This is insane, you don’t need $5 million to retire

This is insane, you don’t need $5 million to retire


If we all do, we’re all doomed.

Then again, this is Suze Orman.  A woman who vacations on a private island and has a private plane to get there.

Yep.  That’s true, at least she said so in a recent interview.

Author, TV host, and seemingly disconnected from reality, money guru Suze Orman made headlines in the personal finance blogosphere recently claiming on the Afford Anything podcast Americans need at least $5 million if you wanted to achieve “FIRE” – be Financially Independent Retire Early.

That’s an insane number.  This post will tell you just some of the reasons why.

  1. It depends…on what you spend

The favourite (and most relevant) answer for most things in life is – it depends.  Personal finance and investing is no different – it’s personal.

How much do you need to retire?  It depends.

How much insurance do you need in retirement?  It depends.

How much investment risk are you willing to take on?  It depends.

You get the idea.

I have no doubt that Suze has gotten accustomed to living large thanks to her private island and plane.  That paradigm will never occur for 99.99999999% other retirees.

According to Statistics Canada, the average Canadian household now spends close to $90,000 per year; increasing by $2,000-$3,000 per year accommodating for inflationary prices of goods and services paid for.

Household expenditures, summary-level categories20122013201420152016
Canadian Dollars
Total expenditure75,69579,09880,72782,69784,489

Most retirees don’t need $90k per year to live from though.  After the mortgage debt is gone, kids have left the house and actually saving for retirement is no longer required, most Canadians could expect to get by on 50-60% of that amount, or, in other words, about $54,000 per year after tax in today’s dollars.

You don’t have to take my word for it – you can check out my reviews and takeaways from actuary Fred Vettese’s collection of fine books for further references to these figures.

Retirement Income for Life

The Essential Retirement Guide

Given most Canadians over age 65 are likely to earn $12,000 or more per year thanks to Canada Pension Plan (CPP) and Old Age Security (OAS) benefits combined, many Canadian families only need to make up a $30,000 per year retirement shortfall – even if their average pre-retirement income is now almost 3 times that much.

Suffice to say in Canada Suze, unless you’re a very big spender to afford that jet fuel to and from your private island, you certainly don’t need a $5 M retirement nest egg to retire in your 40s.

  1. Can you predict your health care future?

I can’t either.  Even Suze can’t.  Nobody can.

This is where Suze’s argument during the podcast makes some sense.  During the interview, she mentioned:  “as you get older, things happen”.  True, they do.  But she went off the rails…

“If you don’t have a significant amount of money…listen…like I do….$20, $30, $50 or even a $100 million dollars…be like me…if you have that kind of money.  Fine.”


Yes, we understand that bad things can happen to great people but you certainly don’t need that kind of money to hedge risks.

“The worker that retires at the age of 30..if something goes wrong from 30 until they’re in trouble.”

Fair point.  But how many 30-somethings actually never work again?  No blogs to run, no books to pump, no side gigs to occupy their time and improve their wallet?  No other business ventures – ever – at all?  I don’t know of any and I’ve never heard of any.

If you truly “retire” early, you have no income other than your nest egg to rely on; no workplace insurance plan to rely on; no dental plan; no health care plan or any government financial assistance plan to support you then yes, sure, the costs incurred to you and your loved ones should something catastrophic happen could cause financial ruin.  (This is a good time to note our health care situation is FAR different in Canada when compared to the U.S.).  If you retire early and stay retired, meaning you never work again, you need to factor in some health care risks that it presents.

Given none of us can predict the future with any accuracy, it would be wise to “insure up” before you make the leap into FIRE – when you’re young and healthy.  No doubt in doing so however you will never need $5 M invested though.

