Dave Ramsey, a well-known personal finance expert, has some straightforward advice for retirees looking to avoid financial disaster. He suggests starting to plan for retirement early by setting clear goals and calculating how much money you will need to save. Ramsey recommends investing 15% of your gross income in tax-advantaged retirement accounts like IRAs or 401(k)s.
This allows you to make significant progress towards your retirement goals while still having room for other financial responsibilities. Paying off all debts, including your mortgage, before retiring is another key piece of advice from Ramsey. Being debt-free lets you put more money towards your retirement fund and enjoy your golden years without financial stress.
If you feel behind on your retirement savings, Ramsey suggests maxing out your retirement accounts, cutting monthly costs, increasing your income, delaying retirement by a few years, and paying off your mortgage quickly. Ramsey also notes that the 4% rule for retirement spending doesn’t work for everyone.
Practical retirement planning strategies from Ramsey
It’s important to review your own finances, goals, and health concerns to determine the best withdrawal strategy for you. Social Security should be viewed as supplementary income, according to Ramsey. He advises consulting an investment professional before deciding when to start collecting benefits, especially with the program’s reserves predicted to be depleted by 2033.
Healthcare costs can be a major expense in retirement. Ramsey recommends opening a Health Savings Account (HSA), enrolling in Medicare, and purchasing long-term care insurance to help manage these costs. Finally, Ramsey emphasizes the importance of maintaining a long-term perspective with your retirement investments.
Avoid impulsive decisions like withdrawing from accounts during market downturns. Staying focused on the long-term increases your chances of achieving your retirement goals.
