Suze Orman: 3 Accounts To Put in Place as You Plan Your Early Retirement
Written by
Laura Bogart
Edited by
Kristen Mae
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You’ve worked hard ever since you got that first job as a teenager. Over the years, you’ve gone from scooping ice cream to leading project teams, and you’ve built a solid financial foundation. As you’ve climbed the career ladder, you’ve worked toward a core goal: retiring early.
Now, you’ve reached a point in your career where you can start planning that early retirement. While you’re likely working with a financial advisor, you may also be wondering what some of the most well-known financial experts recommend. Suze Orman, best-selling author and personal finance expert, is a strong advocate for strategic retirement planning.
Unsurprisingly, Orman advises setting up a few key accounts now to ensure you’re financially prepared for your retirement.
Retirement Accounts
This may seem like a no-brainer, but how many twenty-something professionals truly prioritize their retirement accounts? And how common is it for people in their 30s and 40s to contribute less than they could to their 401(k) plans or IRAs? Orman wants you to focus on these accounts as early as possible.
She strongly recommends that people in their 20s start by saving at least 15% of their income in a retirement account. “Someone who starts saving 15% of their income by age 25 and keeps at it, will be in good shape decades from now,” she wrote.
Orman doesn’t expect that people at the very start of their careers will be able to max out contributions to their 401(k), traditional or Roth IRA. However, if you’re serious about retiring early, once you’re established in your career, you should prioritize maxing out those accounts every year.
Emergency Fund in a High-Yield Savings Account
If there’s one account you’ll need regardless of where you are in life, it’s an emergency fund. That account becomes even more critical in retirement when you no longer have a steady paycheck. Having a well-stocked emergency fund now can also keep you from having to dip into your retirement savings or deviating from your early retirement plan.
Orman wants you to put your emergency savings in a high-yield savings account. These accounts allow your money to grow through interest while still keeping it easily accessible. Best of all, unlike retirement accounts, you won’t face penalties if you need to take any money out.
She also suggests setting up two separate emergency fund accounts: one for predictable expenses and another for unexpected financial shocks.
Investment Portfolio
If you want to retire early, simply saving money isn’t enough — you need to make your money work for you. Building a strong investment portfolio now can help generate the income you’ll need to sustain your lifestyle once you’ve left the workforce for good. Rather than getting caught up in the flashiest stock or hot new investing trend, Orman wants you to invest with your eye on the prize of a stable future.
“My message is to always be looking forward and making sure that your current strategy supports your future goals,” she said. “Simply telling yourself that what has always worked in the past is best for future-you may create undue stress for you in the coming years.”
A well-diversified investment portfolio — one that includes stocks, bonds, real estate and other income-producing assets — can help build the financial stability you need to achieve your early retirement dreams. Orman also stresses the importance of reviewing your investments regularly to make sure you’re still on track with your overall financial goals.
If your goal is to retire early, consider working with a trusted advisor who can help you craft a strategy that balances growth and risk. The earlier you start, the more time your investments will have to compound, increasing your odds of being able to retire ahead of schedule.
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