Author Topic: Suze Orman hates FIRE  (Read 45606 times)

Cassie

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Re: Suze Orman hates FIRE
« Reply #250 on: October 19, 2018, 11:17:32 AM »
She just published a new article saying she didn’t realize that most fire people continue to work in some capacity so she’s fine with that. Pretty funny!

Retire-Canada

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Re: Suze Orman hates FIRE
« Reply #251 on: October 19, 2018, 11:21:42 AM »
You're right that the 4% covers widespread disasters, but it doesn't account for individual disasters of the type Suze mentions--major medical issues, long-term care, etc.

Those are all things you should be considering during your FIRE planning. There are solutions to each item.

genesismachine

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Re: Suze Orman hates FIRE
« Reply #252 on: October 19, 2018, 11:39:42 AM »
You're right that the 4% covers widespread disasters, but it doesn't account for individual disasters of the type Suze mentions--major medical issues, long-term care, etc.

I think that would be a failure of your ability to follow the 4% rule, not a failure of the 4% rule. 

The whole point of the 4% SWR is to give you a guideline of what you can safely spend.  If you spend more than that, it doesn't change the safety of the guideline it just means you exceeded the guideline. 

If a car is crash tested for safety at 35 mph and you then crash it at 70mph, you don't blame the crash standards, you blame the driver for exceeding the design specifications.  Sometimes 70mph crashes still happen.  That doesn't change the validity of the 35 mph crash test rating.  Let's not start blaming the NHTSA because you crashed your car.

I think your analogy is backwards. A more appropriate analogy would be if someone else crashed into you at more than 70mph.

6-Saturdays

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Re: Suze Orman hates FIRE
« Reply #253 on: October 19, 2018, 12:08:12 PM »
Looks financial samurai has jumped on the "S.O." bandwagon, but his lifestyle is so clown-car in a HCOL area that I guess it makes sense for him.

I will personally add him to the list of people I never take financial advice from.

https://www.financialsamurai.com/suze-orman-is-right-you-need-5-million-or-more-to-retire-early/


Retire-Canada

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Re: Suze Orman hates FIRE
« Reply #254 on: October 19, 2018, 12:37:04 PM »
It's probably much easier to drop from an 80k to a 60k annual spend on a stash of 2 mill than it is to drop from 40k to 30k on a 1 mill stash -- typically more fluff in the higher budget that can be cut if necessary.

OTOH an easy $10K/yr PT job is 25% of a $40K/yr FIRE budget, but only 12.5% of an $80K FIRE budget so it's much easier to fill the gap with lower spending if it was necessary.

mizzourah2006

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Re: Suze Orman hates FIRE
« Reply #255 on: October 19, 2018, 12:37:56 PM »
Looks financial samurai has jumped on the "S.O." bandwagon, but his lifestyle is so clown-car in a HCOL area that I guess it makes sense for him.

I will personally add him to the list of people I never take financial advice from.

https://www.financialsamurai.com/suze-orman-is-right-you-need-5-million-or-more-to-retire-early/

Yeah, I saw that. Basically he said this is what you need to barely make it in LA:

1. Eat out every night
2. Save $600k for your kids' college education
3. Get an additional $2M term policy after you have 6.3M NW.
4. Still pay for childcare 10hrs/week (apparently forever)
5. Pay $16/gallon for gas

Other than that, he might be close to accurate if you want to retire with a huge mortgage in LA. I think what people always forget to think about is taxes in the spend down phase are a function of your needs. If you can reduce your need to spend money you can have a huge impact on your taxes as well.

maizefolk

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Re: Suze Orman hates FIRE
« Reply #256 on: October 19, 2018, 12:58:03 PM »
Remember, research looking at the 4% rule in every other developed country outside of the US market has not fared nearly as well. So there is always the possibility that we turn into Japan in 10-15 years. Having said that, most people aren't retiring at 35-40 and not earning another dime for the rest of their lives, so even if that does happen, it's unlikely to send someone into poverty.

Most of the countries with a hundred+ years of financial data are in Europe and were invaded and occupied, had their infrastructure destroyed and a large swath of a whole generation of young people killed during one or both world wars the failure rates can be quite high.

But there is essentially no amount of money that would allow you to FIRE in Germany in 1944 and not have to adjust your lifestyle in any way for decades to come. (Or in France in 1939, or in Japan in 1945, and so on.) If you exclude the effects of having your homeland bombed, invaded, and occupied (and/or experiencing a major civil war (Spain)) as sol and markbike528CBX said, rates around the world than ensure 0% failure tend to be between 3.5 and 4%

ysette9

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Suze Orman hates FIRE
« Reply #257 on: October 19, 2018, 01:03:36 PM »
Though with the recent tax reform, setting aside the minor issue of ballooning the deficit, expands the tax loophole for the rich quite nicely, so those of us living off of our long-term capital gains should be paying very little in taxes.

I suppose I should be thanking my kids for that since they will ultimately be the ones paying for it down the line.

6-Saturdays

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Re: Suze Orman hates FIRE
« Reply #258 on: October 19, 2018, 01:40:54 PM »
Looks financial samurai has jumped on the "S.O." bandwagon, but his lifestyle is so clown-car in a HCOL area that I guess it makes sense for him.

