Apr 19, 2025 04:17 AM IST
Personal finance advisor Suze Orman has laid down some tips to retire early and move on to your other goals in life. Here are some major ones.
Suze Orman, a renowned personal finance advisor, recently released a video on YouTube where she lays down tips on personal finance for those who wish to retire early. The 73-year-old suggests that one should switch to a Roth IRA before it’s too late, especially considering the stock market fluctuations.
Convert to a Roth IRA before it’s too late
Orman asked her followers to switch to a Roth IRA, an Individual Retirement Account to which you contribute after-tax dollars. She has long been a supporter of the Roth IRAs, and went on to say, “It doesn’t matter if it’s a Roth 401(k), 403(b), Roth TSP or a Roth IRA, but one must do it no matter how much money they make”.
“If your portfolio is down and your stock values are much lower than usual, it is the perfect time for US investors planning to retire early to consider converting to a Roth IRA,” Orman said.
What is a Roth IRA account and how will it help Americans retire early?
A Roth IRA is a retirement savings account that’s a bit different from traditional options like a 401(k) or regular IRA. Instead of getting a tax break upfront when you contribute, you pay taxes on the money you put in now. So when you withdraw funds in retirement, both your contributions and the earnings grow tax-free.
“Financial independence is not something we snap our fingers and have materialize right then and there. It is the result of a process that we create and then commit to seeing through,” Orman says.
She also went on to say, “There is nothing more painful as converting to a Roth IRA account when a stock is at $100 a share and you convert it and then owe taxes on that very $100 per share. Even if the stock price drops from 100 to a 90 or 80 or 70, you still owe taxes on that $100 figure. So, you’re ‘winning’ if you are converting to a Roth account when the prices are at $50 a share and not 100.”
