Recently, a client sent us a copy of Suze Orman's “Guide to Retirement” and asked us for our thoughts. Here's what we told them:
While I personally don't care for how Suze delivers her advice or opinions, I do tend to agree with most of what she has to say, which is also very similar to Dave Ramsey and I'm sure many others like them. As I skimmed through the article, five thoughts crossed my mind:
1. I don't think our client is Suze's typical audience. I could be wrong, but I think her typical audience is folks who, for the most part, are living paycheck to paycheck with some consumer debt and not a whole lot of savings.
2. The work until you're 70 years old advice is good for her typical audience; but I don't think it applies to the majority of our clients, at least from a financial sense. On the other hand, if you enjoy what you're doing, why stop just because you've arrived at some arbitrary age?
3. Claiming social security at age 70 is in most cases mathematically correct. If you're married, it provides the surviving spouse with a potentially bigger social security benefit if they out-live you. However, what we usually see is folks starting social security after they retire or when they reach full retirement age. That’s because no one knows for sure how long they'll live. Health can change without notice and accidents do happen.
4. We totally agree with being debt-free, including the mortgage, at or before retirement. Living debt-free just puts less stress on your remaining investments and creates more peace of mind for you.
5. The ‘save less in your retirement account’ advice might be good for Suze's typical audience, but I don't recommend it for our clients or higher income earners in general. The reason I say this might be good for her typical audience, is that it assumes folks have the self-discipline to use the extra money that they're no longer putting into the retirement plan at work to pay off consumer debt and mortgages. I think most folks, unfortunately, don't have the level of self-discipline necessary to make this happen.
The important thing to ask yourself when you come across generic advice, is who is the target audience? And, am I part of that audience?
Knowing how generic financial advice applies to your specific situation can move you one step closer to experiencing your version of an Incredible Retirement – doing what you want, when you want, with the resources you already have.