Suze Orman, financial planning guru, best-selling author, TV personality, entertainer and so on, is scheduled to give a lecture at 7 p.m. tonight at Kent State University. I say scheduled because if she is flying from the East Coast — well, could be iffy. What happened to global warming anyway? Students can attend for free. Others have to pay $20. That isn’t something I would do given that Orman shows up on almost every TV talk show these days. Same message. Different venue.
And hey. We’re in a recession. Orman told viewers watching Oprah a few weeks ago to save cash by not going out to eat for a month. I’m sure those whose jobs depend on people eating out are trying how to best digest that morsel of advice. So given the choice I’d take the $20 and head to Ray’s.
But saying that — I would encourage students to go see her. I think Orman serves up some good advice — and in an entertaining way. And I expect she’ll be long gone before Jack Bauer and 24 comes on the tube.
The point is that financial planning is important. And the sooner you start thinking about it the better. Orman offers what I would call a common sense approach to personal financial management. And this applies to students and others: if you are fortunate enough to be working these days, make sure you have enough savings to survive if you lose your job; diversify your investments; cut your debt — particularly credit card debt; if employed, take full advantage of any employer matching contributions to a savings plan; keep saving, reduce spending.
And the message to young people particularly: You’re pretty much on your own in terms of your retirement. The era of the employer-guaranteed defined-benefit pension is virtually over. Social Security, iffy at best for people years (decades?) from retirement, was never intended to finance a retirement over an extended period of time.
So that raises the million dollar question.
If you manage to save that amount over the course of a working lifetime, in today’s figures, you could expect to have a retirement income of about $40,000 a year. You’ll have to decide when you get to the golden years whether that amount of income is enough or not. But by the time you are heading to play shuffleboard and search for the world’s softest yogurt, you’re sucking a financial tailpipe if it ain’t. And that’s why financial gurus like Suze Orman are such a hot commodity these days.
Saving a million (or more) dollars under the assumptions of the old economy — generally increasing investment returns compounded with deferred taxes over an extended period of time — was doable. Now. Well, nobody knows. And nobody knows for sure how long this recession will last. How much lower the stock market will or can go. And how long it will take to recover if at all. Asian and European markets are tanking again as I write this. The economies of the Eastern European countries are beginning to meltdown. AIG is back for $30 billion more from the public ATM. U.S. stock markets open at a 12-year low. Wow. Maybe I better go see Suze. I digress.
Here’s the reality — expressed by Joel Lovell, writing in The Washington Post, “Outlook: Should We Even Listen Anymore?”
“I write a monthly column for GQ magazine called ‘Men + Money,’ and I had this moment recently, as I was writing about how to rethink 401(k) allocations, when I got to the end of a paragraph and reread it and thought, ‘There’s a good chance that what I just wrote is precisely the wrong advice.’ I tried to figure out how to acknowledge that in the column itself and say, basically, ‘Please don’t make any important financial decisions based on what I’m telling you to do. I honestly don’t know. But also please come back and read what I have to say next month!’ It wasn’t the kind of column that inspired a ton of confidence, money-management-wise.”
So remember that Suze Orman and others are just trying to give you some good common sense insights and advice these days — while making a few bucks in the process. And the fact is nobody knows for sure the answer to the million dollar question.
Wonder if Jack Bauer has a defined-benefit pension plan from the government?