Suze Orman has been called “a force in the world of personal finance” and a “one-woman financial advice powerhouse” by USA Today. A two-time Emmy Award-winning television host, New York Times mega bestselling author, magazine and online columnist, writer/producer, and one of the top motivational speakers in the world today, Orman is undeniably America’s most recognized expert on personal finance.
Listen to the podcast to hear Suze discuss:
- the four documents that EVERYONE should have
- what a young parent with metastatic disease can do protect the financial future of her minor children
- when to start taking disability or Social Security payments if you’ve been diagnosed with stage IV breast cancer
- the differences between wills and trusts
Running time: 30:44
Show Full Transcript
Jamie DePolo: Hello, and welcome to the Breastcancer.org podcast. I'm Jamie DePolo, the senior editor of Breastcancer.org. Our guest today is Suze Orman, who has been called a force in the world of personal finance and a one-woman financial advice powerhouse by USA Today. A two-time Emmy Award-winning television host, New York Times best-selling author, magazine and online columnist, writer, producer, and one of the top motivational speakers in the world today, Orman is undeniably America's most recognized expert on personal finance. We are so pleased she decided to sit down and chat with Breastcancer.org today. Suze, welcome to the podcast.
Suze Orman: Thanks so much, Jamie.
Jamie DePolo: We're so delighted you're here. No one plans to be diagnosed with breast cancer or any other type of chronic disease. So how can people avoid financial problems after being diagnosed? We've seen some studies that say about 25% of women go into debt to pay for treatment, so I was really hoping maybe you could give us some steps or tips that people could take to think about these things or try and avoid that.
Suze Orman: You know, the question that you just asked me, the one word in that question that needs to be underlined is after they've been diagnosed. After anything happens, it's usually too late. After a car accident, after a divorce, after a death. The way that you plan for the “what ifs” of tomorrow are doing it today. So you always have to plan for the worst but hope for the best.
So, everybody listening to this, every one of us, knows people who have been devastated financially, emotionally, and physically by any form of cancer, especially breast cancer for women. And there's no reason any of us should think that can't happen to every single one of us. So you start right here and right now, and start making sure you have an 8-month emergency fund. You make it a number one priority that you have health insurance at all costs, because most people who go bankrupt today are going bankrupt because of a medical expense, after you have been diagnosed, truthfully. And now you find yourself in a situation.
What you need to know is if you don't have the money, if you can't pay for things, make sure if you're going to go into debt to treat it, that you go into debt on credit cards. You go into debt to the actual hospital, because after something has been treated, hospitals are more likely to negotiate with you than any other entity. You'll be able to, 9 out of 10 times, go in and talk to the claims office. See if you can work out a payment plan. But it's really, really hard, everybody, after it has happened to you and you're not prepared financially, it will always be a burden.
Jamie DePolo: So are there things, I know you said have an 8-month emergency fund, make sure you have health care. Are there other tips that people can do right now to, as you said, plan for the worst but hope for the best? Like should they set aside money in another account, say specifically for catastrophic health care? Does that make sense?
Suze Orman: No, it makes more sense to have health insurance, honest to God. Because again, I understand this is about breast cancer, but anything can happen to anybody at any time. I've gone through it. A lot of people have gone through it. And when that happens, right, you've got… that's not the time that you are thinking, “Oh my God, how am I going to pay for this? How am I going to do this?” Your thoughts really need to be on healing.
So the best way — and I get that it's expensive, everybody, I get that what's going on today with health care and Obamacare and the new things. I get how catastrophic that is. But you've got to make it your number one priority. So if you have the money to save in an account… you're never going to have enough money. You don't have the time to save enough money to cover the cost.
All money is better off to go to make sure that you have a decent health insurance policy, and Jamie, I wish that I had more good news. I wish I had a magic wand that said, “Listen, if you just did this, this, and this, and you got cancer, you would be okay.” The only way to be okay financially speaking is health insurance, which is why health insurance is such a vital issue in America today, a vital issue, especially for those people who can't afford it.
