‘I hereby challenge you’: Suze Orman said you should have 10x your income saved for retirement by age 67 — are you on track?

28/06/2024

Orman: Save 10x your income for retirement by 67

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Everyone hopes that their reward for decades of hard work will be decades more to enjoy the fruits of their labor.

But according to financial guru Suze Orman’s rule of thumb — that you should have 10x your income saved by age 67 —the average American is nowhere near ready for retirement.

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A 2024 study from Northwestern Mutual shows that Americans believe they need $1.46 million to retire comfortably, but the current American’s average retirement savings sit at just $88,000.

In a recent blog post, Orman sent Americans a call to action to get themselves on track for their future: “I hereby challenge you to gift yourself more retirement security by increasing your contributions to your retirement accounts.”

Unsure how to start doing this? Here are three Orman-backed tips for getting your retirement savings on track.

1. Invest in an IRA

To avoid paying tax when making a withdrawal from your retirement account, Orman recommends you go for a Roth IRA account.

Because your contributions to a Roth account are made after tax, you won’t have to deal with deductions when you withdraw. Traditional IRAs, on the other hand, aren’t taxed when you make contributions, so you end up paying later.

In an interview with Wall Street Journal this year, Orman explained that a 25-year-old could start putting $100 a month into an S&P 500 index fund through a Roth IRA every year until they hit 65.

“It’s very probable that you will average a 12% annual rate of return over 40 years,” Orman said. “At the end of those years, you have a million dollars.”

Most banks and brokerage firms offer these accounts. But if you’re looking to combine the tax benefits of an IRA with a traditionally recession-resistant asset, opening a gold IRA might be worth considering.

One of the country’s most trusted precious metals companies – with an A+ rating from the Better Business Bureau – Goldco has helped thousands of clients protect their retirement.

This retirement account can help you stabilize your finances by allowing you to invest directly in physical precious metals rather than stocks and bonds.

By opening and contributing to a gold IRA with the help of Goldco, you can diversify your portfolio and get retirement savings on track all at once.

2. Update your investment portfolio

Regularly revisiting your portfolio can help you make sure you’re making informed decisions that are in line with your financial goals and timelines.

As Orman advised in a 2024 blog post: “This is your retirement and your money. Financial literacy is a need, not a want.”

Orman also once told CNBC that she recommends either stocks or exchange-traded funds ETFs that pay dividends. So even if the market sees a downturn, your investments will still provide you some income.

To easily trade stocks and ETFs while paying minimal fees, consider Interactive Brokers.

Interactive Brokers touts the largest electronic trading platform in the U.S. by number of daily average revenue trades and offers low commissions and margin rates, along with tools to find stocks that have that intrinsic value. And all you have to do is fill out their quick online application to start trading.

If you find you’re still building up the diversified portfolio Orman deems so important, you can do so simply spending money using Acorns — an automated investing app that makes investing in ETFs easily accessible.

All you have to do sign up, link your bank account as you normally would. The app will automatically round up the total cost of your purchases and invest the difference in a portfolio of ETFs. So all it takes to help strengthen your portfolio and save for retirement is to make your everyday purchases and watch your money grow.

If you sign up today, you can get a $20 bonus to get you started.

3. Take a hard look at your finances

If you haven’t already, Orman says it’s time to buckle down and take a deep look through your budget.

When speaking with the Wall Street Journal, Orman emphasized that it’s crucial for people to live below their means but within their needs.

She compares strict budgets to diets, explaining, “If you restrict, you limit, you cut back, you don’t buy this, you don’t buy that, and then all of a sudden you explode and you go out and you buy everything at once.”

A platform such as Empower is a great tool to help you take a closer look at your budget and find the best financial route for you.

Empower offers a unique digital suite of finance tools designed to help you stay on top of your finances through budgeting, spending tracking and more.

When you sign up for Empower, you have access to a free financial dashboard where you can keep track of all your accounts in one place.

If you don’t feel confident in tackling this on your own, don’t worry —that’s what financial advisors are for.

On her blog, Orman emphasized that financial pros are not there to make decisions for you “but to help you carefully lay out and understand all the moving pieces of retirement finances.”

To ensure your retirement fund is on the right track— and help you spend less time worrying about it — you can find an advisor that’s right for you with WiserAdvisor.

Just answer a few questions and WiserAdvisor will match you with multiple vetted financial advisors suited to your unique needs. With no fees to get started, you can browse your advisor matches book a free consultation with no obligation to hire.