I will personally add him to the list of people I never take financial advice from.

https://www.financialsamurai.com/suze-orman-is-right-you-need-5-million-or-more-to-retire-early/

Yeah, I saw that. Basically he said this is what you need to barely make it in LA:

1. Eat out every night
2. Save $600k for your kids' college education
3. Get an additional $2M term policy after you have 6.3M NW.
4. Still pay for childcare 10hrs/week (apparently forever)
5. Pay $16/gallon for gas

Other than that, he might be close to accurate if you want to retire with a huge mortgage in LA. I think what people always forget to think about is taxes in the spend down phase are a function of your needs. If you can reduce your need to spend money you can have a huge impact on your taxes as well.

My personal favorites were:

 $6000/yr for staycations. Are you burning 50 dollar bills for warmth in the fireplace in Lake Tahoe???
$4800/ yr in Tennis Club fees. You could meet friends at a public court and buy a new racket every 3 months and still come out ahead. 
$2000/ month in food. If I did my math correctly that is around $148 per person per week and one of them is a child, WTF are you people eating?

rantk81

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Re: Suze Orman hates FIRE
« Reply #259 on: October 19, 2018, 02:19:28 PM »
Remember, research looking at the 4% rule in every other developed country outside of the US market has not fared nearly as well. So there is always the possibility that we turn into Japan in 10-15 years. Having said that, most people aren't retiring at 35-40 and not earning another dime for the rest of their lives, so even if that does happen, it's unlikely to send someone into poverty.

Most of the countries with a hundred+ years of financial data are in Europe and were invaded and occupied, had their infrastructure destroyed and a large swath of a whole generation of young people killed during one or both world wars the failure rates can be quite high.

But there is essentially no amount of money that would allow you to FIRE in Germany in 1944 and not have to adjust your lifestyle in any way for decades to come. (Or in France in 1939, or in Japan in 1945, and so on.) If you exclude the effects of having your homeland bombed, invaded, and occupied (and/or experiencing a major civil war (Spain)) as sol and markbike528CBX said, rates around the world than ensure 0% failure tend to be between 3.5 and 4%

Regardless of those kinds of events, I tend to believe that the large multinational corporations (that provide us all with the products and services we use day-in-and-day-out) will continue to operate.  Whether the shares of ownership are denominated in dollars, euros, ameros, yuan, shillings, or shekels.

maizefolk

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Re: Suze Orman hates FIRE
« Reply #260 on: October 19, 2018, 02:29:29 PM »
Remember, research looking at the 4% rule in every other developed country outside of the US market has not fared nearly as well. So there is always the possibility that we turn into Japan in 10-15 years. Having said that, most people aren't retiring at 35-40 and not earning another dime for the rest of their lives, so even if that does happen, it's unlikely to send someone into poverty.

Most of the countries with a hundred+ years of financial data are in Europe and were invaded and occupied, had their infrastructure destroyed and a large swath of a whole generation of young people killed during one or both world wars the failure rates can be quite high.

But there is essentially no amount of money that would allow you to FIRE in Germany in 1944 and not have to adjust your lifestyle in any way for decades to come. (Or in France in 1939, or in Japan in 1945, and so on.) If you exclude the effects of having your homeland bombed, invaded, and occupied (and/or experiencing a major civil war (Spain)) as sol and markbike528CBX said, rates around the world than ensure 0% failure tend to be between 3.5 and 4%

Regardless of those kinds of events, I tend to believe that the large multinational corporations (that provide us all with the products and services we use day-in-and-day-out) will continue to operate.  Whether the shares of ownership are denominated in dollars, euros, ameros, yuan, shillings, or shekels.

That may be the case. After all Fuji Heavy Industries is still around and today is called Subaru Corp after spending world war two building bombers and fighters for the Japanese army and navy. Volkwagen built military vehicles for the germans in the same war and still survives as a company today.

But I don't know that the people who owned shares of either company prior to the end of the world war II still had ownership stakes in the companies afterwards.

So it might be that case that major internationational companies would survive an invasion/occupation of the country you are living in, but your ownership interests in them might not.

(To be clear I'm not arguing for lower withdrawal rates, just that there are some events you cannot protect against just by saving enough money.)

sol

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Re: Suze Orman hates FIRE
« Reply #261 on: October 19, 2018, 03:46:19 PM »
there are some events you cannot protect against just by saving enough money.)

Financial Samurai told me that I have to save six million dollars before I turn 62 so that I won't get cancer.

ysette9

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Re: Suze Orman hates FIRE
« Reply #262 on: October 19, 2018, 04:27:53 PM »
there are some events you cannot protect against just by saving enough money.)

Financial Samurai told me that I have to save six million dollars before I turn 62 so that I won't get cancer.

He's a certified idiot.  Who the hell retires early with a 3mill investment stash and pays a 30% marginal tax rate?  That's some pretty awful tax planning....
I’ve spent most of my accumulation phase bumbling around in the dark as far as tax planning goes and I won’t be paying anything close to 30% marginal tax rate once FIRE. How does one even do that?

PizzaSteve

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Re: Suze Orman hates FIRE
« Reply #263 on: October 20, 2018, 11:29:26 AM »
there are some events you cannot protect against just by saving enough money.)

