101 Beyond Your Wedding Day Podcast-Retirement
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In this episode of the Beyond Your Wedding Day Podcast, we discuss the Total Money Makeover by Dave Ramsey. We take a look at Chapter 9: “Maximize Retirement Investing: Be Financially Healthy For Life.”
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*Meg wrote in about her debt free story! You can read all about it here!
*Retirement should not be just about getting to the end of a career you hate and quitting
-if that is the case, then you should develop a game plan to change careers
-some scary stats:
*56% of Americans do not consistently prepare for retirement age by investing
*40% of those making less than $35,000 per year say that the best way for them to have $500,000 at retirement is to win the Lotto
*80% of Americans believe their standard of living will go up at retirement
*97% of 65-year olds cannot write a check for $600
*Baby step #4 is to invest 15 percent of your income in retirement
-15 percent is a good rule of thumb
-you don’t want to do much more because you need money for your kid’s college and to pay off the mortgage
-you don’t want to do much less because you have to have a good enough nest egg for retirement
-Invest 15% of your gross income, don’t factor company matches in (that’s just gravy!)
-Also, don’t factor in Social Security benefits in your calculations, I certainly don’t plan on it being there!
*Mutual funds are the way to go!
-Growth stock mutual funds are great LONG TERM investments
-I have some that have averaged over 13 percent in their lifetime including this economic downturn!
-Find investments that have a long track record of doing well, don’t pay attention to what they did over the last year or even 3 years
-Spread them out over 4 types: Growth and Income (Large Cap), Growth (Mid Cap), International (Foreign), and Aggressive Growth (Small Cap)
-Always start where you get a match (usually a 401k)
-Then go to a ROTH IRA
-After the match and you max your ROTH, if you still have more to reach your 15%, put it back in your 401k
*There is an ideal nest egg to have, but you have to start where you are at
*Obviously, the younger you start investing the better.
*Your goal is to have a nest egg large enough to live off of 8% per year and let it grow 4% to keep up with inflation so you get a cost of living raise every year
-For example, if you think you can live with dignity on $40,000 per year, then you will need a nest egg of $500,000.
-This is not a get rich quick scheme, the tortoise beats the hare