Can I afford it: Suze Orman, I’m mad at you!
I was watching the “Can I afford it?” segment on The Suze Orman Show, last Friday. A caller called in, he was 68 years old. He wanted to buy his wife (of 40 years) a trip around the world that cost about $30,000 for their 40th wedding anniversary.
I got a quick snap of their finances, I cannot remember his exact numbers, but I did see that the couple had no debt, some savings, and roughly about $280,000+ saved in retirement.
Suze denied him because they did not have 8 months of savings. Blah humbug!
Look Suze, The man is retired!! 68 years old, not sure if they had children, but I’m sure he and his wife after 40 years of marriage went through a lot of ups and downs. Let them enjoy their lives a little.
Being 68, he faces no penalty for withdrawing money from retirement. After all, his wife deserves a trip after 40 years of marriage. Tomorrow is not promised. They are not sloppy with their money because they did not have any debt.
What’s $30,000 if they have 6 figures saved? I would have approved him, simply because being married that long is something to celebrate. I cannot imagine the look on his wife face when her husband told her they cannot afford it.
Suze, retirement is supposed to be enjoyed. This is their time. Let them have it.
Suze, what ever happened to PEOPLE FIRST?
I’m a fan of the show, but I am mad at you on this one.
April 16th, 2009 at 2:50 pm
What do they need with 8 months of living expenses saved? Personally, I don’t think ANYONE needs more than 6 months saved. They scrimped and worked hard during their YOUNG lives only to scrimp when they’re old… see, this is why it’s so hard to convince young people to save for retirement (including myself) because what for!?!
I hope he winds up not listening to Suze…
April 16th, 2009 at 2:54 pm
Suze use to say 3-6 months of expenses, but now that we are in a recession, she started telling people 8 months reserve.
Anyway, to denied a 68 year old with no debt is ridicolous. Let the man have a vacation, This is the time.
April 16th, 2009 at 3:46 pm
I remember that caller.
I see if the guy was 38yo with $10,000 in credit card debt and wanted to go to Cancun with some friends for Spring Break.
This man seem to do everything right. Except save 8 months of expenses. He could have had it before he call and needed to bail out one of his children.
Whatever the case maybe, Suze you’re wrong
April 16th, 2009 at 3:51 pm
I agree with you, MM. They saved the money to enjoy it. $30K ain’t going to hurt them. As long as his wife knows about and agrees with the expense, they should go see the world together.
April 16th, 2009 at 6:20 pm
I also hope he ignores that advice. They are blessed to be that age and both able to travel. If he is retired he doesn’t need to worry about job loss. I think Suze loses her reasoning on marital finances.
April 17th, 2009 at 11:25 am
I agree. I didn’t see this particular show, but had I seen it I’d be mad too. He is 68 years old. Right now he is healthy, can travel and enjoy it. He is not going to get stronger or healthier. Sure, there are some people who are strong at the age of 80 and can walk long distances. But the majority gets sicker and weaker in their late 60s and early 70s. Plane trips are extremely tiring, especially trips that involve flying from here to the East as anybody who has ever flown to Europe can tell. Besides, at some point one gets so sick one cannot go far from home and needs to be close to doctors. This may be their last chance.
One other thing. Once somebody asked Suze if they should include stock investments into “savings” and she said “no”. One time a caller mentioned: “I also have mutual funds” and Suze said – but “you are not going to sell it, so they should not be included”. So some of those numbers we see may not even be complete – the caller may have additional stock investments. “savings” number that we see is just money in a bank.
I personally wouldn’t feel safe with just 8 month in liquid savings in this economy, but as moneymonk pointed out – they are retired, they don’t need to worry about losing jobs. A lot depends on personal situation – age, family, circumstances, income security, etc.
April 17th, 2009 at 3:49 pm
Yes, not everything can be benchmarked accurately using dollars and cents.
Yup, at 68 years old, and not even knowing how many days you’ve got left, and to travel around the world with someone who’d gone through thick and thin with you for the past 40 years. I don’t think there should be any reason, especially when he could afford it, to hold back such a rewarding treat for the two of them.
April 17th, 2009 at 10:54 pm
I have to agree with money monk on this one. From your explanation it seems that Suze got it comepletely wrong. The money saved for retirement probably does not include the monthly income from social security. I hope he goes ahead and enjoys himself and ignore Suze. She is sounding like the gringe that stole Christmas.
April 19th, 2009 at 7:17 am
I agree with you, she has become really a bear. She even went off on her floor manager cause he got back a $5000 refund. Yes, it is okay to help us but it is demoralizing when she doing her rants. I do hope she will stop doing that.
April 20th, 2009 at 8:49 am
I suspect that if he had exactly $30,000 more in stock funds she still would have denied him.
If age 68 and debt free isn’t a time to splurge, when is? What exactly is the point in taking all this money with him to the grave again?
April 20th, 2009 at 1:01 pm
My folks are in a similar strong position in their retirement and they have been very wise and frugal for many years.
