Deep Dive
Why are many people unprepared for retirement?
Most workers don't know how much they need for retirement, and many rely on external forces like Social Security or their children, which are unreliable.
What is the median 401(k) balance for Gen Xers?
$54,500, which is far below the estimated $1.56 million they think they'll need.
What percentage of income was Social Security intended to replace?
40% of income, but many people rely on it for 90%.
What is the average Social Security payment in 2024?
$1,920 a month, totaling $23,000 a year.
What is the recommended percentage of income to contribute to retirement accounts?
15% of income once debt-free and with an emergency fund.
What is the potential retirement savings with an 8% return over 30 years?
With an average household income of $80,000 and a 15% contribution, you could end up with $1.5 million.
What is the key to retiring well?
Making strategic sacrifices now, getting out of debt, and investing wisely.
What is the demographic shift predicted by the U.S. Census Bureau by 2034?
There will be more adults 65 and older than kids 18 and under for the first time in U.S. history.
What is the significance of Social Security in retirement?
It was intended to replace 40% of income, but many rely on it for 90%, leading to financial hardship.
What is the potential retirement savings with an 8% return over 40 years?
With an average household income of $80,000 and a 15% contribution, you could end up with $3.5 million.
- Most people don't have close to what they need to retire comfortably.
- Gen Xers think they'll need 1.56 million to retire comfortably, but the median 401k balance is $54,500.
Shownotes Transcript
Hey guys, it's George here. Black Friday week is on and we've got some of the best deals on your favorite Ramsey products right now. Go check it out at ramseysolutions.com slash store. I don't want to depress anyone about their future, but we need to get real for the next approximately seven minutes, 16 seconds, give or take. If you haven't been paying attention to your retirement savings, it's time to wake up and smell the hummus. Don't know what it means, but my mom always said it. Clap your hands really fast.
if you think hummus is the best. So today we're talking about your retirement savings, how to know if you're on track to retire in style, and what to do if you're not. But before you find out whether your retirement funds have a healthy pulse or are about to flatline, don't forget to like and subscribe so you never miss this hard-hitting content. All right, grab a big glass of something if you need it, because I've got a bitter pill here for you to swallow. Go on, I'll wait.
All right, ready for it? Most of you don't have close to what you need to retire. That's seriously a real bummer. Don't believe me? Let's pick on Gen X for a moment. They think they'll need 1.56 million to retire comfortably. But the median 401k balance for Gen Xers, $54,500. Yikes. Talk about an Instagram versus reality moment. That is frightening. And I know there's all kinds of reasons for that sad low number. But the reality is most of your money problems are the result of the person looking back at you in the mirror.
Talking to you, you handsome devil. You look good, Jimmy. What have you been doing? You're making me blush, dude. A shocking stat reports that more than half of workers don't even know how much they'd need in retirement. And frankly, there's just no excuse for that. I know we're all busy binging Secret Lives of Mormon Wives and nobody wants this, but nobody wants a retirement crisis either. And by the time they reach retirement age, many seniors in the U.S. still have mortgages, car loans, and Parent PLUS loans sucking their precious income. Not to mention,
Plenty of them believe the lie that their adult kids who are also struggling with money or even worse, the government will swoop in like Batman and Christian bail them out. - I won't kill you, but I don't have to save you. - But that could not be farther from the truth. Something needs to change and quick.
it's your responsibility to retire well no one else's so let's look at the problems with trusting forces outside of your own cash and investments to take care of you in your golden years i'm going to share some practical ways to get on track to retire well no matter what age you are and where you're starting from according to the u.s census bureau by the year 2034 there will be more adults 65 and older
than kids 18 and under for the first time in US history. I can smell the aftershave and potpourri already. So by the time my one-year-old is getting ready to retire, Social Security will most likely be dried up like a floorboard french fry. Another fun fact for you, Social Security was only intended to replace 40% of your income.
one in four people are relying on it for more like 90% of their income. Here's what that looks like. The average Social Security payment as of August of 2024 is $1,920 a month. That means if you're fully relying on Social Security to sustain you in retirement, you're looking at a whopping $23,000 a year. In other words, you're hovering above
at the poverty line. So if this skinny check is your end-all be-all, you'll be eating rice and beans for the rest of your life. And once you reach retirement, don't you think you deserve more? At minimum, rice and beans, a sprinkle of cheese, heaping scoop of guac without even thinking about the upcharge. I want you to have that life. I want you to be guac rich. That's all I've ever wanted.
