Personal Finance

Unlike Dave Ramsey, Suze Orman thinks you need $10 million to retire early, not $1 million

Joey Frenette

Published: January 3, 2025 10:29 am

It can pay some pretty sizeable dividends to listen to the voices of popular personal finance gurus like Dave Ramsey and Suze Orman. Indeed, for those looking to take command of their financial futures, whether that entails getting out of deep debt, making the finishing touches on a retirement fund, or simply getting started on one’s investment journey after starting a career fresh out of college, Ramsey and Orman do their best to help their callers stay on the path.

More importantly, they may be able to offer tips and tricks to steer clear of those financial pitfalls that some less-informed folks may drive directly into. For the most part, I’m a big fan of both personal finance pundits and think it’s never a bad idea to listen in on a show that could help bolster one’s financial literacy. Although Ramsey and Orman are some of the top voices in personal finance, some of their viewpoints differ drastically.

Indeed, in a prior piece, I’ve described Ramsey as more aggressive (but optimistic) with some of his retirement viewpoints than Orman. Though leaning more conservative on the retirement side of things may be less risky, I’d argue that it’s tough to tell whether Ramsey is too aggressive or if Orman is too conservative (or pessimistic), especially regarding the size of one’s nest egg prior to retirement.

The $1-10 million-dollar question for prospective retirees

Of course, if you follow Orman’s advice and bank $10 million to fund an early retirement, you’re far less likely to run out of money in retirement. That said, I’m also not convinced Ramsey’s advice will lead you down the path of running short of cash at some point down the retirement road. He makes a good argument for why you may not need as much as some of the more conservative personal finance experts say you’ll need before you can retire. As always, it’s impossible to tell the future.

Ramsey, who recommends an 8% withdrawal rate (double that of the traditional 4% rule), thinks a million bucks is enough to fund a retirement so that it doesn’t run out of money. The more aggressive withdrawal rate entails a more aggressive investment strategy (much more exposure to stocks).

While Ramsey’s solution, I believe, holds up if stocks continue to appreciate at a rate close to historical averages (let’s say averaging 10% gains annually), the strategy may not hold up if a historic stock market crash hits, the likes of which hasn’t been seen since 1929. Such a crash seems highly unlikely, but it will keep some retirees up at night. Orman’s more conservative approach ($10 million banked) may be a better fit for those who aren’t comfortable staying fully invested.

All one can do is manage risks in the road ahead of them. Though having “too much” cash in retirement may not be viewed as a risk (it’s never a bad idea to have cash left over to give to one’s children or charities, right?), there are opportunity costs of being in the workforce for longer than is necessary. Time is a scarce resource that money cannot buy. And for some people, they may value their time more than an upgraded lifestyle that comes with more cash in the bank.

Ramsey vs. Orman: Who’s right about that “magic” retirement number?

In any case, the big question is what that “magic number” is for retirement. Is it $1 million, as Ramsey and many others believe you should have before you set the retirement party? Or is it closer to $10 million, a sum Orman thinks prospective retirees should have?

For most people who aren’t spendaholics, I think the answer lies somewhere between $1 million to $10 million. If you live a lavish lifestyle, you’re naturally going to need more money in the bank to fund big-ticket purchases and hefty monthly expenses. But you won’t need nearly as much if you’re more frugal and live in a rural part of the country.

Ultimately, the right “magic number” depends on one’s desired lifestyle and expected expenditures. One must also ask whether the risk of running out of money in retirement is worse than the risk of overstaying in the workforce.

Time is money, but money is not necessarily time. It’s a one-way street, so the right balance needs to be met before you can get to that magic number. A financial advisor can help you find the right number, which will likely be closer to $1 million than $10 million, in my humble opinion.

In my opinion, if you’re willing to take on more risk in retirement (100% stocks, which isn’t recommended by most) and aren’t a big spender, $1 million may be enough for some to retire on. However, if you’re not committed to equities and want a big chunk of bonds and cash, or if you want a lavish retirement, you’ll probably need more than $1 million. For most lifestyles, I think $10 million is a tad excessive.