by Christy Bieber | Published on Sept. 4, 2021
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So where does Suze Orman think you should put your money?
There are a lot of different options for where to stash money that you're saving for the future. But if you ask financial guru Suze Orman, there's one account that's far better than most other options. In fact, Orman likes this type of account so much that she stated you should be "putting every single cent" into it.
So what account does Orman like?
Suze Orman's favorite account for saving is a Roth retirement account.
Specifically, Orman likes Roth 401(k)s. These are workplace accounts that some employers provide. For those whose employers don't offer them, Orman is in favor of all types of Roth retirement accounts, which include a Roth IRA.
Roth IRA and Roth 401(k) accounts are different from traditional 401(k) or IRA accounts in important ways:
Orman believes deferring your tax savings will leave you better off. "Please don't go for the tax write off today so that later on in life you have to pay taxes on a traditional retirement account. Go for a Roth," Orman says.
There are also some other benefits she believes are important as well.
For example, while Roth 401(k)s have required minimum distributions (which mandate withdrawals after age 72), Roth IRAs have no such requirement to begin taking money out. You have the flexibility to withdraw your funds whenever you would like instead of when the government tells you to. With a Roth IRA, you also have the option to withdraw your contributions before age 59 1/2 without being subject to a tax penalty -- unlike with traditional accounts (although you'd still owe a penalty on withdrawn gains).
Orman likes the added flexibility that goes along with this kind of account, which is a big reason why she pushes for investing your retirement money in a Roth. She also likes that if you leave retirement savings to your children as an inheritance, your children won't lose much of the money to the IRS as they would if you left them cash in a traditional account.
Now, Orman does acknowledge that you should contribute to a traditional 401(k) if necessary to earn an employer match. Some people who don't have a Roth 401(k) at work would need to do this to avoid missing out on the free money their company provides for retirement savings. But, if that's your situation, she suggests that you contribute only enough to get your employer match and then devote the rest of your money to your Roth IRA.
The good news is, you can open a Roth IRA with any brokerage firm regardless of whether your employer offers access to a Roth 401(k) or not. So if you want to open the account Suze Orman loves, consider exploring the best brokers for Roth IRAs today.
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