It’s Suze Orman one of the worst

[harley]

I'm not a fan, and I agree with GenXguy that she's mathematically challenged, at least in this instance.

I was just reading another article quoting her - Suze Orman slams the 4% retirement rule as ‘very dangerous’ — even though its creator Bill Bengen now calls it too conservative. What’s the new golden number for your golden years?

In the article she says

You could face personal challenges like a health problem that requires a big pile or steady stream of cash. The uncertainties are endless, which is why Orman advises Americans to “take the least amount possible out of retirement accounts.”

Orman says the less money you withdraw each year, the “better off you are.”

If you need a percentage target to hit, Orman suggests you only withdraw up to 3% of your nest egg each year.

At the same time, she encourages Americans to “work until at least 70 or longer, so that your assets have more of a chance to build up” and delay taking Social Security benefits until the age of 70 so that you receive the maximum monthly sum.

The article also says Bill Bergan has increased his percentage to 4.7%. That's a little rich for my conservative blood, but at least he backs his numbers up with math and real data. She's just pulling this stuff out of her tanned behind. And I do realize that her target audience is very different than most here, but still, I'd have probably shot myself if I thought I'd have to work to 70 and only draw down 3% max.

 

[brett]

I always worked for a company with a match. Usually 5 percent. Knowledge based IT firms.

Four things amazed me as a senior manager...

-the number of people who did not take full advantage of the company retirement match

-the number of people who never went into their retirement account or changed investment options. The company average, according to senior corporate HR VP was measured in years... in the high single didgits

-the number of people at one firm who did not take advantage of the company stock plan that guaranteed a return of 15 percent EVERY six months at the buy period. EE's could buy up to 10 percent of their salary via payroll deductions. Then sell immediately after the buy period.

-the number of employees who did not attend company retirement and investment seminars hosted by independent financial experts (who were not selling/promoting a financial product).

Not a particular fan of Orman but perhaps she was trying to reach some of these people.

 

[youbet]

I'd have probably shot myself if I thought I'd have to work to 70 and only draw down 3% max.

Everyone has an opinion, including here on our forum. For example, many here seem to be proponents of sub-4% withdrawal rates. I am. And some are also proponents of continuing some sort of ongoing income in retirement such as hobby jobs, selling on Ebay, etc. I'm not. Haven't earned a penny in 18 years of retirement.

So, we all have different views and live our own lives directed by our own decisions. My WR is well below 3%, yet we're living well, enjoying life and have absolutely zero intention of shooting ourselves as you suggest.

 

[jim584672]

Orman, eye roll. She needs 5 million because she is so bad with money.

 

[youbet]

Not a particular fan of Orman but perhaps she was trying to reach some of these people.

Also not a fan of her personality and/or delivery style. But in this case it's hard to disagree with her (as opposed to disagreeing to the sensationalist paraphrasing done by Fortune) that it's a good thing to start early and take full advantage of employer matching.

Like you, I worked where an employer match for 401k contributions was provided and yet some work-buddies still didn't sign up for contribution levels that took full advantage of the employer matching. Those folks seem to be the specific target of Orman's comments in the interview.

Start saving early and at an amount that at least takes advantage of employer matching if possible. If you just can't afford to contribute to the level of receiving the full match, contribute what you can but start early and stay at it.

I'm surprised at some of the folks showing up on this thread arguing against those concepts. Maybe they'll allowing an overall dislike of Orman, her personality and her delivery style to impact her suggestions in this case?

 

[Koolau]

I didn't see anything about lotto tickets in the article. But, it did say she said that starting saving (some amount I can't remember) at 25 yrs old would make you a millionaire by retirement time whereas waiting until 35 years old to start saving the same amount would leave you far short. Hard to fight that concept as it's something we're all aware of.

She also emphasized how profitable employer matches could be.

I'm no Orman fan, but it's hard to find fault with these suggestions of starting early and taking advantage of any employer matches you can get.

What is surprising is that Fortune magazine continues to exist with the crappy, sensationalist writing and editing they've become so famous for. Who would have thought, years ago when Fortune only existed as a paper magazine we'd read at the library, that Fortune would become the click-bait champion that it has? And employ such sleezy writers?

Sorry, didn't mean to imply that she had mentioned lotto tickets. I was only demonstrating the "if" and "could" words that you find in many such articles and in the news (I'll stop there.)

