The Suze Orman-Inspired Guide to Risk, Work and Retirement
Financial expert Suze Orman offers many tips to help people get out of debt, save money and pursue their retirement goals. However, during his long career, some of the rules have changed with the times.
Longer life expectancy, a changing work environment and volatile markets are some of the new factors that have driven the way people save and invest. Applying the latest money rules can put you in a better position in this ever-changing financial environment.
1. Redefine what retirement means to you
For a long time, retirement meant leaving your job forever and having complete control over your entire schedule. The definition has changed over time to a lifestyle that offers complete flexibility. Working part-time, taking sabbaticals and pursuing seasonal work allows you to make extra money while managing your schedule.
Some people actually don’t want to stop working, and prefer gig work to leaving their working years behind altogether. The new rules emphasize designing a life that works for you right now instead of viewing your work life as all work or no work.
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2. Be skeptical of investment fads
When Orman started his career, there weren’t many financial influencers like him as accessible as they are today. Social media means that information is now easily accessible. But it’s also now easy to come across risky investment strategies that can harm your long-term savings.
Your risk tolerance changes over time. Young investors are able to take on more risk because of their long horizons, while people nearing retirement tend to focus on solid investments. With social media available to give you insight into risky investments that you may not have considered before, it is very important to consider your risk tolerance before you jump in.
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3. Don’t rely on a magic number
Many pieces of retirement advice include a rule of thumb, such as keeping a nest egg large enough to cover all your living expenses and withdrawing about 4% each year in retirement. But the rules need to be adjusted based on your personal situation. Some people may want to focus on how to make a steady income.
Social Security and a pension, if available, are the obvious sources of income in retirement. But there are other ways to increase your steady income, such as dividends, real estate or part-time work and side gigs.
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4. Protect your future
It’s common for people to want to travel sooner after retirement to take advantage of their newfound freedom when they’re younger and healthier than later in life.
But remember that those early years of retirement can have a big impact on the rest of your retirement years. Withdrawing large sums early in your golden years reduces how much cash can be accumulated in your investment accounts – especially if you withdraw during a market downturn. While you are planning to finance your trip, remember that you also want to allow your portfolio to grow.
