Could You Retire Early? Here's What Suze Orman Thinks

Not a multimillionaire? Suze Orman says don't retire early.

For a lot of folks, working until traditional retirement age -- around 70 or older -- is, well, terrifying. Which makes sense; only about a third of workers (34%) feel engaged at work, and 16% feel actively disengaged.

Not only has this dissatisfaction led to many workers finding both new jobs and careers, but it's also pushing more and more people to consider the idea of early retirement. One of the most prominent movements for early retirement is called FIRE, short for "Financially Independent, Retire Early."

The FIRE movement has been around for years, and it's had its fair share of proponents -- and detractors. Not too long ago, famed personal finance guru Suze Orman made it clear she was firmly on the latter side. In fact, when asked what she thinks of it in a 2018 interview, her response was, "I hate it. I hate it. I hate it."

"You'll get burned if you play with FIRE"

Indeed, Orman seems to be staunchly against not just the FIRE movement, but the entire idea of retiring early. She goes so far as to call early retirement "the biggest mistake, financially speaking, you will ever, ever make in your lifetime."

Instead, she insists that folks should wait until 70 to retire -- that is, unless their bank accounts are, essentially, as large as her own.

"If you have $20 , $30 , $50 , or $100 million dollars, be like me. If you have that kind of money and you want to retire, fine," she said. But a spare million or two isn't going to cut it.

"Two million is nothing. It's nothing. It's pennies in today's world, to tell you the truth," she said. "$2 million dollars when you're in your 30s -- you may think that is a lot and you can live on $80,000… you can have a good time for 2 years, 3 years, 4 years, 5 years, and hopefully nothing will go wrong. But I promise you as you get older, as hopefully you will, if you think $80,00 a year… is going to make it for you before taxes, I have a bridge to sell you."

Why do you need so much? Orman has a laundry list of concerns, many of them catastrophic events that would put just about anyone out of sorts. She's also convinced that artificial intelligence is going to have serious impacts on everything from unemployment to taxes, making retirement hard for future generations.

"Artificial intelligence is coming in big time, do not be surprised if by 2030 there is a 25% unemployment rate," she explained. "When people are no longer working because machines have replaced all of us, there is nobody paying into the tax structure. When nobody is paying into taxes, tax brackets will have no choice but to go up. There will not be the money there for Social Security."

The compounding years of your life

Another part of Orman's argument against early retirement is that you'll miss out on a significant amount of potential compound interest if you're not adding to your investments while you're relatively young.

"If you achieve financial independence, and you're no longer putting money into your retirement accounts, you are losing the compounding years of your life," she explained. "When you are younger, your money that you invest makes money, and that money makes money, and that money makes money -- and your money compounds. And you cannot make up for that with sums of money later on in life."

On this point, she does make a certain amount of sense. The more time your money has to compound, the more money you'll end up with. The earlier you start saving -- and the more you save in those early years -- the better off you'll be when you're older. But to say that you can't possibly retire early without amassing tens of millions of dollars seems out of touch, at best.

At minimum, pay off your mortgage and get insurance

When asked about older workers who have yet to retire, but who aren't anywhere near the $20 million dollar mark, Orman has somewhat contradictory advice.

These workers, she says, are likely fine. As long as they continue to fund their retirement accounts, live below their means, and pay off their mortgages before retiring, they should be financially ready to retire by age 70.

So what's the difference? According to Orman, it's a matter of both insurance and the fact that they have untouched retirement funds.

"The worker that retires at the age of 30, if something goes wrong from 30 to 70 -- now they're in trouble," she said. As for the person who works until traditional retirement age, well, they have their job. "The other worker is probably covered by the policies and everything that is at work. Once they retire and they're at 70, now, all right, they still have their portfolios, they haven't drawn them down."

Taking this argument in stride, it seems like Orman shouldn't be against early retirement, per se, so much as an early retirement that doesn't take insurance costs into account. As long as you have paid off your mortgage and planned for health and disability insurance throughout your early retirement -- you should be as ready as someone who retires later in life.