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INTERNATIONAL: Is $3 million really enough to retire early and comfortably? According to financial expert Suze Orman, not by a long shot.

Speaking on the Afford Anything podcast and featured on Yahoo Finance, Orman gave listeners a reality check on why even a seemingly hefty sum like $3 million might leave you scrambling in retirement – especially if life decides to throw a few curveballs.

$3 million is not enough for retirement?

When host Paula Pant asked whether $3 million, combined with a conservative 3% withdrawal rate, could support a secure retirement, Orman wasted no time delivering a blunt answer: “No.” She went on to explain that this amount is “far from enough” to cover the unexpected costs life can present.

Pant then posed a follow-up question: “What would be a safe amount of money that could give someone peace of mind, knowing they’d be okay even if something drastic, like getting hit by a bus, happened?”

Orman’s response was telling. She emphasized that a person would need “millions” to feel comfortable. But how many millions exactly? Orman’s answer, backed by a detailed breakdown, was eye-opening.

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“Your retirement number depends on where you live, what your expenses are, and whether you own your home outright,” she said.

Orman breaks it down

She went on to explain the types of unexpected costs that could arise – namely, long-term care. Drawing from her own experience caring for her mother, Orman explained that full-time care could easily run up to $30,000 per month, which would amount to $300,000 to $400,000 annually. And that’s just for healthcare.

Then, she pointed out the additional costs of everyday living, such as food and other essentials. “Let’s say you need another $100,000 a year just to cover your living expenses. Now you’re at $350,000 annually after taxes,” Orman noted.

To generate $350,000 per year without dipping into your principal, Orman explained, you’d need an investment portfolio yielding at least 5%.

That’s a hefty $10 million or more in assets. “Even if you have $1 million and are getting a 4% return, that’s only $40,000,” she said. “You need at least $5 million, $6 million, and that’s before taxes.” So, to generate $300,000 after taxes, Orman advises, you’d need a portfolio that could yield 5% on municipal bonds.

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Her conclusion? “You might need $10 million, just to be safe.”

Just being realistic

But Orman’s advice isn’t meant to scare people; it’s about being realistic. Unexpected expenses, like long-term care, health issues, or inflation, can quickly derail even the most well-planned retirement. She urges people to think about these potential risks before making decisions based on a seemingly comfortable nest egg.

While Orman insists that retirees will likely spend far more than they anticipate, it’s important to note that the average retiree spends around $4,345 per month, or about $52,141 annually, according to recent data.

Of course, Orman’s outlook is shaped by her own experiences and might not reflect the typical retiree’s situation. However, the underlying message remains — plan for the worst to avoid running out of money in retirement.

This warning certainly struck a chord, particularly among the FIRE (Financial Independence, Retire Early) community, who may be hoping to retire on a smaller portfolio.

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But Orman’s message is clear — don’t gamble with your future. Underestimating your retirement needs now could leave you with fewer choices down the road.

So, if you’re dreaming of early retirement, take Orman’s advice to heart — do the math, check your numbers, and then do it again. The last thing you want is to find out too late that your nest egg isn’t enough to support the life you imagined.