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How Much Retirement Do I Need?

Here’s an interesting video and transcript from Dave Ramsey that I thought would benefit everyone out there.  He takes calls and gets down to brass tacks about retirement investing, which is the topic of my site so I felt it fit very well.  Check it out and drop me a comment below with your thoughts.

Also check out:  Dave Ramsey Outlines Five Things That Will Make You Wealthy

Dave Ramsey Answers Retirement Questions


Dave: Brian is with us in Fort Wayne, Indiana. Hey, Brian, how are you?

Brian: Hi, good afternoon. Thanks for taking my call, Dave.

Dave: Certainly, how can I help you, sir?

Brian: Well, I took this great municipal job about 16 years ago, I had a retirement fund that has been set for the last 16 years in a guaranteed fund, bad or indifferent. I was guaranteed that I would get some sort of retirement at the rule of 85 here in Indiana. I don’t know, there’s a part of this, it’s called an annuity. You are able to place part of that in different sectors of the stock market. I have no idea, I’m not a money person. I don’t know what to do with that.

Dave: Well, here’s the good news. It’s not rocket science. It is going to require that you learn some things so that you’re making good choices on your own. What I recommend is and what I personally do with my 401(k) is, I put my mutual funds in or I put my investments inside my 401(k), which is inside your annuity in this case in four different areas, growth, growth and income, aggressive growth and international. Now, growth and income is the more stable boring category, and sometimes that’s called large cap or blue chip. Does any of that sound like one of your options?

Brian: I think that is one of our options.

Dave: I put some in that and I put a fourth in that, I put a fourth in growth. Growth is called mid cap or growth or sometimes just an S&P 500 index fund would represent a growth fund, something along those lines. Then aggressive growth is obviously small aggressive companies, they’re startup companies, they’re the smaller companies, the more volatile, sometimes those are called emerging markets or small cap.

If you see that small cap, cap means capitalization. Small capitalization means small company. That’s going to be your more volatile, it’s big rates of return but it’s the biggest roller coaster ride of the ones. The growth and incomes the calmest of the four. Then international obviously means stocks in companies outside the US. Sometimes those are called a foreign fund or it has a kissing cousin called a global fund. Global would have some US in it, but foreign as well. A pure foreign would have no US in it. That’s the only difference there.

That’s the type of thing you’re looking at is you’re going to spread it out across different things. If you got it all in the boring, then you’re going to be bored at retirement because you don’t have any money. If you got it all in the exciting, you’re going to be scared to death all the time. I want a little thrill, I want a little Tabasco on my food, but I don’t want to not be able to eat it. You know what I’m saying?

Brian: Got you.

Dave: A little spice and that’s all we’re doing here is we’re mixing it up and having a little of the calm and a little of the wild and a little overseas. The word that investors use for spreading your money around, the word is diversification. That’s all diversification means, spread around.

Brian: Now, well, would one of your ELPs be able to guide me a little bit on this, would somebody know about what date has there for us?

Dave: Absolutely, yes, they would know, probably over the phone would know, because they’re right there in your community and they’ve looked at the state plan 20,000 times over the years and they’ll be able to just go, “Hey, here’s what you got. Here’s what you got. Here’s what you got.” Here’s the thing. You can’t be an endorsed local provider of ours if you don’t have the heart of a teacher. In the last few minutes here on the radio, you’ve learned a couple of little basic things from me. Maybe you knew them before, I don’t know, but you learned some basic stuff.

I want you to continue to learn a little bit more so you’re not doing something because Dave Ramsey said or you’re not even doing something because an ELP said, you’re doing something because you learned enough to make the decision and then you understand why we’re suggesting something. You already understood I was suggesting four different things. Why? Because, spreading it out like that gives you some safety and you’re not too excited where you can’t breathe, that kind of thing. That’s what that diversification thing means.

You just got to learn that from the ELP, but just go to raveramsey.com and click on ELP and they’ll help you. Let me send you a copy of Chris Hogan’s number one best-selling book, Retire Inspired. It’s got a bunch of really good information, you can begin to learn about this stuff. Again, I’m not trying to turn you into some kind of PhD in economics with a pocket protector nerd, but I do want you to understand where your money’s going because you’re the one that’s responsible for it.

Brian: Once I’m done with the debt-snowball, now even though I have my city accounts, so municipality accounts, do I still want to put 15 into my IRA for myself?

Dave: Yes, you want to put 15% into something. Now, if you’re putting money into the city, you can deduct that amount from the 15%. I want you to have some stuff that’s not at the city. A good Roth IRA and some good mutual funds as well would be a way to do that. Hold on, I’ll have Kelly pick up and send you a copy of Chris Hogan’s book, Retire Inspired.

Hey, guys, thanks for watching. If you enjoyed this video, click the subscribe button to get the latest content and check out these other great clips from the show. You are not a victim. You’re not a victim of big corporations. You’re not a victim of Wall Street. You’re not a victim of capitalism. You’re not a victim of wealth inequality. You’re not a victim of racism. You’re not a victim.

Tim Schmidt

A Florida-based Entrepreneur, Author, and Life Hacker, Tim Schmidt decided to take control of his retirement portfolio several years ago by setting up a self-directed IRA. This blog shares his thoughts and opinions on the top of retirement and investments. You can follow his career and travels on his Official Website as well as on his Instagram page.