Suze Orman, a bestselling author and renowned financial advisor, has voiced strong opposition to the Financial Independence, Retire Early (FIRE) movement. This group advocates for aggressive saving and investing to retire early and gain financial freedom. However, Orman believes the movement underestimates life’s financial challenges and unpredictability.
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Orman’s extensive experience in financial planning informs her skepticism. She emphasizes that the pursuit of early retirement is precarious without substantial financial backing due to life’s uncertainties and potential economic changes. “I hate it. Really, I hate it,” Orman said, addressing the FIRE movement’s fundamental premise. She argues that the necessary funds for a sustainable post-retirement life are often underestimated, particularly when considering health emergencies, accidents, or market downturns.
Orman challenges the FIRE advocates to consider the absence of a safety net provided by ongoing employment income. “If you only have a few hundred thousand dollars, a million, or $2 million, I’m here to tell you … if a catastrophe happens, what are you going to do? You are going to burn up alive,” She asserted. Orman believes the sums many associate with financial sufficiency are grossly inadequate. She said, “If you have 20, 30, 50, or 100 million dollars … be like me, OK.” She argues that her substantial wealth allows her to face the future without monetary stress, unlike those aiming for early retirement with significantly less.
She highlighted the potential pitfalls of underestimating retirement living costs, 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 tell you the truth,” Orman stated, emphasizing the rapid depletion of what might seem like an ample nest egg.
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The issue with the FIRE movement, according to Suze Orman, is that people tend not to think about the costs they will face as they age and their loved ones age. Orman described a scenario where you might need to support a disabled family member. She explained that the ordinary cost of care is around $100,000 per year, but full-time care can cost up to $250,000. She elaborated, “This means you’ll need $350,000 per year after taxes to cover your costs, which is $500,000 per year before taxes, which at a five percent withdrawal rate means that you’d need a portfolio of $10 million.”
Orman summed it up by saying, “If you don’t have at least $5 million or $10 million, don’t retire early.”
She also pointed out broader economic trends, such as the rise of artificial intelligence and automation, which could lead to significant unemployment and strain on Social Security and tax systems. “Do not be surprised if by the year 2030, there is a 25% unemployment rate,” she warned, suggesting that these developments could further challenge the sustainability of early retirement.
While some may think Orman is out of touch and she receives tons of backlash for these bold comments and criticisms of FIRE, she may not be so far off. Orman raises concerns about the underestimated costs of caring for disabled family members. Experts echo her apprehensions. The median cost of 24/7 in-home care in 2024 is $21,823 per month, according to A Place For Mom.
If you’re considering early retirement, don’t let Orman’s views discourage your dreams. Plenty of people successfully retire with far less. Explore modern strategies like diversifying your investments, building passive income streams, and picking up side hustles to grow your savings. A financial advisor can offer great insights and help you plan based on your personal goals and comfort level with risk.
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This article ‘If You Don’t Have At Least $10 Million, Don’t Retire Early’ — Suze Orman Warns It’ll Be The ‘Biggest Mistake Of Your Lifetime’ originally appeared on Benzinga.com
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