I told my husband about the now infamous interview between Suze Orman and Paula Pant on the Afford Anything show, and started playing it for him. After Suzes opening proclamation he laughed out loud and said “she’s right”.
Our families perspective on financial independence and early retirement is unique among 30-somethings. We know bad things can happen, out of the blue, to good, ordinary people. It happened to us. They happened to friends. And it can happen to you.
All About The Interview
In case you haven’t heard it, seen the news, or seen it online, Paula Pant of Afford Anything interviewed Suze Orman, the self-proclaimed “Money matriarch” on Monday. In the interview Paula asked Suze about her thoughts on the FIRE (financial independence, retire early) movement.
“I hate it, I hate it, I hate it. And let me tell you why!”
That was Suzes opening to an introduction to all the things that can go wrong, that the folks who retire at 30-something aren’t thinking about (from her point of view, anyway).
Bad things happen to good people, and they can happen to you, she warns. Even $2 million, which sounds like a lot, won’t be enough. $5 million won’t be enough. Long term care is expensive, and getting more expensive every day. It’s not something people in their 20’s and 30’s typically spend much time thinking about. Permanent disability could not only impact your ability to ever earn money again, but also your family will need to support/care for you
“If you play with FIRE, you’re going to get burned”.
Our Experiences With Bad Things Happening
This, specifically, is the part we both agree with. Some of you already know this, but when I was 32 and my husband was 37, he almost died of septic shock.
What was supposed to be an easy, laparoscopic surgery with a few days recovery in the hospital turned instead into an ongoing nightmare. He was in the ICU on a ventilator for a week, away from home for over a month in the hospital and rehabilitation, and has had multiple surgeries since.
He walked into the hospital a healthy man with a young family, and left with lasting damage. You can read more about what happened here , and my husbands perspective on the ordeal here.
We’re not alone. When I was in my 20’s, I didn’t know anyone that bad things happened to. Heck, all my grandparents were alive and healthy back then. But now that I’m 38, I know:
- A very young brand new father who Died of a devastating brain cancer in their early 30’s, only months after their first daughter was born. They underwent months of expensive treatment, surgeries, and time in the ICU before passing away
- A young single mom of two who Died of blood cancer. This was after several years of expensive treatments, including months of hospitalization
- A former co-worker of my husbands who died of colon cancer after a years-long struggle, leaving behind a teenage son. During the years long battle, they could not work.
- Several former co-workers lost family in 9/11. A twin sister trapped in the towers, and a brother-in-law who was a police officer
- My former endocrinologist had his entire family brutally murdered in a home invasion. They even made an HBO movie about it which I cannot watch. He has never worked as a doctor since.
- I know multiple people who either battled or are currently battling colon cancer.
- People whose children have been diagnosed with cancer
- Of my grandparents, I saw one pass away after a lengthy battle with Parkinson’s with Lewy Body Dementia, including months in a skilled nursing facility. One passed after battling Mesothelioma, and one from heart disease. All required expensive care, particularly in their final months.
Even if not ultimately fatal, unexpected medical issues can take a huge financial toll. There are the direct medical costs, of surgeries/hospitalization/
I had health insurance on all of us, but my husband had lost his disability insurance when he was laid off in the Great Recession (his factory closed).
We didn’t have a 50% savings rate back then, but we saved a good portion of each paycheck. We had some debt, but not much. And so when everything went to hell, and we had to pay for crushing bills, daycare costs, remodeling costs, lost his unemployment with no disability for him- we were able to cover the bills by tapping our emergency fund and decreasing our savings for a year.
Once he was recovered, we went into financial overdrive. We got rid of our debt, slashed our expenses, and focus today on getting rid of the mortgage ASAP.
It’s precisely because something may go wrong that it’s important to pursue the FIRE life. The RE part doesn’t need to mean retirement. That’s why I call it “retirement elective” and not “retire early”.
What Else Suze Doesn’t Get Right
When listening to the discussion, you could be forgiven for thinking that because you earn a lot, you must spend a lot. She mentions expenses like private K-12 school, $30k per month long term care costs, paying the quarter million out of pocket cost for Harvard, and other lavish expenses. Not to mention her boat, private plane, and private island. She also went on a bit of a tangent about how artificial intelligence is going to take all our jobs by 2030, leaving massive unemployment. I’ve written about that before, and I don’t think it’s true. People have had the same fear about every major technology revolution, and every time, society adapts.
When Paula pushes her asking about someone who is a low income earner retiring with a certain amount saved, Suze thinks that’s fine. Although Paula pushes repeatedly to understand why they would be fine when someone who earns a high income but spends at a much lower level would not be, Suzes only point about the difference is that the earlier you retire, the more time you have for bad things to happen.
