Why Suze Orman Thinks These Are the 5 Best Moves to Prepare for Retirement

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  • Preparing for retirement can be a challenge, but Suze Orman has some tips that can help.
  • Orman recommends taking these five steps, including looking into long-term care insurance.

Getting ready for retirement is easy with these five Orman tips. 

Building financial security for retirement is something to work on throughout your life. Unfortunately, it can be a major challenge to figure out what steps to take in order to successfully prepare for your future. 

The good news is, finance expert Suze Orman has outlined the things you will want to do while you are working in order to be ready for your later years. Here are the five steps Orman says you should take.

Suze Orman says to make these retirement moves during your working years

On Twitter, Orman suggested that you "make the most of your working years with these 5 retirement moves." 

The five steps she recommended include the following:

  1. Focusing on debt payoff: Orman recommended that you make "paying off all debt before you retire" a top priority and one of the first essential moves you make. 
  2. Living within your means: This means living on less than you earn so you have plenty of money to save for your future. It was Orman's second recommended step. 
  3. Being smart about retirement savings: In Orman's list of tips, she specified that doing this includes saving more and using the "right accounts" to do it. She has previously recommended using a Roth account because of the tax-deferred growth these accounts provide and the ability to make tax-free withdrawals. You can open a Roth with most brokerage firms
  4. Working for longer: Orman recommended working for a longer period of time than you might have originally planned. Making a plan to work for longer, which was her fourth suggested step, offers more time and opportunities to save. It also reduces the number of years you'll be reliant on savings, so your account balance won't have to be quite as large. 
  5. Looking into long-term care insurance: This type of insurance provides coverage for nursing home or home care in the event of incapacity. Medicare won't pay for these costs in most cases, so it makes sense that Orman would make this the fifth step on her list of recommendations. 

Should you listen to Orman?

The five steps to retirement readiness that Orman has outlined are definitely important for most people to at least consider.

If you have a lot of debt or if you do not live within your means and end up spending more than you earn, this can create huge problems for you when preparing for retirement. You may not be able to save enough to supplement Social Security, which is something you absolutely must do because your Social Security benefits only replace around 40% of pre-retirement income. If you end up retiring with debt, this also eats into the income you have available to support yourself.

Saving in the right kind of retirement account is also important as you have multiple choices and you want to maximize the tax breaks you claim. And long-term care insurance could prevent financial disaster if you get a comprehensive plan. 

As far as working longer, this may be necessary if you don't follow her other recommendations and build a hefty nest egg. But if you save responsibly throughout your career while avoiding debt, investing wisely, and getting the proper insurance, then you may be able to retire when you're ready without worries about how to cover the costs.

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