Special | 1h 9m 27s | Video has closed captioning.
Join the acclaimed personal financial expert for essential advice on planning for and thriving inretirement. With empathy, straight talk and humor, Suze provides information about key steps for anyone trying to achieve their “ultimate retirement.”
Aired: 04/03/20
Can you all live The Ultimate Retirement?
You can.
(man) From the New World Center in Miami Beach, acclaimed personal finance expert Suze Orman provides essential advice to make your retirement more successful and secure.
Every little action that you take can make a tremendous difference.
It's never too soon to begin.
Fear no more.
(man) Join us for Suze Orman's "Ultimate Retirement Guide."
Please welcome Suze Orman!
[loud cheers & applause] Thank you.
This show is called "The Ultimate Retirement Guide."
A very interesting name for a show, isn't it?
'Cause can you imagine, can you just envision, what is your dream of an ultimate retirement?
What do those words mean to you?
What is so interesting is that yesterday I was talking to somebody, and I asked him, "What does an ultimate retirement mean to you?"
And he answered in a very incredible way; he said, time to be with my family, time to see friends, time to do things that I've never done before.
He did not say one thing about money at all.
Then I thought, now that's interesting, and I started to go to every single person, "What does ultimate retirement mean to you?"
"What does ultimate retirement mean to you?"
I even today, asked my makeup artist and my hair person, "What does it mean to you?"
And the majority of the people either answered like the first person did, I'm going to have time to go see my family and my friends and do things I want, or they answered, "I have enough money, I don't have to worry about money."
So that's when I put it together, believe it or not that, if you have your money together, all you care about is what you're going to do with your time and how to connect with those that you love.
If you do not have your money together, then the answer to that question is about money.
I want to have money, I want to be able to pay my bills, but they didn't at all mention about what they want to do with their life.
The ultimate retirement is about your life being one that you enjoy, that you love waking up every single morning to, that you love to see the sun rise and you love to see the sun set, versus oh another day, oh I have to do this, I have to do that.
So I ask you, what is your ultimate retirement?
Ask yourselves that question right now.
And I'd like to know how many of you out there are on track to reach what you consider your ultimate retirement to be?
How many?
Please raise your hands if you think you are.
In fact, don't raise your hands, stand up.
If you're on track to reach your ultimate retirement.
Alright, stay standing for a second.
Now I want you to look around this room 'cause this is a very sad picture.
This is not 50 percent of this room even standing up.
This is not even 40 percent, this is like 20 percent of the people in this room are on track.
That means 80 percent of you are not.
You can sit down, thank you, I'm happy for all of you.
But by the end of this show, I hope I'm going to be happy for 100 percent of you because here's what you have got to understand.
If you are not on track, then the question has to be answered, why not, and what can you do to get on track?
Because every single one of you has what it takes to achieve your ultimate retirement.
I look around and I see that there are people in this room that are older and there are people who are younger.
I just want to say, for those of you who are younger in this room, you have to know that now is the time to learn from those who are older.
Because it is never too soon to begin to achieve your ultimate goal.
And isn't it true that the reason that you work every single day is so that one day you could retire from working?
That is supposedly why you all work.
However, my goal for all of you is to love working or love whatever you're doing, even in your retirement years that you continue to do it.
You know, today it's very different than it was 40 years ago when I first started as a financial advisor in 1980.
Can you believe that?
40 years ago.
How old was Suze Orman 40 years ago?
[laughter] Who cares about 40 years ago, let's talk about how old I am right now.
As I stand in front of you, I'm 68 years of age.
[applause] No...
Wait a minute, there's something wrong when somebody applauds you for how old you are!
[laughter] But here's what's fascinating about that.
I never thought I was going to be 68.
Did you ever think that you were going to be almost 70, or you were going to be 50?
Or do you remember being like in your 20s or in your 30s and somebody in their 60s would be talking to you and you'd go, god, they're old, [laughter] they're really old.
And you go, oh, I have a long time, and then all of a sudden you wake up one morning and here you are, and you are almost 70 years of age!
That is a big deal!
And I don't know about you, but it freaks me out.
[laughter] It freaks me out, and because I love my life so much, that means I don't have a lot of years left really to live everything that I love doing.
But you know what I mean, but that's a reality that starts to come in your head, oh my god, I need help getting up.
You know, I walked up those stairs yesterday, it's not easy for me to walk up those stairs.
Years ago I would have popped up those stairs.
But as the body may be aging, the one thing great about money is that it doesn't have to age.
You worked your entire life for money.
When you get older, you now have to make sure that your money works its entire life for you.
40 years ago, 'cause I always specialized in retirement planning, I don't know if you know that my degree is in social work, with a specialty in geriatrics.
[applause] So I had this love for the aging.
I wanted to make sure that their lives were fabulous.
And very early on I realized what makes their lives fantastic is when they have money, when they can pay the bills, when they can hire an aide, when they don't have to worry about it, and they don't have to be a burden on their children.
That's what makes it fantastic, but 40 years ago, you guys, it was so easy, I have to tell you.
There's a very different story than we have right now.
