HerMoney Podcast Episode 205: Suze Orman On Coronavirus, Your Retirement and Recession Fears

Saving money on hermoney podcast episode 205 does not have to be complicated. We rounded up the essentials so you can spend less and skip the guesswork.

Key Takeaways

• We’re living in frightening, anxiety-provoking times, but we have to be able to hold on tight and weather the financial storm , we want all...
• A recent survey from Magnify Money showed that nearly 20% of investors would tolerate no more than a 5% market decline before giving up on s...
• Suze is the author of ten consecutive New York Times bestsellers, she’s a two-time Emmy award-winning television host, and she’s the author...

We’re living in frightening, anxiety-provoking times, but we have to be able to hold on tight and weather the financial storm , we want all our listeners to have the knowledge and the confidence they need to make it through this downturn, and the next. A recent survey from Magnify Money showed that nearly 20% of investors would tolerate no more than a 5% market decline before giving up on stocks for retirement, and an additional 33% of investors said they could handle no more than a 10% dip before abandoning stocks… These numbers are so upsetting because when people make changes based on short-term market events, they frequently lose a lot of money, and don’t get back into the markets in time to catch the rebound. 

There is perhaps no better person to sit down with this week to discuss what it means to be a life-long, level-headed, ready-for-retirement investor than Suze Orman. Suze is the author of ten consecutive New York Times bestsellers, she’s a two-time Emmy award-winning television host, and she’s the author of the new book, “The Ultimate Retirement Guide for 50+: Winning Strategies to Make Your Money Last a Lifetime.”

Listen in as Jean and Suze dive into all the market worries surrounding coronavirus and the downturn in the markets , how should we be looking at this, and what should we do with our portfolios? Suze offers up her advice for how best to ride things out, and weighs in on when she thinks the market will rebound. She also discusses why she went from having an 8-month cushion in cash to having a 3-5 year cushion in cash, and why you never want to have to draw down on your principal while the market is down.

Suze discusses how where you’re holding your money (in a retirement account or in an investment account) influences the moves you need to make now. She also discusses how to offset your losses at the end of the year, from a tax perspective. The pair also dive into diversification and how it differs in 2020 from what we saw in 2008 , in other words, what moves do we need to make now that we didn’t make 12 years ago?

Suze talks about the safer bet of preferred stocks, specifically dividend-paying stocks where the dividends don’t make up more than 50% of a company’s earnings. She also goes into bonds, high-yield savings accounts, and the danger of getting out of the stock market and not getting reinvested in time to catch the inevitable rebound. 

Pulling from her new book, Suze discusses 10 things retirees should keep in mind to make sure they’re using their money in the best way possible, and offers her advice on annuities, as well as the ideal age for women to start taking social security. Here’s the link to Suze’s informative piece on retirement from the AARP Bulletin that she and Jean discuss on-air. 

Suze also discusses why she thinks leasing a car is a big waste of money, and why feeling the need to own a “new car” every few years is a big financial mistake. She and jean also talk about the importance of downsizing, and how the more money you save, the more money you have. Because for every $1 you waste now, you’re actually wasting between $3 and $5 because of the compound interest you’re missing out on if you’d invested that money instead. 

In Mailbag, Jean and Kathryn talk about the importance of measuring our expectations on the rates of return that we’re going to get from our investments in 2020, 2021 and beyond. Jean discusses the recent market swings due to coronavirus, and what we should actually be buying more of during the downturn. We tackle a question from a listener who’s curious if she should contribute more to her IRA this year since it has experienced a higher rate of return than her 401(k), and we also field a question from a woman worried that she’s not getting the best deal on the managed portfolio fees on her 529 plan. Lastly, we take a question from an anonymous listener who’s curious if she should take a job opportunity in Pittsburgh, or return to Washington, D.C. Then, in Thrive, Jean dishes on what to do if you owe money to Uncle Sam this tax season.

Transcript

Suze Orman: (00:02) When you start to really value the things that you have and your money, you don’t make decisions to impress other people you don’t even know or like with money you really don’t have.

Jean Chatzky: (00:18) HerMoney is supported by Fidelity Investments. We want to inspire you to demand more from your money by first knowing what you own, what you owe, and what you want from your money. We’ll help you reach your financial goals faster. At Fidelity.com/demandmore. HerMoney comes to you through PRX.

Read More...

Jean Chatzky: (00:36) Hey everybody, I’m Jean Chatzky. Thank you so much for joining us on HerMoney. I am thrilled to have all of you here today. I’m even more thrilled to have Suze Orman with us today. Suze, of course, needs no introduction, but she’s here because she’s got a brand new book out that we all need. I mean, this is number… Is this number 10 or 11?

Suze Orman: (01:11) Actually, this is the 11th but it’s the 10th consecutive New York times bestseller.

Jean Chatzky: (01:16) Amazing, amazing. It’s called The Ultimate Retirement Guide for 50 Plus: Winning Strategies to Make Your Money Last a Lifetime. And it’s your first book really focused on the changing financial needs of people who are looking at retirement, particularly now with the markets so volatile and thinking, what do I do? So I’m so happy you’re here.

Suze Orman: (01:39) Thank you.

Jean Chatzky: (01:40) Tell me a little bit about this book and where the desire to write one for this particular audience came from.