They take a trip every month together to enjoy their retirement. My Dad told me that it was hard getting used to spending some money after all of these years of savings. But, they want to enjoy their life while they are still healthy and can get around.
April 20th, 2009 at 6:09 pm
he could have had $300K in retirement and lost a little during the market crash, who knows
Whatever the case he gets an approval from me
April 21st, 2009 at 4:42 pm
Am I the only one who disagrees?? I totally think they should be entitled to a trip, but do they really need to spend $30K to go all the way around the world?
I don’t care about 6 months of expenses, but rather I’m shocked that they want to blow over 10% of their retirement account!! This couple (esp the woman) could live another 20 years easily – and the odds that you will go up if you make it past 65.
If they are completely living off social security or pension income and don’t need to touch the retirement funds, then that’s one thing. But if they are relying on those funds for ANYthing then they cannot be spending that kind of money on one trip.
They can NOT afford it.
April 22nd, 2009 at 12:06 pm
You’re alone in this Meg.
Why does he need an EF? He has a retirement fund to draw from.
They COULD live 20 years more, but they may very well not, and be stuck with $300,000 that they didn’t enjoy as their last trip
That’s a good idea for a trip in retirement. I’m going to save it for when BF and I get time and we can afford to blow $30k on a trip around the world
That’d be fab.
I agree with MM. I also dislike Suze greatly.. and I had a little mini rant all about 8 months and debt minimums written up on my blog already.
June 20th, 2009 at 9:43 pm
The segment is "CAN I AFFOR IT," not "SHOULD I DO IT."
$280K in retirement is not that much if all you have is social security as other income – month to month expenses will add up quick and they need money coming it. That 30K is antoher $2,000 ot $3,000 per year they could have in to spend during retirement.
June 26th, 2009 at 9:59 am
I agree with DB above. 280k is not that much in retirement. That money will dissappear so fast in retirement it's not even funny. People who posted on this are acting like "poor old people, skimped by on nothing for the last 40 years and now they don't get to go on a vacation". This is crap.
I don't think they skimped by on nothing their whole lives. If you put 450 bucks away in even a diversified mutual fund for the last 40 years (just since 28 years old people, not since 12 years old) they would have 4 million in there retirement and a year long trip around the world would be a given. Even if they lost 40 percent of that portfolio, they would still have 2.4 million in that portfolio IN ADDITION TO their socialism, I mean social security benefits.
The truth is, they didn't do so well in their retirement savings and Suzie is simply worried about them going broke.
280k in investments, while drawing 5% per year as a safe withdrawal rate is only 14k per year. That plus what social security gives you is not a "travel the world year 'round" lifestyle.
She is helping to protect them. Why not take 2 smaller trips per year and enjoy a little safer travel each year and over the course of their retirement, see the world and have a safe retirement?
If they wanted to take 30k vacations, they should have planned for this MANY years ago in their financial plans and done it smarter.
August 18th, 2009 at 12:37 pm
@Anon..
Not sure the math you are using to get to 4mm. If these folks saved $450 per year (for 40 yrs) and made 9% they would have approx. 152k. If it is 450/month for 40 yrs = 2.1MM.
I do agree 280k is not a lot in retirement savings. It all comes down to their day in and day out lifestyle/budget. If they live a very frugal lifestyle, then a once in a life time trip is not out of the question. It is impossible to say whether or not they can afford to take the trip without all the information.
October 13th, 2009 at 12:30 pm
I'm torn on this one. Well, I think the 8 months in savings when you're that old is not necessary — but two reasons why I'd 'agree' with Orman's decision even though not her reasoning.
They don't have enough in retirement savings. If these figures are accurate, they should not be spending $30k on a trip (I'm w/ Meg on this.)
Why spend $30k? They should definitely take A trip, but you can do Europe… even the rest of the world… on less money. Maybe the trip will be shorter, the hotels less luxurious, but is a 30k trip necessary?
Still, Suze denied them for the wrong reason.
October 24th, 2009 at 4:28 pm
Please understand that Suze has access to more information than we have on the show. There is a complete financial breakdown that we don't really see.
With that in mind, there must have been more to the situations.
Plus… that really was not very much in retirement.
January 18th, 2010 at 8:55 pm
Oh, I'm totally with MEG on this one. My grandmother was spending $6,000 a month (A MONTH!) in her assisted living facility. FOR ONE PERSON! If she hadn't had the money (if it had run out), she would have gone into a nursing home and gotten awful care (no offense to nursing homes, but they're understaffed and underfunded). That $30,000 could have supplemented their social security benefits and other retirement distributions and held them out longer in quality care. That's just the way it goes with elderly care.
However, I agree they should have taken a trip, just not one that extravagant.
And 8 months living expenses in savings? For what? In case he loses his job? I mean, wasn't he already retired? Is there something I'm missing here? An emergency fund, I guess, in case they have a water heater or furnace blow on them and they don't want to take a bunch out of their retirement (for tax implications, maybe?)