40 years ago you had a situation where almost every single one of the people that I saw had a pension plan.
And their pension also gave them full health insurance for them and their families for their entire lives!
Real estate was relatively cheap, believe it or not.
Interest rates, yes, they were through the roof, they were 16 to 18 percent, but you still could have a money market account or anything, and you could be earning 18, 19, or 20 percent.
You could get 14.5 percent back then on a 30-year treasury bond.
Are you kidding me?
So if you wanted your money in retirement to be safe and sound, you had a place to put it.
So I could easily say to people, do this, do that, do that, do this and it was done-- just that simple.
It's not that simple today.
As I'm recording this show, we have interest rates that are the lowest they've ever been.
Good luck finding 2 percent anywhere.
Real estate prices have absolutely gone through the roof, you have a stock market that has also performed incredibly well.
Who knows, will it go on, or will it not?
So now you're afraid; what do I do?
I don't get a pension, I can't put my money anywhere safe and generate income, I still owe money on my home, I'm possibly even still paying for my kid's college education and I don't know what to do, I'm afraid of everything.
Fear no more, because there are things that you can absolutely do to change your life around.
And what's so fascinating about my job as a finance expert is to be able to come up with advice to fit today's economy, today's economy and tomorrow's economy.
And not continue to give you advice that I would have given you 40 years ago, 10 years ago, or possibly even 5 years ago.
You have to be getting advice that is good for today that will carry you through your tomorrows, so the question is, are you getting that advice?
Do you know what to do or are you listening to your next-door neighbor who listens to your next-door neighbor who listens to the other next-door neighbor?
Before you know it, you're all making the same mistakes.
No, no.
"The Ultimate Retirement Guide" is the name of this show, and this show is for every single one of you, to guide you from wherever you happen to be right now, right here, to where you want to be, to where I want you to be.
'Cause I want you to love your life, your personal side of your life, your financial side of your life, 'cause I no longer want any of you to have one foot in one boat called your life and another foot in another boat called your money, 'cause when those two boats start to separate, you have problems.
I want you to have both feet in one boat called life where you love everything around you, you feel secure, you know what your money is doing, you know what you can do and you take all of that with the people that you love around you and you wake up every single morning with a smile.
That is the goal of this show.
Now, you all came here.
Maybe you just came here to see me.
Maybe, but hopefully you came here because there is something that you need to know, 'cause I'm going to talk about what you need me to talk about.
So who has a question for me?
Yes ma'am.
Oh my god!
Hi Suze.
So exciting to be here to finally talk to you, I'm so grateful for any information.
(Suze) How are you?
Your life good?
(woman) Yes.
(Suze) I'm glad, what else?
My financial track is because of you, but I have a question regarding long-term care.
Should I start that because I'm in my 50s, I'm going to be 55, and should I start that now, or should I focus a little bit more 'cause I don't have my 8-month emergency fund, which I know you were always telling us to do that.
The perfect age to buy long-term care insurance believe it or not, is about 59, right before you turn 60 'cause there is a big premium increase at that point.
Up to you to decide if you want to do it or not.
Do you have credit card debt?
(woman) Yes.
So you have credit card debt, you don't have an 8-month emergency fund, and yet you want to buy long-term care insurance.
(woman) No, I really don't, but I want to make sure that... [laughter] Do you have any student loan debt?
No.
What is the interest rate on your credit card debt?
It's like 16, 15.
Do you contribute fully to your retirement account?
Yes, Roth IRA.
How much do you have in your Roth IRA?
Uh like 45,000.
(Suze) And how much do you in credit card debt?
4,000.
(Suze) 4,000.
I have $4,000 at 16 percent, I have $45,000 of how much of that have you originally contributed?
When I first started it?
So altogether it's worth 45,000, how much of that has it grown, have you put in 30,000 and now it's 45,000?
Oh no, I started with like 1,000, 2,000 and then I deposit 550, my max every month.
But you put at least $4,000 of that, you put in of your money.
(woman) Yes.
(Suze) Alright, so listen to me now.
I want you to withdraw from your Roth IRA $4,000 and I want you to pay off your credit card debt.
How can I guarantee you a 16 percent return on your money?
Pay off your debt.
(woman) I thought I'd get penalized for... That is why this show is so important.
Any money that you originally put into a Roth IRA, the money that you deposited into this account, you can take out at any time without taxes or penalties, regardless of your age or how long the money has been in there.
It's the earnings of that money that have got to stay in there for at least 5 years and until you are at least 59-1/2 years of age.
Then you can take it all out, tax-free.
But I would much rather see you take out $4,000, get rid of the debt.
Does that debt make you feel insecure?
(woman) Yes.
If you want to be secure, which I'm telling is the goal of money, you have got to get rid of the things that make you feel insecure.
So you have the money to get rid of that which makes you feel insecure, and that money is supposedly supposed to make you feel secure but it's not making you feel secure 'cause you feel insecure, so let's take money from here, get rid of what's making you feel insecure over here.
Now you feel secure, and when you are secure you are more powerful, and when you are powerful you attract people and people pay you, people give you a job promotion, people are your customers.