Financial Samurai told me that I have to save six million dollars before I turn 62 so that I won't get cancer.

He's a certified idiot.  Who the hell retires early with a 3mill investment stash and pays a 30% marginal tax rate?  That's some pretty awful tax planning....
I’ve spent most of my accumulation phase bumbling around in the dark as far as tax planning goes and I won’t be paying anything close to 30% marginal tax rate once FIRE. How does one even do that?
I think it is because you can only tax protect a certain amount of wealth. Since the IRS limits tax advantaged savings, unless you have a mega backdoor available, your surplus wealth generates too much in gains.  If you follow Suzis plan, you will be a high tax bracket person, regardless of planning. 

A typical early retiree could build maybe 2M max in tax sheltered accounts, even less for us older folks because tax advantaged retirement contribution limits in the 80s and 90s were much lower.

You can only shelter so much wealth, without seriously complicated strategies.

maizefolk

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Re: Suze Orman hates FIRE
« Reply #264 on: October 20, 2018, 01:12:07 PM »
I suspect it's a combination of getting much of not getting much of his income from long term capital gains or dividends and living in a state with a very steep progressive income tax system.

Also, least others be mislead, the first half of the 1980s was a GREAT time to shelter income if you happened to have access to a 401k (they were much rarer back then). In 1980 and 1981 you could save more than $45,000/year tax deferred (call it $130,000/year in today's dollars) and in 1982-1985 you could save $30,000/year (worth about $70,000 in today's dollars if we compare to 1985).

Now the party kind of ended in the second half of the 1980s when the limit dropped to about $16,000 in today's dollars ($7,000 then), and the limit has been relatively stable in inflation adjusted terms ever since.

ender

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Re: Suze Orman hates FIRE
« Reply #265 on: October 20, 2018, 01:56:03 PM »
No, Suze Orman loves making the middle class and heaven forbid people below median income feel terrible by offering shitty advice which basically says, "if you aren't well above average income, you're screwed."

Anyways, on the subject, I wonder if people who get massive anxiety about this sort of thing have measurably higher risks of heart attacks, etc, than those who don't care. I'd guess if you could control for just money anxiety you'd see a lot of impact - people working harder/longer at jobs they hate, etc. It'd be interesting. I suspect the likilhood of health complications from this would be noticeable.

nereo

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Re: Suze Orman hates FIRE
« Reply #266 on: October 21, 2018, 08:19:09 AM »
Anyways, on the subject, I wonder if people who get massive anxiety about this sort of thing have measurably higher risks of heart attacks, etc, than those who don't care. I'd guess if you could control for just money anxiety you'd see a lot of impact - people working harder/longer at jobs they hate, etc. It'd be interesting. I suspect the likilhood of health complications from this would be noticeable.

I wonder about this too.  People who feel like they need $10MM to be truly secure are going to feel very vulnerable for a much, much, much longer period of their life.  Chronic stress does very bad things to our health and to our longevity.  Feeling financially secure early on can have some massive health benefits, regarldess of whether that security is a reality or an illusion.

Retire-Canada

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Re: Suze Orman hates FIRE
« Reply #267 on: October 21, 2018, 08:23:35 AM »
Anyways, on the subject, I wonder if people who get massive anxiety about this sort of thing have measurably higher risks of heart attacks, etc, than those who don't care. I'd guess if you could control for just money anxiety you'd see a lot of impact - people working harder/longer at jobs they hate, etc. It'd be interesting. I suspect the likilhood of health complications from this would be noticeable.

I think that ^^ is a concern. Plus I also think people truly underestimate the damage they are doing to themselves and their families working sedentary FT jobs many extra years beyond what they have to in order to hit high NWs and/or super low WR%. It's frog in the pot syndrome. The damage is being done slowly to their bodies and their relationships so perhaps it feels like the incremental difference of OMY is no big deal even if it is...once you start adding up decades of damage. Everything can seem fine for a long time and then you have a heart attack or you spouse files for divorce, etc...

OtherJen

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Re: Suze Orman hates FIRE
« Reply #268 on: October 21, 2018, 08:44:04 AM »
Looks financial samurai has jumped on the "S.O." bandwagon, but his lifestyle is so clown-car in a HCOL area that I guess it makes sense for him.

I will personally add him to the list of people I never take financial advice from.

https://www.financialsamurai.com/suze-orman-is-right-you-need-5-million-or-more-to-retire-early/

Yeah, I saw that. Basically he said this is what you need to barely make it in LA:

1. Eat out every night
2. Save $600k for your kids' college education
3. Get an additional $2M term policy after you have 6.3M NW.
4. Still pay for childcare 10hrs/week (apparently forever)
5. Pay $16/gallon for gas

Other than that, he might be close to accurate if you want to retire with a huge mortgage in LA. I think what people always forget to think about is taxes in the spend down phase are a function of your needs. If you can reduce your need to spend money you can have a huge impact on your taxes as well.

My personal favorites were:

 $6000/yr for staycations. Are you burning 50 dollar bills for warmth in the fireplace in Lake Tahoe???
$4800/ yr in Tennis Club fees. You could meet friends at a public court and buy a new racket every 3 months and still come out ahead. 
$2000/ month in food. If I did my math correctly that is around $148 per person per week and one of them is a child, WTF are you people eating?

