Suze Orman: These 3 Accounts Can Make or Break Your Retirement

You might be counting down the days until retirement even if it’s years away. Maybe you’ve got your dream travel destinations mapped out, a list of hobbies to explore, and plans to spend more time with family. It all sounds amazing — until you remember that you need to establish a rock-solid retirement plan to make those dreams a reality.

Contents

1. Your 401(k)2. Roth 401(k)3. Roth IRA

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According to financial guru Suze Orman, the difference between a comfortable retirement and one filled with financial stress often comes down to the accounts you choose to prioritize. Here are three accounts Orman often recommends, each playing a pivotal role in ensuring your retirement is as secure as it is fun.

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1. Your 401(k)

Your 401(k), or 403(b) if you work in certain fields, forms the foundation of a solid retirement plan. However, many people let their plans coast on autopilot, especially if they’ve switched jobs over the course of their careers. Ignoring your 401(k) could mean missing out on valuable employer contributions, effectively leaving money on the table.

“About 1 in 4 savers aren’t contributing enough of their salary to qualify for the biggest possible matching contribution from their employer,” Orman explained on her blog. “Your plan automatically chose a starting contribution rate that is too low to qualify for the maximum match. Call up HR and find out what your contribution rate needs to be to qualify for the max match. Make the switch ASAP.”

Prioritizing your 401(k) and ensuring you’re making the most of any available match is one of the most reliable ways to set yourself up for a comfortable retirement.

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2. Roth 401(k)

You might be blinking and scratching your head: You’ve heard of a 401(k) and a Roth IRA, but this combination of the two seems like a whole new beast. Instead, consider it the best of both worlds — a Roth 401k combines features of a traditional 401(k) and a Roth IRA, allowing you to contribute after-tax dollars to a separate account within your 401(k).

Introduced in 2006, the Roth 401(k) is gaining traction among employers. Orman has encouraged savers to take advantage of this option if their employer offers it, citing its long-term tax benefits.

“With a Roth, your contributions come from money you have already paid tax on. But in retirement, every dollar you withdraw will be 100% tax-free,” she said on her blog. “The ability to contribute today, then have your money grow for a long time to a much bigger sum, and then be able to use that money tax-free is the main reason I think saving in a Roth 401(k) is the way to go.”

Even the one quirk Orman used to take issue with concerning the Roth 401(k) got an overhaul. Starting in 2024, Roth 401(k)s no longer required required minimum distributions, or RMDs. This means you can let your savings grow untouched for as long as you want, making this account even more attractive.

3. Roth IRA

The Roth IRA is another essential tool in Orman’s playbook. It’s easy to set up, offers flexible investment options, and, like the Roth 401(k), allows for tax-free withdrawals in retirement.

“A U.S. ‘total market’ stock index fund or ETF is a smart core holding to build around,” she advised.

With no RMDs and the ability to grow your money tax-free, the Roth IRA provides both flexibility and peace of mind — making it a great option for anyone serious about crushing their retirement savings goals.

Retirement isn’t just about clocking out of your 9-to-5; it’s about living the life you’ve always dreamed of. Suze Orman’s advice is clear: prioritizing the right accounts can make all the difference. By focusing on your 401(k), Roth 401(k), and Roth IRA, you’ll be well-equipped to build a retirement that is as secure and stress-free as you’ve always envisioned.

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