Personal finance expert Suze Orman didn’t grow up wealthy — she worked her way through a number of challenging jobs and learned how to invest before becoming the success she is today.
Orman is a firm believer that everyone deserves to live without financial stress — both during their working years as well as in retirement. To achieve that goal, Orman is a fan of living below your means, always having a financial safety net, and working toward financial independence.
But doing that takes time and effort.
As Orman says, “Financial independence is not something we snap our fingers and have materialize right then and there. It is the result of a process that we create and then commit to seeing through.”
If your goal is to achieve financial independence to the point where you’re able to retire early, the right tools could set you up for success. To that end, here are three accounts Orman recommends putting in place as soon as possible.
You never know when you might face a surprise expense or a period of financial hardship. That’s why it’s important to have an emergency fund — money in savings to cover unplanned bills, or to take the place of your paycheck for a while if that becomes necessary.
Unfortunately, an early 2025 U.S. News & World Report survey found that 42% of Americans do not have an emergency fund. In addition, SecureSave, a fintech Orman co-founded, reported in August of 2023 that 63% of workers do not have enough emergency savings to cover an unplanned $500 expense.
At the very least, it’s a good idea to save enough money in an emergency fund to cover three to six months of essential bills. However, Orman would prefer that you save more.
“You know that I want you to have far more than three months of living costs set aside. One year is my sweet spot advice for being prepared for major financial setbacks,” she said.
An emergency fund could also be an important component of your early retirement strategy. If you retire before you can access your IRA or 401(k) penalty-free, you can potentially dip into your cash reserves to pay bills (though ideally, that money should be saved for unplanned expenses).
You can also use your emergency fund to cover expenses during periods when the stock market is down and it’s a bad time to tap your portfolio.
Read more: The US stock market’s ‘fear gauge’ has exploded — but this 1 ‘shockproof’ asset is up 14% and helping American retirees stay calm. Here’s how to own it ASAP
The number of Americans who are nearing retirement without savings is alarming. AARP found last year that 20% of Americans 50 and older don’t have any money socked away for their golden years.
In addition, the Federal Reserve puts median retirement savings among Americans 65 to 74 at just $200,000 as of 2022.
Orman says the key to building a strong retirement nest egg is to start saving when you’re young — ideally, in your 20s. The sooner you fund your retirement account, the more time that money has to grow.
Orman also thinks people should save at least 15% of their income for retirement when they’re younger (and beyond). And if you want to retire early, you may even want to aim higher.
If you have access to a 401(k) plan, it can be particularly advantageous to participate — and max out if possible. This year, that means contributing $23,500 if you’re under 50, $31,000 if you’re 50 or older, or $34,750 if you’re between the ages of 60 and 63.
One easy way to boost your 401(k) savings is to claim your employer match in full. If you’re not sure what that entails, ask your benefits department.
You should also know that your employer match won’t count against your contribution limit. So if you’re 29 and want to contribute $23,500 out of your paycheck, and your employer matches your first $2,500 in contributions, you can put in $26,000 this year.
The nice thing about retirement plans like IRAs and 401(k)s is that they give you a tax break on your money. With a traditional IRA or 401(k), for example, your contributions go in tax-free and investment gains are tax-deferred.
The problem with these accounts, though, is that you’re required to wait until age 59 and 1/2 to take distributions. If you take an earlier withdrawal, you’ll typically face a 10% penalty. And a penalty like that could easily eat away at your savings.
That’s why it’s important to invest in a taxable brokerage account if you think you’d like to retire early — though you won’t get any IRS benefits, your account will also be unrestricted. You’ll be able to take withdrawals whenever you want and contribute as much as you want in any given calendar year.
Orman says it’s important to be strategic with your investments — and to be mindful of your asset allocation at different stages of life.
“For many people, as they near retirement, it can make sense to reduce their reliance on stocks if they want a smoother ride,” she said. “But just because you had 80% or more invested in stocks when you were 40 doesn’t mean you need or must keep that much invested in stocks when you are 65 or 75.”
To be clear, you shouldn’t reduce your stock exposure at a certain age so much as at a certain point before retirement. Generally speaking, the five-year mark is a good time to start moving out of stocks and into bonds, which tend to be more stable.
This doesn’t mean you should dump your stocks completely as retirement nears. But you may want to limit your portfolio to 50% or 60% stocks so you’re not overly exposed to market volatility at a time when you’re ready to start tapping your investments for income.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
