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Suze Orman He is a bestselling author, television and podcast host and has taught millions of people about money.
One of his favorite money topics is retirement, so here are some of his best saving and investing tips for retirees.
Wait until age 70 to receive Social Security
Orman is adamant that waiting as long as possible — until age 70 if you can — is the best way to maximize your Social Security benefit.
Your Social Security benefit is calculated at your full retirement age, or FRA. For people born in 1960 or later, your FRA is 67. If you claim at age 62, you’ll get 70% of your FRA benefit. According to , if you wait until age 70, you’ll get 124% of your FRA. social Security Administration. Once you begin receiving benefits, your benefit amount is fixed and increases only by annual cost-of-living adjustments.
For those who say they don’t know what the future of Social Security will be, Orman notes these facts.
Much has been made about Social Security “running out of money,” but that won’t happen. Even if Social Security stops collecting enough from current workers to pay 100% of benefits, as is expected to happen in 2034 if Congress does not act, benefits will not stop completely. Instead, profits will be cut by up to 25%. But you will still get 75% of your profit.
In 1983, changes were made to Social Security in response to the impending shortfall we are seeing today. One of them was raising the full retirement age, but this had no impact on anyone already retired.
If you are in good health, waiting for collections makes good financial sense. The break-even point, at which you’ll collect more total dollars by waiting until age 70 versus starting at 62, is around 81, Orman said. After that age, if you start at 70 you’ll collect more than if you start at 62.
When one spouse dies, the surviving spouse receives the larger of the two benefits. So it is important to make that profit as large as possible.
You can claim any time between age 62 and age 70, and your benefit increases for each month you delay.
work long hours
By working long hours — even part-time — you can put off collecting Social Security and get a bigger check when you start receiving benefits. Orman recommends Eat well and exercise to stay healthy longer, keep your skills up to date to avoid falling out of shape, or start a side job that you can continue into retirement.
Tap into the equity you have in your home
Big fan of Orman missing mortgage payment In retirement. But what if you still have several years to pay and you don’t have the cash to pay it off? Selling your home and buying a smaller home can help you go into retirement without mortgage payments. And a bonus of this strategy is that you can choose your new home based on your retirement lifestyle, whether that means moving to a warmer climate or switching to a one-story residence.
Avoid the temptation to help adult children
This is something Orman talks about a lot. While she understands that sometimes adult children need financial help, she also knows that sacrificing your retirement savings to get your kids out of financial trouble is often a bad idea. She speaks often about parents who take out loans for their adult children, or who help with rent in a high-priced city.
one in blog post On her website, Orman tells it as she sees it.
“If continuing to provide financial support to your children is making it harder for you to get your finances in good shape — saving more for retirement, paying off your mortgage, eliminating credit card debt — then you’re actually making matters worse for your family,” Orman said. “Years from now, your adult children will need you to step up and help them. At a time when they are trying to support their families. If you help today, it may not be at the cost of hurting you tomorrow.”
investing in retirement
Orman suggests continuing to have a diversified portfolio in retirement, but he also recommends keeping one to two years’ worth of expenses in cash. This way, you won’t have to liquidate your investments in a down market. She also recommends withdrawing no more than 3% to 4% of your savings annually.
Despite all the planning we do for retirement, the journey doesn’t always go as we expect. But following these tips can help you navigate the bumps along the way, and help you enjoy the retirement you’ve dreamed of.