone in this position to consider part-time work instead of tapping public safety early.
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New retirement rules
Orman’s approach to retirement includes the following three rules:
1. Focus on preparing for retirement
Orman stresses the importance of stress testing your retirement plan so you know you’re financially ready for retirement. This method removes the focus from 70 in particular.
Your savings, lifestyle expectations and current health impact if it’s the right time to retire. Moving to a less expensive place or getting a part-time job can allow you to leave your full-time job quickly.
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2. Have money
Orman also emphasizes the importance of having cash for retirement. He recommends three to five years of living expense savings, although most financial advisors recommend closer to one to two years.
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3. Find peace of mind
Orman’s focus on peace of mind has become an integral part of his modern financial advice. He says that you should not only measure your wealth by how much money you have, but also that you should worry about “what if.” Working up to a reasonable age with your finances and having a savings account can help.
