Rachel Cruze’s Top 3 Tips That Will Save Retirees From Financial Disaster
Written by
Andrew Lisa
Edited by
Amber Barkley
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Rachel Cruze is a certified financial coach who travels the country preaching the gospel of debt elimination, accelerated savings and long-term financial planning.
The daughter of personal finance celebrity, author and radio host Dave Ramsey, she is a prominent personality in the Ramsey ecosystem, serving as a frequent co-host on her father’s program and hosting her own namesake YouTube show and podcast.
In a recent episode, she spoke about the difficulties that so many Americans have with building a nest egg and offered the following tips for retiring in comfort and financial security.
Open a Roth IRA
Cruze lamented the fact that millions of working Americans don’t have access to employer-based 401(k) plans with company matches. She stated that countries like the U.K., Germany, Canada and Australia automatically enroll all working citizens in retirement plans — and while she acknowledged the unfairness of that disparity, Cruze urged her viewers to accept the reality of the situation and take control of their own destiny.
Her solution? Roth IRAs.
“Your Roth IRA is a great option, because it grows tax-free versus a traditional IRA,” Cruze said. “But if your company has a 401(k) and a match, go up to the match first and then go and fund your Roth.”
Seek Professional Guidance
Cruze said the No. 2 biggest barrier to saving for retirement is maintaining the discipline required to be consistent over time.
“That’s why I always recommend sitting down with an investment professional,” she explained. “This is something that’s really important when it comes to investing.”
Financial planners, investment advisors, retirement planners, portfolio managers, financial coaches and even robo-advisors can help you forecast years or decades in advance, develop a long-term strategy, identify possible roadblocks and help you implement a plan to keep your contributions consistent over time.
Lay a Strong Financial Foundation Before You Start Investing
Cruze also echoed her father’s long-standing belief that investing is prudent only after you’ve built a solid financial base by eliminating all non-mortgage debt and saving for unplanned expenses.
“When you’re to the point where you’re debt-free [and] you have a fully funded emergency fund, jump in there and start investing,” Cruze said.
“Fully funded” is the key term.
One of the hallmarks of Dave Ramsey’s philosophy is what he calls “7 Baby Steps” to financial transformation.
- Step one is to build a “starter” emergency fund of $1,000.
- Step two is to eliminate debt.
- Step three is to flesh out your full emergency fund with three to six months’ income.
It’s not until step four that the Baby Steps suggest beginning to save for retirement.
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