Frankly it’s not the members of the FIRE movement Suze should be worried about. It’s the people who are in debt up to their eyeballs, or the 40% of Americans who can’t cover a $400 unexpected emergency. It’s the 65% of Americans with little or no retirement savings. And the 78% who live paycheck to paycheck. These are the people really playing with FIRE.
Even with health and disability insurance, Americans in these situations would likely go bankrupt if they ran into a situation like I did. I was able to deduct over $10 grand from my taxes in medical expenses that year. Disability insurance only pays a portion of your income. And there’s no “caregiver insurance”-unless you’re fortunate to work for a company that offers paid caregiver leave, FMLA is unpaid.
If you can’t cover a $400 emergency, you’re going to file bankruptcy or be in debt for many years in a situation like ours.
The fact that it was FIRE principles that saved us is part of the reason I believe the stereotypes of the FIRE movement are so damaging. If you think the principles of living below your means, getting rid of what you’re spending that doesn’t align with your values, eliminating debt, and saving as much as possible for the future of your dreams can’t be for you because you’re not a high income earner-I worry about that.
Dismissing these ideas and principles and continuing to live with your head in the financial sand puts you much more at risk than an “early retiree” would be.
The Rest Of The FI Community – Are They What Suze Thinks?
I mentioned before that I have, indeed, seen people who dismiss longevity risk and health problems as issues that they could need to deal with. Fortunately, most are not.
Most people are focused on living well below their means as a way to take a leap into a different life. Some want to reach financial independence but continue working in their current field. They simply want security and flexibility. The majority of people who FIRE don’t have debt (or only have a small mortgage) and DO plan for health, life, and disability insurance.
I’ve been hanging around financial forums and consuming financial content of all kinds for the past 20+ years, so similar to Suze, I’ve seen it all. There have always been folks that are totally risk averse, others who take big risks (which sometimes pay off, and other times lead to disaster). Most are somewhere in between.
I have seen people taking big risks-going without health insurance, not having an emergency fund, assuming the market will always go up, and the like. But I’ve fortunately seen a lot more folk ensure they have a solid financial foundation underneath them before leaping into a different line of work.
Key Takeaways
Make sure you have a solid financial foundation. Don’t neglect an emergency fund/plan, and health/life/disability insurance. Insure against risks that you can’t cover. Even – or especially-if you’re going to work for yourself.
Ensure your plan and financial projections take into account the costs of college (if applicable), health care, health coverage, and long term care later in life. A comprehensive financial plan includes not only your current day-to-day expenses, but also costs for large lump sum events. And it includes accounting for inflation.
FIRE is an acronym many people use as shorthand for “financial independence, retirement elective”. People don’t want to retire in the traditional sense of sitting in a hammock and doing nothing all day. Instead they want financial security underneath them to help them pursue other goals and dreams. Those goals and dreams will likely be taking in an income of some kind.
But most importantly, don’t buy an island.
https://twitter.com/thevisualscribe/status/1047591549901524992
Other Reactions Around The Web
Clark Howard tackles the idea that you need $10 million to retire.
Early Retirement Dude talks about how FIRE is the new avocado toast.
Wait – Suze told Physician on FIRE WHAT about the 4% rule???
The Money Vikings talk about what Suze got right – and wrong.
Halt Catch FIRE, a blogger from Serbia, talks about how the FIRE movement is just fine, thank you Suze
I Want To Hear From You!
Have you listened to the interview? What was your reaction? Let me know in the comments!
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Great commentary CMO.
FI principles are what saves you when bad things happen.
To me that says it all. If she hates our goals so much, us who save millions, then her hate for the rest of America and the way they live must be epic.
I also just have major problems with her life of rampant consumerism and her carbon footprint and impact on the planet. I’ve read articles about her political views and let’s just say it’s a typical case of hypocrisy and “do as I say, not as I do”.
I’ve read before that she also invests exclusively in municipal bonds-not sure if that’s still true in recent years.
Good post CMO, I remembered your post about the unfortunate events with your husband. You are, unlike many others, a living example of why “the devil” (thanks for your tweet of my post by the way) is partially wrong. Even if you don’t aim for FIRE, improving your financial household will help you weather unforeseen circumstances! It’s a good thing to be part of this community, as Accidental FIRE already noted, she must really hate the rest! (or not, for buying her books and making her rich!)
