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Then, Orman, with a net worth estimated to be in the neighborhood of $30 million, dropped a reality bomb of self awareness.
“Listen, if you have 20, 30, 50 or 100 million dollars, be like me, OK?” she said. “If you have that kind of money and you want to retire, fine.”
If not, and that’s most of us, better build that cushion, because, she says, if you stop stashing money, you’re losing the compounding years of your life.
“When you are younger, the money that you invest makes money and that money makes money and that money makes money,” Orman explained. “You cannot make up for that with sums of money later on in life.”
When Paula Pant, the host, asked what level of wealth would be necessary to comfortably reach FIRE, Orman threw out some big numbers.
“You need at least $5 million, or $6 million. ... Really, you might need $10 million,” she said — short of that, it’s just not going to be enough for most people.
No, you don't NEED $5M to retire. All depends on the level of luxury you want to live in. Many people downsize or live overseas and are perfectly happy with much, much less.
You don't need $5 million to retire, you don't even need $1 million to retire. There's plenty of ex-pat retirees living off a $30K a year pension in an ex-pat destination country, happy as could be be. Golfing and soaking it up on the beach everyday on their retirement visa.
Retirement is about adjusting your lifestyle to what you saved up for. Not coming up with some arbitrary number you'll never meet and working until you're dead.
She advocates working full-time until age 70. The whole crux of her approach, is that early retirement is fraught with so many risks, that even an eye-watering amount of money may be insufficient, even for frugal people who attend to their health and who avoid frivolities. The diametrically opposing view is Mr. Money Mustache. It would be amusing to have those two engage in public debate.
To Suze's credit, working longer is a strategy that solves or obviates all sorts of financial problems. It may not be pleasant or rewarding, or even possible. But it does offer numerous advantages.
My question for Suze is - assuming that the numbers are right - why does she only have $30M net worth? I mean, given her speaking-fees, her shows and her books and her radio appearances, her endorsements and celebrity status... why doesn't she have $300M?
The shock factor she uses can be detrimental to the people she purports to help.
I mean, i won't be able to have any $1m retirement, but life has thrown me major curve balls.
If Suze is purporting to help me, i will just give up and say " there is NO freaking way i can save $1 m let alone any $5m, so why even bother".....
That is IF i listened to her.
I used to listen to her show, and used to agree with some of what she said.
But to listen to her, or even Dave Ramsey, who want $millions in your bank account befire you retire, buy a car or house, just makes the " little people" turn a deaf ear to their words as totally unattainable.
I will have a comfy retirement, could have been wonderful if life hadn't thrown me such chronic severe health problems , causing me to go through all my savibgs and retirement to a point i once was homeless ( hard to keep a job and insurance when you spend a total of 8 months of a 12 rolling month period in the hospital). I HAD been doing well at savingin my early 20s until i got ill.
Now I do what i can.
Im technically retired as i draw SSDI, but also have worked part time to boost my eventual SS.
Now Mr. Money Mustache has some good ideas too. But i cant ride a bike everywhere, health won't let me. I live in a stable COL area, reasonable but we work hard for what weve got and save what we can.
I used to pay attention to these financial gurus, but unless its Warren Buffett, i dont listen anymore. Their advice isnt always apropo to me, to us, and i know they make money off " hopefulls" who want to have money, but like playing the lottery and never winning, never will if they give all their money to these people in buying books, buying their seminars, etc.
Now, i think i will go buy a lottery ticket, i think i have better chance of winning it than saving $5m.
The investment advisors say that kind of stuff all the time and the amount climbs each year. It kind of preys on the fear that people have of being broke in old age and it helps pump more money into their own coffers (brokers and advisors). What she said though reinforces that people never feel they have enough--even her. If she has 30 million that may not be enough for her. People keep on working. In reality, most people have low enough 401k balances to ever reach a material amount even with compounding. The brokers peel off a percentage of everyone's balance, so they want higher balances stashed away.
The likely reality is that most people are going to rely on Social Security and Medicare. Full stop. They're going to see their spending ramp-down as retirement progresses, to the point that they're fairly comfortable in what an objective observer might declare to be outright penury. They won't receive any benefit from what might be termed "wealth management" advice.
Where this million-dollar advice (so to speak) matters, is to people who have already achieved some threshold of wealth. One of my favorite strawmen, or perhaps more properly, cartoon-characters in a vignette, is a superstar young hotshot lawyer, who wins an 8-figure case at age 35... and then becomes disillusioned with the law, taking very very early retirement. Is this foolish? I mean, the man (or woman) is worth $10M, maybe a bit less if he takes it as lump-sum and pays income tax. Suze would say, "Don't you dare retire, even if you already have more money than most 65-year-old salaried professionals". Other gurus, especially those in the "FIRE" community, would say the exact opposite. Who's right? Well, in terms of outright costs and resources, the FIRE people are right. But in terms of neuroticism, angst and worry, and that all-important "leaving money on the table", Suze is right.
My question for Suze is - assuming that the numbers are right - why does she only have $30M net worth? I mean, given her speaking-fees, her shows and her books and her radio appearances, her endorsements and celebrity status... why doesn't she have $300M?
Of course, we know the answer. She's spendy. Maybe not compared to her income, but compared to your typical upper middle class American lifestyle.
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