There’s even a separate line item that includes “children’s food”.

PizzaSteve

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Re: Suze Orman hates FIRE
« Reply #269 on: October 21, 2018, 09:47:47 AM »
there are some events you cannot protect against just by saving enough money.)

Financial Samurai told me that I have to save six million dollars before I turn 62 so that I won't get cancer.

He's a certified idiot.  Who the hell retires early with a 3mill investment stash and pays a 30% marginal tax rate?  That's some pretty awful tax planning....
I’ve spent most of my accumulation phase bumbling around in the dark as far as tax planning goes and I won’t be paying anything close to 30% marginal tax rate once FIRE. How does one even do that?
I think it is because you can only tax protect a certain amount of wealth. Since the IRS limits tax advantaged savings, unless you have a mega backdoor available, your surplus wealth generates too much in gains.  If you follow Suzis plan, you will be a high tax bracket person, regardless of planning. 

A typical early retiree could build maybe 2M max in tax sheltered accounts, even less for us older folks because tax advantaged retirement contribution limits in the 80s and 90s were much lower.

You can only shelter so much wealth, without seriously complicated strategies.

Not necessarily. As long as you can keep your expenses reasonable, it is perfectly feasible to set up your investments so that you are living primarily off cash savings + a reasonable amount of dividends +strategic cashing out of capital gains.  That is what we are doing, and it is working fabulously.  We will also be gradually using available space in the 10-12% tax brackets to convert traditional retirement savings to Roths over the next 20 years with the plan to get most everything into the non-taxable bucket by the time I turn 70.5 (I turn 50 in a few weeks, DH is 60), so that we avoid a big tax hit on RMDs.  But even if we use the full space in the 12% bracket, it only amounts to a few thousand a year in taxes, and probably around a 5-8% marginal rate after deductions and credits.

We're currently spending about 80-90k/year, so hardly a bare bones existence.  I did have the advantage of having a Roth 403b at work for about 8 years during the market run-up, so I do have a nice bit of the retirement stash in Roths already.  And we live in a state without income tax.  That is a choice people can make, too.
Your missunderstanding my point.  Suzi says you need 10M to retire.  At 5%, a 10M portfolio grows and spits out 200k+ without trying.  Unless you are advising sub optimal investments, the taxes will hit as you fund her lavish suggested lifestyle.

Of that 10M, maybe 2M could be in a Roth, and tax advantaged, but not the full 10M for most people, due to contribution limits.

Of course one can save less and be more tax efficient, but that is not her advice. I was saying that people who follow her advice will inevitably be higher bracket payers, not someone like yourself.  High RMDs and taxible wealth levels are not by themselves bad, as income is handy and taxes help fund our society, but it is definitely not the most efficient path.
« Last Edit: October 21, 2018, 09:56:30 AM by PizzaSteve »

nereo

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Re: Suze Orman hates FIRE
« Reply #270 on: October 21, 2018, 10:23:31 AM »
there are some events you cannot protect against just by saving enough money.)

Financial Samurai told me that I have to save six million dollars before I turn 62 so that I won't get cancer.

He's a certified idiot.  Who the hell retires early with a 3mill investment stash and pays a 30% marginal tax rate?  That's some pretty awful tax planning....
I’ve spent most of my accumulation phase bumbling around in the dark as far as tax planning goes and I won’t be paying anything close to 30% marginal tax rate once FIRE. How does one even do that?
I think it is because you can only tax protect a certain amount of wealth. Since the IRS limits tax advantaged savings, unless you have a mega backdoor available, your surplus wealth generates too much in gains.  If you follow Suzis plan, you will be a high tax bracket person, regardless of planning. 

A typical early retiree could build maybe 2M max in tax sheltered accounts, even less for us older folks because tax advantaged retirement contribution limits in the 80s and 90s were much lower.

You can only shelter so much wealth, without seriously complicated strategies.

Not necessarily. As long as you can keep your expenses reasonable, it is perfectly feasible to set up your investments so that you are living primarily off cash savings + a reasonable amount of dividends +strategic cashing out of capital gains.  That is what we are doing, and it is working fabulously.  We will also be gradually using available space in the 10-12% tax brackets to convert traditional retirement savings to Roths over the next 20 years with the plan to get most everything into the non-taxable bucket by the time I turn 70.5 (I turn 50 in a few weeks, DH is 60), so that we avoid a big tax hit on RMDs.  But even if we use the full space in the 12% bracket, it only amounts to a few thousand a year in taxes, and probably around a 5-8% marginal rate after deductions and credits.

We're currently spending about 80-90k/year, so hardly a bare bones existence.  I did have the advantage of having a Roth 403b at work for about 8 years during the market run-up, so I do have a nice bit of the retirement stash in Roths already.  And we live in a state without income tax.  That is a choice people can make, too.
Your missunderstanding my point.  Suzi says you need 10M to retire.  At 5%, a 10M portfolio grows and spits out 200k+ without trying.  Unless you are advising sub optimal investments, the taxes will hit as you fund her lavish suggested lifestyle.

Of that 10M, maybe 2M could be in a Roth, and tax advantaged, but not the full 10M for most people, due to contribution limits.

