Suze Orman Says You Need ‘To Plan for Retirement as If Social Security Won’t Exist’ — Here’s How
Written by
Jaime Catmull
Edited by
Gary Dudak
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Many Americans plan to use Social Security to fund a significant portion — if not all — of their retirement. A recent survey found that the average American said they are relying on Social Security to provide 28% of their overall retirement funding, with personal savings covering 22% and retirement savings covering 28%.
But Suze Orman, host of the “Women & Money” podcast, does not think Americans should bank on Social Security to pay for their retirement years. “A person needs to plan for retirement as if Social Security won’t exist,” she told GOBankingRates. Here’s why.
Social Security Won’t Be Enough To Keep You Afloat
Orman said that many people who retire with the plan to use Social Security to fund a significant portion of their retirement often end up having to return to work.
“If your retirement plan is to live on Social Security, you’re already in trouble,” she said. “Too many people end up having to work during retirement due to rising rent and cost of healthcare. I often ask people I see who are older working at the grocery store or [elsewhere] why they have to work in retirement and it’s always the same answer: inflation [and/or] rent went up.”
Even with cost of living adjustments, Social Security typically isn’t enough to cover all of your living expenses.
How To Plan To Retire Without Social Security
Orman said you should calculate how much you will need to save for retirement, without including Social Security income as part of the equation.
“Figure out how much you will need to live the lifestyle you’re currently accustomed to,” she said. “Many people think they have saved enough only to find out the hard way.”
To ensure you will have enough money in retirement, Orman recommends paying off your mortgage before you exit the workforce.
“I would suggest figuring out how to get your house paid off so when you retire, you don’t have a mortgage or the burden of rent,” she said.
Orman also recommends looking for ways to reduce your overall living costs.
“You need to keep your expenses as low as possible,” she said. “That means downsizing, and moving to a place where the cost of living and taxes are lower.”
It’s also important to stick to a budget and plan realistically for your lifespan in retirement. The average life expectancy is now 76, but because that’s an average, many people will live beyond that age.
“Live on a budget, and don’t go traveling all around spending all your retirement money and savings thinking you are going to die in 10 years,” Orman said. “Save and budget in retirement, and keep investing as if you have a long time to live.”
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Gabrielle Olya contributed to the reporting for this article.