  1. Lost time to the compound machine

Anyone who argues $5 M is not enough to retire is seemingly disconnected from the reality the rest of us live in.  I mean, it’s hard to fathom given my point #1 above that any senior in Canada or in the U.S. or really anywhere on our planet for that matter can’t “get by” on even half that amount using some form of geographic retirement arbitrage. This is a huge sum of money in a global context.  A $2 M or $2.5 M portfolio should easily churn out $80,000 or so per year in income for decades if not generations depending upon where you live and what you spend.

Yes, income taxes can change over time.  High levels of inflation might come back too.  Again, bad things can happen to very good people when it comes to their health. Robots could rule the world; AI might take over in a decade or less thanks to Elon Musk’s latest invention.  I suppose anything is possible  But I would think the biggest argument against retiring early is missing out on the power of compound interest.  You see, if you’re drawing down your portfolio in your 30s or 40s, you’re as Suze puts it “insulting compounding”.  That could be the biggest mistake young retirees are making today.


This FIRE movement absolutely has some traction.  It also has huge haters like Suze Orman who quipped:  “I think it’s just ridiculous”.

While I remain curious about some form of semi-retirement myself this FIRE stuff is certainly not something I’m ready to work towards radically or aggressively right now.  Instead of being an uber-frugal 40-something living in a small 1-bedroom rented unit with my wife and our beloved cats, I’m gravitating to a job/work that I thoroughly enjoy that I can do for many decades on end.  This means I don’t need FIRE.  I just need my/our plan.

If your life’s purpose is to retire early or even have some sort of semi-retirement that buys more time to do something else, great, go for it.  Reach for that star.  Otherwise, love your personal life and work towards that passion related to your professional life.  In doing so you may be able to work as long as you want; be a productive member of society in the process, be far happier and become utterly fulfilled, and you’ll certainly never have to worry about scrimping and saving towards some (insane) $5 million nest egg.

Doesn’t that sound so much better?  What’s your take on this latest FIRE craze/movement?  Do you even care? 

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

35 Responses to "This is insane, you don’t need $5 million to retire"

  1. So this will be my first full year of retirement.
    Single; two cars (one toy); paid off house; live in QC – Eastern Townships
    I have done pretty well whatever came up this past year which meant a bit of overspend in the vacation(3) department. Another slight hiccup was paying for two years of car insurance this year as it is less expensive than paying per year. So that doubled this year but will be negated next year. Which goes to show that one year does not make a budget.
    For ten months my cash burn rate per month is close to $3,150 NET. Pretty well in line with what I had guesstimated ($3,500 per month) prior to retirement. Still one big month to come in December with Christmas.
    Another hiccup was not receiving full OAS because of my previous working salary. This is coming in to line as my earned income drops to “0” as of this year. However that was compensated by the OAS clawback counting as tax so I recouped on my income tax declaration.
    I consider myself to living quite well all considered, I bought my toy car in 2016, so Suze is definitely out of line for “normal (without private plane) people. I have no doubt that a couple could do better than I am because they would, hopefully, have two incomes to split the services component of living – taxes/rent, telephone, hydro, car costs, etc,etc.
    The bank financial planner said I would croak with more money in my portfolio than I have now but he is basing that on 90 years. For some reason he did not redo the chart when I told him I wanted to live to 200. LOL


    1. Thanks for the detailed comment. I think ~ $3,500/month budget without debt is pretty decent for a retiree. Are you getting CPP and OAS? If so, my estimates show most retirees can expect to get ~ 1,000 from both programs after age 65 assuming they worked about 30 years. Thoughts? Just curious if you don’t mind sharing.

      Well done Ricardo. Always nice to have a fun car!

  2. @BB1917

    I used taxtips and adjusted our 2018 income to 84489 to check taxes as 59 yr old retirees. Came to 13473 (~16%) compared to the 15310 (18%) Canada avg. and I’m in a higher taxed province. Eligible dividends, income sharing help to get it down. (I haven’t decided how much more to withdraw from RRSP in ’18 so not sure what income will be yet for tax purposes = more.) 42.5% is certainly a number that gets attention. I expect ours is less as we spend ~35+% in USD (much lower taxed).

