Dave Ramsey suggests how couple who 'don't have enough' to retire could reach £2million

David said: “My wife and I are worried about retirement. “We’re trying to figure out how much we should put away and where to put it.

“We have a household income of $80,000 – $90,000 (around £ 60,400 – £68,000) a year.

“We both have 401ks (US employer-sponsored defined-contribution pension account) at 15 percent, and this year we both started a ROTH IRAs (US tax free withdrawal individual retirement account).

“Between the two of us, we have approximately $300,000 (around £226,714) in there.

They fear that they “will not have enough” for retirement and do not know what to do.

Dave Ramsey suggests how couple who 'don't have enough' to retire could reach £2million
© THE RAMSEY SHOW Dave Ramsey Mr Ramsey responded: “Good, you have a really good start.”

He suggested that the couple may want to invest, as that is what he does.

He continued: “We teach folks to invest in four types of growth stock mutual funds and I put in a fourth in each: growth, growth and income, aggressive growth and international.

“I’m 60 and I’ve been doing most of that for my working life and putting 15 percent away, and when I was debt free, I maxed out everything I’m allowed to do, and put my money into tax free accounts.

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“Anything I can put money into and keep the governments hands of it.”

Mr Ramsey went onto explain to David how the stock market works, and how he could potentially use it as an income source once retired.

He said: “The stock market, since it began, has averaged 11 percent so if you’re invested in decent mutual funds, you should be in the 10 to 12 range.

“So, if you retired and had $1million and you wanted to pull off eight percent while earning more than eight percent on your money hopefully, that’s what you would have been doing on your money away, then that would be $80,000 (around £60,457.21) dollars a year.

Dave Ramsey suggests how couple who 'don't have enough' to retire could reach £2million
© THE RAMSEY SHOW iNVEST

“If you’re invested in the rate that I’m talking about, you can take your lump sum now and it will double every seven years approximately.

“So, seven years from today when you’re 59 you’ll have $600,000 (around £453,429.06) and seven years from then when you’re 66, you’ll have $1.2million (around £906,858.12), and that’s if you add nothing else to it.”

David expressed that retiring with $1million (around £755,715.10) would “be awesome” for him and his wife.

Mr Ramsey explained to David that this is achievable if he continues to work until 65 and if he continues investing 15 percent into the things he mentioned earlier.

David could potentially have up to $3million (around £ 2,267,145.30), by the time he is 66 if he continues investing in the stock market averaging 10 to 12 percent.

However people should know that with investing, capital is at risk.

By putting money into a bank account offering one percent, people may not “have enough” for retirement.

With “decent mutual funds”, Mr Ramsey’s suggested that David “will be on track”.

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