• Motley Fool - Suze Orman Says You Need $5 Million to Retire Early. Is S

    From a425couple@21:1/5 to All on Sun Nov 4 19:18:18 2018
    XPost: alt.politics.economics

    Retire early? You need 'at least $5 million,' according to Suze Orman ... https://www.marketwatch.com › Retirement
    5 days ago - Suze Orman just threw water all over the FIRE movement
    that's been spreading across the internet.

    Suze Orman Is Right: You Need $5 Million Or More To Retire Early https://www.financialsamurai.com/suze-orman-is-right-you-need-5-million-or-more-t...
    Rating: 4 - ‎Review by Financial Samurai
    Oct 8, 2018 - Suze Orman hates the FIRE movement and believes retiring
    early is the biggest mistake ... She believes you need $5 million to
    reitre early. ... between 40 – 50 if you so choose with a safe
    withdrawal rate of between 3% – 5%.

    Do you need $5 million to retire early? Suze Orman says so. But 'FIRE ... https://www.washingtonpost.com/.../do-you-need-million-retire-early-suze-orman-says-s...
    2 days ago - Suze Orman says so. ... Orman poked her nose out of
    retirement, where she's living on a private ... You need at least $5
    million, $6 million. ....

    Suze Orman says you need at least $5 million to retire early - Business ... https://www.businessinsider.com/suze-orman-says-you-need-at-least-5-million-to-retir...
    Oct 8, 2018 - Personal finance guru Suze Orman says you need at least $5 million to retire early. In a recent podcast, personal finance guru,
    Suze Orman said she thinks early retirement is the biggest financial
    mistake "you will ever, ever make in your lifetime."

    Suze Orman Says You Need $5 Million to Retire Early. Is She Right ... https://www.fool.com/.../10/.../suze-orman-says-you-need-5-million-to-retire-early.asp...
    Oct 14, 2018 - Author, show host, and financial "guru" Suze Orman has
    once again made waves in the financial world. Appearing on the Afford
    Anything podcast, Orman claimed you'd need at least $5 million if you
    wanted to "FIRE" -- an acronym for the ability to be financially
    independent and/or to retire early.

    Of course, consider she is the fool who suggests:
    Suze Orman says 70 is the 'new retirement age' - CNBC.com https://www.cnbc.com/2017/10/.../suze-orman-says-70-is-the-new-retirement-age.html

    (some interesting Quara things = can't get to.) -----------------------------------------------------

    Let us go with the Motley Fool one first https://www.fool.com/investing/2018/10/14/suze-orman-says-you-need-5-million-to-retire-early.aspx

    Suze Orman Says You Need $5 Million to Retire Early. Is She Right?
    While limiting your downside is important, here's why Orman's claim is
    so out of touch.
    Brian Stoffel (TMFCheesehead)
    Oct 14, 2018 at 7:02AM
    Author, show host, and financial "guru" Suze Orman has once again made
    waves in the financial world. Appearing on the Afford Anything podcast,
    Orman claimed you'd need at least $5 million if you wanted to "FIRE" --
    an acronym for the ability to be financially independent and/or to
    retire early.

    This isn't the first time Orman has used anecdotal evidence to make
    straw-man arguments that are easily refuted by...well...demonstrable
    facts. This claim takes that tendency to an entirely new level.

    But rather than throw the baby out with the bathwater, we should
    investigate the spirit of Orman's warning. Valuable nuggets lie there.
    So does a bunch of nonsense. I'm here to separate one from the other.

    Scared and anxious young people (two men and a woman) who are hiding
    peek from under the table. Icons above their heads indicate that they
    have questions and ideas to solve a problem.

    "You never know..."
    The overarching premise of Orman's argument is solid: You never know
    what's going to happen. During the podcast, Orman said, "The worker that retires at the age of 30 -- if something goes wrong from 30 until 70 --
    now they're in trouble."

    She gives several examples of things that can go wrong: You get hit by a
    bus, you get cancer, AI takes over all of our jobs, tax brackets
    increase markedly, Social Security and Medicare disappear.

    While these concerns might seem neurotic, there's a crucial principal at
    play: limiting your worst-case scenario.

    Earlier this year, best-selling author and trader Nassim Taleb made a
    very similar point when I interviewed him:

    As an investor you need to think about it in these terms: No investor
    knows what's going to happen to him or her in the future.

