A $2 million nest egg is a lot more money than most people have when they retire, but it’s not nearly enough to be financially secure — at least not if you listen to finance guru Suze Orman. In a 2018 interview on the “Affordable Anything Podcast,” Orman stated that “two million dollars is nothing. It’s nothing. It’s pennies in today’s world, to tell you the truth.”  

Orman warned that if you have just $2 million invested and a catastrophe happens, you’ll be in dire straits — especially if you are hoping to retire at a younger age. And, she suggested you have a whole lot more for your future. “If you have $20, $40, $50, or $100 million, be like me, okay. If you have that kind of money and you want to retire, fine.” She also went on to say that the minimum you should have before considering early retirement is $5 to $10 million. 

Now, Orman was specifically talking to people aiming to retire at a very young age, but her advice may still be frightening to those who don’t think they’ll ever amass so much money. The big question is, is she correct? Do you really need that much money to quit working? The answer in most cases is a definite no — even if you’re thinking about retiring early. 

How much do you realistically need to retire early?

Rather than making outlandish assumptions that you’ll need $5 or $10 million to be comfortable, it makes good sense to run the numbers. Specifically, you need to think about how much money you need as a retiree and how much you expect your nest egg to produce.

The amount of income you’re going to require depends on your financial needs. The less you plan to spend, the easier it is to retire with less. If you’re talking about $2 million, though, this could produce around $74,000 in annual income assuming you follow the 3.7% rule (which recently replaced the 4% rule as the expert recommendation for making withdrawals while ensuring you don’t run out of money. 

Now, Orman said that she doesn’t think that amount is enough, especially once you take taxes and inflation into account. However, considering the average income in the U.S. was just $58,084 in 2023 according to the Bureau of Labor Statistics, it seems hard to believe a nest egg producing considerably more than that would be insufficient — especially given that, even if you retire early, you’ll eventually become eligible for Social Security which will produce even more income later in life to supplement your savings. 

Unless you plan to go on a spending spree and really blow through your funds, $2 million should be just fine given these numbers — and setting unrealistic goals like $5 to $10 million is just going to discourage you from trying to achieve your dream of retiring early. 

Orman said you need more money if disaster strikes

Orman’s big argument that you need $5 to $10 million before retiring is that you could end up needing a lot of money if a catastrophe happens. However, the reality is that most people can’t just withstand a catastrophe that costs them hundreds of thousands or millions of dollars per year — regardless of whether they are working or retired.

That’s why people prepare for catastrophe by doing things like buying health insurance and homeowner’s insurance. If you have the right coverages in place, and you have $2 million, you should be fine for life if you follow your spending limits and maintain a safe withdrawal rate.

While you can, and should, talk to a financial advisor about your specific situation to confirm that’s the case for you, don’t let Orman’s words scare you into working until you’ve saved an amount that, for most, is an unrealistic sum. Otherwise, you could be stuck working forever for no reason at all.

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