Jamie DePolo: Absolutely. So, if a woman is diagnosed with breast cancer, or a man, are there things that a person should do right away, financially speaking? Say a person has health care, gets diagnosed, are there other steps that he or she should take?
Suze Orman: No. You know what's so sad is that most people in the United States today don't have what I call the four must-have documents. They need a will, they need a trust, they need an advanced directive, they need a durable power of attorney for healthcare, they need a durable financial power as well, and they need those documents in place.
Not many people know this, but it was May 2 in 2002, that I had a tumor on one of my kidneys. And there I was in Sloan Kettering, and I had tubes coming out of me everywhere and people found out that I was in the hospital. And at that time it was a Wilms tumor as an adult, and it came out benign, but it was — they couldn't believe that it was benign because there was never in the history of Sloan Kettering a benign Wilms tumor, and when you have one of these you're dead in 6 months.
Jamie DePolo: Oh wow.
Suze Orman: And what was interesting about that with KT and everybody that was going through that with me, was that at least I knew I had everything in order. I had my paperwork in order. I didn't have to worry about that. And what was fascinating is when the word got out that I was there, people were coming into my room and said, “Suze, I'm not going to make it. I have cancer. I don't know, I don't have a will, I don't have a trust, can you help me?”
Jamie DePolo: Oh my goodness.
Suze Orman: And I would look at them and I would have these, like I said, tubes everywhere, and I would say, “I can't help you now. I can't do that. You have to do it.” But what was sad is that they weren't worrying about getting healthy. They were worried about, “I haven't done what I need to do today to protect my tomorrows.” And that is why it's so essential that you get those documents in place.
Jamie DePolo: Okay. You actually, you must have read my mind or I read yours, because one of… my next question was going to be, does everyone need a will, and how easy is it to create one? And I know there's also a living will, and I'm not sure what the difference is between a will and a living will, if you could explain a little bit about that.
Suze Orman: The truth is, everybody needs a living revocable trust, but I will explain the differences.
A will is simply a document that says where your assets are to go upon your death. That is all that it does. But it does it in the most inefficient and cost prohibitive way possible.
So, let's say you're in the state of California. You have a home worth $200,000 and you want to leave it to your kids, and you do it via a will. In the state of California, statutory probate fees to leave your kids that home is going to be about $14,000. If you don't have $14,000 or the kid doesn't have $14,000, the courts will sell the property to pay the lawyer, all right? Because the lawyer will want his or her money because probate is a court procedure and it will take 6 months to 2 years.
A living will is simply — also known as an advanced directive or a durable power of attorney for health care — is that while you are living, you simply designate how you want your body to be treated. Who is going to help you with your healthcare decisions? It has nothing to do with your death and where your assets are to go.
A living revocable trust, however, is while you are alive, you take the steps to transfer the title of your home into the title of the trust, held for your benefit while you're alive and whoever else's benefit after you have died. In the case of California, you want to leave [the house] to your kids? The house now goes into the trust. It's the Suze Orman Trust, Suze Orman, Trustee. Upon Suze Orman's death, that house would pass to the kids absolutely probate free, no other cost, nothing, maybe $350 to file some papers, but that's about it, and you can do it in 2 weeks.
So, a trust also has an incapacity clause in it, if it's a good trust, that says if you become incapacitated who's going to pay your bills for you, who is going to write your checks for you. Now, those things are important.
An advanced directive, in my opinion, is better than a living will. An advanced directive and a durable power of attorney for healthcare says, in advance of you getting sick or whatever, you give a directive to your doctors as to do you want to be resuscitated, what do you want to do? And the health power, the durable power of attorney for healthcare is who is going to make decisions for you if you can't make them.