So when you are more powerful, you attract people, people control money, now you're going to control more money.
Got that?
(woman) Got it.
(Suze) That's what you're going to do.
(woman) I feel more secure.
[applause] So I just want to touch briefly on long-term care insurance.
Long-term care insurance may be one of the most important insurances you will ever buy in your life.
And the reason is this: your health insurance does not pay for a long-term care stay, Medicare doesn't really pay for it.
You will be the ones that pay for a long-term care stay out of your own pocket.
And when you look at the cost, it's 10,000 a month, 15,000 a month, it is a lot of money.
The average age of entry into a nursing home is 84.
That age is key.
Why?
'Cause if you buy long-term care insurance, you have to know that you can afford it from the year that you purchased it all the way until age 84 or longer.
Should you be buying long-term care insurance and going, but Suze I doubt I'll ever use it.
What insurance do you buy in the hopes that you're going to use it?
Really, do you want your home to burn down?
Do you want your car to be in an accident?
But you all carry insurance on that.
One out of three of you will spend some time in a nursing home after the age of 65.
Now, a lot of you know when it comes to long-term care insurance, that premiums, if you have a long-term care insurance policy, has skyrocketed on you over the past few years.
So if you buy long-term care insurance, you have to factor in that if you're paying $4,000 a year for it, you may be paying $8,000 a year a few years from now.
Can you afford it?
But I can tell you this: that out of all the years that you pay for your premium, it will be less than you will pay for one year in a nursing home.
So if you can afford long-term care insurance from the time you purchase it, all the way through, I would absolutely go ahead and do so.
Alright, we are going to take a break, and when we come back, I'm going to continue to answer your questions.
[cheers & applause] Thank you!
Alright, let's take a question.
I have a good-looking man right there.
Yes sir?
Hi Suze, welcome to Miami.
(Suze) Thank you.
With increased longevity, and if one does not have a pension, how does one know when to retire?
Because I'm really not sure one can really measure that because we don't know how long we're going to live and I'm not necessarily sure we can save enough to retire.
Great, let's talk about your life expectancy.
My mother, God rest her soul now, 7 years ago, lived till 97 years of age.
The most important thing that you should all understand in reaching the ultimate retirement is that most probably you are going to live until your late 80s, early or late 90s.
And that actuarially speaking is the truth.
So it's not like it was back in the '30s or '40s or years ago when Social Security first came about, when you couldn't get Social Security till you were 65, but did you know that the average life expectancy was still 62?
The buggers never expected you to live long enough to collect Social Security!
How do you know when you are ready to retire?
Alright, so let's talk about that.
Financially ready and emotionally ready are two different things.
'Cause you might be ready financially to retire, and emotionally you might not be ready to lose your identity of what you do.
So they're two separate things that you have really got to have clear.
So let's just talk about the financial aspect of it now.
You have got to be very aware of what your expenses are going to be in retirement.
You have got to know, what does it cost you to pay your mortgage, your car payment, your electricity-- everything that is an absolute expense, that is not going to go away.
Once you know your expenses, then you have to know what are your steady streams of income that will be paying those expenses.
If you have a pension, if you have Social Security, if you have the minimum distributions from your retirement accounts that you are going to have to start taking out, if you have an income annuity, whatever it may be, will it cover your expenses, or will it not?
Hopefully it will, because if it doesn't, then you have to make a decision, do you need to continue to work?
Should you retire from the job you currently have and take on another job?
You have to decide all of those things, but in the equation, here's what I want to say to you-- Social Security.
'Cause for the ultimate retirement, the biggest decision that you are going to make is when to take Social Security.
And do not take the easy path here.
You are to wait till at least full Social Security age.
Now I know a lot of you are like, no way, I get Social Security at 62, and I'm going to take it.
Do you know that if you waited from 62 to the age of 70 to take Social Security, you would get 76 percent more than if you took it at the age of 62?
So when you are figuring out your income versus your expenses, do not include Social Security until you are 70.
I would rather see you use up money in a savings account or a retirement account to get you through all those years than for you to take Social Security earlier to get through those years.
Why?
Because especially from the age of 66 or 67 till 70, you're guaranteed an 8 percent increase every year.
You're not going to get 8 percent in the stock market guaranteed.
You're not going to get 8 percent in a certificate of deposit right now.
The new retirement age, seriously, should be a minimum of 70 today.
I know, it sounds like, uh!
But you know why that sounds terrible?
Because you hate the job that you have.
[laughter & applause] If you loved what you did, if you felt like you were a vital part of society as well as your own life, if you did not have one foot in your money boat and another foot in your personal lifeboat, but you were in one boat, and you were steering it where you wanted it to go, you would not be upset about having to work till 70.
You would actually be saying to yourself, I hope I get to work forever, forever, 'cause I love it!
I hope I get to do this forever.
Do you think I do this 'cause I need to make money?
No.
So the goal of you working, I know you think is to make money.
And it is that, but it's also because you love what you are doing.
And it makes you feel like you have a purpose.
