Best-selling author and nationally-televised financial adviser Suze Orman gave a lot of great advice in a recent two-hour PBS taping of her money class Tuesday night in front of a packed auditorium of adults and teenagers.
Orman, who hosts a weekly call-in financial advice show Saturday nights on CNBC, said people should forget the old American dream of having a fancy car and living in a big house. Instead, they should join her in creating a new dream to “stand in your truth” and “live below your means” but within your needs to live peacefully without the constant worry of making ends meet with ballooning consumer debt. For example, if you qualify for a 2,000-square foot house, buy a 1,500-square foot house, Orman said.
And in spite of the record low interest rates, Suze said people should not become homeowners without having 20% for a down payment and a savings account with enough to cover living expenses for eight months. She also recommended that people take advantage of free money by contributing to their job’s 401K up to the income percentage matched by their employer, but nothing more. She said it’s a 50% return on your money, which is unheard of, if a company adds .50 cents to each dollar an employee puts in a 401K.
Her best advice was how couples can equally share in paying bills even though one person makes less than the other. She said a couple should add their incomes together and divide it into their combined debt and expenses and that percentage is how much each person should put into a joint account to pay bills. Excellent advice! So if one person makes $1,500 and the other makes $3,500 and the joint bills are $3000, each person should contribute 60 percent of his or her income to the household, so each is paying their fair share. That advice will probably save a lot of relationships in which the higher earner fills taken advantage of and the lower earner feels inadequate.
But hold up. Wait a minute.
Her advice for middle-aged workers and retirees should not be followed. Orman advised this age group, which is 55 years old and up, to put their hard-earned nest egg at risk in dividend-paying stocks. Her example is as follows:
A retiree with $200,000 in a CD goes from a $10,000 annual income to $2,000 after the interest rate falls from 5% when his or her CD matures to the current going interest rate of 1%. So Orman recommended moving the $200,000 to stocks that pay 6% dividends to yield $12,000 per year and to monitor the stocks in case the market falls — and it will.
That’s not the best advice for an aging individual who is trying to hold on to what they’ve worked so hard to save to supplement their social security check. Seniors should not risk their life savings. They should be relaxed while enjoying a livable, stable income instead of stressing about their stocks’ performance.
Suze admitted her retirement advice is risky. Her background is in risking people’s money as a former Merrill Lynch stock broker. She pursued her investment license and joined Merrill Lynch after a stock broker lost her money from a $50,000 tip she was given as a waitress. My background is in fixed, non-risky life insurance products that provide a stable, competitive interest rate to build a substantial nest egg and provide a lifelong income.
So while I agree with most of Suze’s advice, I have less risky advice for retirees. A retiree should place that $200,000 into an immediate annuity that pays out $2,800-$3,000 per month for the rest of his or her life. That’s about $36,000 a year — forever — without the hassle of constantly moving money around for higher interest-bearing CDs or risky stocks.
But if a retiree is just looking for a supplemental income to the social security check or pension, he or she can put $100,000 into an immediate annuity for a lifetime income of $1,400-$1,600 per month, which is about $18,000 annually, and put the other $100,000 into a single premium, fixed Universal Life insurance policy that doubles to a $200,000 face amount that can be requested for long-term care needs with access to the $100,000 in cash value to be used at the retiree’s discretion.
An annuity is the only financial tool that produces an income that will never run out in the person’s lifetime. A life insurance agent or financial advisor can assist an individual with the purchase of an annuity to secure a lifetime income. Ask your friends and family for a recommendation to a trusted professional. Meanwhile, feel free to ask my opinion on about your finances by emailing me at teneshia@mytensense.com.
By Teneshia LaFaye
Read more of my blogs on financial advice.
Buy my financial advice book for your child/young family member!
Follow me on Twitter!
Like My Ten Sense on Facebook!
If you enjoyed this article, please consider sharing it!
1,844 Responses to Debt guru Suze Orman gives great money tips (video), but retirement advice is too risky
Leave a Reply
You must be logged in to post a comment.
Announcement
Loading ...
Check this out…
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
2011…
We are a group of volunteers and opening a new scheme in our community. Your website offered us with valuable information to work on. You have done an impressive job and our whole community will be thankful to you….
2011…
Those are yours alright! . We at least need to get these people stealing images to start blogging! They probably just did a image search and grabbed them. They look good though!…
Hey…
Just a smiling visitor here to share the love (:, btw outstanding design. “Individuals may form communities, but it is institutions alone that can create a nation.” by Benjamin Disraeli….