Suze Orman: (01:48) You know, Jean, you yourself just said that this was, you know, my 10th or 11th book and my very first book was called, You’ve Earned It. Don’t Lose It: Mistakes You Can’t Afford To Make When You Retire. But I wrote that book in 1995 and I was essentially 45 years of age back then. Okay. And so here we are and now I’m going to be 69 and it’s very different when you are 69 and you’re facing not only the financial struggles possibly, but also the emotional and psychological struggles of what it means to get older, to write a book for people who are getting older than when you’re 45 writing a book for people who are 65, 70 and 75. So this book brings a total different perspective to it than any other book really I have written, because I retired when I was 65 which was almost four years ago. So all those things of your identifications, of the host of The Suze Orman Show, gone, writing for Oprah, gone. You know all these other things I was doing. I just stopped them all at once.

Jean Chatzky: (03:04) How was that?

Suze Orman: (03:07) That was back in, well, it was now almost four years ago, I stopped everything.

Jean Chatzky: (03:12) But how was that for you? I mean I think about that all the time, right? I think about what happens. Cause I don’t want to work, I want to keep working, but I don’t want to work as much as I’m working forever. And so much of all of our identities I think are tied up in what we do.

Suze Orman: (03:27) So this book has a lot to do with that as well. But how it was for me was interesting because not only did I stop everything, but I sold five of our homes, all of our cars, I sold everything. KT thought I was having an absolute nervous breakdown and we moved to a private Island in The Bahamas, which we live full time even to this day, which, where I’m talking to you from, so I’m sorry if the connection isn’t fabulous, everybody. But there aren’t communications on this little Island. And so it took a little bit for me to get used to that, but not long cause I found a new passion and that passion was fishing, believe it or not. And I can send you pictures for you to see. But KT and I have now become over all these years, master fisherwomen where we really enter contests and tournaments. And a year or so ago we won the Wahoo tournament here on the Island in The Bahamas, which is a fish that’s like six feet long, swim 60 miles an hour, is the most dangerous fish to catch. If you can catch one. And now we’re master Wahoo fishermen. And everybody doesn’t know me, you know, they don’t call me the money lady anymore. They call me the fishing girl.

Jean Chatzky: (04:43) That’s amazing.

Suze Orman: (04:44) They can call me a fishing girl at this age, I don’t mind. So I found a new passion. We will spend eight to 12 hours a day going fishing.

Jean Chatzky: (04:51) That’s fantastic. I was out on a fishing charter in Florida about a year ago. We were fishing for mahi. My one and only experience, but boy, it is not simple.

Suze Orman: (05:02) No it’s not. But we now travel the world to fish in different places everywhere. And what was so fascinating to me is a little bit ago when Oprah was on her Vision 2020 Tour, I joined her in Minnesota and I walked in and this was the first time now I had really been in public and around people who knew me and everything. And 18,000 people went crazy when they saw me. And Jean, you know how it is. People come up, can I have a selfie? And all of a sudden you’re back in that frenzy of quote celebrity. And we were on stage with Oprah and it was so fabulous. And we laughed. And KT said, Suze, do you miss it? And I said, KT, I don’t miss it as much as I do fishing. Cause we hadn’t fished for a week. So I found a new life. But even in finding a new life, you know, I found also my own podcast, the Women and Money podcast. And I love that podcast. And I try to answer almost every single person’s question when they write in and it’s, you know, all these women of all ages. And that’s how this book kind of really did come about. Where women who were 50, 60, 70 writing me saying, Suze, I’m alone now. My husband died, my spouse died, they divorced me, I have to start over. Can you help me? So there’s an entire group of women, and the men smart enough to listen by the way, who are looking for guidance. And now I can guide them because, not only of my financial knowledge, but really Jean because of how old I am. Because that brings a whole different perspective.

Jean Chatzky: (06:43) I love how much you’ve embraced that. I also think that being in retirement gives you a perspective that we all really need right now because the markets have been up and down and up and down. We’re dealing with Coronavirus. There is so much uncertainty and our audience, we know we’ve got, one third millennials, we’ve got one third Xers, but we’ve also got one third boomers and and the closer you are to retirement, the bigger the risk this sort of volatility presents. So what are you telling people to do right now with their portfolios? How do we look at this?

Suze Orman: (07:26) Well, the way that I’ve always told people is that if you really need money within three to five years, that money never belonged in the stock market per se. It just didn’t. But let’s just say that you’re there now and you didn’t get out or whatever it is. This is the type of market that you need to ride out and you just are going to have to ride it out at this point for possibly this entire year. I do think that we’ll see it return again in probably two to three years. You should be okay. But that’s why, you know, I’ve switched. I was on a few shows a week or two ago and they read the book and the host would say, Suze, you’ve gone from eight months of an emergency fund to almost three years. Why? And so what I’m suggesting for everybody right now is that when you do go into retirement, that you have a three year cushion in cash. And the reason that you want that cushion is because you don’t want to sell when the markets are going down. And if you have to take money out of a retirement account while money is going down to live on, you’re taking out more than

Final Thoughts

Before you check out, double-check hermoney podcast episode 205 against current offers and any coupons you can stack. Small habits like this add up to real savings over a year.

Originally published at savingswitch.com.