Financial expert Suze Orman delivered a reality check that many Americans need to hear during a recent episode of her show. When a 53-year-old caller named Kathy asked if her husband could retire at 62, Orman’s analysis revealed a shocking truth that applies to countless retirees.
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The Million-Dollar Illusion
Kathy and her 58-year-old husband seemed financially secure on paper. With nearly $1 million in net worth ($970,833 to be exact), including $675,000 in retirement accounts, they appeared ready for early retirement. Kathy even gave herself a “B-” grade when asked if they could afford her husband’s retirement at 62.
But Orman’s deep dive into their finances revealed a devastating reality.
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The Hidden Financial Disaster
Despite their substantial assets, the couple was living beyond their means. Their monthly expenses of $5,534 exceeded their take-home income of $5,239 by $295 per month. They were already spending more than they earned while both were still working.
When Orman calculated their projected retirement income, the numbers became even more alarming. At 62, the husband would generate approximately $2,000 monthly in after-tax income from their retirement accounts. Combined with the wife’s $1,600 monthly income, they’d have just $3,600 to cover $5,534 in monthly expenses.
That leaves a staggering $2,000 monthly shortfall.
Orman’s Verdict: An ‘F’ for ‘Forget About It’
Orman didn’t mince words, giving the couple’s retirement plan a failing grade. “The F stands for forget about it,” she said. “It is not going to happen.”
But she also provided a roadmap to financial security.
The Essential Steps to Retirement Safety
According to Orman, retirement isn’t safe until you’ve completed these critical tasks:
1. Eliminate All Housing Debt
The couple’s biggest mistake was carrying a mortgage into retirement. With 28 years remaining on their home loan, Orman emphasized that paying off the mortgage must be their “number one priority” before retiring.
2. Establish Proper Legal Protection
The couple lacked basic estate planning documents. Orman stressed they needed:
- A will
- A trust
- Proper insurance coverage
3. Secure Long-Term Care Insurance
Orman highlighted the devastating costs of long-term care, drawing from personal experience with her mother. Without insurance, these expenses can destroy retirement savings.
4. Maintain Adequate Life Insurance
The couple was “under insured,” creating another vulnerability in their financial plan.
5. Work as Long as Possible
Perhaps most importantly, Orman advised against early retirement altogether. She couldn’t even recommend retirement at 66 for this couple, emphasizing the need to work “as long as you possibly can.”
The Real Problem Most Americans Face
This case illustrates a widespread problem: People confuse net worth with retirement readiness. Having substantial assets doesn’t guarantee financial security if your expenses exceed your sustainable income.
Orman’s analysis shows that even couples approaching $1 million in assets can face retirement poverty if they haven’t properly structured their finances.
The Bottom Line
Your retirement isn’t safe simply because you have money saved. According to Suze Orman, true retirement security requires debt-free living (including your house!), legal and insurance protection, realistic income projections and extending your working years, when necessary.
The couple’s story serves as a wake-up call: Before you can safely retire, you must honestly assess whether your projected income can actually cover your expenses. If it can’t, no amount of assets will save you from financial disaster.
As Orman concluded, “You better get a real grip on your situation.”
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This article originally appeared on GOBankingRates.com: Suze Orman Says Your Retirement Isn’t Safe Until You’ve Done This