Of course one can save less and be more tax efficient, but that is not her advice. I was saying that people who follow her advice will inevitably be higher bracket payers, not someone like yourself.  High RMDs and taxible wealth levels are not by themselves bad, as income is handy and taxes help fund our society, but it is definitely not the most efficient path.

I'm still not understanding how one would get anywhere near the 30% tax rate being quoted.  Even with $200k in LTCG the current tax code would put most of that at 15%.  Certainly some optimization could bring that down several points lower. Someone living off their investments is going to be paying much less in taxes than a person who has earned income in the $150-200k mark (for a similar cash flow).

radram

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Re: Suze Orman hates FIRE
« Reply #271 on: October 21, 2018, 01:15:49 PM »
there are some events you cannot protect against just by saving enough money.)

Financial Samurai told me that I have to save six million dollars before I turn 62 so that I won't get cancer.

He's a certified idiot.  Who the hell retires early with a 3mill investment stash and pays a 30% marginal tax rate?  That's some pretty awful tax planning....
I’ve spent most of my accumulation phase bumbling around in the dark as far as tax planning goes and I won’t be paying anything close to 30% marginal tax rate once FIRE. How does one even do that?
I think it is because you can only tax protect a certain amount of wealth. Since the IRS limits tax advantaged savings, unless you have a mega backdoor available, your surplus wealth generates too much in gains.  If you follow Suzis plan, you will be a high tax bracket person, regardless of planning. 

A typical early retiree could build maybe 2M max in tax sheltered accounts, even less for us older folks because tax advantaged retirement contribution limits in the 80s and 90s were much lower.

You can only shelter so much wealth, without seriously complicated strategies.

Not necessarily. As long as you can keep your expenses reasonable, it is perfectly feasible to set up your investments so that you are living primarily off cash savings + a reasonable amount of dividends +strategic cashing out of capital gains.  That is what we are doing, and it is working fabulously.  We will also be gradually using available space in the 10-12% tax brackets to convert traditional retirement savings to Roths over the next 20 years with the plan to get most everything into the non-taxable bucket by the time I turn 70.5 (I turn 50 in a few weeks, DH is 60), so that we avoid a big tax hit on RMDs.  But even if we use the full space in the 12% bracket, it only amounts to a few thousand a year in taxes, and probably around a 5-8% marginal rate after deductions and credits.

We're currently spending about 80-90k/year, so hardly a bare bones existence.  I did have the advantage of having a Roth 403b at work for about 8 years during the market run-up, so I do have a nice bit of the retirement stash in Roths already.  And we live in a state without income tax.  That is a choice people can make, too.
Your missunderstanding my point.  Suzi says you need 10M to retire.  At 5%, a 10M portfolio grows and spits out 200k+ without trying.  Unless you are advising sub optimal investments, the taxes will hit as you fund her lavish suggested lifestyle.

Of that 10M, maybe 2M could be in a Roth, and tax advantaged, but not the full 10M for most people, due to contribution limits.

Of course one can save less and be more tax efficient, but that is not her advice. I was saying that people who follow her advice will inevitably be higher bracket payers, not someone like yourself.  High RMDs and taxible wealth levels are not by themselves bad, as income is handy and taxes help fund our society, but it is definitely not the most efficient path.

I'm still not understanding how one would get anywhere near the 30% tax rate being quoted.  Even with $200k in LTCG the current tax code would put most of that at 15%.  Certainly some optimization could bring that down several points lower. Someone living off their investments is going to be paying much less in taxes than a person who has earned income in the $150-200k mark (for a similar cash flow).

Completely depends on what those investments are. CD yields are treated the same as earnings, for example.

zolotiyeruki

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Re: Suze Orman hates FIRE
« Reply #272 on: October 21, 2018, 03:32:03 PM »
Completely depends on what those investments are. CD yields are treated the same as earnings, for example.
Well, if you assume your retirement accounts are all held in CDs, then Suze's $10m number looks slightly less ridiculous!

maizefolk

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Re: Suze Orman hates FIRE
« Reply #273 on: October 21, 2018, 03:43:58 PM »
Completely depends on what those investments are. CD yields are treated the same as earnings, for example.
Well, if you assume your retirement accounts are all held in CDs, then Suze's $10m number looks slightly less ridiculous!

Indeed. If you found a CD earning 3%, you'd pay 0.9%/year in income taxes, for a post-tax nominal yield of 2.1%. With inflation currently running at 2.3%/year, your real post-tax rate would be -0.2%/year.

sol

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Re: Suze Orman hates FIRE
« Reply #274 on: October 21, 2018, 03:59:27 PM »
I'm still not understanding how one would get anywhere near the 30% tax rate being quoted.  Even with $200k in LTCG the current tax code would put most of that at 15%.

I think your first mistake is assuming that these financial bloggers know anything at all about taxes.  I'd be shocked if Financial Samurai can quote the current tax brackets from memory. 

These folks are online entertainers, not professionals.  We should probably all stop taking them so seriously.

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Re: Suze Orman hates FIRE
« Reply #275 on: October 21, 2018, 05:53:20 PM »
Required distributions from IRAs and 401Ks, plus other investment income can reqlly add up.   For example RMDs are treated as ordinary income. 

Suzi's retiree worked unto 65.  For example, a 65 year old with a 2M IRA, earning 7% would need to have at a minimum RMD withdraw of 95k per year. That alone fills up the desirable brackets.

