I Can’t Afford To Invest 15% Of My Income Into Retirement

Summary

Ramsey Everyday Millionaires: Episode Summary

Episode Title: I Can’t Afford To Invest 15% Of My Income Into Retirement
Host/Author: Ramsey Network
Release Date: July 9, 2025

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In this episode of Ramsey Everyday Millionaires, the Ramsey Network delves into the challenges faced by individuals striving to invest 15% of their income into retirement. Hosted by Dave Ramsey, Ken Coleman, Rachel Cruze, George Kamel, Jade Warshaw, and Dr. John Delony, the episode provides insightful discussions, practical advice, and motivational support for listeners aiming to build extraordinary wealth through disciplined financial management.

1. Guest Introduction: Jill's Financial Journey

Timestamp: [00:14] - [00:35]

Ken Coleman welcomes Jill from Michigan, who is currently navigating Baby Step Two with only $9,000 left to achieve financial freedom. Jill shares her dedication, working seven days a week and enduring exhaustion to reach her goals. Her primary concern revolves around investing 15% of her income for retirement, as the numbers don’t seem to add up.

Notable Quote:

• Jill: "I am currently in baby step two. I have only 9,000 left to go. I've been working like crazy seven days a week and evenings and I'm exhausted."

2. Assessing Financial Numbers and Priorities

Timestamp: [00:58] - [03:02]

Dave Ramsey and Ken Coleman engage with Jill to dissect her financial situation. Jill earns a gross income of approximately $60,000 annually, including summer earnings, but struggles to see how she can allocate 15% for retirement investments after covering her household expenses of around $3,000 monthly.

Key Discussions:

• Gross vs. Net Income: Dave emphasizes understanding the difference between gross income and take-home pay to avoid being misled by the budget.

  Notable Quote:

  • Dave Ramsey: "You're looking at investing $750 a month. That's what 15% is of your gross income."

• Employer-Sponsored Retirement Plans: Jill has access to a 403B plan with a 4% match, but she hasn't started investing yet.

  Notable Quote:

  • Dave Ramsey: "Match beats Roth, beats traditional. Invest up to the match, that's 4%."

3. Strategies to Allocate 15% for Retirement

Timestamp: [03:02] - [05:30]

Dave Ramsey guides Jill on how to prioritize her retirement investments. He advises that once debt-free, Jill should aim to increase her budget allocation to 15%, adjusting her expenses accordingly. The conversation touches on optimizing her 403B contributions and considering a Roth IRA for additional investments.

Key Points:

• Debt-Free Focus: With minimal debt payments, Jill is encouraged to reallocate funds towards retirement.

  Notable Quote:

  • Dave Ramsey: "Once you're debt free, you're going to start doing your budget. I would ratchet it up to 15% and then see what the deficit is."

• Investment Distribution: Prioritize employer match, followed by Roth IRA contributions.

  Notable Quote:

  • Dave Ramsey: "If you still haven't hit 15%, you would move back to it."

4. Increasing Income vs. Reducing Expenses

Timestamp: [05:30] - [08:07]

Ken Coleman shifts the focus to income enhancement rather than solely reducing expenses. He challenges Jill to explore opportunities beyond her current teaching role, suggesting that she might be undervaluing her skills and potential earnings.

Advice Given:

• Exploring Career Opportunities: Ken encourages Jill to consider roles such as corporate training, which could substantially increase her income.

  Notable Quote:

  • Ken Coleman: "I'm trying to get you fired up a little bit... You're worth more than that."

• Maximizing Summer Income: Instead of relying on low-paying summer gigs, Jill is urged to seek higher-paying opportunities that align with her expertise.

  Notable Quote:

  • Ken Coleman: "Can we make $9,000 in the summer? Let's set a goal."

5. Overcoming Self-Doubt and Taking Action

Timestamp: [08:07] - [08:41]

Ken Coleman emphasizes the importance of mindset and proactive efforts in achieving financial goals. He recognizes Jill's self-doubt but motivates her to take actionable steps towards increasing her income and adhering to her budget.

Encouragement:

• Belief in Possibility: Ken and Dave reinforce the idea that with the right strategies, Jill can achieve her investment goals without resorting to long-term side gigs.

  Notable Quote:

  • Ken Coleman: "You cannot find it if you don't look for it."

