adminA WORRIED son tries to improve his mother’s financial future.
Kevin called into The Ramsey Show to find solutions on how he could start saving for retirement.
A conversation on the financial advice podcast, The Ramsey Show, between a caller named Kevin and Dave Ramsey, focused on one woman’s difficult journey to retirement.
Kevin called on behalf of his 68-year-old mother.
He has $18,000 in his 401k and $60,000 in cash saved.
His home is valued at $500,000, according to his son, but he owes a $205,000 mortgage.
Caught in a “what to do next” moment, she refuses to talk about her situation, according to her son, despite his concerns.
“That’s a tough man,” said Ramsey who asked how much money he currently makes.
His mother makes $70,000 as a nurse, with about $2,200 going into Social Security each month, Kevin said.
Ramsey said his ultimate goal is to get her out of the situation and build her a nest egg so she can be comfortable until retirement.
But, the financial expert said he wasn’t exactly sure how to do that with his income and his age.
Ramsey advised Kevin that if he were his mother, he would start looking for a condo with cash to make sure his home is covered.
THE PRICE OF A PERFECT PROPERTY
Once the subject of housing came up, Kevin threw Ramsey a curveball when he suggested that his mother could build a small house on land provided by his brother-in-law.
But Ramsey quickly shut down the idea.
“I wouldn’t build a tiny house,” he said several times. “There’s no resale for them. There’s no proven market. It’s a fad.”
Instead, he encouraged Kevin to consider real estate deals that could only increase in value and to think about long-term habitable homes.
That could mean building a house on the land his son-in-law gives him, but only if it’s a house built to last, according to Ramsey.
Where to save your retirement money
There are several places you can put the money you save for retirement. Each has different tax advantages, but not all are available to everyone.
401(k) – an employer-sponsored retirement account. Contributions are made before tax and many employers will match a certain percentage of your contributions. Taxes are paid when funds are withdrawn in retirement.
Roth IRA – an individual retirement account. Contributions are made after tax but retirement withdrawals are not taxed.
TSP (Thrift Savings Plan) – a retirement savings and investment plan for federal employees and members of the uniformed services. They work similarly to 401(k)s but may have more limited investment options.
pension – a labor benefit that the employer undertakes to pay the worker during retirement. Pensions are increasingly rare.
She advised him to have the property deeded to her, or transfer the property in the form of a signed agreement.
“Cut off a plot, an acre or something, and give mom an acre,” Ramsey said. “Then she [can] build a house on it and use the proceeds from the sale of yours.”
“This will help a lot,” he said in closing, advising that Kevin’s mother build a house for $200,000 and save the extra $100,000 to start her nest egg.
The US Sun has covered other cases of seniors struggling to save as retirement increases.
Watch as one woman lives on the beach on $420 a month after failing to save for retirement.
Plus, Dave Ramsey helped another penniless retiree sort things out—turns out her car was the solution.
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