It’s common knowledge for many Americans to understand that Social Security benefits come in the form of payments made to retired people.
But personal finance radio host Dave Ramsey shares advice about Social Security, Medicare and wealth that is geared toward helping people find ways to enjoy their retired years to the fullest.
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For one, as a major point of emphasis, Ramsey advises people to be aware of the fact that they should not be solely reliant on Social Security paychecks when they retire.
Saving and investing money while in the workforce is of serious importance. And that is often smartly taken care of through employer-sponsored 401(k) plans and Roth IRAs.
Another chief priority for Americans is being sure they are enrolled in Medicare at the proper time as they approach retirement.
Ramsey stresses that, while Medicare is functional at giving people affordable health care coverage for prescription medicines, visits with their physicians and hospital stays, it does not cover everything people need.
Retirees enrolled in Medicare are financially responsible for deductibles, copays and long-term care. To prepare for these expenses, Ramsey recommends that people purchase personal insurance for long-term medical needs by the time they are 60 years old.
One effective way to handle this financial reality is with Health Savings Accounts (HSAs), where invested money grows free of taxes.
But Ramsey pivots to another point about saving for retirement with enough wealth so people can live the lives they dream of after their careers at work.
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Social Security and Medicare are only two parts of the retirement equation
Ramsey bluntly explains a basic fact about retirement planning, including how the act of enrolling in Medicare and Social Security may only be the beginning of people’s retirement aspirations.
He also suggests that there are some major pitfalls to avoid. The personal finance coach asks a simple question: What comes to mind when you picture a millionaire?
Ramsey challenges his readers to wonder whether that thought experiment calls to mind someone who lives in a huge house, drives a luxury car and sports designer clothes.
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“The mortgage lender could own the house, the bank could own the car, and they might have racked up a ton of credit card debt buying the clothes,” Ramsey writes. “Lots of people can look like a million bucks without actually having a million bucks, and they could be one step away from losing it all.”
Related: Dave Ramsey warns Americans on Social Security, Medicare
Ramsey says being a millionaire is do-able for average Americans
Ramsey Solutions conducted a study about millionaires who have prepared wisely for retirement. It was concluded that, for the most part, millionaires were ordinary people who simply lived financially smart lives.
According to Ramsey’s research, the top five professions of millionaires he studied were accountants, engineers, management, attorneys and teachers.
Ramsey explained some basic strategies people used to achieve a financial status that allowed them to have a lifestyle that is relatively free of financial stress.
First, they stayed out of debt. They also invested early and consistently in their 401(k) plans. They prioritized savings. They cut unnecessary expenses out of the budgets.
And, of course, they found ways to increase their income, either by applying for more lucrative employment or by taking on extra jobs.
Importantly, the Ramsey research found that a large number of millionaires who set themselves up for a comfortable retirement made their money on their own — without inheriting money.
“In fact, a whopping 79% of millionaires didn’t receive any inheritance at all,” Ramsey wrote. “And 8 in 10 grew up in households at or below middle-income level, while only 2% said they came from an upper-income family.”
“Here’s the truth — millionaires are made, not born.”
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