Dave Ramsey explains if man, 58, should use savings to overpay mortgage or pay in pension | Personal Finance | Finance
On The Ramsey Show – Highlights Youtube channel, the American personal finance personality guided John, 58 on his troubling situation. John did not believe he would be able to retire in his current financial situation so sought advice from the finance expert.
John explained that him and his wife had no debt other than their house which could get paid off in the next ten years.
They had just refinanced their house, however they did not want to get less money for it.
At the time, the market had exploded in his home town so their house was worth $230,000 (around £184,000) in equity.
He wanted to liquidate the property so he could get his hands on the cash.
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He was worried about the market crashing and getting less than his house is worth at this time.
John said: “We’re just really concerned for our twilight years.
“That’s about the only thing that we have and can look forward to.
“I have a small 401k [a US workplace pension] but it’s nothing really to brag about.
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He asked if he should stop overpaying his mortgage $200 (around £160) extra each month and start putting that money into retirement.
However Mr Ramsey reassured John he had enough time to do both.
He explained John had five years to get his house paid off and build a nest egg (retirement fund): this is all someone needs for a “solid retirement”, according to the expert.
Mr Ramsey added: “So you have to aim at that. It’s not going to be $200 (around £160) each month extra, it’s going to be more than that.
“At least 15 percent of your income should be going into retirement.”
