54-Year-Old Woman With No 401(k) And Only $12,000 In Savings Seeks Suze Orman's Advice, Orman Says 'Put $8,000 Into A Roth IRA'

Suze Orman frequently offers financial advice to those who write into her "Women & Money" podcast. Recently, 54-year-old Kim reached out about how to make the most of her $12,000 savings. 

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Kim disclosed that she doesn't have any retirement plans or investment assets. The only money she has saved is that $12,000. Her employer offers a 401(k), but they don't offer a match on it, so she hasn't started it. The only debt she has is $4,000 left on a car loan. "I want to create the most security for my future, especially at my age," Kim wrote. 

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Immediately, Orman advised against starting the employer 401(k). "Given the fact that your company does not match the 401(k), I don’t want you to put a penny in their 401(k). Useless."

From there, Orman outlines three things Kim should do to maximize her savings. First, Orman tells Kim to put $8,000 into a Roth IRA. She recommends putting it into a money market account, making around 4%. 

In 2024, the contribution limit for Roth IRAs is $8,000 if you're 50 or older ($7,000 if you're younger than 50). The benefit of this strategy is that Kim can still access her contributions tax and penalty-free, as long as she doesn't touch her earnings on those contributions. 

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The second piece of advice Orman gives Kim is to open an Ultimate Opportunity Savings Account with Alliant Credit Union. "I would put $100 a month in every single month," Orman says. "It will be earning 3.1 percent interest. Again, if you need it, you can get it any time you want, but it will be earning 3.1 percent interest. But at the end of those 12 months, they will give you $100."

The last thing Orman addressed was Kim's car loan. She advised Kim to pay that off quickly with anything she had left. The fewer expenses Kim has, the more she'll be able to save and put toward securing her financial future. 

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Kim isn't alone in this situation. According to an AARP survey, 20% of Americans ages 50 and up don't have retirement savings. And 61% of this demographic are worried they won't have enough money to support themselves in retirement. 

"America is facing a serious retirement crisis. AARP has a long history of supporting legislation to expand access to retirement savings. Still, Congress must act more swiftly to provide the financial support older Americans need and deserve," said Nancy LeaMond, AARP Executive Vice President and Chief Advocacy & Engagement Officer. 

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