‘What can I do?’ Dave Ramsey suggests how man, 51, with £16k saved, can retire by 70

https://www.youtube.com/embed/suGY0qzhLhU

On The Ramsey Show – Highlights YouTube channel, the finance expert often answers money questions from listeners. Jeff called in worried about his future as he was about to lose his job.

Jeff, 51, explained to the American finance personality that he works in a dying industry that has years around five years before it closes completely. He works with plants on a vegetation.

He is debt free but does not have a lot saved for retirement.

He has around $20,000 (around £16,000) in a workplace pension scheme for retirement.

His job pays $165,000 (around £136,000) a year.

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Jeff said: “I’m just wondering what I can do so that I can retire decent?”

Dave said: “You’re probably going to be working more than five more years if you have zero saved for retirement.”

Once the plant shuts down, Jeff plans to start his own greenhouse business.

With this business, Jeff said he could be making around $50,000 (around £41,000) a year.

Dave said: “What a substantial drop.

“That won’t really assist you when building a nest egg.

“Since you have no bills and five years with this fabulous income, let’s turn up the heat.

“Max out your pensions. Let’s see how much money we can get saved in the next five years.”

Mr Ramsey explained that if he can save $50,000 (around £41,000) for five years, Jeff would have $250,000 (around £206,000) in his retirement account when he leaves his job.

As Jeff is looking to start his own business, he will also need to be saving for that.

Mr Ramsey said: “You have two goals here that you need to budget for and you need to really lean in on that.”

He explained the value of compound interest.

If Jeff can take control of his saving now and maximise his pension pots for the next five years, it could set him up well for retirement.

Dave continued: “Here’s the thing, if you put $250,000 (around £206,000) in there and you don’t save anything else, every seven years or so it will double if it’s in good mutual funds.

“By the time you’re 63 it could be $500,000 (around £412,000), at 70 it could be $1million (around £825,000).

“But you need that $250,000 (around £206,000) in there in the next five years.”

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