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Suze Orman Takes on Retirement

The personal finance expert joins Bob Edwards to share tough-love guidance for people seeking financial security

Take on Today Podcast

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Bob Edwards:

Hello. I’m Bob Edwards with An AARP Take On Today.

Personal finance expert Suze Orman has been dispensing tough-love guidance for years to people seeking financial security.

In the August/September issue of AARP The Magazine, the money guru shares some of her best planning advice for people who may be years away from retiring to those who are already retired.

Bob Edwards:

You applauded the #MeToo movement but you also pointed out that women need to stand up for themselves financially also.

Suze Orman:

If you look at the #MeToo movement and #TimesUp movement, obviously it's a fabulous movement. Both of those.

But you really have to wonder what makes a woman say yes to something that she knows is violating her. That puts her down. That puts her in a situation that she doesn't want to be in.

And the reason that happens, in my opinion, is because she needs the job. She needs the promotion. She needs the part in the movie, or the play.

Why does she need that? She needs it to make money.

Why does she need to make money? Normally, it's to provide for her family. So, the whole thing about the #MeToo movement isn't about women need to make money and things like that.

Wrong. Wrong. Wrong.

It's women need to become powerful over their own money. And once they're powerful over their own money, then hopefully they'll never be in a situation where they have to say yes to something simply to make money to provide for those that they love.

Bob Edwards:

You say too often the man, the husband, is the manager of the money.

Suze Orman:

It's not that the man is, you know, necessarily the manager of the money.

The problem is that most men, if they are managing the money, do they know what they're doing?

Do they understand why they're making the moves that they’re making?

Over the 35 years that I've been doing this, I have found that sometimes “Joe” does this, because “Peter” did this, because “Paul” did this, because “James” did this.

None of them really know what they're doing. And that's partly why people like Bernie Madoff were able to be so successful in really conning everybody.

Usually, a woman takes care of the household finances and that is because her house holds everything that she loves.

If she's in a relationship, yet not all women by any means, but a lot of women will let the man still make the financial decisions.

Bob Edwards:

How is saving for retirement different for men and for women?

Suze Orman:

It's actually not different at all. It's a necessity for both of them.

But, women nine out of ten times will use the money that they have to make sure that their kids are okay. That their family is okay. That their brother, their sister is okay. So, a lot of times men have a lot easier time saying no than a woman.

A woman will say yes out of fear that somebody won't like her and give money away versus not out of love for herself. And so, that's a big difference between a man and a woman.

Bob Edwards:

You should not take social security until age 70?

Suze Orman:

Yeah, 70 needs to be the new 65. And what I mean by that, is that if you think you're going to retire at 65. What's so sad is that you probably don't realize that you will spend more years in retirement that maybe you ever did working.

So, if you could just move that figure from 65 to 70 in your head then you would have five more years of accumulation on your retirement accounts. Five more years that you're not withdrawing from your retirement accounts. Five more years to work and generate income to pay off the mortgage on your home, so you don't have a payment after you have retired.

And five more years to let your Social Security actually accumulate, assuming that you're healthy and going to live a normal lifespan. So, that you can start taking social security at 70, which is a lot bigger paycheck for you than at 65.

Bob Edwards:

You say invest that tax smart way. What is the tax smart way?

Suze Orman:

A tax smart way is that, you know we're in a situation right now, where we have tremendous deficits. The United States can't even pay their own bills. You know, just, we need to build our own financial security and we don't have it. So, you need to really understand that the only way to solve the financial crisis, in my opinion, is to most likely increase tax brackets years from now.

So, if you really want to be smart with your money and you're putting it in a retirement account the only retirement accounts that you should use are Roth IRAs Roth 401Ks, Roth TSAs if you're in the military, and Roth 403Bs. So, that what you see in your retirement account, is what you get.

If you have any other type of retirement account besides a Roth type of retirement account, what you see in your retirement account doesn't mean that's what you're going to get. Because if tax brackets go back up again, they could go 50-60-70. They can go all the way back up to 80 or 90 percent. They were there once. There's no reason they can't go there again.

A lot of that money may go to the government in taxes to solve the government's financial problems and leave you in the lurch.

Bob Edwards:

You warned us against scams. There's even been a fake Suze?

Suze Orman:

Yeah, there's… everybody's got to be really, really careful. I personally… I'm not sure I would believe anything that I read on the internet anymore. In terms of where somebody is saying: this person, this pundit, this celebrity, this whatever, says buy this, do this, with your money.

If somebody's going to say it, you need to hear them say it themselves. You need to see them on TV. You need to go to their websites.

And whenever you go to somebody's website, please make sure that you're spelling that person's name correctly. Because the scam artists out there already know that, chances are you're going to misspell somebody's name, and therefore you're going to end up on a fake website that looks identical to the real website.

And before you know it, you're going to buy something.

And the reason that there was a fake Suze, is that… I was reading…. I love CNN and I was reading all the stuff from CNN. And all of a sudden, I see an interview on CNN logo – looks like their web site – between me and Wolf Blitzer.

And in there, Wolf is asking me: well what should America do with their money?

And in there, you hear Suzy say you should invest in this, this, this and that.

