The amount you’ll need to retire depends on various things, such as your lifestyle, location and housing. However, regardless of your circumstances, the amount needed to retire comfortably is increasing. A 2024 study by Northwestern Mutual revealed that most Americans believe they need at least $1.46 million to retire. However, not everyone agrees with this number.
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Personal finance expert and podcaster Suze Orman has some bad news for the average American. She declares a $2 million retirement nest egg to be chump change, especially if your family has a history of longevity. On the positive side, she does have advice on how to boost your retirement savings. Here are four tips that Orman suggested you use to prepare for retirement.
Spending less than you make sounds like common sense, but it can be difficult for many. Orman has been adamant about saving money by living below your means, saying, “I don’t care if you can afford a 3,000-square-foot home; buy a 2,500-square-foot home.” Taking her advice means setting aside more for your retirement.
It’s easy to overlook this, especially when you get a raise or a salary bump. “Lifestyle creep” happens when you begin spending more to match an increase in income. This can be dangerous because you can get comfortable going out to eat more often, driving fancier cars or taking more trips. Once you get comfortable spending more, less goes into your savings. Orman wants people to rewire their mindsets so they get as much joy from saving as they do from spending, which can put them on the fast track to a healthy financial future.
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If you have any type of debt, whether it’s from personal loans or credit cards, Orman suggested paying everything off before you begin saving. “Debt is bondage. You will never have financial freedom if you have debt,” she said
It’s common knowledge that having debt means you’ll be paying extra money in interest, but Orman has noticed other trends that can have direct negative effects on your financial health. She explained that debt makes people feel powerless, which in turn saps them of their energy. When you lack energy, it’s harder to make money, and you become locked in debt. By making a conscious effort to get out of debt, you’ll find more motivation to save and make more money for retirement afterward.