Suze Orman: These 5 moves will keep you out of the poorhouse in retirement

Suze Orman: These 5 Steps will keep you out of the poor house in retirement
Everyone hopes that after decades of hard work, they will retire rich enough to spend decades more enjoying the fruits of their labor.
But if you ask financial guru Suze Orman, the average American is nowhere near ready. Your savings won't last for decades - they last for about three years.
Research from the Transamerica Center for Retirement Studies found that the average savings in this country is only $ 144,000. That may sound like a healthy amount, but seniors over 65 spend an average of $ 46,000 a year, says the Bureau of Labor Statistics.
If you have wish for more than three good years, Orman's book, The Ultimate Retirement Guide for 50+, offers five key steps you can take today to prepare for a happy retirement. How to start.
Take a close look at your finances
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If you haven't already, Orman says it's time to buckle up and take a thorough look at your budget.
Compare what you spend with what you save. Trim the fat where you can and cut down on unnecessary spending so you can use more for your retirement savings column.
Do you own a home and plan to stay in it until you retire? Then Orman says you need to come up with a plan now to make sure your mortgage is paid off in full before you retire.
Not sure how Mortgage refinancing at the historically low interest rates today could save you hundreds of dollars a month and allow you to get out of your home loan sooner.
Downsize your home
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You may have many sentimental reasons to stay in your current home, but if there is more space than you need and you can make money from it, consider selling it now.
It makes sense not to wait to sell the house, Orman says, because if you invest the profits now, you get a lot more interest than if you wait another 10 or 15 years.
“I don't want you to wait until you're 60 or 70 to sell this house,” she says. "I want you to downsize now so you can save more money right away."
While some are reluctant to part with their family homes, a small space is easier to clean, cheaper to run, costs you less in home insurance, and becomes more accessible as you age.
Refill your emergency fund
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Financial experts usually recommend that you have an emergency fund of at least three to six months to cover the cost of living, Orman actually recommends that you put that on for two or three years.
Yes, spending three years in an emergency fund. Their reasoning is that if the market ever suffers a downturn, you don't want to withdraw from your retirement accounts until it recovers.
With an extensive emergency fund, you can get by until it is safe to withdraw money from your retirement account again. If you need a little help setting up your emergency fund, you can turn to a fiduciary financial advisor.
Invest in a Roth IRA
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To avoid paying taxes when withdrawing money from your retirement account, Orman recommends that you opt for a Roth IRA account.
“Later in life, you want to withdraw your money tax-free,” she explains.
As your payments into a Roth account are made after tax, you do not have to worry about any deductions when paying out. Conventional IRAs, on the other hand, are not taxed when you contribute, so you have to pay later.
However, the IRS has limits on how much you can contribute and who can contribute. Must have an adjusted gross income less than $ 139,000 or $ 206,000 for married or joint applicants.
Most banks and brokerage firms offer these accounts. And if you don't want to make the big investment decisions yourself, you can always open an IRA through a robo advisor who will manage your retirement account for you.
A popular robo advisor even allows you to fund your account by investing your "change".
Update your investment portfolio
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A “set it and forget it” approach to your investment portfolio rarely pays off. You need to regularly review your portfolio and make sure it is still in line with your financial goals and schedules.
Check with your financial advisor to make sure your cash, stocks, and bond balance is the right amount for your retirement goals.
And keep your costs down by downloading an investment app that offers deals with low or no commissions.
Orman recommends either stocks or exchange-traded fund ETFs that pay dividends. Even if the market experiences a downturn, your investments will still provide you with some income.
“When you get to a point where the market starts to fall, you want these stocks to still give you income,” she says.
The moral of the story
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When it comes down to it, the biggest threat to your retirement isn't the stock market, your savings, or exorbitant spending - it's you.
Orman says it is normal to make a few missteps along the way, but if one day you want to retire comfortably, it's time to learn something. Whether you do your own research or work with a professional financial advisor, the more financial knowledge you seek, the less likely you are to screw it up.
"The biggest mistake you will ever make in your financial life are the mistakes you don't even know you are making," Orman says.
This article is for information only and is not intended as advice. It is provided without any guarantee.

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