Read was interesting, stay in touch……
[...]please visit the sites we follow, including this one, as it represents our picks from the web[...]……
You should check this out…
[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]……
Visitor recommendations…
[...]one of our visitors recently recommended the following website[...]……
Recent Blogroll Additions……
[...]usually posts some very interesting stuff like this. If you’re new to this site[...]……
Hello…
Hi my loved one! I wish to say that this post is amazing, nice written and come with approximately all vital infos. I’d like to peer more posts like this….
Blogs ou should be reading…
[...]Here is a Great Blog You Might Find Interesting that we Encourage You[...]……
Sites we Like……
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]……
Websites we think you should visit…
[...]although websites we backlink to below are considerably not related to ours, we feel they are actually worth a go through, so have a look[...]……
Recommeneded websites…
[...]Here are some of the sites we recommend for our visitors[...]……
Online Article……
[...]The information mentioned in the article are some of the best available [...]……
Sites we Like……
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]……
Great information…
This is often wondrous. Tip stare upon the herb substance so we are stunned. We’re curious about this kind of areas. Our team appreciate you create quotation, and advantages your precious time in this. Please keep enhancing. They are exclusive reliabl…
Recommeneded websites…
[...]Here are some of the sites we recommend for our visitors[...]……
Gems from the Internet…
[...] below are some links to sites that most of us link to because we presume they are seriously worth visiting [...]…
… [Trackback]…
[...] Find More Informations here: mytensense.com/2011/03/debt-guru-suze-orman-says-live-below-your-means-but-her-retirement-advice-isnt-wise [...]…
Great information…
This can be astounding. Issue stare upon this technique contented so we are stupefied. We are precisely fascinated by this kind of techniques. One particular appreciate the potential reference, and evaluate your precious time inside this. Please keep e…
Hi…
I am not really excellent with English but I line up this real easygoing to translate….
Hi…
Good – I should certainly pronounce, impressed with your web site. I had no trouble navigating through all the tabs as well as related info ended up being truly easy to do to access. I recently found what I hoped for before you know it at all. Quite un…
Nicely done my friend!Thank you!…
I like what you guys are up to. Such smart work and reporting! Keep up the superb works guys. I have incorporated you guys to my blogroll. I think it’ll improve the value of my web site.
…
Hello…
Learn how to get rid of stretch marks naturally and fast from the comfort of your home….
Hello…
Thank you for the sensible critique. Me and my neighbor were just preparing to do a little research about this. We got a grab a book from our local library but I think I learned more from this post. I’m very glad to see such great info being shared fr…
Wow!…
A very fascinating post….
[...]that {is the|will be the|may be the|could be the|would be the} {end|finish} of this {article|write-up|post|report}. {Here|Right here} {you’ll|you will} {find|discover|locate|uncover|come across|obtain} some {sites|websites|web sites|internet sit…
[...]Every as soon as inside a while we decide on blogs that we study. Listed beneath would be the most recent websites that we opt for [...]…
Visitor recommendations…
[...]one of our visitors recently recommended the following website[...]……
Related……
[...]just beneath, are numerous totally not related sites to ours, however, they are surely worth going over[...]……
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
Visitor recommendations…
[...]one of our visitors recently recommended the following website[...]……
Hi…
Really nice design and superb content material , absolutely nothing else we require : D….
Online Article……
[...]The information mentioned in the article are some of the best available [...]……
Useful and precise…
Its quite troublesome to seek out super informative and accurate data but now I discovered…
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
Related……
[...]just beneath, are numerous totally not related sites to ours, however, they are surely worth going over[...]……
… [Trackback]…
[...] There you will find 62886 more Infos: mytensense.com/2011/03/debt-guru-suze-orman-says-live-below-your-means-but-her-retirement-advice-isnt-wise [...]…
You should check this out…
[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]……
… [Trackback]…
[...] Find More Informations here: mytensense.com/2011/03/debt-guru-suze-orman-says-live-below-your-means-but-her-retirement-advice-isnt-wise [...]…
Just Great…
I don’t commonly comment but I gotta state appreciate it for the post on this perfect one : D….
… [Trackback]…
[...] There you will find 68366 more Infos: mytensense.com/2011/03/debt-guru-suze-orman-says-live-below-your-means-but-her-retirement-advice-isnt-wise [...]…
Great information…
This is often brilliant. Members stare upon this technique gratification when we are staggered. We are attracted to this kind of anything. Another one appreciate each of your record, and assess your precious time in this. Please keep enhancing. They ar…