So those four must-have documents are really, really vital, and every single one of you should absolutely have it. You know, normally when I'm giving an interview, I never, ever tout products that I've created, be it — you know, the concept of this interview is to educate you, not to sell you something. But honest to God, I have created the four must-have documents. You could go to SuzeOrman.com, you can see them right there. It's in a gold box that's online, and they're like $80 or whatever it is, because those documents will normally cost you $2,500. And I was so furious that people who can't afford $2,500, what are they supposed to do? And where are they going to find a lawyer?
So I had my own attorney — and billion and billions and billions of these are out there. These are my documents. They're my trust, my will, my advanced directive, all of those things are there. You know, they're there to be purchased to protect all of you, and it's just something that you might want to think about. And after you have purchased it once, you have the legal permission to give it to as many people as you want to help to protect your friends and everything. But it's just something you might want to look into, people. It's the most extraordinary product I've ever created, and it was created really for your benefit.
Jamie DePolo: So, if someone does decide to create those things, do you still need an attorney?
Suze Orman: No. The truth is, these are legal documents, created by my own attorney. They are easy to do. You just have to follow the directions line by line. It couldn't be easier. You can do it on your iPhone or anywhere you want. After you've done it, if you have followed everything, you should be fine. But if you want an attorney to just look it over, it might cost you then $100 or $200. Even the attorney who created them can do it for like $200 for you. But there's a big difference between $200 and $2,500.
The other thing that's great about this product that I created is that every time you have a change, you can go back for free and just change it. It invalidates your old documents and you create new ones. If you do it with an attorney, every time you go back, $500, $1,000, $500. So it probably is the best investment you'll ever make in your life.
Jamie DePolo: Okay, so if somebody did just go to their own personal attorney and get these four documents, that's what you were saying, it would cost about $2,500.
Suze Orman: At least, if not more.
Jamie DePolo: Okay, okay. That sounds great. And so, just to recap, I want to make sure I got this, the four documents are a will, a living trust, advanced directive.
Suze Orman: A living revocable trust.
Jamie DePolo: [A will,] a living revocable trust, durable power of attorney, and advanced directive.
Suze Orman: Yeah.
Jamie DePolo: Okay. Okay, good.
Suze Orman: For healthcare, right.
Jamie DePolo: For healthcare. I know that thinking about the end of life is extremely difficult for everyone, both perhaps a person who's sick and the person's loved ones. But it seems to me it could be a bit easier if there's a roadmap, since there are so many things going on — treatments, emotional, professional, personal, all sorts of issues. From your viewpoint as a financial expert, what should be done first if someone says, “I know this is coming. I want to be proactive. I want to make sure my family is taken care of, that they are not left with anything.” Is there some sort of checklist that people can follow, are there four things that people should do first?
Suze Orman: So, first of all, it depends on your age and your financial status. Let's say you're younger out there and you have a child or children and they're minors. You have to really understand that minors cannot inherit money. So you can't leave, if you have a life insurance policy, you can't leave your child who's a minor as the beneficiary. So that's why you also want to create the living revocable trust, so the trust is the beneficiary of a life insurance policy. Because if it is a minor child, the money's going to go in a flat account and they're not going to be able to get it until they are 18 years of age. So if you have life insurance, make sure that you have checked all your beneficiaries and everything is up to date.
The same thing with your retirement accounts. You would never leave a minor as the beneficiary of your retirement accounts. If you are married, your spouse is always the first beneficiary, or primary, and the secondary would be your trust. Okay? Never make the trust the primary beneficiary of a retirement account if you are married. If you are not married, then the trust should be the beneficiary of your retirement account. But married? Retirement accounts? Always the spouse first, then the trust.
If you aren't diagnosed yet and you're healthy right now, now is the time to make sure that you are carrying a term life insurance policy, especially if you have people who are financially dependent upon you. Because once you have been diagnosed, you're not going to be able to get life insurance. The only type of life insurance that you should purchase is term insurance, good for a specific term.