I actually was a Suze fan back in the 2000’s-found her books helpful for some of the “money basics” to set a solid financial foundation. Nowadays, of course, there are many more great sources of information. And yes, even if you don’t want to retire ever, the general principle of living below your means still apply
To me the Suze Orman interview represented all that is wrong with media today. You have someone that is ill informed about a topic but throws out a few click bait comments and they get all of the attention. It’s a shame that Suze is one of the most popular personal finance gurus out there because after listening to her she’s clearly a character who knows how to drum up media attention.
Huge shoutout to Paula Pant. She is my favorite podcast host and it’s a shame people like her who give solid well informed advice don’t get more attention. If you haven’t listened to her follow up episode published this past Friday (Oct 5) you should give it a listen. It’s so well done and provides a variety of different perspectives on the original interview.
Thanks for sharing your story about your family. I can only imagine how difficult of a time that was for you. However, I’m sure pursuing FI made it a little less challenging than if your finances were in bad shape.
That’s right, and I think that’s the most important takeaway. Perusing financial freedom doesn’t prevent bad things from happening, but neither does living paycheck to paycheck. And I’d rather financially be in the former situation than the latter. When bad things happen, you want to have minimal money worries on top of everything else to worry about
I’ve been looking forward to reading about your thoughts on this, and it’s absolutely spot on and thorough. This –> ” 65% of Americans with little or no retirement savings. And the 78% who live paycheck to paycheck.” is terrifying.
You’ve done an awesome job detailing the principles behind the movement and how they saved you when your husband almost died. It’s aweful that your family went through this, I am however thankful that you share your experience and bring this different and valued perspective to the movement.
Those have always been the stats that really scare me
With your husband almost dying at 32, do you ever have the desire to stop working and doing something else? I must imagine you’re super motivated to provide for the family now and you like your job. But are there some things you’d rather do instead?
How do you decide how much is enough?
Sam
An excellent and hard question Sam. Not one that I have a good solid answer to in terms of a number, but I have given it thought. I will say that I am very selective about where/how I work at work, and I’m not afraid to move to a work environment or team that works better for me and my family. I’m relatively conservative too – partially always was, and this event has made me even more so. That’s why goals like being mortgage free and funding enough to help with college for my boys are important to me. Once those two major goals are achieved, then I’ll reevaluate my other goals. I only have under three years left until my oldest starts college. I know exactly what it will take to reach my goals there, so at least there’s a clear path forward
I love the quote Paula posted, “Smooth seas create weak sailors.” We “woke up” financially because of a crisis, albeit not as major as yours. When Mr. ThreeYear was laid off twice in one year, it snapped us out of our financial lethargy and we quickly paid off our debt and started learning the basics of frugality. It’s absolutely ludicrous to think that because you don’t have $5 or $10 million in the bank you can’t retire. Doomsday prophecies feed the media’s insatiable need for more bad news, I guess. Helping people feel self-sufficient and self-reliant? Maybe Suze’s worried she’d be out of a job. Plan for the worst, prepare for the best. And live your life. Many, many frugal people I know have retired on the earlier side. That’s not a coincidence. It’s because they carefully prepared for years and then got to the point where they realized they were good, even if a major catastrophe struck. Because they’d developed that self-control and work ethic for years. And it didn’t go anywhere in retirement. PS It was sooo good to see you at FinCon Liz!!!
Yes I’ve known plenty of people retired at 50. Some continued to work but differently, and some just retired. And I doubt they all had ten million dollars in the bank.
Great commentary on the podcast. I love how your husband responded and your family’s situation clearly highlighted why FI is so important to many. I listened to it and had a feeling the arguments presented was more delivered as a fear tactic rather than an objective perspective. I am not a retirement early person as I would probably loose my mind if I didn’t have something meaningful to do every day but as a person who is striving for FI your rebuttals are right in line with my thoughts on financial independence. Just last week, I decided out of the blue to take a day off from work and spend with my mom who has been having some health issues lately. Without being on the path to FI I would have never wanted to upset the apple cart at my job and take an extra day after being on vacation for an extended period that month. Striving for FI is definitely a game changer.
Right-it helps provide security so you can prioritize what’s really important to you, rather than stressing because you NEED that next promotion/raise/whatever. I’ve also found financial security, even when not FI, makes work in general less stressful
Security and flexibility. That’s exactly the draw for me as well. If we ever do “Retire Early” I expect it will be more a la Tanja of Our Next Life and have contingencies upon contingencies. But reaching financial independence alone is kind of freedom that almost no one ever experiences.
Call me a contrarian and maybe slightly biased but I sort of tend towards Suze’s views. I agree that anything that can go wrong, often does. I also buy her point that compounding really becomes something worthwhile when given good time. And if we end up only using up interest in those years instead of beefing up the principal, it possibly may not outlast us.
