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What are some of Dave Ramsey's tips for saving for retirement?

A:

Quick Answer

Dave Ramsey advises people saving for retirement to contribute more to their 401(k) plans, pay off mortgages and find accountability partners. Individuals saving for retirement should find experienced professionals and emotional motivators to help them focus on their goals, recommends Dave Ramsey.

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Full Answer

Individuals who are 50 years or older can invest up to $24,000 in their 401(k) and up to $6,500 in their Roth IRA every year, states Dave Ramsey. Money contributed to a 401(k) reduces taxable income while money set aside for a Roth IRA is not taxed during withdrawal. If a couple sets aside $60,000 for both plans every year, they can save $900,000 in 15 years. Investing these contributions in good growth mutual funds can raise savings to more than $2 million.

People saving for retirement should make extra payments to clear their mortgage or sell their homes and downsize to homes for which they can pay cash, advises Dave Ramsey. Clearing mortgage can free up income that individuals can add to their retirement funds. An accountability partner, who is usually an objective third party, helps an individual saving for retirement stick to his goals. Dave Ramsey also advises people to set aside and invest about 15 percent of their annual income to increase their retirement-plan contributions.

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