So one COULD be a billionaire by buying a lotto ticket IF it came in the winner.

 

[youbet]

Sorry, didn't mean to imply that she had mentioned lotto tickets. I was only demonstrating the "if" and "could" words that you find in many such articles and in the news (I'll stop there.)

So one COULD be a billionaire by buying a lotto ticket IF it came in the winner.

I don't think the comparison between buying a lottery ticket and saving regularly from an early age to reach a million bux has much meaning. A lottery ticket is cheap, requires little effort and is unlikely to succeed. Regular saving (such as 401k contributions) begun early and done continuously can be challenging/tough but has a high probability of success.

A lot of things COULD happen............ I just don't think that the concept of saving early and continuously and reaching FI has the long odds that buying a lottery ticket does....... They're so far apart, they defy comparison.

BTW, I'm a lottory virgin! Saving that experience for my next life.

 

[Koolau]

I don't think the comparison between buying a lottery ticket and saving regularly from an early age to reach a million bux has much meaning. A lottery ticket is cheap, requires little effort and is unlikely to succeed. Regular saving (such as 401k contributions) begun early and done continuously can be challenging/tough but has a high probability of success.

A lot of things COULD happen............ I just don't think that the concept of saving early and continuously and reaching FI has the long odds that buying a lottery ticket does....... They're so far apart, they defy comparison.

BTW, I'm a lottory virgin! Saving that experience for my next life.

One more time: I was reacting to the "ifs" and "coulds" in the article. I'm fine with your view point and don't wish to extend this discussion since we have a friendly disagreement. Aloha and Pua =

 

[GenXguy]

I'm surprised at some of the folks showing up on this thread arguing against those concepts. Maybe they'll allowing an overall dislike of Orman, her personality and her delivery style to impact her suggestions in this case?

I don't think anyone is arguing against contributing to the retirement plan and getting the company match. That seems like common sense to me. Who needs Orman to point out the obvious?

Stating that someone can likely get a 25% annual return over someone's career is another matter, even with a typical employer match.

 

[GenXguy]

Orman, eye roll. She needs 5 million because she is so bad with money.

Bad with money and bad with math, apparently.

 

[LateToFIRE]

That may be the worst most irresponsible thing she has ever said. You’d have to be really fortunate to even get 12%.

Orman gets a pretty bad rap these days, sometimes deserved, sometimes not. I do credit her with getting wife and I started on reading about personal finance +30 years ago with her first books (ex. "Courage to be Rich"), which were new and refreshing in their time. Since then, her efforts to remain relevant have led her down some fairly trashy roads.

 

[athena53]

I put Suze and Dave into the same category: when you're just starting out and especially if you're starting as a financial train wreck, simplistic advice (all debt is bad, credit cards are bad, the stock market is too risky, spend less than you make, separate wants from needs) all make sense.

Most of the people on this Board have been LBYM for years, have emergency funds and can withstand the ups and downs of the market so we have the luxury of saying "Yes, but..." I'm not paying off the $52,000 balance on my 3.0% mortgage no matter what Suze and Dave say.

Another 401(k) data point: For 6 years I was with an employer that matched 100% of the first 6% I put in AND threw in another 6% at the end of every year (regardless of any participation level) because they'd acquired my company after they'd terminated their DB plan and that was their way of making up for it. So yeah, that was an extraordinary return on my contributions in the years I made them, but it certainly wasn't ongoing.

 

[CardsFan]

I don't think anyone is arguing against contributing to the retirement plan and getting the company match. That seems like common sense to me. Who needs Orman to point out the obvious?

Stating that someone can likely get a 25% annual return over someone's career is another matter, even with a typical employer match.

Re: bold above:
A LOT of people need to hear the obvious (to us) over and over. Because, some people just don't get it. Yeah, people here, for the most part, already know this. NOT everyone does it!

I haven't done the math, and have no desire to, but if someone only contributes enough to get the match, and then gets a 10-12% return (only possible if you are all equities), then I can believe the OVERALL return, based on just YOUR contributions, could be that high.

As far as Suze goes, I actually used to watch her regularly on PBS years ago. She basically reinforced everything we say here. I have not listened to her for years, so maybe she has gone "over the top".

Anyway, I cut her some slack on this one.

 

[Dash man]

Maybe the title of this thread should be changed to “Fortune Magazine is the worst!”

