Question 1

What is Dave Ramsey's 15% rule for retirement?

Accepted Answer

Dave Ramsey recommends investing 15% of your household income in retirement accounts. This includes 401(k), 403(b), Roth IRA, and traditional IRA contributions. The 15% rule applies after you've completed Baby Steps 1-3 (emergency fund and debt payoff).

Question 2

What are Dave Ramsey's Baby Steps for retirement planning?

Accepted Answer

Dave Ramsey's Baby Steps are: 1) Save $1,000 emergency fund, 2) Pay off all debt except house, 3) Save 3-6 months of expenses, 4) Invest 15% of income in retirement, 5) Save for children's college, 6) Pay off home early, 7) Build wealth and give. Steps 4-7 focus on retirement and wealth building.

Question 3

How much should I have in my emergency fund according to Dave Ramsey?

Accepted Answer

Dave Ramsey recommends starting with $1,000 (Baby Step 1), then building it to 3-6 months of expenses (Baby Step 3). The exact amount depends on your job stability and family situation. More stable jobs can use 3 months, while less stable jobs should aim for 6 months of expenses.

Question 4

What investment strategy does Dave Ramsey recommend for retirement?

Accepted Answer

Dave Ramsey recommends investing in good growth stock mutual funds with a long track record of success. He suggests diversifying across 4 types: growth, growth and income, aggressive growth, and international. He recommends avoiding individual stocks, bonds, and annuities for most people.

Question 5

How does Dave Ramsey's retirement planning differ from traditional advice?

Accepted Answer

Dave Ramsey's approach differs by: 1) Focusing on debt elimination first, 2) Using 15% instead of higher percentages, 3) Emphasizing mutual funds over other investments, 4) Prioritizing emergency fund before retirement savings, 5) Avoiding debt in retirement planning, 6) Focusing on giving and wealth building in later steps.

Question 6

What is Dave Ramsey's 4% rule for retirement withdrawals?

Accepted Answer

Dave Ramsey follows the traditional 4% rule for retirement withdrawals, meaning you can safely withdraw 4% of your retirement savings annually without running out of money. For example, if you have $1 million saved, you can withdraw $40,000 per year in retirement.

Question 7

Should I contribute to retirement while paying off debt?

Accepted Answer

Dave Ramsey's Baby Steps say to pause retirement contributions (except employer match) while paying off debt (Baby Step 2). The only exception is if your employer offers a 401(k) match, which you should take advantage of as it's free money. Focus on debt payoff first, then resume full retirement contributions.

Question 8

How much should I save for retirement according to Dave Ramsey?

Accepted Answer

Dave Ramsey recommends saving 15% of your household income in retirement accounts. The goal is to have enough saved so that 4% of your retirement balance equals your desired annual retirement income. For example, to have $60,000 annual income, you'd need $1.5 million saved.

Question 9

What retirement accounts does Dave Ramsey recommend?

Accepted Answer

Dave Ramsey recommends: 1) 401(k) up to employer match, 2) Roth IRA up to maximum, 3) 401(k) up to maximum, 4) Traditional IRA if eligible. He prioritizes Roth accounts for tax-free growth and recommends avoiding annuities, whole life insurance, and other complex financial products.

Question 10

How do I calculate my retirement needs using Dave Ramsey's method?

Accepted Answer

To calculate retirement needs: 1) Determine desired annual retirement income, 2) Multiply by 25 (for 4% withdrawal rate), 3) This gives your target retirement savings goal. For example, $60,000 annual income × 25 = $1.5 million needed. Then use the 15% rule to determine if you're on track to reach this goal.

Dave Ramsey Retirement Calculator - Baby Steps & 15% Rule

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Dave Ramsey's Baby Steps for Retirement

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Early Starter (25 years old)

Late Starter (45 years old)

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