Denise, 54 called The Ramsey Show as she was panicked about retirement. In the clip posted to The Ramsey Show Highlight Youtube channel in 2020, my personal finance guru reassured her she “would be fine” if she considered his suggestions.
Denise was “blessed but panicked about retirement,” as she did not know how to organise her finances. She explained that she thought about it 24/7.
Denise has $94,000 (around £74,000) in her workplace pension, a seven month emergency fund worth $25,000 (around £19,000),a mortgage with $123,000 (around £97,000) left and gross income of $70,000 (around £55,000).
Denise and her husband also have two cars that they need to pay off.
She was a realtor so her monthly income differs however she “doesn’t know where to go”.
READ MORE: Martin Lewis shares ‘magic number’ predicting when to fix your energy bills to save
The American finance personality explained that by the time she is 75, $94,000 (around £74,000) in her workplace pension should become between $300,000 to $400,000 (up to around £318,000) if she doesn’t add anything to it.
She should be able to achieve this if she’s invested in good growth stock mutual funds that are averaging what the US market is averaging – which is about 10 percent.
“Of course you will add to it,” he said, so there was potential for her to earn more than this.
He listed a plan of action for her to be able to visualise her future.
He said: “Your goals need to be to become debt free first, so you should use your emergency find to pay off your cars immediately, so sell them.
“Then after that they can start putting 15 percent of your income away which will equate to about $12,000 (around £9,500) a year.
“If you can do that for the next 20 years you will be fine with that amount of money saved.”
After Denise builds up her emergency fund and starts paying 15 percent of her income into retirement funds, he suggested that she starts paying what she can to the house.
“You need three to six months worth of expenses.
“Then you start putting 15 percent of your income into pensions, and then you start throwing money at the house.
“You do all of that and make sure your pension is invested in good mutual funds and you put it in there.”
Mr Ramsey explained that by the time Denise is 70 years old, she will have around $700,000 (around £556,000) and a paid for house.
However he did warn that she will be working past 65 if she wants that future.
“You will be millionaire at 70 with that income, based on the numbers in front of us,” he concluded.