NEST EGG
I’m 59 with over $1m – I don’t feel ready for retirement but an expert said my mortgage won’t put me in ‘danger zone’
Some near-retirees are less successful, but there are ways to save
OLDER Americans often struggle to predict how retirement will play out for them — even if they’re relatively well-off.
One aging dentist recently called into a financial advice podcast to check in on her money situation.
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Susan, from Jacksonville, Florida, called into the The Ramsey Show for help.
She told the hosts she has mortgage and student loan payments left to make.
However, her assets were worth over $1 million.
With just a few years until she reaches full retirement age, she feared her debts could pose a problem, despite her wealth.
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“I’m turning 60 this year and I’m like, ‘holy cow, I’m probably not where I should be,’” she said.
Host Dave Ramsey pointed out the “danger zone” in her plan, and it wasn’t her mortgage or student loans.
STOCK SHOCK
Susan said she has a $600,000 home and retirement savings worth $257,000.
She also had $519,000 invested in her company’s stock.
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This added a bonus to her $400,000 annual income as a dentist.
She said that she feared her investments were not diverse enough.
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“You’ve identified the danger zone,” Ramsey confirmed.
He said that if that one company she has invested half a million dollars into goes broke somehow, she would lose about a third of her net worth.
Putting some of that money in other accounts would increase her “safety,” he said.
However, he also told her not to panic, and said she was on the right track.
Diversifying investments can help insulate you from the shock of a sudden business failure or other financial crisis.
If Susan took some money out of her company’s investment account, she could protect her assets.
Retirement savings plans vary greatly, and talking to an expert can be the best way to address your individual situation.
RETIREMENT TIPS
Ramsey has advised numerous other retirees on their finances.
He recently received a call from a 58 year old married to a 68 year old.
Where to save your retirement money
There are several different places where you can put the money you save for retirement. Each has different tax advantages, but not all of them are available to everyone.
401(k) - an employer-sponsored retirement account. Contributions are made pre-tax and many employers will match a certain percentage of your contributions. Taxes are paid when the funds are withdrawn in retirement.
Roth IRA - an individual retirement account. Contributions are made post-tax but withdrawals in retirement are not taxed.
TSP (thrift savings plan) - a retirement savings and investment plan for Federal employees and members of the uniformed services. They work similarly to 401(k)s but may have more limited investment options.
Pension - an employee benefit that commits the employer to make payments to the employee in retirement. Pensions are becoming increasingly rare.
She said her husband was not interested in investing as they headed for their golden years.
Ramsey’s advice was to help her husband “start being a grown-up.”
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Some older adults have nothing saved for retirement, but it’s never too late to start putting money aside.
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