Investing

How to Avoid Financial Ruin in Retirement, According to Suze Orman

Ian Cooper

Published: December 21, 2024 1:02 pm

At some point, we all want to retire.

We want to enjoy life with the money we’ve set aside for retirement.

Unfortunately, according to finance coach Suze Orman, the average American is nowhere near ready to even think about retiring. In fact, according to CBS News, about one in five Americans will have enough money to retire comfortably. Right now, many 55-year-olds have a median savings of just $50,000, which is far from enough to fund retirement, they added.

Key Points About This Article 

• According to finance coach Suze Orman, the average Americana is nowhere near ready to even think about retiring. In fact, according to CBS News, about one in five Americans will have enough money to retire comfortably.
• Check in with your financial advisor who will know a bit more about your finances.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

If you’re in that boat, check in with your financial advisor on ways to catch up, and ways for you to ultimately retire at some point comfortably. Also, as Suze Orman will tell you:

Update Your Investment Strategy

Again, check in with your financial advisor who will know a bit more about your finances.

And, as Suze Orman suggests, invest in stocks and exchange-traded funds that pay dividends. That way, even if the market sinks out of the blue, you still have passive income from those dividends, which are either paid out quarterly or monthly.

Invest in a Roth IRA

Orman also suggests investing in a Roth IRA, which is a tax-advantaged investment account that allows you to save for retirement with after-tax dollars. As noted by Fidelity.com, “Generally speaking, most investors should consider having a Roth IRA as part of their overall retirement plan because it offers federal tax-free growth potential and withdrawals, which have the potential to help minimize taxes and maximize retirement savings.”

Dig into your finances 

If you have a budget, great. If not, and you find yourself struggling financially, consider putting one together. With it, compare your monthly expenditures with what you expect to spend. Did you come in below or over expectations? If you went over, you may want to consider reducing your spending or attempting to increase your income in 2025.

As noted by Morgan Stanley, “A budget is the foundation of your financial strategy. While everyone’s expenses are different, the 50-30-20 Rule can serve as a helpful framework. It suggests allocating 50 percent of your budget to needs, 30 percent to wants and 20 percent to savings and investments.”

Review your retirement plans, life insurance, and your health savings accounts

Check on your retirement plans, life insurance policies, and your health savings account, if you have one set up. You want to see if you can increase your policies, and even make sure your beneficiaries are up to date – especially if you divorced the current beneficiary. Unfortunately, there’s really no way to change your beneficiary after you pass away.

Be aware of your overall financial situation

“It’s impossible to map out a route to your destination if you don’t know where you’re starting from,” Orman told O, The Oprah Magazine, as quoted by GoBankingRates.com. To know where you’re headed, you’ll need to get a panoramic view of your finances, what Orman calls a “before” snapshot to shape the “after.” 

“You’ve heard me say this a million times, but I want you to open every single financial statement — bank, credit card, mortgage, 401k, brokerage account — and take a look. Only when you have everything in front of you can you set priorities about what to do next.”