Because what's interesting is when you can't define yourself by what you do, your job title, and then who are you?
You need to know the answer to that question.
We have a question right here.
Yes sir.
Suze, I wanted to know how to go about finding one's ideal financial advisor.
That's a good question.
A really great financial advisor is somebody who's been a financial advisor now for 15 or 20 years.
They have seen up markets, they have seen down markets, and then they've seen up again, good economies and bad economies.
The very first thing they tell you is here's how much I charge.
Here's how I work, here's what I'm going to do, and then they should at least be interviewing you for an hour or two to understand.
Are you afraid of the stock market?
Do you feel good with the stock market, are you happy in your marriage, are you going to inherit money, are going to have to take care of your parents, do you have a will, do you have a trust, do you have any credit card debt, do you own a home, do you want to own your home outright, do you have kids, do you want to leave money to your kids?
They should be asking you every possible question, everything in your life, because they have to know who you are as a person before they can invest your money for you.
Here's what you really need to understand about finding an advisor.
You should never talk yourself into trusting anyone-- ever.
When going to see a financial advisor, if it doesn't feel right, guess what?
It's because it's not right for you.
But what do you do?
You talk yourself into trusting that person-- big mistake.
So do not do that.
Get up and walk out.
Don't be guided to have somebody be a captain of your boat and take you where they want it to go versus yourself.
You have got to be like this woman here, with this captain's hat on.
Right?
And you have to know that your financial journey into your retirement years is started where you have charted the right course.
You don't want to be doing something just because some financial advisor tells you to do it.
It's got to make sense to you, it's got to make sense to you.
Next question, who has one?
Yes.
Hi Suze, thank you for coming.
I've followed you since the beginning, your first book, it's so old, but I... (Suze) That actually was my second book, but that's beside the point.
But look at that picture on that.
I want your signature today That picture on that book was taken in 1994.
Don't you think I look better now?
(woman) Yes!
[applause] Gorgeous.
But what is your question for me?
My question is if you already, well, I was fortunate enough to have a pension plan, but it was way before the Roth IRA and all that existed.
If you've got quite a bit of funds in that IRA now and you have to roll it over into a Roth for tax purposes and for your beneficiaries, but what about that lump sum tax that you have to pay on that money?
How do you get that large sum of money?
If I were you, here's what I would do.
If you have a lot of money in a pension or a retirement account that's pretax, first roll it over custodian to custodian to an IRA rollover, no tax.
Then little by little, if you want to convert it to a Roth, after consulting a CPA, decide on how much you can convert each year without it affecting your tax bracket.
The last thing you would want to do is to take a large sum of money and convert it, have to pay taxes on it.
Also, if you are near retirement and you don't have at least 10 years to recoup the taxes and the growth on the taxes, do not convert it to a Roth.
Leave it in a traditional.
Just because Suze Orman loves a Roth, sometimes it makes sense to leave the money that you have in a traditional retirement account because you're going to retire in 2 years.
So if you now convert it to a Roth, you're going to be losing all that tax money, you're better off just leaving it where it is, and paying the taxes as you go.
'Cause either way, you have to pay taxes.
So when you convert, you want your money in the Roth for a long time to recoup the taxes with the growth that you will sustain.
Next question, who has a question for me?
Hi Suze, you mentioned be wary of insurance products, can you elaborate on that please?
Oh you betcha I can.
Insurance is insurance, investments are investments, and the two should not cross.
Years ago, when everybody was buying mutual funds and making all this money, when all mutual funds had a commission to it, the insurance companies wanted to get in the game.
They were like, man, maybe we can create a product and sell it to all the people out there who want to invest in the stock market and make it seem like it's more beneficial to do it that way and we'll capture all of that money.
Now, I have been licensed over my career in almost every single state to sell insurance.
Actually, not to sell insurance, to bash it as to why most of you should not buy it when it comes to an investment.
I personally think the only type of life insurance that makes sense, is term insurance, term insurance that's good for a specific period of time.
Universal, variable, and whole life insurance are the worst investments you could ever buy, bar none.
They just don't make sense.
So many times they're sold to you as-- you can invest in such a way and have it all be tax-free and experience the stock market and get life insurance.
The commissions on most insurance products are so high, you have no idea.
Possibly 70 to 80 percent of your first-year premium.
But today, you now have brokerage firms out there that are charging you no commissions at all to buy stocks, no commissions at all to buy exchange-traded funds, no commissions to buy mutual funds at all.
Are you kidding me?
If there was ever a time to want to be investing in the stock market commission-wise, now is the time.
So does that make sense to you?
Investments are investments, insurance is insurance, do not mix the two, do not mix the two ever, in my opinion.
Next question.
We have a question right here.
Yes sir.
Hi Suze, what's your opinion on target retirement funds?
Yes, a target retirement fund, which is how many of you invest for retirement, thinking that that fund is going to give you your ultimate retirement.
I personally am not a fan of them.
And a target fund, just to be clear, is that you decide the year that you are going to retire.
You target the year of your retirement.
Then this mutual fund is investing your money to do what?