 

[Aerides]

I put Suze and Dave into the same category: when you're just starting out and especially if you're starting as a financial train wreck, simplistic advice (all debt is bad, credit cards are bad, the stock market is too risky, spend less than you make, separate wants from needs) all make sense.

And there aren't many other sources telling folks this (basic) stuff. For many - like me it was the first time I heard the practical step by step advice they both offer.

If you are a bit of train wreck it's hard to admit that and ask for advice. Yes, even from your parents.

 

[Graybeard]

It’s been a while since I’ve been annoyed by her this much:

The 12% annual average rate of return, which would make a Gen Z worker a millionaire before the age of retirement, is a conservative percentage, according to Orman, who estimates you can expect up to a 25% rate of return on your money.


https://apple.news/AbnR-Uj7XQVuYA_oumymxnQ

Sounds like the same crap that spews from dave ramsey's mouth.

 

[scrabbler1]

I lost considerable respect for her advice when she made the blanket statement not to invest in bond funds. But I did watch her show from time to time years ago and her advice (she had one of those yes-or-no advice segments) was pretty good.

 

[zippy2020]

Here is the sum total of her deep financial advice: Don't go into debt and work till you are 70.

Unfortunately, there are way too many people for whom those two concepts are impossible for them to grasp. When she reads the spending questions some of her fans send in, it's mind-boggling.

But I actually KNOW some people like that, so yeah, they really do exist. And she at least tells them - a lot more politely than I would - that they are doing irreparable damage to their financial future.

 

[Act2]

I think Suze, and probably Dave, are excellent starting points as people learn. Or at least she was, back in the day.

I really enjoyed her “can I afford it?” segments: “I’m in terrible debt and just lost my job. But I’ve been planning an expensive vacation and have a separate bank account just for vacations. Can I Afford it?”

Or better yet: “I can put the vacation on my credit card.”

 

[youbet]

I don't think anyone is arguing against contributing to the retirement plan and getting the company match.

Ironically, you are!

 

[GenXguy]

Ironically, you are!

No, I never did. Go back and re-read.

As I have made clear a couple times, I was arguing about the 25% annual return figure Suzi is stating is incorrect. I never once said anyone shouldn't invest into their retirement plan to get the company match.

My full quote was:

I don't think anyone is arguing against contributing to the retirement plan and getting the company match. That seems like common sense to me. Who needs Orman to point out the obvious?

Stating that someone can likely get a 25% annual return over someone's career is another matter, even with a typical employer match.

 

[GenXguy]

Re: bold above:
A LOT of people need to hear the obvious (to us) over and over. Because, some people just don't get it. Yeah, people here, for the most part, already know this. NOT everyone does it!

I haven't done the math, and have no desire to, but if someone only contributes enough to get the match, and then gets a 10-12% return (only possible if you are all equities), then I can believe the OVERALL return, based on just YOUR contributions, could be that high.

As far as Suze goes, I actually used to watch her regularly on PBS years ago. She basically reinforced everything we say here. I have not listened to her for years, so maybe she has gone "over the top".

Anyway, I cut her some slack on this one.

People know they should save - they just don't do it anyway, regardless of what Suzi says.

The Genz isn't going to get 25% real returns over their career, regardless of getting a partial match on part of their retirement contribution.

 

[youbet]

People know they should save - they just don't do it anyway, regardless of what Suzi says.

So, just out of curiosity, if you didn't save how did you reach FIRE? Lottery? Inheritance? Married into wealth? Illinois politics/corruption? Dealing drugs? Somehow I managed to dodge all those quick solutions and got stuck working, LBYM and saving for 40 years!

 

[harley]

So, just out of curiosity, if you didn't save how did you reach FIRE? Lottery? Inheritance? Married into wealth? Illinois politics/corruption? Dealing drugs? Somehow I managed to dodge all those quick solutions and got stuck working, LBYM and saving for 40 years!

What's your point? Nobody is saying people shouldn't save. You seem to be looking for a fight. All anyone is saying that her numbers don't work. And the comment that you quoted above is merely saying that some people won't save no matter who tells them to.

 

[athena53]

I really enjoyed her “can I afford it?” segments: “I’m in terrible debt and just lost my job. But I’ve been planning an expensive vacation and have a separate bank account just for vacations. Can I Afford it?”

Dave Ramsey once reported that a couple said they needed to consult with him ASAP- they were deep in debt and needed his help. He proposed a date and they told him that one wouldn't work- they were booked on a cruise.