And so you need to make sure that you have the proper amount of insurance, that everything is set up with the right beneficiaries. So that's the first thing you want to check is the beneficiaries, because I cannot tell you how many people used to call into the Suze Orman Show to say, “My spouse just died of cancer, and the retirement account and the life insurance policy is going to his ex-spouse.” He never changed it, or she never changed it. There's nothing you can do. So remember, a designated beneficiary overrides the wishes that are designated in your trust or your will. So if you say on the… there's a place to designate who gets the money on the product, like life insurance, it's going to go to them even if you say in your trust [that] everything is to go to somebody else.
Do you see, Jamie, why it's so important? And most women don't even think about it. Even men don't think about it. And when you are in the situation of, “Oh my God, I may die. It may be faster, I don't know what I'm doing. I can't pay,” they forget to do those little things like that.
It's also really important, another reason, to have those documents, those must-have documents? If you think that your children are going to be able to peacefully — if you have money, a little money, whatever you have — divide what is left without designating it? Oh my God. They won't. It will destroy families. They start to fight. It's really horrific, when they should be mourning the death of their mother, they're fighting over what wasn't clear. So you need to sit down and talk to your family about who you've left what to, why you've left them that, with all of them at once.
You know, it's like we're all so afraid to talk about this topic known as money, or things, and we feel like it's a dirty thing to talk about, who's going to get what. You owe it to yourself, to your family, to sit down as a family unit and say, “This is what my trust, this is what my will has designated, and I want you all to abide by it. I want you to all look at each other and say, ‘I will do so.’” And it's an important thing to do.
Jamie DePolo: Yes. Is there... when you were talking about the beneficiaries, do you recommend that somebody review, say, a life insurance policy, a retirement policy, like once a year, once every couple years? Does that make sense?
Suze Orman: I actually review mine every single year. I just want to make sure that something hasn't happened at the institution that I may have my retirement accounts with, I don't carry a life insurance policy because I don't need one anymore. But it's just to make certain it is how I wanted it to be. And a lot of the advisers or the people that have those things for me, they say, “Suze, we just did this a year ago.” I say, “I just want to see it in writing again.” I just want to know. Because you never, ever know when something can happen.
Jamie DePolo: No, that makes good sense. That makes very good sense. Now, some of our visitors to the website who have been diagnosed with stage IV disease, they are asking about when to start taking disability or Social Security payments. Are there general strategies for that if someone's been diagnosed with metastatic disease?
Suze Orman: Yes. You know, you’ll always hear me say, “Wait until your 70s to take Social Security.” The one exception to that rule is if you're stage IV, the chances are not very good, and you qualify now. You're 62, you're 66, so whatever it is, just take it. Just take it, but you have to be really clear that you're not going to make it. You have to really feel like it's pretty much… it's hopeless. Which is a hard thing to feel, because there's always hope. But if you need money, if it's really, you know, you're struggling. Do the best you can.
Disability, if you have a disability policy, that would be the greatest. If you can do Social Security Disability, absolutely do that. So chances are you’re Social Security Disability, if you qualify, until you’re full age for regular Social Security, and then maybe switch over. But it all depends on your individual situation. But absolutely, if you know that you're in dire straits here, any money that's owed to you, you need to start taking it. You need to take your pension, you need to do everything as soon as possible.
That's another thing, Jamie. A lot of people still today have a choice of whether they get a monthly pension when they retire or get early retirement, or do they take that money and do an IRA rollover with it, where it’s all in an account that you can then take income from. If you know that, in fact… you know, you're a single mother, let's say, and that upon your death your pension would just cease. It wouldn't be there anymore for your kids or anything, then you're better off doing an IRA rollover. If you do decide to take a pension, you might want to make sure that you do 100% joint and survivor annuity, which means when you die, your spouse continues to get that same thing come until the day he or she dies.