For you to be able to retire on that date, and the closer you get to that date, the more money they put into bonds, the less money they put into stocks.
So they do all the work for you.
And it is one of the most popular investments out there in 401(k) plans because you don't have to do any work.
You just put your money in this target date mutual fund, and you just let it go.
I'm somebody who doesn't like to go on automatic pilot.
I'm somebody who when I'm about to retire, I want to look at what the economy is doing and maybe it's a good time to do what, to be in bonds, but maybe it's a better time to be in stocks.
Let's go back to 2008, 2009.
If you had had a target mutual fund for 2009, 2008, you would have been mostly in bonds at that point.
Great, so you didn't get killed in the stock market.
But in 2010 and 2011 and 2012 and 2013 and 14 and 15 and 16 and 17 and 18 and 19 and 20, you missed one of the biggest bull markets ever.
So should you have been in bonds during that time or should you, even though you had retired, should you be in the stock market?
Because you all have to keep up with inflation.
And inflation is something that is very serious.
So your ultimate retirement, and listen to me closely here now, is one that when you actually retire, you do not want all of your money in bonds.
You want some of your money in stocks because even though stocks may go up, and stocks may go down, in the long run, you will be relatively okay, especially if they are dividend paying stocks, so that you are able to get income while the market is going down.
So please don't be one of these people that go to retire and you go totally into bonds.
Next question.
(woman) Hi, good afternoon, I have two questions.
The first question actually is the follow-up to the whole life insurance, that question is for my mom.
After she heard what you said previously, she had a question.
And the second question is mine about annuities.
So my mom's question about the whole life, she has two policies and being in her 60s she wants to know now, what insurance should she get because now she's not very pleased with the whole life insurance?
(Suze) Because Suze Orman said that.
>> Because Suze Orman said that.
Here's the question, watch this interaction now.
This is a good financial advisor asking the question before I answer a question, because I can't just answer her without knowing things.
Does your mother, in her opinion, need insurance?
Is anybody financially dependent on her?
If your mother were to die, is anybody-- where's Mama?
Right there.
(Suze) Mama!
Too shy to ask her own question.
(Suze) I'm not answering it.
Mama!
Okay, answer my question, answer my question.
No, no, Mama, come on down, come on down Mama.
[applause] Mama talk to me!
Hi Mama.
Hello.
There you go, so Mama, if you were to die today, is anybody financially dependent on you?
No.
Why do you have insurance?
I have it because I don't want my kids to be responsible.
Yes, but if you die, your kids aren't going to be responsible for you anymore 'cause you're dead.
Right?
(mama) True.
You want them to appreciate you while you are alive and enjoy you while you are alive.
So do you have this policy simply to pay for your funeral?
Absolutely.
Alright, and how much of a death benefit is it?
It's 10,000 on both.
(Suze) So you have two policies.
(mama) Two policies.
And how long have you been paying on it?
(mama) For five years now.
(Suze) For five years and how much does whole life insurance cost you?
Per month?
(Suze) Yes.
$56 a month.
So that's $600, almost $700 a year, so you have already paid in $3500 in 5 years to have $10,000 of insurance, and as you get older, 'cause you're still young, you're in your 60s.
(mama) 69.
(Suze) 69, and so you're not projected to die for another 30 years.
Yes, my mom is 94.
Alright, so you're going to be now paying $50, $56 a month for all those years.
Really?
I don't think so, what is the cash value of that policy?
If you were to cash it out today, how much is in it?
You know, I really didn't do the math.
Alright, so you're going to find that you put in $3500, however, good luck if you have $1000 in there.
(mama) Yes, that's what my daughter was telling me.
So here's what you're going to do.
We know you're healthy, we know everything's good.
What would it feel like to have $1000 to your name right now?
Because, if you're worried about paying for your funeral, that says to Suze Orman, you don't have any money.
(mama) Yes, I realize that now.
Alright now, guess what we're going to do?
We're going to cash out that whole life policy, first you got to make sure Mama's healthy, if Mama's healthy, we're going to cash out that whole life insurance policy, the insurance agent might say, but the taxes-- no taxes-- you put in 3500, you get back less than that, no taxes, and you're going to put that money into a savings account, a high-yield money market account or savings account online and just watch it, and then you're going to take the $56 that you were putting towards the insurance and you're going to put it into your own savings account.
And before you know it, you're going to have $10,000 in there.
And then you're going to have $20,000 and then we're going to go out to dinner Mama!
Yes we are!
(mama) Thank you.
(Suze) That's what you're gonna do.
(mama) Thank you.
And Mama, I just have to ask this, was that that hard, to stand up and talk for yourself.
Oh no, no, no, I didn't know she was going to ask, I was just mentioning it to her up there.
(Suze) She said, you said right, that she was afraid, one of you is lying!
Right?
Have I got this right?
One of them is lying.
The daughter is standing there going uh-uh, she said I ain't gonna do this.
Alright, that's fine, alright.
I was, I was.
[laughter & applause] (Suze) Alright, your question.
(woman) I've been looking into annuities, and I wasn't sure if it's a smart thing for me to do.