    I put my expenses in Marks previous cookbook thread. When I sign on to my bank my net worth shows (investment accts minus house & HISA elsewhere). Can’t avoid it! My savings rate = less than zero with after tax transfers from registered withdrawals to TFSA and with being in decumulating mode.

  3. I can’t say I follow Suze Orman. Many years I watched a few of her shows and it seemed like sensible advice for typical Americans at the time.

    Given this kind of opinion from her it would seem she has completely lost her way as a credible person helping people with their finances. Maybe it is driven by a deep need to raise her profile or profit somehow.

    RE income/asset goals I think people have to figure this out carefully for themselves based on their own situation, needs, wants, potential etc. We all know $5M isn’t at all realistic or necessary for all but a tiny portion of people.

    RE 85-89K? It sounded high to me so I looked at the data you provided Mark and also came up with another site. I would like to see avg Canadian household income to compare and satisfy my curiousity about if/how much of expenditure is financed into the future. The other site uses same stats Can. data but better identifies the broad spending categories, showing lower or higher percentages by province vs avg, and also looks at spending vs. income by Province. Spending seems to increase by just over 2% per yr approx. inline with claimed CPI.

    The 2016 data shows $84,489 as total expenditure but I note there is a total current consumption stated amount of $62183. Total expenditures includes $15310 in tax but that still leaves another $6996 difference. This difference appears to be the last 2 line items on stats Can. chart – pension/insurance contributions of $5067 (mostly savings, CPP etc?) and $1929 donations.

    1. It seems quite high to me but it includes some forms of taxation and pension/insurance contributions as you have noted.

      I suspect the real spend for Canadians, after-tax, is probably closer to $60k per year.

      1. Yeah, that’s the $62,183 current consumption number for 2016. Coincidentally that’s within a couple of K of our avg. retirement spend to date last 4.5 years. Seems reasonable. Too bad we can’t find avg household income numbers to compare.

        1. You’re great at your estimates.
          Found this older paper here.

          re: income replacement.

          “Statistics Canada found that gross replacement rates vary by income
          but are typically above 70 percent (Ostrovsky and Schellenberg, 2010). People
          in the lowest income quintile on average have replacement rates of 100 percent,
          implying their real standard of living actually rises after retirement. For
          higher income quintiles, the replacement rate was between 70 and 80 percent,
          with few people below 50 percent. Given the earlier discussion that suggested
          70 percent was probably higher than necessary, this would explain why most
          retirees currently are living comfortably.”

          With our current accelerated mortgage payments, saving for condo, TFSA contributions x2, RRSP contributions x2 – we’re paying back/saving close to $5K per month. All that will disappear in 5-10 years.

          1. Thanks.
            Interesting link.
            Ours vs peak earning 5 yrs avg:
            me 40% replacement (must be an outlier!)
            her 55% replacement
            combined 48% (less if inflation factored in)
            Estimate this will rise to 62% in 5+ yrs with cpp & OAS. My guess is many people with replacement rates of 70-80% in higher quintiles have at least one large work pension.

            Well planned. That will be very nice to look forward to. Best wishes.

            RE OAS/CPP expected numbers I believe it’s important to consider at what age for CPP.
            Ie at 60 or at 65 or higher. Either way your numbers are on the low end for a CDN resident of 40 yrs/30 yrs CPP (somone earning below avg earnings, or fewer working yrs) since OAS alone is 7204 of the 10K. The difference leaves only $2796 which is $5281 below the average CPP payout or 34.6% of it. Most will get more.

            I calculated using govt CPP avg payout 8077.20/yr, and then mine with exactly 30.0 yrs CPP :

            CPP @60 =5169 (incl 36% penalty)
            OAS 7204
            Total 12373

            CPP@65 = 8077
            OAS 7204
            Total 15281

            CPP @ 65 = 10469
            OAS 7204
            Total 17673

      2. The income tax listed in the 2016 expenditure works out to just 18% – seems a little low but I’m reminded that the survey will include seniors, etc. The Fraser Institute said last year that the average household spends 42.5% of its income on taxes of all kinds including property taxes, sales taxes, etc. Ouch!

