Suze Orman: FUD* in Detroit

I heard Suze Orman, the well known motivational speaker and "personal finance expert", on Paul W. Smith's morning show (760AM WJR) this morning. Paul W. asked Orman what she thought of President Bush's proposal to create private investment accounts as part of his social security reform package. I was a little surprised at what I heard: (quotes are approximate, based on my memory)

Orman: "Why can't the government just take care of us, like it is supposed to?"

Paul W: "Suze! You sound like a socialist."

Orman: "Not a socialist, a realist. Look, we go around the country and ask people, "do you have a will? do you have an irrevocable trust?", and people don't even have those. And now we expect them to invest their social security money? These are the same people who mortgaged their houses to buy technology stocks in the 90's bubble... the stock market still hasn't recovered from that yet, and financial planners, they still don't know what to tell people to do."

This is surprising because of what Orman teaches in her PBS shows and books: that people have to take charge of their retirement. From the Oprah web site:

Maximize retirement accounts. We can't rely on Social Security to meet our
retirement needs, so it's crucial to save as much as you can now. This pertains
to single, life partner and married retirees: Those who are single won't share
living expenses. If you're married and you're both planning on drawing Social
Security income, when your spouse dies, you'll go from two checks to one.
Maximize your contributions to 401(k) or 403(b) accounts, and if you qualify, take advantage of funding a Roth IRA.

So Orman says that we can't rely on social security, and that we have to plan for our own retirement... but we can't be trusted to make the decisions? Doesn't Orman make a handsome living teaching us ignorant Americans how to structure our finances? I would think that Orman should be heartily supportive of private retirement accounts, more people would buy her books.

Orman also implies that people would be able to invest their social security accounts foolishly, but that is not very likely to be allowed. Details are still scarce, but the likely scenario is a basket of low fee funds that offer asset allocation choices, which an investor can pick from based on their level of risk tolerance. People who are willing to risk more can pick the fund that is stock weighted, while people who are conservative can pick the fund that is invested mostly in government bonds.

What better way is there to educate people about money and investing than to offer them a chance to actually do it? If everyone had a retirement account, and had to make investment decisions, the level of involvement would invariably increase.

*Fear, Uncertainty, Doubt

Tags :

Share this article please, on :

Share on fb Tweet Share on G+