Why were you looking into annuities.
Because after reading all of your books, I was trying to be prepared for my retirement.
There is no way that you read a book by Suze Orman that said to buy an annuity!.
(woman) No, I know, I know, you did not recommend that, but I wanted to be prepared, so I looked at everything that's available and everything possible.
So I'm asking your opinion right now.
So here's what I would tell you-- annuities are starting to change.
Index annuities okay, single premium deferred annuities okay, variable annuities I really do not like on any level, although even those are starting to change.
Here's what I do want to tell you, and you're going to be surprised at this.
Remember how I stood up here before, and I said, "What I used to tell you before I'm not telling you now."
You know how you told me, a lot of you raised your hands, you said that you're afraid that you don't have enough income and you don't know what you're going to do.
It is possible that an income annuity where you deposit a specific sum of money and they pay you out a monthly income is something that you may all need to look at as you get older, and you want to retire.
Would you be doing that now, given that Mama's 69, that means you have to be what, how old?
(woman) 47.
(Suze) 47, way too early for you to be thinking about this on any level.
No really, the way you would be thinking about it would be I want to be out of debt, I want to own my home outright, I want to be saving money in my Roth IRAs, I want to be cutting down on my expenses, I want to do all those things far before you would do an annuity.
Okay?
You know, I just want to say this.
I only wish I had a magic wand that I could wave and say to all of you in this room and all of you and the millions of you that will see this program, that I can wave my magic wand and make it all so that you are never ill, never in any situation where you had any financial distress, and you had all the financial independence in the world, and that everything was great for you.
I don't have a magic wand.
But guess what?
You do, you have a magic wand for your own lives.
You might think that you don't.
You might think well, what difference can it make if I make this little wave here, and I do this wave here?
Every little action that you take can make a tremendous difference in your life.
Can you all live the ultimate retirement?
You can, but you have to want to.
And you not only have to want to, you have to take the actions that absolutely make it possible, which means you pay off the mortgage on your home, you get out of debt, you start to have Roth retirement accounts, you do everything today, you sell something, you downsize, you do whatever, but you have to have a plan for your lives.
So we have just answered many of your questions, and we have one more segment to continue to do so, so that all of you can have an ultimate retirement.
We will be right back.
So in terms of an ultimate retirement, if I were to give you one piece of advice, as to how do I make the most out of my money, Suze Orman?
With interest rates low, I don't want to be in the stock market, what should I do?
Ready for this one?
Pay off all of your debts.
It should be mandatory that if you own a home, that you own it outright by the time you retire.
If you do not, and you plan especially to stay there, you are making one of the biggest mistakes in my "Ultimate Retirement" playbook.
Because if you could simply get rid of your debt, the more debt you have gotten rid of, the less income you need to pay the expenses on that debt, and now you can start to make more out of your money.
Now, for those of you who have retirement accounts, you probably have a traditional IRA or a traditional 401(k) or 403(b) because you wanted the tax write-offs today.
And you just didn't want to pay taxes today.
Big mistake.
In my retirement playbook, I would have all of you in Roth IRAs, Roth 401(k)s, Roth TSPs if you're in the military, Roth 403(b)s if you're a teacher, I would have you in Roth accounts.
Why?
Because everything that you have in a Roth, you give up the tax write-off today and you get to take that money out later on tax-free.
With a traditional retirement account, you get a tax write-off today, but when you go to take it out, you have to pay ordinary income taxes on it.
You all want that tax write-off today, even though we are in the lowest income tax brackets in the history of the United States.
So you have all got to start to think different.
We're not 40 years ago, we're today.
And the rule of thumb is this: you want to know what you see is what you get.
What good is it going to do you if you have all this money in all these retirement accounts that you're going to have to pay taxes on when you retire and they force you to start taking money out of those accounts, April 1st of the year after you turn 70-1/2.
So what is Suze Orman telling you to do?
I want you to do a few things.
If you know that you are going to have a mortgage when you retire, and you are going to be keeping that home, I want you to continue to contribute to a retirement account that matches your contribution up to the point of the match and then everything after that, I want you to pay down the mortgage on your home.
That guarantees you to be debt-free, you don't have to then worry about the stock market, or interest rates, and nothing will make you feel more secure in life than owning your own home outright.
Now I have said in most every single show I have ever done, that the goal of money is for you to be secure.
So you have got to look at your lives and ask yourself, what in your life, financially speaking, makes you feel insecure?
Because whatever makes you feel insecure, you have got to remove from your life so that you can feel secure.
Got that?
Who in this room would feel more secure if you owned your home outright?
Raise your hands.
Well, now we have almost 100 percent participation.
[laughter] So that's what you are looking for.
These are all things that you need to figure out on your own.
That you can look at this and go, what can I do so that I have the ultimate retirement?
And what you can do is to make little moves today-- pay off the mortgage on your home, have Roth investments, know that you're going to claim Social Security at 70.
Decisions like that will change your entire life.
Next question, who has the mic?
Yes.
Hi Suze.
Right here, it's Mama Bear.
Thank you Suze.
