Suze Orman Says Your Retirement Isn’t Safe Until You’ve Done These 5 Things

In a recent episode of "The Suze Orman Show," financial planning guru Orman shared some tough love with a caller who hoped her husband could retire early. 

The couple had a solid foundation, plenty of cash in their retirement accounts, and owned property, but Orman crunched the numbers and gave some solid (and universal) advice for hopeful retirees.

Here's what Orman said on the show, along with five crucial things to handle before even thinking about early retirement.

The caller, Kathy, said she and her husband were 53 and 58, and she hoped that her husband could retire in four years, at age 62, and hold off on collecting Social Security until he was 66.

According to Kathy, they had quite a bit in their retirement accounts, but she became concerned when she thought about their day-to-day expenses.

That's when she reached out for Orman's advice on whether their early retirement dream could really become a reality.

Orman crunched the numbers for the couple. With over $900,000 in net worth, they had approximately $675,000 in retirement accounts and an emergency fund with around $44,000 in it. The couple also had two homes valued at a total of about $320,000, along with $70,000 in mortgage debt and about $500 in consumer debt.

While this looks great on paper, Orman pointed to their monthly expenses. At that point, Kathy and her husband were spending $295 more per month than they were bringing in, which means that even while working, they were spending beyond their means. Throw in Orman's calculations of their projected retirement income, and the couple would have only $3,600 to cover $5,534 in monthly expenses if he retired early.

She gave the following advice — which could apply to anyone nearing retirement — to get them retirement-ready.

According to Orman's calculations, the couple has a net worth of about $970,000. "That's a lot of money," she explained. "A lot of people who have almost a million dollars, they go, 'oh, I can do this.'"

However, with their mortgage debt, the couple's monthly expenses were more than $5,000. Without her husband's income, they would be in a $2,000 deficit every month. Orman said it is necessary to have homes completely paid off.

"You need to have it be your number one priority that your home is paid off in full by the time you retire," she said.

Orman's next piece of advice for the couple was to create a will and trust. "You don't have a will, you don't have a trust," she told Kathy. "You need to get those in place right now."

Orman's advice to those hoping to retire early was to forget about it until these administrative tasks were handled as well.

"You should both look into long-term care insurance," Orman told the caller. "It is a fortune."

Long-term care insurance policies reimburse customers to help cover basic services that may become necessities as they get older. This can include help completing daily activities like eating, bathing, or taking medication. It is best to look into long-term care insurance before health problems develop, as this can affect coverage and rates.

For couples approaching retirement, life insurance policies are important, Orman says. She told Kathy that she was underinsured — and fixing that must be a priority over the coming years.

"You have to have more insurance for the next five years or so just to make sure that it's OK," Orman said.

Finally, Orman dismissed the dream of early retirement by stressing to the caller that she and her husband should both work as long as possible to put themselves in a good position in their golden years.

"You should be working as long as you possibly can…I'm not even sure I see [retirement] at the age of 66," Orman warned. She left the caller with a few questions to think about: Can you afford to keep two homes? Can or should you downsize? What are the real pros of early retirement — and what are the risks?

Orman's advice centers around the idea that measuring one's financial fitness and retirement readiness requires more than simply looking into how much is in your retirement account.

Taking stock of monthly expenses, understanding your insurance policies, and reassessing if it's truly wise to hang on to assets like a home (or multiple homes) should all play an important role in retirement decisions.