        Most on this site probably track their net worth (accounting balance sheet) each year, but do you look at your income statement? Every January I download our inflows and expenditures from our bank accounts to see what it costs to run our home and what portions are “fixed” like property tax, utilities, insurance, etc. About half our expenditures are fixed (food, transit, clothing, etc. are variable in my mind). Doing so also helps you see your savings rate.

        As for Suzie Orman, her basic messages are sound but she comes across as over-the-top. In the media world, you need to be in order to attract attention and of course advertising revenue. Just talking about her leads people to look, which makes her richer! Just the same way financial magazines plaster their covers with “Hot stocks you MUST buy now!”

        BTW: I’m a huge fan of this site – I’ve learned tons from Mark and the commenters who share perspectives here – an invaluable resource!

        1. Hey BB,

          I know almost for a fact I’m very close to 42.5% taxes given my income. It sucks, but that’s the cost of having a decent job. I wouldn’t change it for now while I have debt (mortgage) to repay.

          Many months ago I tracked my net worth on this site but then I stopped it in year 2 or so because I didn’t want to publish that information online. I still track it mostly for fun but I figure if you’re going to be accurate you have to include things like the commuted value of my workplace pension; after-tax value/worth of our RRSPs; etc. so I don’t really bother/worry about it. All I know is, it continues to go up over many months.

          We were fortunate to become millionaires (net worth) about 5 years ago, age 40. That’s not enough for us to retire (as you know from reading the site) so I’m pushing for $0 debt and $1 M in personal invested assets by age 50. I figure that will be some great goals for us.

          It’s funny, I don’t really track my savings rate either. I mean, I do, generally speaking but I’m probably the most hands-off blogger budget-er there is. I could easily calculate it but I don’t really care what I spend after 1) our mortgage is paid, including some additional prepayments, 2) TFSAs are maxed out every year (currently saving ~$11K-$12K for that for January 2019), 3) RRSP contributions are made (my RRSP is maxed out), and 4) some short-term savings (e.g., for vacations are set aside). Otherwise, we spend from there for entertainment, etc. That means we could save even more money by rubbing pennies together but I don’t have the energy for it 🙂 I also have to live my life!

          Suze is very good at pumping herself, her shows, her books, etc. just like magazines do. I figure anyone or anything trying that hard to get you to spend money is nothing you should invest in!

          Thanks for being a huge fan. I learn from readers as well!

  4. Orman has had more good advice than bad so I think perhaps we should cut her some slack. Atleast she’s trying to inform people and single women in particular how to manage money, get out of debt and take charge of their lives.

  5. I honestly cannot believe how much attention this Suze Orman crap is getting!

    Of course you don’t need 5 friggin million dollars…haha

    I think she was either trolling everyone, or just saying something so outrageous so everyone would talk about her (and it seems to be working).

    That 90,000/spending figure seems high to – I wonder what it would be for the average Canadian not living in Vancouver or Toronto.

  6. Actually, from my understanding, the main part she didn’t like was the expectation that a 30 years old with a million dollars saved could sit on his ass for 65 years. This is a long time to forecast and any health issue, law change, weather event, hyperinflation/deflation/stagflation or any unforeseen circumstance could force someone to need a job at a time they won’t be able to find one, so all their family would suffer.

    Suze later said that she’s all in favor of becoming financially independant as soon as possible. Also she agreed that being able to do work that you like is much better than being forced into whatever pays the bills.

    Overall, this discussion seems to be based on how anyone sees retirement. Some people start a side business in their spare time, which lets them earn more than their previous job.

