Personal finance expert Suze Orman is challenging conventional retirement planning wisdom with a bold recommendation that could push retirement savings targets well beyond what most Americans expect. According to Northwestern Mutual’s 2025 research, the average American believes they need $1.26 million to retire comfortably, but Orman argues this figure may fall short for those seeking true financial security in their golden years.
On her Women and Money podcast, Orman outlined her retirement savings strategy that emphasizes building a substantial cash cushion separate from traditional retirement accounts. She recommends that retirees maintain three to five years’ worth of living expenses in liquid, low-risk accounts such as high-yield savings or checking accounts, in addition to their standard retirement savings.
Understanding Orman’s Retirement Savings Formula
Orman’s approach addresses a critical vulnerability in traditional retirement planning. Both 401(k) plans and IRAs are heavily invested in stocks, leaving retirees exposed to market volatility at the worst possible time. “It’s not always that stocks go down and bonds go up, or bonds go down and therefore stocks go up. Sometimes everything can go down,” Orman said on her podcast.
For someone with $50,000 in annual expenses, following Orman’s guidance means adding between $150,000 and $250,000 to their retirement target. This pushes the total retirement savings goal to potentially $1.41 million to $1.51 million when combined with Northwestern Mutual’s baseline figure.
Why Market Timing Matters for Retirement
The rationale behind this additional cash reserve is straightforward but often overlooked. Retirees who are forced to sell investments during a market downturn lock in losses permanently, potentially derailing their entire retirement plan. However, those with adequate liquid reserves can wait out market downturns without touching their investment portfolios.
This safety net becomes especially critical for individuals planning to retire at a specific age. If the market happens to be experiencing a significant decline at that precise moment, having accessible cash means retirement plans don’t need to be delayed or compromised.
Building an Emergency Fund Before Retirement
Financial advisors typically recommend maintaining three to six months of expenses in emergency savings during working years. Additionally, Orman’s recommendation for retirees goes far beyond this standard guidance. “If you really wanna be on the safe side, it’s five years,” Orman stated.
High-yield savings accounts have emerged as an effective tool for building these cash reserves. While the national average interest rate for U.S. savings accounts stands at 0.39% APY according to Federal Reserve data, online banks frequently offer significantly higher returns while maintaining FDIC insurance protection of up to $250,000.
Orman’s Market Outlook for 2026
Despite recommending substantial cash reserves, Orman maintains a bullish outlook on American markets for 2026. In a January 2026 podcast episode, she emphasized that “the United States is still the place of the most extraordinary opportunity out there,” encouraging investors to keep politics separate from financial decisions.
Meanwhile, many investment advisors are looking overseas for stability, but Orman remains committed to domestic markets. “I’m going to keep my money at home. Just that simple,” she said.
Strategies for Catching Up on Retirement Savings
Northwestern Mutual’s research reveals the importance of starting early. Those in their 20s need to invest just $330 monthly to reach the $1.26 million target, while individuals in their 40s must contribute $1,547 per month to achieve the same goal.
For those behind on retirement savings, delaying retirement by one or two years can significantly improve outcomes. This extended timeline allows for additional savings contributions, reduces the number of years requiring funding, and may increase Social Security benefits.
Diversification Beyond Stocks and Bonds
Orman’s emphasis on cash reserves reflects a broader principle of diversification. In contrast to portfolios concentrated solely in traditional assets, some investors incorporate alternative investments like precious metals, real estate, or private equity to reduce correlation with stock market movements.
Gold, for instance, has experienced substantial appreciation over the past year, demonstrating the potential value of alternative assets as part of a diversified retirement strategy. However, financial experts consistently recommend that such alternatives comprise only one component of a well-balanced portfolio.
As market conditions continue to evolve throughout 2026, retirement savers will need to reassess whether their current savings trajectories align with both traditional benchmarks and Orman’s more conservative recommendations. Those approaching retirement should evaluate their liquid cash positions and consider whether their current emergency reserves would sustain them through an extended market downturn.
