Suze Orman, a well-known financial expert, argues that $2 million is not enough to retire early in today’s world. She suggests that individuals looking to retire early need between $10 million and $100 million to ensure a secure financial future, depending on their lifestyle and plans. Orman is highly critical of the FIRE (Financial Independence, Retire Early) movement, which emphasizes strict saving and investing to retire before 65. She believes this approach can be risky due to the unpredictable nature of life and the economy.
Orman points out that retiring early means leaving potential compound interest on the table, which could significantly impact future wealth. For young people especially, the power of compound interest is crucial for long-term financial independence. She advises people who want to retire early to live below their means, take advantage of employer retirement contributions, and delay withdrawing Social Security benefits until the age of 70 to maximize payouts.
She emphasizes careful planning for the unexpected, like health care costs or economic downturns, and urges individuals to ask themselves key questions before considering early retirement. These questions include assessing their motivations for retirement, preparedness for healthcare costs, and the ability to handle unforeseen expenses. Orman’s advice also includes budgeting for long-term costs like housing, groceries, and travel, while considering whether or not people plan to assist family members financially.
In essence, Orman’s message is that retiring early is only feasible for those with significant financial resources, and even then, it requires meticulous planning and preparation for life’s uncertainties.