I never interviewed with Wolf. We never, both of us, were scammed. A lot of people put their money in something, they didn't check it out. So, you have to be very, very, very careful.

It's better to do nothing, than to do something, that you have any doubts about, whatsoever.

Bob Edwards:

You're a big believer in saving for a long-term care?

Suze Orman:

I am a big believer in that.

You know, my own mother lived till she was 97 years of age. And years ago, when she was in her 60s, and I was a financial adviser seeing clients at the time, I begged her to buy a long-term care insurance policy.

I told her I would pay for it. It didn't matter, you know. I just wanted to know, if something happened, that she would be okay.

I did the same thing with my aunt and my uncle. My aunt and my uncle listened to me.

My own mother says to me: “Suze, I'm never going to need it and don't worry about it. Look how healthy I am.”

Well, starting at the age of her late 80s, mommy didn't need it. And it caused Suze – because I was the one who was financially responsible for her – 20 to 30 thousand dollars a month for over seven and a half years to take care of her. In the way that I could afford to, number one, and the way I wanted her to live.

My aunt and uncle were doing the exact same thing and because they had long-term care insurance, it really didn't cost them anything.

So, it was a real shame. And what if you don't have a little Suzy that can take care of you that way? So, I love long-term care insurance. If and only if: not only can you afford it, you happen to purchase it within your 60s or whatever age you are, but every single year until you are at least 84 or 90 years of age because that is the average age of entry into a nursing home.

And you also have to know, that not only can you afford what the premiums are when you purchase it, but would you be able to afford it if the premiums doubled or tripled over those years? Because that is what's happening to them. But, however, you will spend less than one year… you will spend less on all the years that you have long-term care insurance on the premiums, than you will spend for one year in a nursing home.

It's something that everybody really should look into, if and only if, they can easily afford it. Otherwise, do not do it.

Bob Edwards:

What America really wants to know is do you have more than one pair of earrings?

Suze Orman:

No.

[LAUGHTER]

Suze Orman:

No, the truth is I have... And I'm telling you this for the first time… Well, I have the earrings that I always wear. I do have a second pair of those earrings. Somebody had a pair. They saw that I always wore them. And they sent them to me as the gift because, they said, if you ever lose one. Now you don't have to be afraid. And so, I have two pairs of earrings but they are the same.

Bob Edwards:

What's the story?

Suze Orman:

You know the story behind that is a kind of a very sweet one.

I was doing The Oprah Winfrey Show, which I did 29 times during my stint with Oprah there, and I was talking to the members of the audience. And this one woman had on a blue dress and, I just started being on The Oprah Winfrey Show, and this woman had on a blue dress. And I said do you have credit card debt? Because she told me that she had bought it for the show in case somebody saw her on TV. And she said yeah, I have credit card debt but don't worry about it. Right after the show, I'm going to take it and return it.

I started to think about how much people really care about what they look like, if they’re going to be seen on TV, blah blah. And I thought, well I'm going to be on TV a lot. Therefore, I should start wearing the same black undergarment, the same earrings, the same necklace, the same watch. Everything should be the same and I just started to do that.

So, then I was able to say listen people: if I can do it, so can you.

You don't need a million pairs of earrings, a million pairs of this, a million pairs of that. Just find one pair that you like and wear it all the time. So, that's how that started and it just kind of lasted. It makes my life really easy.

Bob Edwards:

Thank you so much.

Suze Orman:

You're welcome.

Bob Edwards:

Here’s what else you need to know this week.

Since the arrival of the first all-purpose credit card around 1950, part of the process to make a purchase secure was to sign your name.

but today chips embedded in your card provides significantly more fraud and safety protection than that signature ever did

now three of the four biggest credit card companies in the U.S.: MasterCard, American Express and Discover, will no longer require merchants to collect signatures.

Signature requirements have been on the decline for years now, particularly for smaller transactions.

The signature less transaction reflects a desire on the part of card companies and merchants to speed up the in-person checkout process and they also reflect the belief that there are stronger ways of preventing payment card fraud than asking you to sign a charge slip or an electronic screen.

But not all businesses will make the change. Many restaurants, for example, rely on signed receipts to get patrons to add tips for the staff. How much however is still up to you.

For more personal finance news and tips visit aarp.org/money.

One convenient benefit of online shopping, aside from avoiding long checkout lines, is the ability to read reviews of a product from those who have already purchased it.

But not everyone buys things for their intended use, something eagle-eyed shoppers have noticed in some write-ups on e-commerce sites like Amazon.

For example, one customer wrote about using stainless-steel dog bowls for collecting and fertilizing fish eggs.  Another rated the effectiveness of a particular superglue to tether insects for behavioral monitoring. Yet another reviewer talked up tea strainers as a tool for introducing one ant colony to another.

There's even a Twitter hashtag #ReviewForScience where clever scientists can share or brag of their inventive repurposings. Because as all scientists know creativity is the mother of invention.

Bob Edwards:

For more, visit AARP dot org slash podcast.

Become a subscriber, and be sure to rate our podcast on iTunes, Stitcher and other podcast apps.

Thanks for listening.  I’m Bob Edwards.

Personal finance expert Suze Orman shares some of her best planning advice for people seeking financial security and highlights her new rules of retirement in the August/September issue of AARP The Magazine.

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