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Suze Orman Gets You Ready For Retirement | Money - YouTube
Channel: MONEY
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I am the one and only Susie Orman, and my
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goal is to make you as
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independent from financial advisors as possible,
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because you are never going to be powerful in life
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until you are powerful over your own money.
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And my job is to make sure you
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can achieve just that.
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So rather than asking more from
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your money that it can't give
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you, you have to ask
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less of your spending habits from yourself which
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means you have got to get rid of all credit
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card debt.
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All debt.
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Total debt of car loans, mortgage
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debt, all debt that you have has
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to go.
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So one thing that you have to look at is
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if you have a debt, that is your sign
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that you can't afford to retire.
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Maybe you retire from the job that you currently have,
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but then you have to get some side hustles or
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something.
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So my best advice to you is
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start living below your means but
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within your needs.
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How do you do that?
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From this day forward, every time you go to make a
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purchase, ask yourself a question, 'Is this a want
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or is this a need?'.
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If it's a want, please don't purchase it.
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If it's a need, you have to buy it.
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It's just that simple.
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You know, a lot of you, when you're approaching
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retirement, you look at your portfolio
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and usually your portfolio is this:
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you have a 401 9k), 403 (b), a Thrift savings plan
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if you work for the government or whatever, it may be,
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the military.
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And now you've retired and now normally
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you would then do an IRA rollover with
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that money.
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But now you're 'Oh my God, what should I do?
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I never invest in money before, really.
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I've just put money in every single month into these
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mutual funds.
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And now I don't know what to do.'.
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If you are going to be withdrawing money from your
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retirement account to pay
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for your everyday expenses, you
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have to know that you have -- ready for this,
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everybody -- at least three
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years of expenses
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in cash, earning you a high
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interest rate or whatever the highest interest rate is
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that you can get.
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The rest, at this point in time,
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should really be diversified into
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high-yield dividend-paying either stocks
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or exchange-traded funds.
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If you need really short term money and you want to
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get a higher interest rate for very short term money,
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right, I don't have a problem with bills.
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And, you know, I myself will put a serious sum
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of money protected in bills because if
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you're investing more than $250,000,
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then you really have to go to a variety of banks
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in order to get FDIC insurance -- or even
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credit unions.
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So if you have a large sum of money of $1 - $3 million
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that you just want liquid, then I
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use Treasury bills for that.
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I don't have a problem with that at all.
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And they keep rolling over but I know that they're
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guaranteed by the taxing authority of the United
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States government.
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If we're talking now, though, about amounts
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that are $250,000 or below,
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I think that you're far better off, right
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here and right now, putting the money in
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a high-yielding savings account.
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So for smaller amounts of money, savings
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account. For $250,000 or above
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that you want liquidity and the highest interest rate,
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I don't have a problem with Treasury bills.
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You don't have the documents in place today
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to protect your tomorrows.
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You don't have a will.
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You don't have a living revocable trust.
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You don't have an advance directive and durable power
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of attorney for health care.
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And you don't have a power of attorney for finances.
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You need those things not just to make
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sure that your assets pass freely
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to your beneficiaries.
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You need those things for you.
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So here you are now and your spouse has died.
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Who, as you get older, who's going
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to write your checks for you?
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Who's going to pay your bills for you?
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If you get sick, you have an incapacity, who's going
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to do that?
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So it's very important that you
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get the documents that are correct.
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Long-term care insurance, if you can afford
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it, will absolutely protect
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your little nest egg if one of
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you ends up in a nursing home.
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One out of three of you will spend some time in a
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nursing home after the age of 65.
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So look around and
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if you decide to buy long-term care insurance,
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the perfect age to buy it is really in your 50s.
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But here's the key.
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You better know that you can afford a long-term
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care insurance premium because they're not cheap.
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From the age of when you buy it all the way until at
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least 84 because it makes no sense for you to purchase
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it. Pay for it in your 50s, in your 60s.
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Now here you are in your mid 70s, you can't afford it
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anymore and then you drop it.
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You're better off just not buying it at
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all.
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Let me just put it to you bluntly.
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You are to stay as far away from a reverse
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mortgage as you possibly can.
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There is not one situation out there
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where you should be getting a reverse
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mortgage. A reverse mortgage is based on the
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interest rates that are in effect right here and now.
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It's based on your age.
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And it just makes no sense.
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If you own a home and you can't afford to
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stay in that home -- with real estate prices
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as high as they are --
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you could just sell your house right now
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and either seriously downsize, or
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there is nothing wrong with renting.
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