Of course she went on random tangents like AI taking away all jobs and the $30K per year medical costs.
Apart from that, like I mentioned on my blog earlier, I am not much for the idea of early rerirement either. I agree with her on the point of making your professional life something you are passionate about rather than running away from it.
I always have to remember how similar our stories are. FI principles ARE what help you get through. Nearly loosing my wife at 35 motivated a bigger safety net, but it caused us to double down on our expense management and allowed me to focus on her health without any real concern about “what if I get fired”. I wholeheartedly disagree with Suze on this and hope to have something posted soon to add to your list. I’m convinced she’s disillusional from living in the top 1% of income for the last 20+ years. What she considers normal expense are not what everyone else considers normal.
If you write something, be sure to let me know and I’m happy to add it in. I read a post from Mad Money Monster that had very similar points, you should check that one out too.
Thank you for sharing your voice on this topic! I agree that FI helps us handle all the situations that arise, and nobody knows what will happen, but the best way to prepare is by putting yourself in a good position today. Suze is supposed to be the Money Matriarch, but we need voices from other women who are living all different lifestyles! Thank you again for addressing this topic!
I haven’t heard the interview but I’ve certainly heard ABOUT the interview. I agree with your concern for long-term health costs for the FIRE crowd. I think most underestimate just how quickly all (or at least most) of it could go away with one or two serious health problems/crises. Especially since so many seem to gamble with high deductible insurances because they’re healthy now.
I think FI is a good goal, but retiring early… That makes me nervous. That said, it’s my intention to get us back to socking away as much into retirement and savings as possible. We’ve gotten lax over the last few years, not to mention that most of our savings went either to Tim’s dental implants ($26,600) and double pane windows for a house *full* of windows ($10,000). So we’ve had a few… Not financial setbacks, but definitely financial hurdles.
Houses are so expensive! I didn’t even talk about that, but there certainly are some major costs involved there.
Great article, Liz.
Yeah, saving for financial independence has put me in the best possible financial position…ever.
I listened to the interview and wasn’t too impressed. She made some valid points but she also seems to misunderstand a lot about the FIRE movement.
Although it was hard to listen to Suze sometimes with her incessant boasting, I decided to back her up like MadMoneyMonster and agree that $5M sounds about right.
My post is linked in the UR field..
Sam
This is very inspirational. My grandfather who had been healthy his whole life almost died of sepsis a year ago out of no where! I can relate. He also happens to be my personal inspiration for FIRE before it was called this, as a blue collar guy that never had a fancy job, but retired comfortably at 50 through frugality and investing. I like how you bring home the concept that FIRE is a kind of lifestyle that emphasizes the precious time we have.
I think Suze is off on the $5 million thing, that is if you want her lifestyle. Many people are pretty happy with a simple life that can be much more affordable. Plus, it is very hard to reach $5 million, does she understand how small a percentage of the population that is? Really, we can’t live comfortably off $2 million?
Greg, The Money Vikings
Hi, well written. But I feel it is missing the point. I sometimes feel that FIRE advocates get too defensive and miss a few key points. My take on Suze is that she was off base at various points but the main point she was raising was on RE not FI. No one questions the need for FI and the different means to get there. Question is on retire early (RE). How does a family of 4 cover Health Insurance, Disability Insurance and other types of insurance (long-term care) without having to spend 25K per year? Even if one is financially independent to cover day to day living (food, housing, utilities, transport, auto insurance, property tax etc), the way health care is set up in this country and the huge expense associated with this, it is difficult to imagine RE, especially when one is in the 30’s and 40’s. Sadly there is not much discussion on this aspect within FIRE. Lack of discussion or minimizing this aspect can mislead other would-be FIRErs.
Health care is definitely one of the biggest unknowns. It’s expensive, and getting more expensive all the time. People certainly need to take those costs into account in their financial plans.
Wow. The fact the “bad things can happen” is actually a motivation for FIRE, not a reason to avoid it. A cool $2 mill, throwing off 7-8% per year (long term average on a diversified portfolio) should cover living expenses (not ridiculous consumerism) perpetually, with money always in the kitty for emergencies. Suze is just selling a line, and shows she is quite out of touch with the majority of salary/wage earners and less extravagant entrepreneurs. So eeking out a living chained to a desk until you are 70, retiring and dying at 71.5 with a ton of money in the bank is more palatable? Ah, whatever. To each their own. You can’t outthink a non-thinker (or someone who has an underlying agenda like Suze).