The Rachel Cruze Show - 5 Numbers Everyone MUST Know Before Retiring

Starting point is 00:00:05 All right, trigger warning. Are you ready? Retirement investing. Yeah, two words that can instantly send people into a complete spiral. But listen, it doesn't have to be that way. So today I'm going to make things very simple and share five numbers that you need to know when it comes to investing and your retirement. And don't forget to subscribe and share this video with a friend who may love it. All right, we're going to talk through some numbers when it comes to retirement investing. And the first number is 15%. Okay, this is your goal. It is 15% of your take-home pay going into retirement. So that is going to be your goal. Now, before you do that, I want you to be completely debt-free, everything but your house, and to have a three-to-six-month emergency funds set aside. Okay, so those two things need to be in place because when you're trying to do a bunch of things, and that's what most people do, they're, like, putting some percentages into retirement,

Starting point is 00:00:58 usually like five or six percent here. You know, they're trying to maybe like keep up with some debt, maybe try to pay it off, trying to save for something here. I mean, they're trying to do like 18 things at once with their money, and you just don't make a lot of progress when you do that. So what we have found is if you actually pause retirement investing, pay off all of your debt, which will take on average around two years, then get an emergency fund, a fully funded emergency fund,

Starting point is 00:01:18 a three to six months of expenses, then go press play on retirement. And instead of just the four or five, six percent that some people do, 15 percent, which can seem like a lot, but it actually catches you up on the times you've paused and is going to give you plenty of money at retirement. And so when you look at this 15%, a couple things to remember, if you do have an employer match when it comes to your 401k, their contribution does not count. So let's say they match you 5%. So 15% take minus 5 of your money, then you have 10% left.

Starting point is 00:01:53 The 5% that they match you does not count in this equation. So when you look at it, your 401k, Roth IRA, all of these are great options when it comes retirement, but remember 15% of your income going into retirement. Now, that subject is a 401K brings me to number two. Another number that you need to know, a 401k or a 403B. So these are two options when it comes to retirement that your employer will offer you. And they're basically retirement accounts. So you can put your money in. They'll invest it on your behalf, right? And then you actually go in and tell them where you want to invested into mutual funds and all of it. But that covering is a 401k and most employers will actually match you the percentage of your income that you put in.

Starting point is 00:02:35 And so it's a company benefit. And if you work for the government, it's going to be a 403B, not a 401k. It's so funny. I saw on Instagram and I actually reposted it because it made me laugh of this clip of Will Ferrell and Amy Poehler and they're like sitting like with this like investment person and they're like, what do you mean? Do we have enough for retirement? I don't know. I don't know. And so she's giving them numbers and Will Ferrell's like, no, but we have $401,000 in this account. She was like, no, that's your 401k. I was like, okay. So again, 401k is always through your employer versus like a Roth IRA. If you earn income, anyone can, you know, apply for a Roth IRA, but your employer hopefully will have a 401K for you as a company benefit, which is great. And then

Starting point is 00:03:15 when you think about a 401k versus a Roth IRA, remember this, match beats Roth, beats traditional. So always go up to your company match. And then whatever's left in your 15%, go and fund your Roth IRA. and then if you have any money left after you've maxed out your Roth IRA, then you can move that money back over to your 401k and finish, you know, putting money into there. But that's kind of the formula match beats Roth beats traditional. All right, number three, seven years. So this is kind of a trick that I use in my head if I'm having to do fast math. When you're looking at your investing, your accounts, you're looking at retirement, all the

Starting point is 00:03:50 things. If you have money in an investment and you don't put another penny in, there's like this rule of like every seven years, your money's going to double. So if you need some quick math when it comes to retirement, I love this because you can kind of instantly see, okay, I have this amount. How much will I have? And, you know, by the time I'm 65. And if you don't have a calculator right there or your phone, which everyone will. But you can just say, okay, every seven years it's going to double.

Starting point is 00:04:12 Do the quick math to get you what you need to know. All right. Spoiler alert. The two most controversial numbers are coming up next. But first, I do want to tell you about something that is a total no-brainer. And that is Christian health care ministries. When you go against what society thinks is, quote, normal, it might seem weird at first, but that is totally okay because we want you to be weird if that means you're doing things intentionally, including how you spend your health care dollars. And one way to be intentional is with Christian health care ministries.

Starting point is 00:04:41 CHM isn't health insurance. They're a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of health care costs without sacrificing their freedom. The program starts as low as $98 a month. find out more and join at c h ministries.org slash budget that's c h ministries dot org slash budgets. All right number four. The next number to remember is a 10% rate of return. So people love and hate our rates of return that we throw out for examples here at ramsie. Some experts will use like five to seven percent but you guys that is like very low where again for years we use 12 percent at ramsie because it is showing the average.

Starting point is 00:05:23 But you can expect anywhere from 10 to 12 percent and even more. And again, it's going to depend on the year. But even last year, like when we looked back, I mean, it was insane. We had, I mean, Winston I, which again are not like secret mutual funds, but they were just out there for anyone to find. And they were like 18%. So like it is wild. If it is a good year, you're going to do great. And if it's not a great year, that's okay too.

Starting point is 00:05:46 That's going to happen. But again, the 10% rate of return is a pretty standard way to calculate. what you're going to have and what you're going to see when it comes to your interest over the long call when you're looking at your retirement. So if you are doing the math there, use the Ramsey investment calculator. But 10% is great. But I mean, even 12% is very realistic as well. And this is one reason we also say to diversify your investments. Because when you actually don't have everything in one single stock, that one stock may do great, may not. But when you diversify into mutual funds.

Starting point is 00:06:20 Those are 90 to 200 stock. And so it is great to see like, okay, it's spread out amongst a lot of different companies. So if the economy is doing great and doing fine, you're going to see that rate of return, which is awesome. All right. The fifth and final number to remember is an 8% withdrawal rates. So 8% is what we say at Ramsey when you go to withdrawal the percentage every single year when it comes to retirement.

Starting point is 00:06:45 And so there's some controversy around this because it is a pretty, aggressive percentage, I would say, you know, some industry, you know, say four to five percent. But again, you can kind of calculate and just understand that when it comes to inflation, this is what you're looking at because you're saying, okay, here's what my money's going to grow to. Here's going to be the reality of living in then, you know, 30 years from now and what things are going to cost. And if you take money out, you know, again, 8%. If you're making 12% on your money, you're going to be fine.

Starting point is 00:07:12 But the more conservative approach is around that more 4%. So again, talk to your investment professional when you're looking at all of this, especially if you're getting close to retirement age because that percentage is going to be important to you. Now, you can memorize dozens of retirement numbers, but ultimately what's going to give you peace of mind is having a professional guide you. So I just mentioned a investment professional. But again, having somebody that does this day in and day out is so key. So I highly recommend connecting with a smart vester pro. I'll leave a link down below so you can get connected if you want to. But sitting with someone to look at all the numbers of your investing, especially when

Starting point is 00:07:46 it comes to retirement is so, so key. And at any stage of investing, you definitely want to catch my episode on how to invest the right way in 2025. You can click right here, or if you're listening on podcast, I will put a link in the description. All right, you guys, remember to take control of your money and create a life you love.

The Rachel Cruze Show - 5 Numbers Everyone MUST Know Before Retiring

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