Suze Orman's Retirement Stress Test: How Will These Factors Impact Your Retirement?

Retirement should be a time to relax and enjoy the fruits of your decades of work. However, to ensure a comfortable retirement, you need dedicated planning and careful preparation. You also need to be willing to test your plan against potential financial curveballs. 

Suze Orman recently released her "retirement stress test," designed to help you uncover vulnerabilities in your retirement planning before they become major problems. Here's what you need to know. 

What If You Have To Retire Earlier Than Planned? 

While many American workers plan to retire well into their 60s, that's not always the reality of what happens. Due to illness, disabilities, family circumstances, unexpected job loss or any number of external factors, many people face early retirement years before they planned. 

Don't Miss:

• I’m 62 Years Old And Have $1.2 Million Saved. Is This Enough to Retire Stress-Free? 
• The average American couple has saved this much money for retirement — How do you compare?

Orman says it's important to ask yourself: What would your financial situation be like if you had to retire at 62? 

Additionally, she added these questions: 

• Could you find part-time work to bring in some income? 
• Could you continue with your plan to delay claiming Social Security? 
• Would you have the mortgage paid off?

Retiring early can affect your retirement income in a few different ways. For one, retiring early means you must stretch your savings out longer. Plus, it could impact your Social Security benefits – whether you start claiming them early to add a little extra income when you retire or hold off taking benefits to gain a higher payout. 

To prepare for early retirement, Orman suggests building a solid financial cushion. Paying off your mortgage or other significant debts before retirement can reduce financial stress. Exploring options for part-time work after retirement may also help bridge income gaps.

Trending: The average 401(k) balance soars to a record-breaking high – Here's how to know if your nest egg is keeping pace.

How Would You Handle a Storm of Unexpected Expenses?

Life doesn't always go as planned, even in retirement. From major car repairs to unexpected medical bills, surprise expenses can wreak havoc on a carefully constructed budget. Orman points out that many retirees don't have sufficient emergency savings. She recounts a recent survey showing that four in 10 retirees admitted they had less than three months' worth of living expenses set aside – far below the eight to twelve months she recommends.

Building a larger emergency fund now can help you weather these storms. That might mean cutting unnecessary expenses or finding ways to reduce current spending. Downsizing your home, switching to a one-car household or encouraging adult children to become financially independent can all free up funds for savings.

See Also: ‘Which Bucket Do I Draw From First?’ Suze Orman Explains To 67-Year-Old The Best Order For Tapping Into Her Retirement Accounts

Take Advantage of Retirement Savings Opportunities

Orman also wrote that if you’re between 60 and 63, 2025 brings a new opportunity to bolster your retirement savings. Under updated rules, individuals in this age group can make supersized 401(k) catch-up contributions, with limits increased to $34,750. This is a great option for those who need to close the gap in their savings before retirement.

Why Stress Testing Your Plan Matters

The beauty of Orman's stress test is its proactive approach. By identifying potential weak spots now, you can address them before they become major issues. Whether that means increasing your savings rate, paying down debt or rethinking your retirement timeline, the goal is to enter retirement in the strongest possible financial position.

Preparing for the unexpected might seem overwhelming, but it's a critical step toward retirement peace of mind. By taking these challenges seriously today, you can enjoy a more secure and stress-free future.

Read Next:

• Planning Your Retirement? New Changes To Social Security In 2025 Could Affect You
• Can you guess how many Americans successfully retire with $1,000,000 saved? The percentage may shock you.