Suze Orman: Time to 'Be Conservative' With Your Retirement Portfolio

“You don’t know what the markets are going to do,” she says. And “If the tariffs stay in place, you’re going to have rampant inflation.”

Her revised and updated edition of “The Ultimate Retirement Guide for 50+,” originally published in 2020, highlights strategies influenced by changes in retirement rules, the Covid-19 pandemic, a bear market, inflation spikes and swings in interest rates. (Publisher Hay House just cut the book's price to $10.)

Maintaining that “productivity is being replaced by robots,” Orman is heavily invested in artificial intelligence.

In the interview, the co-founder of the emergency savings program SecureSave — who has her own YouTube channel — reveals the biggest position held in her well-diversified mega-portfolio and other favorites. (The portfolio was up a whopping $1 million in a single day last week, she says.)

Discussing the value a financial advisor can bring to investors — Orman has had the same FA for more than 25 years — she said: “A great financial advisor [is] worth their weight in gold.”

Here are excerpts from our conversation:

THINKADVISOR: You write that investors shouldn’t withdraw more than 3% of their portfolio in their first year of retirement. That’s more conservative than most experts recommend. What’s your rationale?

SUZE ORMAN: I know everybody thinks you should withdraw 4% or 5%. But you don’t know what the markets are going to do. The world has become very advanced.

THINKADVISOR: Is the idea to play it safe?

ORMAN: Yes. A lot of people automatically withdraw 4%. But if you don’t have to withdraw a lot of money, why do it? If you can leave your retirement money in, say, your 401(k), to compound tax-free in a Roth situation, the better off you are.

THINKADVISOR: What are the implications of the world’s becoming “very advanced”?

ORMAN: I don’t like the things that are happening. It’s not just [President Donald] Trump [and his policies], though a lot of it is Trump.

I think the next war isn’t going to be won with guns and bombs. It’s going to be a total cyberattack.

Moreover, a lot of jobs will be eliminated because of artificial intelligence. Even programmers will be eliminated. AI will program for them.

Productivity is being replaced by robots. The writing’s on the wall.

THINKADVISOR: How should people approach retirement planning, then?

ORMAN: Start doing it a little bit differently. You have to save more and spend less, get out of debt and be really careful with income streams like 401(k)s, because if the tariffs stay in place, you’re going to have rampant inflation — and your expenses will absolutely be going up.

And maybe there will come a day that you don’t have health insurance or Medicare doesn’t pay for the things they pay for now.

I don’t want to scare the hell out of people, but be conservative, just take a little out to let your money grow, adjust your spending.

THINKADVISOR: What about your own investment portfolio? How are you allocated? In January 2023, you liquidated almost all your portfolio of about 150 individual equities and directed the funds received mainly toward Treasurys.

ORMAN: I’m totally diversified. I have millions in stocks and about $20 million or more in a portfolio of 40 to 50 dividend-paying stocks. And I have quite a few million in private equity.

I also have about $10 million or so in Treasurys. And I’ve kept my Series I bonds. I have half a million in those now.

My wealth has really increased substantially over the years because my money has made money.

Last week we were up over $1 million in one day!

THINKADVISOR: You were heavily into bonds. Still are? 

ORMAN: I just liquidated $10 million in bonds because they aren’t performing for me anymore, and I also liquidated the preferred stocks I had. It was like, “Let’s get rid of them!”

I’m dollar-cost-averaging equities, you bet.

THINKADVISOR: What do you like specifically?

ORMAN: My absolutely largest position is Palantir Technologies. They and Nvidia have CEOs that are conquering the area of artificial intelligence.

I love Apple. I like Chevron; INDA, the Indian ETF; IonQ [hardware and software]; JP Morgan, Meta and Microsoft.

THINKADVISOR: Do you still have a financial advisor?

ORMAN: I do. I’ve been with John for over 25 years. We talk every day. I like the relationship [partly] because other people are involved [with my account] at the firm, too. One is in control of the dividend-paying stocks, another in control of private equity [and so on].