I hope I'm right on that right?
Yes!
[laughter] I'm 34 weeks pregnant.
I've actually been a fan of yours since I was 15 years old.
I read your book, Young, Broke... "Young, Fabulous, and Broke," yes.
That book.
I currently maxed out my retirement accounts, I don't qualify for the Roth IRA, we're going into this stage, so my question is surrounding the 529 plan versus the prepaid college, which is better?
And do you have any credit card debt?
>> No.
>> Eight month emergency fund?
>> Yes.
Absolutely, and you're contributing now.
That's what happens when a 15-year old... [cheers & applause] ...watches and reads about money, and then here they are in a situation where we all wish we could be and turn back the hands of time.
So it's never too soon to begin.
It is never too soon to begin.
I like both a lot.
If your child's going to go to a school like in Florida or whatever, I like prepaid plans a lot because it takes out all the thing of is the market up, what should I invest in, what should I do?
And when you have kids, and you have everything going on, unless you want to deal with all that, then a prepaid plan is probably how I would go.
If you like investing and whatever, 529 plans are equally as good.
But here's the question back to you.
You're about to be a parent, do you have a living revocable trust?
I do not.
Do you know that minors cannot inherit money?
I did not.
So if you have a child, and you have all this money, your 401(k), everything that you've done and now you want to leave it, you and your spouse in a car accident, it happens everybody.
And now you want to leave that to your children.
It will go in a blocked account until they're 18 years of age.
If they had a living revocable trust, you would name a successor trustee as to who would watch over that money for your minor children.
Very important for you to have.
>> Thank you.
And most of you in this room, do not have the most important document you could have, bar none, a living revocable trust.
A will is simply a document that says where your assets are to go upon your death.
That is all it does.
And it does it in the most cost and effective way possible.
A living revocable trust, living, you do it while you're alive, revocable, you can change it anytime you want.
Trust is the name of the document.
While you are alive, you transfer your assets, the title to your home, your bank account, your stock brokerage accounts, whatever it may be into the title of the trust, held for your benefit while you're alive, and your beneficiaries' benefit after you have died.
What is the difference between the two?
A will has to be probated in most circumstances.
That can take months, it can cost thousands of dollars, it absolutely, that's all it does.
A trust, 2 weeks later, 3 weeks later after you've died, everything passes to your beneficiaries free of probate.
But that's not the reason you should get it.
The reason you should get it is because of incapacity.
If something happens to you, who's going to pay your bills?
Who's going to write your checks for you?
Who?
A will just says where your assets are to go upon your death.
A trust, a good one, that has an incapacity clause in it, says that somebody else can sign for you when you no longer can sign for yourself.
And this is important.
The other day, I was in the bank taking out some money and this really old woman in her 90s was standing there and she said to the teller, she said, "I have to ask you a question, how much money do I have left in my account?"
And the teller told her.
She said, "That's impossible, it's impossible, "I know how much money I should have in there "and that's not what's in there.
"And I kept getting the statements, "but I couldn't believe what I was seeing "so finally I thought I should come in.
There has to be something wrong."
Now, either she's spending money that she doesn't know, or possibly somebody is ripping her off of money.
But do you understand how not only do you have to protect yourselves as you get older, but every one of you in this room should be protecting your parents as well.
Your parents that become vulnerable to all kinds of people that befriend them and then do all kinds of things and before you know it, all this money is gone.
So a trust is possibly the most important document you can have, bar none.
You know, I'm just wondering, is anybody in this room afraid of when you get older you're not going to be able to pay your bills, and you're going to be dependent on your kids?
Does anybody in this room have that fear?
All right, you do, you do.
Can somebody talk about that?
I would like to hear somebody address that.
This woman right here, all right, you have a fear.
Yes, I was... You can put your purse down.
[laughter] So I have a 99-year-old mother, which getting back to the life expectation means that you know, I supposedly have quite some time ahead of me.
I have no kids, I have no long-term insurance, I have no debts.
So I don't know who's going to take care of me.
I lost my job 3 months ago, which I needed for living.
My mother and I own an apartment where she lives right now, and I rent another where I live with my husband.
I have a 401(k), I have a CD, and I have a savings account.
(Suze) So you're afraid.
Of course I'm afraid and as I said, I have no kids, so nobody to look after me.
And how old are you?
73.
You're 73, and what do you do with this fear?
Like who do you talk to about it?
I'm serious 'cause how many of you in this room can relate to what this woman just said?
So do you see first of all that you're not alone, you're not alone.
Most of America is in the situation that you're in, where we are getting older, we don't have any money, we don't have kids or if we do have kids, they need us to take care of them, [laughter] and good luck them taking care of us.
So what do we do, where do we go to start this conversation?
Here's what I want to say to you.
73, so obviously you've started Social Security.
What you have to do is understand that 73, even though I know it feels older, 'cause I get that, 70's a big one, it's big number to pass, even approach up to.
Is that you're still in the youth of your life if you're healthy.
So there are all kinds of things that you can do, whether it's continuing to work, saving money in a Roth IRA, making sure that you do not have any debts, but fear is the main internal obstacle to wealth and the only way to conquer fear is through action.
