Dave Ramsey suggests how pensioner with £11k in retirement can get by


On the Ramsey Show YouTube channel, he spoke to Albert and his wife about the best strategies to save for retirement. The couple had cash in the bank but did not know how they should use it.

Albert explained they had $40,000 (around £35,000) in the bank and he was “not sure what to do with it”.

He did not know whether to put it into his house or towards retirement.

Mr Ramsey explained that he teaches people to use each dollar they get and work it into a detailed financial plan called ‘The Baby Steps’.

He said: “Baby Step One is save $1,000 (around £800). Two is to be debt-free on everything but your home.

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“Baby step three is to have a fully funded emergency fund. This is three to six months worth of expenses. A rainy day fund.”

Albert said he had $18,000 (around £15,000) in savings for emergencies as well as $13,000 (around £11,000) in retirement savings.

Dave suggested the couple start to put 15 percent of their income away for retirement.

They owe $140,000 (around £123,000) on their home. Their income is $2,800 (around £2,400) from their pension and his wife has a part-time job.

Dave said: “If you invest the money in the bank, neither way is it there to live on, it’s going to be working in the background.

“I think your nest egg is devastatingly small so I would put the money into retirement.”

The $40,000 (around £35,000) is from a payout from an injury claim at work.

He suggested they invest that in his nest egg so they can have a total of $53,000 (£46,000) and they can let that grow.

“If it’s invested in good mutual funds, in six or seven years on average it will double which will be around $100,000 (around £88,000), a little more comfortable.

“Meanwhile you’re about to chip away at the house and try and get it paid down and paid off.

“Our goal is twofold here – a paid-off house and a good size nest egg so I don’t know which of those you will reach first but they are both good goals.”

If the couple needed more information on investing, Mr Ramsey suggested using the smartvestor tool on his website.

The couple needed to find advisors who have “the heart of a teacher”.

He said: “If you don’t understand it , don’t do it.

“When you put money into something you don’t understand it keeps you freaked out and you can’t sleep at night.

“And you should be because you’re probably going to lose it.

“Always understand what you’re investing in. Their job is not to pick an investment for you, their job is to teach you and put some investments in front of you for you to pick.”

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