Suze Orman’s three key numbers to financial security: 740, 88 and 70

For all the complexity that can come into play in your financial life, I have a fairly simple proposition that can help you build a “big picture” framework to guide all your decisions.

Focus on these three numbers: 740, 88, 70. 

What you'll learn

• What a 740 credit score says about you
• Plan to be living well into your 80s
• For a bigger payoff, wait until age 70 to start collecting Social Security

If you use those numbers as the foundation for many of your financial decisions, you are going to be on the path to financial freedom.

740 is the credit score level that will put you in shape to land the best deal when you need to borrow.

88 is the age that half of today’s 65-year-old, non-smoking women—in average health—can expect to live. For men, your longevity number to focus on is 85. Keep these in mind when making big decisions (hint: don’t be in a rush to retire early).

70 is the best age to start collecting on your Social Security retirement benefits to ensure you're getting as much money as possible.

What a 740 credit score says about you

As you likely are already well aware, credit scores come into play throughout your financial life. Your credit score plays a role in whether you can get a credit card, or a credit card deal you have your eye on. It’s also a factor in the interest rate you pay on loans, and many landlords run a credit check when checking applications these days. 

Credit scores range between 300 and 850. I want you to aim to have a credit score of at least 740. Once you’re at that level (or higher) you will be considered a reliable and solid borrower. 

Not there yet? Time to get to work on boosting your credit score. There are a bunch of factors that go into how your credit score is calculated. I recommend you focus on two behaviors that will help you the most. 

Pay every bill on time. Being on time accounts for 35% of your score. C’mon you can do that. 

The other big win is if you’re able to get your credit card spending down to where you can pay all—or most of it—off each month. The amount of your unpaid monthly balance divided by your total available credit is known as your credit utilization ratio. This ratio determines about 30% of your credit score. Keep your credit utilization ratio below 30% and you’ll be doing great!

Plan to still be living well into your 80s

I see so much confusion around “life expectancy.” When people read or hear their life expectancy is age 85 or 88, they think that means they are expected to die by then. 

That’s not it at all! Life expectancy is the age at which half of a given population is expected to still be alive—not dead!

In terms of retirement planning, the key life expectancy statistic to think about is life expectancy at age 65. That is, if you are alive at 65—a traditional retirement age—how long might you continue to live?

Sure, none of us know for sure. But we can turn to some statistical calculations to understand the probability of being alive at a certain age. The Society of Actuaries, who looks at nonsmokers of average health, calculates that a 65-year-old male today has a 50% chance of being alive at 85. And for females, half of today’s 65-year-olds will be alive at 88.

The big takeaway is that whether you are 35 or 65, you should be thinking about the odds that you if you make it to 65 in average health, there’s a pretty good chance you will be alive into your late 80s (and beyond). That’s one big reason I do not recommend early retirement for many people in their early 60s. The longer you work—even if only part time—the greater your ability to make some wise decisions that can serve you well into your 80s and longer.

That leads me to the last of our trio of key numbers.

For a bigger payoff, wait until age 70 to start collecting Social Security 

Now that you understand the probability that you could be very much alive well into your 80s, I hope you will think through when to start collecting your Social Security retirement benefit.

You can start collecting payments as early as age 62, but if you make that choice, you will lock in a permanently reduced payment. For someone born in 1960 or later, claiming at 62 entitles you to a monthly payout that will be 30% less than what you would receive if you waited until age 67, your “full retirement age” (FRA) in Social Security lingo.

So why do I want you to focus on 70? Because between your FRA and age 70, Social Security will boost your payout even more if you keep delaying. For someone with an age-67 FRA, the guaranteed increase is 8% a year—that means a 24% boost to your payout if you wait until age 70 to start. For married couples, it’s so important for the higher-earner to consider delaying payments until age 70. That’s how you ensure the surviving spouse will have the biggest possible benefit. 

For a healthy financial future, remember these numbers: 740, 88, 70. These three simple numbers won’t help you win the lottery, but they will ensure a more affordable life now and in retirement.