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Suze Orman warns employer-paid housing perks can erase retirement income
Orman said that while a client’s housing and utilities were covered at about $1,100 per month, retirement costs could rise to $4,000 to $5,000 monthly, creating a projected shortfall versus after-tax income.
Suze Orman used a retirement planning case study to argue that workers often underestimate the value of employer-paid perks that disappear when they retire, according to Yahoo Finance.
In the example, Orman described a 43-year-old named Kiki who plans to retire at 58 with $410,000 in total assets, no mortgage, no consumer debt, and a monthly surplus. Kiki’s employer covered roughly $1,100 per month in rent, plus cable and electricity while she worked and lived on a college campus.
Orman said that once she retires, those benefits stop, and monthly costs that are currently about $2,145 could balloon to $4,000 or $5,000 per month once she is responsible for housing, health insurance, and long-term care insurance. She projected Kiki would have about $970,000 in a 401(k) and $230,000 in a Roth IRA, or roughly $1.2 million total, but after accounting for taxes, the plan could generate about $2,966 per month in after-tax income.
Yahoo Finance also cited U.S. labor economics, noting Bureau of Labor Statistics figures that employer costs averaged $49.32 per hour worked, including $33.72 for wages and $15.60 for benefits, and referenced a PwC finding that employees may value benefits more when they understand how directly they meet financial needs.