Suze Orman, a best-selling author and renowned financial advisor, has been a vocal opponent of the Financial Independence, Retire Early (FIRE) movement. This group advocates aggressive saving and investing to retire early and achieve financial freedom. However, Orman believes the movement underestimates the financial challenges and unpredictability of life.
Do not miss it:
Orman’s extensive experience in financial planning shapes her skepticism. She emphasizes that pursuing early retirement is precarious without substantial financial support due to life’s uncertainties and potential economic changes. “I hate it. I really hate it,” Orman said, addressing the fundamental premise of the FIRE movement. She argues that the funds needed for sustainable retirement are often underestimated, especially when considering health emergencies, accidents or market downturns.
Orman challenges FIRE advocates to consider the absence of the safety net provided by ongoing earned income. “If you only have a few hundred thousand dollars, a million, $2 million, I’m here to tell you… if disaster strikes, what are you going to do? You’re going to burn alive,” she asserted. Orman believes the amounts many associate with financial sufficiency are woefully inadequate. She said, “If you have $20, $30, $50, $100 million… be like me, OK.” She argues that her considerable wealth allows her to face the future without financial stress, unlike those who strive for early retirement on considerably less.
She highlighted the potential pitfalls of underestimating the cost of living in retirement, market fluctuations, reduced dividends, rising living expenses and health care costs. “Two million is nothing. It’s nothing. It’s pennies in today’s world, to be honest,” Orman said, emphasizing the rapid depletion of what seems like a large nest egg.
Trending: Warren Buffett once said, “If you don’t find a way to make money while you sleep, you’ll be working until you die.” These high-yield real estate bonds yielding 7.5% – 9% make it easier than ever to earn passive income.
The problem with the FIRE movement, according to Suze Orman, is that people often don’t think about the costs they will incur as they get older and their loved ones get older. Orman described a scenario where you have to support a disabled family member. She explained that the typical cost of care is about $100,000 a year, but full-time care can cost up to $250,000. She elaborated, “That means you need $350,000 a year after taxes to cover your costs, which is $500,000 a year before taxes, which at a five percent withdrawal rate means you need a $10 million portfolio.”
Orman summed it up this way: “If you don’t have at least $5 or $10 million, don’t retire early.”
She also pointed to broader economic trends, such as the rise of artificial intelligence and automation, that could lead to significant unemployment and pressure on social security and tax systems. “Don’t be surprised if we see a 25% unemployment rate by 2030,” she warned, suggesting that these developments could further jeopardize the sustainability of early retirement.
While some may think Orman is out of touch, and she’s been widely criticized for her bold comments and criticism of FIRE, she may not be so far off. Orman is raising concerns about the understated cost of caring for disabled family members. Experts share her concerns. The median cost of 24/7 home care in 2024 is $21,823 per month, according to A Place For Mom.
If you’re considering retiring early, don’t let Orman’s vision discourage your dreams. Many people retire with much less. Explore modern strategies like diversifying your investments, building passive income streams, and picking up side jobs to grow your savings. A financial advisor can provide great insight and help you plan based on your personal goals and comfort level with risk.
Read more:
“SECRET WEAPON FOR ACTIVE INVESTORS” Boost your stock market game with the #1 “news & everything else” trading tool: Benzinga Pro – Click here to start your 14-day trial now!
Want to receive Benzinga’s latest stock analysis?
This article ‘If You Don’t Have At Least $10 Million, Don’t Retire Early’ – Suze Orman Warns It Will Be the ‘Biggest Mistake of Your Life’ originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