    The market may deliver whatever people claim it will deliver. But if you
    have a drop in the market that may force you to liquidate --
    particularly a drop in the market that may correlate with your loss of
    business elsewhere -- then, automatically, your returns will be the
    returns from today until that drop in the market. It de-correlates from
    the market.

    Taleb might be the most important risk expert in the world today. The
    point he makes is in the same vein as Orman's. It's worth heeding: If
    you retire early, you must protect your downside.

    Terrible math, self-aggrandizement, and general nonsense
    Unfortunately, while the basis of Orman's warning is solid, the
    conclusions she draws from that warning strain credulity.

    Let's consider how she arrived at her $5 million figure in the first place:

    I took care of my mother [in old age]. Remember, it was $30,000 a
    month... So you're talking about maybe $300,000 to $400,000 a year. All
    right, say I'm wrong: you're talking about $250,000 per year there.

    Now you have other expenses -- food and everything -- and let's just say
    you need another $100,000 a year to live. So now you need $350,000 a
    year after taxes. You need at least $5 million, $6 million.

    There are so many issues with this that I'm not sure where to start.

    More than anything, Orman's true detachment from reality -- compared to
    how the average American experiences daily life -- is on display. This shouldn't be too surprising; she mentions multiple times in the podcast
    how she lives on her own private island and flies on her own private plane.

    Here's how her numbers hold up:

    Actually, if you need $350,000 per year, using the 4% rule -- which she
    cites -- you'd need $8.75 million to retire early.
    While I'm sure Orman -- like any of us -- got the best nursing-home care
    for her mother that her money could buy, it's not typical. According to SeniorLiving.org, the nationwide average for a semiprivate nursing home
    room is $82,128 -- almost 70% below Orman's "low-ball" figure. In some
    states, the average is below $55,000.
    The typical American household in retirement (65 or older) spends just
    under $50,000 in 2017. And this is the mean! The median -- which is less affected by the wealthiest 1% -- is likely far lower. Either way, that's
    less than half Orman's example.
    For most of us, Orman's $350,000 figure is outlandishly high. If you're
    the average American, $50,000 per year seems reasonable. Using the 4%
    rule -- and not including any Social Security, Medicare, or pensions --
    this requires a nest egg of $1.25 million -- or 75% less than Orman's

    It might be tempting to say, "But the average retired American is poor
    and miserable." But when we measure these things, we see the exact
    opposite: Retired Americans are the happiest, least stressed age cohort
    in America. And they do it -- on average -- with annual expenditures of
    less than $50,000.

    But Orman's suspect math doesn't stop there. Long-term care insurance --
    which can run between $3,000 and $5,000 annually for a couple --
    usually covers the first $150 per day in a nursing home for three to
    four years. Using the figures above, that means paying about $27,000 per
    year for nursing home care, plus the $5,000 per year in premiums --
    which comes to $32,000 per year -- or what Orman claims you should be
    prepared to pay in a month!

    That's why I call this a straw-man argument. The fact that early
    retirees need to protect their downside is obvious. Health, long-term
    care, life, homeowners' insurance -- all of these things are vital to
    support proper early retirement. But pretending there are no affordable
    and sensible options to mitigate these risks is just plain nonsense.

    The big picture is what's really missing
    Here's the bigger problem with Orman's take on "FIRE-ing": Her
    assumptions make it seem as if she read a single blog post about the
    movement and drew wild -- and highly inaccurate -- conclusions about
    what it means.

    Alternately throughout the conversation, she says that retiring early is
    a bad idea because (1) you stop earning money during your compounding
    years and (2) you'll get endlessly bored by sitting around all day.

    I've been reading about -- and practicing -- this lifestyle for almost a decade. There's a reason for the FI (financial independence) to be
    included in the acronym: It's not about sitting around all day.

    Instead, it's about meeting your basic needs and then freeing up the
    time. With that time, you can focus on the only three things that really
    matter in creating a fulfilling life:

    Connections to family and friends.
    Having purpose and meaning.
    Progress toward what you're working on.
    That is the North Star of the FIRE movement. It is not a hope to become
    a multimillionaire, own a private island, or ride on a private jet.
    Sometimes you might get paid for following this North Star, sometimes
    you won't. The point is that you'll be OK either way.

    We'd all be wise to heed Orman's advice about protecting our downside.
    But we'd be equally wise to ask ourselves where our level of "enough"
    really is and recognize that anything above it will have significantly diminished returns.

    Your life might require $5 million to retire early, but 99% of earth's inhabitants would be just fine with far less.

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