Now, the actions that you are going to take are particular to your situation, and you're going to have to sit down with your husband and go, what can we do?
Should we rent a smaller apartment right now?
Should you sell the home that you have right now and downsize now, 'cause what happens is we keep putting off all of these decisions until we're older and older and older 'cause we don't want to have to deal.
Rather than making a decision of let's sell the house right now, let's move to a place that's less expensive, let's take the difference and do it.
Oh, I'm renting, alright I'm renting a 2-bedroom place right now, let's rent a one-bedroom place.
Oh, I'm renting a one-bedroom place, let's rent a studio.
Oh, we have two cars, let's go to one car.
So you have to now become a warrior and you have to not turn your back on the battlefield.
And the battlefield is known as retirement and how are you going to pay for yourself.
So you're going to start to give birth to financial children by the name of Bill, Buck, and Penny.
[laughter] That's pretty good!
[applause] And you're going to have to make decisions with your husband.
What can you do, and I don't care if it's to save $100 a month here, you cut your cable bills, you do whatever it is that you can do to save $50 here, $100 there, and you would be amazed at the more money you start to accumulate, the more secure you'll feel.
But you do nothing and you have nobody to talk to about it.
So here's who you're going to talk to about it.
You're going to talk to yourself about it.
And you're going to be the one who solves that problem.
And you're going to be the one to figure out what you can do to either make more money as well as spend less.
'Cause the key to the ultimate retirement, everybody, is not to save more, but it's to spend less.
'Cause if you spend less, you're able to save more.
And the key is stop postponing spending less.
You don't think $25 here and $50 makes a difference.
It all adds up.
As soon as you start taking more action, you'll start feeling more powerful.
And then that fear will start to go away and then you'll have more energy to take more action.
Alright, there you go, alright.
Thank you.
[applause] Yes ma'am.
(woman) Thank you so much for coming.
I've been watching you for years.
I'm the senior, I guess, in the room.
I'm 80 years old, my husband is 91.
We've been contributing to Roths since they started.
But we didn't get a chance to contribute very long because then we retired.
But I've passed your information down to my children and they are contributing.
My question is, I have grandchildren, I have two daughters, I'm leaving everything to them.
What I need to know right now.
is there any way that I can, at my age, or should I start converting some of my traditional IRA funds to a Roth?
Alright, so you have been, because you are now older than 70-1/2.
(woman) I'm 80, yes.
You have been taking required minimum distributions from your traditional retirement accounts, correct?
>> Yes.
>> And paying taxes on them.
>> A lot of taxes.
>> A lot of taxes.
The answer to your question is, are your children and grandchildren in a lower income tax bracket than you?
Because, when you leave this money to them in a traditional retirement account, and they take it out, they're going to have to pay ordinary income taxes on it.
Truthfully, in your situation, at where you are right now, in retirement, I would leave everything where it is.
But is this your granddaughter next to you.
(woman) This is my daughter.
(Suze) Your daughter, well, that was a compliment.
[laughter] I didn't mean to give you a compliment.
She came from Orlando to join me for this occasion.
[applause] Can I talk to your daughter for one second?
So here's what I want to hear from you.
Mommy and Daddy have done incredible.
When you sit here and listen, and Mommy starts talking about her death and that, how does that make you feel?
Just sad, I want them with me as long as possible.
(Suze) Yeah, and do you yourself have children?
'Cause Mommy said there's grandchildren.
That would be my sister.
Your sister, so when you look at your own life, and you see what Mommy and Daddy have done, can you just tell me how you feel about your life?
When you look at your life and retirement?
Actually I'm blessed to feel secure.
(Suze) Great.
They were great teachers.
(Suze) Great teachers, so you learned from Mommy.
Mommy, out of all the things that you did in your life, out of all the money that you saved, the proudest you should be and the most priceless gift that you've given yourself is that you have a daughter that feels secure because of you.
[applause] And that is the gift that all of you need to pass on to your children, your beneficiaries, as well as you having the conversation with your parents as well.
And I can stand up here and talk to you about money, as you could tell, from now until eternity.
There really isn't one question that you could possibly ask me that I don't know the answer to, and I think I've proven that to you over all the years that I've done this.
But the greatest departing gift, when I talk about the Ultimate Retirement, I'm talking about happiness, I'm talking about inward happiness, and you knowing who you are, as well as you have a family that appreciates you, and you appreciate them.
And if you're out there, and you're all alone, and you have nobody else, you have to at least have yourself.
So the "Ultimate Retirement" is one where not only do you know everything you need to know about money, but you need to know everything about your own life, the purpose of your life, who you are when you can't define yourself by everything around you as well as your job title.
You have to know these things.
I hope you enjoyed this journey with us today, I hope you learned enough to at least start you on the road to an "Ultimate Retirement" and really, may retirement one day bless each and every one of you and may God bless you as well.
Thank you so very, very much.
[cheers & applause] [piano, bass, & drums play in bright rhythm] Captioning-- Armour Captioning & TPT