Lets say they also have 8M in a taxable account, half in income focused REITs and half in a S&P500 index stock fund.  The stocks pay roughly 2% ordinary dividend, not including any forced capital gains.  Thats 4Mx2% or another 80k.  If the REIT pays maybe 7%, so thats 4Mx7% or 280k more.

So RMDs and dividends have this guy already at 450+k in income, not counting SS, which gets added in too.  Now I never personally said it is 30%, but thats also not a 15% bracket.  AMT is still out there too.  Plus, if they like the lights of LA, CA state tax!

You might be suprised how taxes under her scenario add up.  Sure there are ways to try to minimize the tax, but clever tax dodging schemes are scarcer than you might suspect these days.  Many have been voided by the IRS or require accounting which limit options or introduce other headaches, so many just pay their tax.  A vague statement that they should be able to avoid taxes is not a real thing.

PS, if you have specific plans other than the usual keep earned income low, max your cap gains and fill up ROTH options, Im all ears.  In summary, we all agree that too much wealth can be sub optimal (from a tax perspective, certainly). Sol summarized it well.
« Last Edit: October 21, 2018, 06:04:39 PM by PizzaSteve »

OurTown

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Re: Suze Orman hates FIRE
« Reply #276 on: October 25, 2018, 07:56:15 AM »


Worth a repost [Thanks Maizeman!] to get some perspective on what you should really be worried about.



This ^^ one is for old people like me....the contrast is even more stark.

You are saying there is a 100% probability I will end up dead?

nereo

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Re: Suze Orman hates FIRE
« Reply #277 on: October 25, 2018, 08:12:17 AM »

You are saying there is a 100% probability I will end up dead?

Only if you keep orbiting the sun. :-P

DS

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Re: Suze Orman hates FIRE
« Reply #278 on: October 25, 2018, 08:35:02 AM »

You are saying there is a 100% probability I will end up dead?

Only if you keep orbiting the sun. :-P

Your spirit will never die though!

farmecologist

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Re: Suze Orman hates FIRE
« Reply #279 on: October 25, 2018, 08:46:41 AM »
Looks financial samurai has jumped on the "S.O." bandwagon, but his lifestyle is so clown-car in a HCOL area that I guess it makes sense for him.

I will personally add him to the list of people I never take financial advice from.

https://www.financialsamurai.com/suze-orman-is-right-you-need-5-million-or-more-to-retire-early/

Yeah, I saw that. Basically he said this is what you need to barely make it in LA:

1. Eat out every night
2. Save $600k for your kids' college education
3. Get an additional $2M term policy after you have 6.3M NW.
4. Still pay for childcare 10hrs/week (apparently forever)
5. Pay $16/gallon for gas

Other than that, he might be close to accurate if you want to retire with a huge mortgage in LA. I think what people always forget to think about is taxes in the spend down phase are a function of your needs. If you can reduce your need to spend money you can have a huge impact on your taxes as well.

I used to read his articles.  However, he has become so 'upscale' that it is kind of silly at this point for the average person.  The problem I have with him is that he 'justifies' his articles by the fact he lives in a 'HCOL' area, etc...  However, he doesn't *have* to live there. 

Anyway, his site has moved far down the list of sites I check frequently.

 

« Last Edit: October 25, 2018, 08:54:46 AM by farmecologist »

nereo

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Re: Suze Orman hates FIRE
« Reply #280 on: October 25, 2018, 09:07:51 AM »

I used to read his articles.  However, he has become so 'upscale' that it is kind of silly at this point for the average person.  The problem I have with him is that he 'justifies' his articles by the fact he lives in a 'HCOL' area, etc...  However, he doesn't *have* to live there. 

Anyway, his site has moved far down the list of sites I check frequently.
 
He doesn't *ahve* to live there, nor does he *have* to live like other Los Angelinos. That's the main beef I have with the FS, and why I prefer MMM's philosophy better.  Housing is about the only thing you can't avoid paying more for in a HCOL area, but food, entertainment, even education doesn't have to be wicked-expensive.  Just because your neighbors and friends spend $2k/month on restaurants doesn't mean you have to (or even should).


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Re: Suze Orman hates FIRE
« Reply #281 on: October 25, 2018, 09:31:48 AM »
I used to read his articles.  However, he has become so 'upscale' that it is kind of silly at this point for the average person.  The problem I have with him is that he 'justifies' his articles by the fact he lives in a 'HCOL' area, etc...  However, he doesn't *have* to live there. 

Anyway, his site has moved far down the list of sites I check frequently.
He doesn't *ahve* to live there, nor does he *have* to live like other Los Angelinos. That's the main beef I have with the FS, and why I prefer MMM's philosophy better.  Housing is about the only thing you can't avoid paying more for in a HCOL area, but food, entertainment, even education doesn't have to be wicked-expensive.  Just because your neighbors and friends spend $2k/month on restaurants doesn't mean you have to (or even should).

I was hoping that someone else would find that FS blog to be sarcasm or a joke. 
I mean 25k/year for the rest of your life for 529 college? Really?