But if you’re with a one-person firm, should something happen to your advisor and they’re suddenly gone, what’s going to happen to your money?

THINKADVISOR: Do you see a bear market on the way?

ORMAN: No. I see August and September as possibly not being the best of months, especially September. So I would be absolutely powder-dry [cautious] because we don’t know what’s going to happen at any time.

I’m hoping that Palantir and IonQ go down, and I can buy more. I won’t sell them. I think that probably four or five years from now, Palantir will be at $400 or $500 a share. It started at $7. So I’m not selling that sucker!

A few months ago, it went from $135 to $75 when news [broke] that they had deals with Trump. Now it’s back at $180-something.

THINKADVISOR: What’s the biggest mistake investors make?

ORMAN: They sell when they should be buying more or at least keeping the stocks if they’re good quality.

A while ago, Netflix was at $700, I believe. It went all the way down to $100-something. I’m sure people freaked and were selling.

Don’t tell me that financial advisors don’t get afraid, as well. Of course they do. I call it the financial jitters.

THINKADVISOR: What’s the biggest mistake people make in retirement planning?

ORMAN: One of the biggest is that they don’t plan for what-if’s.

THINKADVISOR: Shouldn’t their advisors recommend that they do that?

ORMAN: If you have a great financial advisor, they’re worth their weight in gold. [In contrast], an investor who just contacted me said he had a great advisor; but I saw that he has him in, maybe, 100 different stocks and ETFs, all duplicating one another.

Are you absolutely crazy? Why not just invest in the S&P 500 and forget it!

This [man’s] portfolio is up only 4% for the year. If he’d put the money in the S&P, he would have been up 8%!

THINKADVISOR: In what ways should an investor assess their advisor?

ORMAN: [Pay attention] to what they’ve been telling you to do with your money. Are they getting you a better return than you would have had if you’d gone into the S&P index?

They should be beating or at least matching it after fees.

If you’re paying an advisor a fee to put you in ETFs and mutual funds, that makes no sense.

THINKADVISOR: In gauging advisors, what’s the most important thing to look at?

ORMAN: They have to be doing better than what you could do on your own. What service do they provide that you can’t provide for yourself?

THINKADVISOR: In your book, you recommend income annuities. Why would they be helpful in retirement?

ORMAN: When you retire, you want to cover your monthly expenses with guaranteed income without going into your stocks or other investments. So if you’re, say, $2,000 a month short, I don’t have a problem putting money into an annuity that guarantees you that income.

Of course interest rates are now relatively high, but we’ll see what happens [at the September Federal Reserve meeting].

THINKADVISOR: You’re forecasting a huge cyberattack. Suppose that happens and paralyzes the entire financial system and people can’t get cash from their bank accounts. How can they protect themselves now?

ORMAN: You should have some amount of cash in your home, probably in a fireproof box or someplace where you can grab it and go if you have to. You should make sure that the money you have in banks or credit unions are under FDIC insurance.

If you work with a brokerage firm, do they carry extra FDIC? Are you safe there? Do you feel they’re solid?

THINKADVISOR: For 14 years now, you and [wife Kathy “KT” Travis, managing director of Suze Orman Worldwide Enterprises] have been living on a private island. Does that lifestyle still have allure?

ORMAN: We’ve put our island home on the market for sale. There are a few reasons, one being that I can’t do a lot of things I used to, like snorkeling and pulling in fish [because of 2020 surgery for a benign spinal tumor and subsequent neurological arm issues].

But also, we’ve been living in this house for 10 years. It’s just time.

THINKADVISOR: What are your plans, then?

ORMAN: We’ll go up to our winery in Napa. And we’re going to the Redwoods. We’re taking a painting class in Tuscany.

One of our goals is to get a really big boat and live on it in the Mediterranean till we find someplace we like and then maybe settle down.

(Credit: Marc Royce)