    Even if I had millions in the bank, I would probably still work at something. Either creative work, or tinkering with a classic car, or crafting wooden ornaments, etc. Anything that keeps my hands busy and my mind at ease. I might even end up working longer hours than at a regular job, but on my terms, on my schedule, and I know I can stop anytime once it feels like a burden.

    I’m pretty sure FIRE enthusiasts have similar goals of perfecting their craft, learning new things, helping their community, being awesome full time parents, etc.

    1. She was very contradictory really. Unfortunately the whole definition of retirement, FIRE, etc. is so loosely twisted we seem to make it whatever we want. I’m not saying all definitions or terms don’t have a context, but there is a point. If you’re not working for an income, you’re not working for an income. You are therefore probably considered retired – i.e., not working.

      None of these FIRE youngsters (they are younger than me – I’m 45 for the record) don’t work. They blog, they pump books, podcasts, other. I’m fine with that – but please don’t call yourself fully retired. You are simply working on your own terms. That’s fine too.

      I know for me, I will work as long as I’m physically and mentally able to. I need to be busy. That may or may not work for others. 🙂

      Thanks for your comment.

      1. One thing that irritates me is that people bother my husband about retirement. He works hard and loves what he does. He hopes to keep doing it until he is 70! He’s got 7 years until that age. People FROWN on us or try to make us feel bad because he is still working at a high paying career. With the giant job of downsizing from a house that is enormous we could easily retire and live very well. We have hit that magic number BUT he likes what he does!

        1. Hit the Orman “requirement.” No wishes to retire and knock on wood won’t be forced. Lots of planning to do like where to live and such. It’s good to be prepared but again I am annoyed that people think we must be destitute because my husband is still working at 63.

        2. Very well done Barb. I think ageism is alive and well. I do see the reason why some folks might frown but I also see the other side of the equation since working likely keeps him young(er) and motivated – that’s great for longevity. Good on him to enjoy what he does!

  7. Whatever Ms Orman thinks is irrelevant she is irrelevant at best. Good thing times have changed and real life usable resources are widely available. I’m 100% convinced thatone can figure this out with some basic financial education and experience. You must be your own advocate and advisor you and no one else has your back.

    Based on my calculations you are spot on with the amounts needed in retirement in Canada asuming one continues to live within their means and you build a inflation resistant tax friendly income stream. Reading the retirement income blueprint by Daryl Diamond, a good Canadian resource.IMO.

    FIRE is often taken out of context if one can retire from the rat race earlier one should no matter what age. It does not mean you are/have to be without income sources it just means living on your terms not someone elses. Perhaps time for a new accronym?

  8. I think your comments hit right on the “mark” (pun intended) ! To say nothing about the American Greed that gives back to no one, is narcissistic and centered on the accumulation of stuff. I think what she is saying is just gross.

  9. “Do you even care?”

    Nope, not really. Each person should base their decisions and plans on their situation, wants and needs in consultation with those that matter to them. If a person wants to “retire” at 35 or work until they’re 80, who am I to say differently.

  10. Mark your line “seemingly disconnected from reality” nails it. 🙂
    I read one of Suze’s books years ago ( can’t remember which one ) and determined that the lady had little to say that was of use. Resolved at that point to ignore anything coming from her. She definitely falls into “do as I say” rather than “do as I do” type of pundit – see private jet and island – mere mortals need not apply.
    Much prefer the reasoned posts from MOA.
    ps. I FIREd with well below that $5M more than 10 years ago and haven’t felt stressed about it at all.

  11. I think people place way too much emphasis on having stuff. As you get older (& retire) you realize you don’t need a new wardrobe every year, a new car etc. etc. Your house should be paid for, you should have an RRSP and TFSA, and they don’t have to be huge, treat them as an emergency fund. We don’t travel much anymore – who knows where the next fire, flood or hurricane will be? And having spent 50+ years working with people, we’re just content for the peace & quiet. I used to watch Suze on TV but now I find her just irritating.


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