Now, thankfully, there's a simple DIY remedy to clean up this mess, but it's going to require a little thing called sacrifice. But you know what doesn't require a big sacrifice but still saves you big money? Saying goodbye to overpriced phone plans and switching to Telo, one of the sponsors of today's episode. They use T-Mobile's tower, so you get big guy coverage with little guy pricing. Their plans start as low as $5 or just $25 for unlimited everything.
And when you consider the average monthly cell phone payment is now a whopping 144 bucks, it'd be silly not to switch. And on top of all that savings, you can get an extra five bucks off your first month of the unlimited plan by going to tello.com slash George, or just click the link in the description below.
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And right now you can get 20% off any of their plans by going to join delete me.com/george or click the link in the description below. Okay, back to cleaning up your retirement mess. It's as simple as making strategic sacrifices now so you can retire well later. So many people just assume, well, if I worked for 40 years, I should be able to retire, but they never actually pull out a calculator and crunch the numbers.
And then once those people hit retirement and those Social Security checks don't look so great, they don't understand why their labor over the past 40 or so years didn't bear more fruit. And that is scary. But if you're not on track, it's not too late to make some serious progress, even if you're approaching retirement. It's just time to face reality and acknowledge the gap between what you thought retirement would look like versus what it's actually going to look like. So number one, if you're still in debt, your new A1 is to get out of debt as fast as humanly possible.
Period. I used the Ramsey baby steps and the debt snowball method to do this, and it worked wonders for me. The next thing you need to do is figure out how much you need to retire and then reverse engineer it to figure out what age you can actually make that happen. We've got a handy dandy retirement calculator that you can use to make it easy, and I'll link it in the description below.
Next, if you're already contributing to your retirement accounts, great. I recommend 15% of your income going into those retirement accounts once you're debt-free with an emergency fund. And if you're there and you're going, how do I get to 15%? I'm doing five and it's, I don't know where to find the money. Listen, you can contribute more if you cut back on unnecessary expenses each month or work on getting that income up, even if it means picking up a side hustle for now. And once you're on your investing journey, the next step might be to work with a financial advisor.
They can give you a really good picture of what could happen with your investments. They can help with tax planning, estate planning, college planning, you name it. I think it's a great thing to have an expert looking over your shoulder, making sure that you're on track. And lastly, even if you're not trying to retire tomorrow, you don't have time to lose. So don't squander it. As botanists and financial experts always say, the best time to plant a tree was 20 years ago. The next best time is today. So instead of living it up in this season's Viore, sipping on a $13 kombucha, put some cash into that Roth IRA.
Think about it. If you take the average household income, 80 grand, and you invest 15%, that's a thousand bucks a month, and you do that for 30 years and you get an average 8% return, you would end up with $1.5 million. And if you do it for 40 years, it comes up to 3.5 million. And that's 8%. It could be 9, 10, even 11. So listen,
Retirement is not an age, it's a financial number. Someone could be a 45-year-old digital marketing whiz with more than enough to retire, or they could be 82 and still working part-time at the Publix bakery just to make ends meet. Not that there's anything wrong with that. Love you, Doreen. But here's the deal. If you're in your 70s or 80s and you're working, I want it to be because you want to, not because you have to.
So when can you actually retire? Well, when your assets and your investments are making as much as you do or they're enough to cover your monthly expenses. Because once your investments are doing the heavy lifting, you can quit the day job and get your one-way ticket to a Mai Tai in Key Largo. But exactly how much should you have in that nest egg? Well, keep watching this video where I break down exactly how much you should have in your 401k by age so that you can have a cush retirement or click the link in the description below. As always, don't forget to share this video with someone who needs a retirement reality check. Thanks for watching. We'll see you next time.