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Re: Suze Orman hates FIRE
« Reply #282 on: October 25, 2018, 09:44:54 AM »
I used to read his articles.  However, he has become so 'upscale' that it is kind of silly at this point for the average person.  The problem I have with him is that he 'justifies' his articles by the fact he lives in a 'HCOL' area, etc...  However, he doesn't *have* to live there. 

Anyway, his site has moved far down the list of sites I check frequently.
He doesn't *ahve* to live there, nor does he *have* to live like other Los Angelinos. That's the main beef I have with the FS, and why I prefer MMM's philosophy better.  Housing is about the only thing you can't avoid paying more for in a HCOL area, but food, entertainment, even education doesn't have to be wicked-expensive.  Just because your neighbors and friends spend $2k/month on restaurants doesn't mean you have to (or even should).

I was hoping that someone else would find that FS blog to be sarcasm or a joke. 
I mean 25k/year for the rest of your life for 529 college? Really?

At its most expensive, 4 years of Ivy-league university education runs about $240k, which includes tuition, materials, room & board.  It's fairly easy to cut this number in half and still get a top-tier education.  I have no idea why FS and Suze somehow double or triple this maximum amount necessary and declare that "what you need to save for your children's college fund".  It's bonk.  And I work in higher-education. 

sol

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Re: Suze Orman hates FIRE
« Reply #283 on: October 25, 2018, 10:25:25 AM »
I have no idea why FS and Suze somehow double or triple this maximum amount necessary and declare that "what you need to save for your children's college fund".  It's bonk.  And I work in higher-education.

I expect they are extrapolating the past increases in college prices 20+years into the future.  In which case they're talking literal dollars, not today's dollars, after separating out regular inflation from the inflation of college costs.

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Re: Suze Orman hates FIRE
« Reply #284 on: October 25, 2018, 10:43:48 AM »
I used to read his articles.  However, he has become so 'upscale' that it is kind of silly at this point for the average person.  The problem I have with him is that he 'justifies' his articles by the fact he lives in a 'HCOL' area, etc...  However, he doesn't *have* to live there. 

Anyway, his site has moved far down the list of sites I check frequently.
He doesn't *ahve* to live there, nor does he *have* to live like other Los Angelinos. That's the main beef I have with the FS, and why I prefer MMM's philosophy better.  Housing is about the only thing you can't avoid paying more for in a HCOL area, but food, entertainment, even education doesn't have to be wicked-expensive.  Just because your neighbors and friends spend $2k/month on restaurants doesn't mean you have to (or even should).

I was hoping that someone else would find that FS blog to be sarcasm or a joke. 
I mean 25k/year for the rest of your life for 529 college? Really?

At its most expensive, 4 years of Ivy-league university education runs about $240k, which includes tuition, materials, room & board.

I think most ivy-league schools are free or mostly free. Most of the schools have a "pay your EFC (expected family contribution), and no more!" program. Ivy league schools have more money than they know what to do with.

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Re: Suze Orman hates FIRE
« Reply #285 on: October 25, 2018, 10:52:35 AM »
I have no idea why FS and Suze somehow double or triple this maximum amount necessary and declare that "what you need to save for your children's college fund".  It's bonk.  And I work in higher-education.

I expect they are extrapolating the past increases in college prices 20+years into the future.  In which case they're talking literal dollars, not today's dollars, after separating out regular inflation from the inflation of college costs.

Hard to believe these people should then be considered 'financial experts'. 

Let's take the most expensive option available today, then extrapolate cost increases for two decades.  We'll ignore inflation entirely and assume that your college fund will have a zero rate of return.  We won't allow for cheaper and more practical options. And then just for the hell of it we'll tack on another 50%. Yeah, that seems realistic, when its so expensive that >99% of families could never afford it...

I think most ivy-league schools are free or mostly free. Most of the schools have a "pay your EFC (expected family contribution), and no more!" program. Ivy league schools have more money than they know what to do with.
Many are, and to my knowledge all offer extensive support for a good portion of their student body. That's why I said "the most expensive option" possible.  Harvard and Stanford both offer free tuition for families with an AGI of <$100k. Many in-state public schools are top-tier institutions and charge just a few thousand per semester.  There are so many ways of keeping college well under the $100k mark (all 4 years combined) without sacrificing quality of education.


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Re: Suze Orman hates FIRE
« Reply #286 on: October 25, 2018, 01:43:27 PM »
I think most ivy-league schools are free or mostly free. Most of the schools have a "pay your EFC (expected family contribution), and no more!" program. Ivy league schools have more money than they know what to do with.

Orman and friend are recommending that you work long enough to have SO much money that your EFC will still be paying full freight.  This is one of those circumstances where the more you have, the more you pay.

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Re: Suze Orman hates FIRE
« Reply #287 on: October 28, 2018, 05:22:01 AM »
It's all a clever marketing ploy. Suze's got a book coming out; this new FIRE thing is getting a lot of publicity - let's get a lot of publicity by crapping on it publicly! She got a week worth of free publicity from a wide variety of bloggers who either couldn't spot the play or decided to play along, then she 'recanted' and got another week of free publicity! And then of course all those bloggers posted about her again, getting their own opportunity to piggyback off her recent notoriety. Everybody got a whole bunch of exercise by riding their favourite hobbyhorses, everybody got a bunch of extra pageviews or book sales and the whole fight was about as real as WWE wrestling.

