Major Financial Advisor Suze Orman Warns About the Most Prevalent Blunder in Retirement Planning
In her nearly 40 years as a financial adviser, Suze Orman has encountered numerous mistakes people make in their retirement planning. As a New York Times best-selling author, podcaster, and motivational speaker, Orman offers valuable insights to help pre-retirees avoid these pitfalls.
One of the biggest mistakes Orman sees is claiming Social Security early, before full retirement age, which is 67 for anyone born after 1960. By claiming early, individuals pass up an 8% increase each year in their Social Security from their full retirement age all the way to 70. For example, a 62-year-old in 2025 can receive a maximum monthly check of $2,831, but by waiting until they turn 66 or 67, their monthly check increases to $4,018 and $5,108, respectively.
Another common mistake is ignoring the Roth conversion. Orman encourages pre-retirees to take advantage of the Roth 401(k), 403(b), or Roth IRA, as required minimum distributions (RMDs) can result in a large tax hit if the RMD is large enough. A Roth conversion is a taxable event, so it's recommended to consult a financial adviser and/or tax professional before making any moves.
Orman also advises taking advantage of the Roth IRA, even if you are currently working and earning a lower income. This can provide tax-free growth and withdrawals in retirement, which can be particularly beneficial during retirement years when income may be lower.
Living above your means is another common mistake in retirement planning, according to Orman. She emphasizes the importance of living below your means and within your needs in retirement planning. This can help ensure that savings and Social Security payments are sufficient to cover expenses throughout retirement, which can last 20 years or more for many people.
Orman also advises against buying a life insurance annuity, especially after attending retirement seminars. These products can be complex and may not always be the best choice for pre-retirees.
Everybody should have a revocable living trust, as incapacity can be just as difficult to navigate as death. This can help ensure that your wishes are carried out and your assets are managed efficiently in the event of incapacity.
Many people collect Social Security early out of fear it won't be around for much longer, but Orman doesn't think this is a viable reason to claim benefits. The Old-Age and Survivors Insurance Trust Fund, which pays Social Security retiree benefits, is projected to become insolvent in the first quarter of 2033, but this doesn't mean it will collapse. If nothing is done by then, benefits would face a 23% cut, and beneficiaries would then receive 77% of their benefits.
Assuming you'll always have an income is another common mistake that can lead to financial instability in retirement. It's important to plan for the possibility of unexpected expenses and changes in income during retirement.
In summary, Suze Orman offers valuable advice for pre-retirees looking to avoid common mistakes in retirement planning. By avoiding early Social Security claims, taking advantage of the Roth conversion, living below your means, and planning for the unexpected, you can set yourself up for a successful and secure retirement.
Read also:
- Developing a Sales Strategy: Methods, Sample Plans, and Templates for Sales Plans
- Events that transpired on the night of August 13, 2025.
- Manchester-based entrepreneur Amman Ahmed propelled an unusual venture to an 8-digit empire, without external financing. This is the story of how he crafted a groundbreaking genre in the world of animal-oriented media, one growl and rhythm at a time.
- Cooking Quantity of Beef Corresponds to Citizens' Salaries - Analysts Disclose
