Suze Orman’s 5 rules to avoid going broke in retirement
After decades of hard work, Americans hope to retire rich enough to spend decades more enjoying their retirement.
But if you ask financial guru Suze Orman, the average person will fall very, very short. Instead of lasting decades, their savings will last about three years.
Right now, the median savings held in retirement accounts in the U.S. is just $65,000, according to a Federal Reserve study released in September 2020. Meanwhile, the government says households led by seniors 65 or older spend an average of about $47,600 a year.
If you want more than three good years, Orman’s book The Ultimate Retirement Guide for 50+ offers five essential rules to ensure a comfortable retirement.
1. Take a hard look at your finances
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If you haven’t already, Orman says it’s time to buckle down and take a deep look through your budget.
Compare what you’re spending to what you’re saving. Trim the fat where you can and cut back on any unnecessary spending so you can allocate more to your retirement savings column.
Do you own a home and are you planning to stay in it through retirement? Then Orman says you need to come up with a plan now to ensure you’ll have your mortgage fully paid off before you retire.
Not sure how? A mortgage refinance at today’s still historically low interest rates could save you hundreds of dollars a month and make it possible to get out from under your home loan sooner.
2. Downsize your home
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You may have plenty of sentimental reasons to want to stay in your current home, but if it’s more space than you need and you can make money off of it, you may want to consider selling now.
Not waiting until you have to sell the house makes sense, Orman says, because if you invest the profits now, you’ll accrue much more interest than if you waited another 10 or 15 years.
“I don’t want you to wait till you’re 60 or 70 to sell this home,” she says. “I want you to downsize right now, so that you can start saving more money right now.”
While some may hesitate to part with their family homes, a smaller space is easier to clean, cheaper to run, will cost you less in homeowners insurance and will be more accessible as you …….