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Re: Suze Orman hates FIRE
« Reply #288 on: October 28, 2018, 05:55:16 AM »
It's all a clever marketing ploy. Suze's got a book coming out; this new FIRE thing is getting a lot of publicity - let's get a lot of publicity by crapping on it publicly! She got a week worth of free publicity from a wide variety of bloggers who either couldn't spot the play or decided to play along, then she 'recanted' and got another week of free publicity! And then of course all those bloggers posted about her again, getting their own opportunity to piggyback off her recent notoriety. Everybody got a whole bunch of exercise by riding their favourite hobbyhorses, everybody got a bunch of extra pageviews or book sales and the whole fight was about as real as WWE wrestling.

... in the style of "it's better to be talked about than good" - or maybe "no publicity is bad publicity"...

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Re: Suze Orman hates FIRE
« Reply #289 on: November 02, 2018, 08:28:43 AM »
I listened to this podcast - and I was struck by how much she seemed to LOVE herself.   IMO it seemed that there was ZERO humility on two accounts.

First I found that I was listening like I was gawking at a car wreck - incredulous that someone would publicly speak in such a manner. I have over $100M, I was welcomed with Open Arms back to NBC - they love me, I live on a private island, I am the best at Finance. If I didn't know it was Orman I would swear it was Trump.

Second, I found it surprising there was no care by Orman to ask what FIRE was, what it means to others.

It will be interesting to find out the reactions to her over the Webs .

The Wikipeda article on Suze quotes her saying she has $10M...

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Re: Suze Orman hates FIRE
« Reply #290 on: November 02, 2018, 08:49:42 AM »

The Wikipeda article on Suze quotes her saying she has $10M...

well if Wikipedia says it...

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Re: Suze Orman hates FIRE
« Reply #291 on: November 02, 2018, 09:47:14 AM »
And several other news outlets as well...

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Re: Suze Orman hates FIRE
« Reply #292 on: November 02, 2018, 10:31:16 AM »
I listened to this podcast - and I was struck by how much she seemed to LOVE herself.   IMO it seemed that there was ZERO humility on two accounts.

First I found that I was listening like I was gawking at a car wreck - incredulous that someone would publicly speak in such a manner. I have over $100M, I was welcomed with Open Arms back to NBC - they love me, I live on a private island, I am the best at Finance. If I didn't know it was Orman I would swear it was Trump.

Second, I found it surprising there was no care by Orman to ask what FIRE was, what it means to others.

It will be interesting to find out the reactions to her over the Webs .

The Wikipeda article on Suze quotes her saying she has $10M...
I was curious, so I looked. The Wikipedia article you mention states the reference said her net worth was "more than $10 million". That was reference #38. That reference, wrongly attributed to "The Young Turks", is only discussing her use of whole life insurance, and her hiding the fact that she uses it while telling others it is a waste of money.

That looked odd to me, so I looked for the article by Deborah Solomon mentioned in the reference. Here it is:
https://www.nytimes.com/2007/02/25/magazine/25wwlnq4.t.html

In it, she says her net worth was about $32 million, with only about $1 million of that in stocks and $7 million in real estate. There is no mention at all in the online article referencing insurance. When searching for "The young +Turks Suze Orman", I found nothing.

I looks like Michael Scott failed me regarding Wikipedia:
https://www.youtube.com/watch?v=kFBDn5PiL00

I would doubt very highly she lost or spent $20 million in a decade. Since she is in low/no risk munis, it likely increased.

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Re: Suze Orman hates FIRE
« Reply #293 on: November 02, 2018, 10:51:09 AM »
I listened to this podcast - and I was struck by how much she seemed to LOVE herself.   IMO it seemed that there was ZERO humility on two accounts.

First I found that I was listening like I was gawking at a car wreck - incredulous that someone would publicly speak in such a manner. I have over $100M, I was welcomed with Open Arms back to NBC - they love me, I live on a private island, I am the best at Finance. If I didn't know it was Orman I would swear it was Trump.

Second, I found it surprising there was no care by Orman to ask what FIRE was, what it means to others.

It will be interesting to find out the reactions to her over the Webs .

The Wikipeda article on Suze quotes her saying she has $10M...
I was curious, so I looked. The Wikipedia article you mention states the reference said her net worth was "more than $10 million". That was reference #38. That reference, wrongly attributed to "The Young Turks", is only discussing her use of whole life insurance, and her hiding the fact that she uses it while telling others it is a waste of money.

That looked odd to me, so I looked for the article by Deborah Solomon mentioned in the reference. Here it is:
https://www.nytimes.com/2007/02/25/magazine/25wwlnq4.t.html

In it, she says her net worth was about $32 million, with only about $1 million of that in stocks and $7 million in real estate. There is no mention at all in the online article referencing insurance. When searching for "The young +Turks Suze Orman", I found nothing.

I looks like Michael Scott failed me regarding Wikipedia:
https://www.youtube.com/watch?v=kFBDn5PiL00

I would doubt very highly she lost or spent $20 million in a decade. Since she is in low/no risk munis, it likely increased.

I'm not a fan of Suze any longer, but I wouldn't fault her over using whole life in her situation.  It's a waste of money for the vast majority of people, but not for wealthy business owners.