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You might not need to check off all five to be comfortable in retirement.

Key points

  • Suze Orman recommends paying off all debt and getting used to living below your means before you retire.
  • Try to save more and be ready to work longer if you’re concerned about having enough money.
  • The financial guru also suggests looking into long-term care insurance.

Retirement planning is a complicated subject. You need to make sure you’re in a stable financial position when you retire, and that you’re ready for any curveballs life throws at you. Suze Orman recently shared the five retirement moves you should make during your working years to be fully prepared. Here are all five and whether they’re worth doing.

1. Prioritize paying off all debt before you retire

Paying off all debt before retirement is a great goal to set for yourself. By getting rid of debt payments, you’ll have fewer bills to deal with every month. That’s even more important when you’re done working and on a more limited income.

Start by prioritizing your high-interest debt, which for most people means credit card debt. After that, it usually makes the most sense to continue prioritizing debts based on their interest rates.

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If you have a mortgage, that will likely be what you pay off last. It’s okay if you end up carrying mortgage debt into retirement, but if you can pay it off before then, it’s nice to have that taken care of.

2. Embrace living below your means

Next up on Orman’s list is to live below your means. The most accepted definition of living below your means is to spend less than what you earn. This is sound advice overall, but it’s really more of a basic rule of personal finance than a retirement move.

To improve on this, see if you can get to the point where your essential bills are only 50% to 60% of your take-home pay. When your fixed costs don’t take up too much of your income, it gives you much more financial security. You’ll also have more money to save and invest.

3. Save more for retirement…in the right accounts

To have enough money for retirement, a good rule of thumb is to put 10% to 20% of your income toward retirement savings. There’s nothing wrong with saving even more, either. A larger financial cushion in retirement is always welcome, as long as you’re not saving so much that it’s affecting your quality of life in the present.

What are the “right accounts”? Here are the retirement accounts Orman recommends:

  • 401(k): If your employer offers a 401(k) plan and will match your contributions, Orman says to max out that employer match. An employer match is basically free money, so it’s smart to take advantage.
  • Roth IRA: Orman loves Roth IRAs. With this type of retirement account, you invest after-tax dollars and get to make withdrawals in retirement tax-free.

A Roth IRA works well for some people, but IRAs aren’t a bad choice, either. You could save more on taxes with a traditional IRA if you expect to be in a lower tax bracket when you retire.

4. Have a plan to work longer

When talking about retirement, Orman has said that 70 is the new 60. For anyone who is concerned about having enough money, she believes planning to work longer can be a big help. You can take Social Security later, wait to tap into your retirement savings, plus you’ll have more time to build those retirement savings.

Whether you should follow this advice depends on your financial situation. If you’re in your 50s or 60s and you’re not sure you have enough money put aside, then working longer is a good contingency plan. But if you’re younger than that, focus on saving enough to retire when you want.

5. Consider long-term care insurance

Long-term care insurance provides coverage for home health care and nursing home care. Health insurance plans, including Medicare, typically only cover a limited amount of care. If you need long-term care, it can easily end up costing tens of thousands of dollars.

In my opinion, this is Orman’s best retirement tip, because long-term care insurance is something a lot of people don’t think about. If you can afford it, then it’s worth considering. Even if you’re a long way from retirement, rates for this type of insurance are lower for younger adults. Another option is life insurance with long-term care, which allows you to get life and long-term care insurance together.

For the most part, Orman’s retirement advice is worth following. Paying off debt, living below your means, and saving more are all excellent decisions. Working longer and getting long-term care insurance depend on where you’re at financially. Neither is bad advice, they just aren’t universal tips that work for anyone like the first three.

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