Get aggressive with savings
Tom’s family doesn’t have a mortgage, so they will be debt-free after their consumer credit is paid off later this year. To maximize his chances of retiring in a few years, Tom intends to max out his retirement accounts — the 401(k) and Roth IRA.
Ramsey Show co-host George Kamel recommends using the catch-up contribution room available to someone of this age. The IRS allows workers over the age of 50 to make additional contributions to their tax-advantaged retirement accounts every year.
Another retirement investment to consider is a gold IRA, a type of individual retirement account that allows you to invest in gold and other precious metals.
With the help of Rosland Gold, you can work to diversify your portfolio and stabilize your finances. These self-directed IRAs have the benefit of the tax advantages of a traditional IRA, as well as the inflation-hedging properties of gold.
If you’re curious about whether this is the right retirement investment for you, you can get a free information kit to learn more.
Tom also intends to sell the family home and downsize to boost his chances. Downsizing has become more difficult in recent years, however, and only 5% of people over the age of 65 report moving between 2016 and 2021, according to Bloomberg.
Instead of downsizing, Tom can explore ways to optimize his savings with conservative investments.
One option is CD Valet, an online CD marketplace that allows users to compare top certificate of deposit rates from various banks and credit unions nationwide.
Their extensive database shows the most competitive rates without bias, including daily rate updates and earning calculators to give consumers an array of free resources to help them find the right CD to meet their savings goals.
Despite these efforts, Tom’s goal of retiring by 65 might still be beyond reach.
Investing in a high-yield savings account could help mitigate this challenge by potentially delivering turns of 4%, compared to the standard savings APY of 0.01% offered by U.S Bank.
For guidance on choosing the best account for you, check out the Best High-Yield Savings Accounts of 2024.
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Get StartedIt would be a quick turnaround
Approaching retirement with debt instead of savings isn’t unusual. U.S. Census data suggests that only 58.1% of baby boomers, older than 56, had at least one retirement account as of 2020. As for what’s in those accounts, by 2022, thosesomeone aged between 55 and 64 had a median debt balance of $90,000, according to data from the Federal Reserve’s Survey of Consumer Finances.
Even Tom’s spending spree after an existential crisis isn’t unusual, with 27% of American adults now “doom spending,” according to a survey by Intuit’s Credit Karma. Dreadful news about home affordability, inflation, geopolitics and climate change areis impacting the way Americans save and spend.
What is unusual is Tom’s determination to retire by 65. While the average age of retirement in the U.S. is 61, Tom’s lack of savings and debt totalling $26,000 will make it challenging for him to retire comfortably, to say the least.
If you want to pay downget a hold of your debt before nearing retirement, you should consider consolidating your debt through Credible.
Credible makes it easy to streamline your debt repayment at an affordable rate. Their online marketplace of vetted lenders provides personalized loan offers based on your needs, allowing you to pay off your debt more efficiently at a fixed rate — without juggling multiple bills.
Just provide some basic information and Credible will present you with a list of loan options to help you start paying down your debt.
However hard it will be, Tom isn’t waving the white flag yet. Instead, he’s determined to get back on track.
After paying off debt, Tom believes his family will have excess cash available to start saving. He has a plan in place, but called The Ramsey Show to find out where he should invest his savings to get the most returns.
One way you can start to incorporate savings automatically into your daily spending habits is through Acorns.
Acorns is an automated investing app that invests the leftover change from your everyday purchases into a diversified portfolio of ETFs. Acorns automatically rounds up the price of your purchase to the nearest dollar and deposits the difference into a smart investment portfolio for you, allowing you to grow your wealth without even thinking about it.
It takes less than five minutes to sign up – all you have to do is link your cards and start spending as usual.
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