Jamie DePolo: Okay, that makes sense. That makes sense. I'm also wondering, too, if a woman is unable to work because of treatment, and I'm assuming — or I'm thinking there may be two answers to this question, depending on the stage of the cancer. So if someone is early stage, it looks very treatable, it's possible that she will be cancer-free after treatment, but she's unable to work during treatment, how do you counsel her? Are there things that she should tap into, versus someone– ? Oh, go ahead, sorry.
Suze Orman: I was going to say, you know there’s short-term disability that you can apply to tap into if you qualify for it, but that's why it's also seriously important that you have at least an 8-month emergency fund, and that you should start saving for to this day. The other thing is, make sure that your FICO score, your credit score, is really, really good, because if you don't have a big financial reserve, the best thing to do would be able to have a credit card that will allow you to pay 0% interest rates for like 15 months, 18 months, you know, 22 months.
So that if you're going to need money, if you already had a card that was your emergency card that you went to so you could get by to get your reserve, not go on vacation, not because you're going to go out to eat all the time. You do this really for your household needs if you're out of money. A 0% credit card for the longest period of time is a fabulous tool that could probably get you by, which you then, only having to pay the minimum payment due or whatever you could do to just keep going until you're able to start paying it off.
But you have short-term disability, you have a credit card that you should have for that, and maybe even a few, to try to stay out of debt and not have any other bills that you would have to pay to keep your expenses low and to just really, just buy needs, not wants. A lot of times when we suffer an illness, we find that we go out to make ourselves feel better and we buy things we normally wouldn't buy. Don't do that. Before anything you ever buy, if money is tight, ask yourself the question, “Is this a want, or is this a need?” And if it's a want, walk away. If it's a need, you need to buy it.
Jamie DePolo: Okay. Okay, that is great advice. I could sit here and ask you probably a million more questions, but I'm going to ask you one more because I know we have a limit on our time. You mentioned that you should never leave money to minor children, but if somebody is nearing the end of life and they do have minor children, what is the best way to make sure that child or children's financial future is protected. And especially if the woman, say, doesn't have life insurance. What should she do?
Suze Orman: So if you don't have life insurance, all of you listening that are just on here and you still are healthy, that's why it's so important that you do have term life insurance. A million-dollar policy at the age of 30 or 35 is only going to be about $30, $40, $50 a month. So life insurance is key here. Health insurance for yourself and your future family is key.
But if you are in a situation where you don't have life insurance, you don't have any money to leave the kid, and now you have this child and you're the only one. You're a single mother, the father or the mother or whatever it may be, nobody's there? You've got to start talking to your friends and have maybe the hardest conversation of your life. Your friends, your parents, your relatives — “Can you take care of my child for me?” Because it's not just the money that's going to take care of this child. It's the love and the devotion of others to him or her that will help him or her get through the hardest period of their time, which is the loss of their mother or father.
So it's more than just money. It's… you're going to have to go to somebody, and you're going to have to pray that those people will step up to the occasion and say, “Yes, I'll take your child in and I'll be okay and they'll be okay and we'll make it work.” And you should then have those people start being around the child a lot so that the transition happens while you're still alive. And if that final transition never has to happen, who cares? At least that bond was made with the child.
So it's really, really important, more than money. You know, Jamie, you always hear me say to people, “First spend money then save.” And so when we take care of ourselves first — and when I usually say people first, I mean women. Because women, we don't take care of ourselves. We take care of everybody else before us. We take care of our spouse, our children, our brothers, our sisters, our pets, our plants, our parents, and then when it's all said and done, we think about ourselves. You need to think about yourself right here and right now. You need to give to yourself as much you have given of yourself. And you need to make sure that you've done everything for that child, not with what you can buy them, but with the bonds of love and support around in case anything were to happen.
Jamie DePolo: Excellent. That's excellent advice. Suze, thank you so much for talking with us today. This has been great advice. I can't thank you enough. This is invaluable information.
Suze Orman: You're welcome, Jamie, and to everybody out there, my love goes to each and every one of you.
Jamie DePolo: Thank you.