• Proactive Approach: Listeners are encouraged to actively seek opportunities and adjust their financial plans based on realistic assessments and professional advice.

6. Conclusion and Final Thoughts

Timestamp: [08:41] - [End]

Dave Ramsey wraps up the episode by reiterating the importance of connecting with financial professionals, such as SmartVestor, to receive personalized investment advice. The hosts provide closing remarks, encouraging listeners like Jill to remain committed to their financial journeys and leverage available resources to overcome obstacles.

Final Encouragement:

• Stay the Course: Emphasizing that financial freedom is achievable through disciplined budgeting, strategic investing, and continuous self-improvement.

  Notable Quote:

  • Dave Ramsey: "Learn [e-mail] SmartVestor."

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Key Takeaways:

• Understanding Financial Metrics: Differentiating between gross and net income is crucial for accurate budgeting and investment planning.
• Prioritizing Retirement Investments: Allocating 15% of income towards retirement should be balanced with current living expenses and debt management.
• Exploring Additional Income Streams: Enhancing income through career advancements or higher-paying opportunities can alleviate the burden of saving a significant percentage.
• Mindset and Action: Overcoming self-doubt and taking proactive steps are essential for achieving financial milestones.

This episode serves as a valuable resource for individuals feeling constrained by their current financial situations, offering practical solutions and motivational support to help them invest wisely and build lasting wealth.

Transcript

[Dave Ramsey]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor let's go to Detroit.

[Ken Coleman]

Michigan next where Jill joins us. Jill, how can we help today?

[Jill]

Hi. Oh my gosh, I'm so nervous.

[Ken Coleman]

Oh, well, it's because George is on. He's very intimidating. But I'm going to be here for you.

[Jill]

Yes. So I am currently in baby step two. I have only 9,000 left to go. I've been working like crazy seven days a week and evenings and I'm exhausted. But I'm trying to figure out once I'm in baby step four how to invest 15% because I don't see the numbers working out. And I'm wondering if I should pay off my mortgage like it's baby step two or if I need to just do side gigs for the next decade or so.

[Dave Ramsey]

Side gigs for a decade. I'd rather see you get your full time income up. But let's dig into the numbers here to see what's actually going on.

[Ken Coleman]

A budget ectomy, George.

[Dave Ramsey]

Yeah. Okay. What is your income?

[Jill]

Yeah.

[Dave Ramsey]

Your gross income.

[Jill]

I make 57,800. I'm a teacher, so I also make about 3,000 or 3,500 gross in the summer. Great.

[Dave Ramsey]

So about 60 grand. Okay. And you're saying you can't invest 15% once you're debt free. You're not going to have the margin to do it.

[Jill]

I mean, according to the numbers that I, according to the math that I did, my household expenses are around 3,000.

[Dave Ramsey]

Okay.

[Jill]

And I think my net income according to my paychecks is about 3,225. And then the summer, I mean, divide that by 12 and add that to the income.

[Dave Ramsey]

So you're talking about investing $750 a month. That's what 15% is of your gross income. And so when you do your every dollar budget and you list out your, your take home pay, now it's coming out before it hits your bank account. You have a 403B through your employer.

[Jill]

I do. I'm not investing right now, but I get a 4A. Yeah. 4% match. So.

[Dave Ramsey]

Okay, so once you're there, you invest 15%. Whatever's left becomes your take home pay that you're gonna pay all of your bills out of.

[Jill]

Okay.

[Dave Ramsey]

So it may not be as much of an issue as you think as long as you can live off the rest of that take home pay.

[Jill]

I'm just like, when I look at my margin, it's like $475. So I mean, unless I'm missing something, I don't know.

[Dave Ramsey]

Well that's on the net side. You're looking at your budget with your take home pay. So it would reduce your, your gross income by 750 bucks. So if you were making 5,000, what's going to actually end up in your bank account is 4250 you tracking.

[Jill]

Okay. So I think so right Now I have 6% being taken out for my pension automatically.

[Dave Ramsey]

Okay.

[Jill]

So that's already. And I think you guys need to cut that in half.

[Dave Ramsey]

Yes, we would count that as half of your 15%. So we would count it as three. You would still need to invest another 12.

[Jill]

Okay. And then I wanted to do the 4% for the match and then do the rest in a Roth ira. And so that's why I was doing net income. Does that make sense?

[Dave Ramsey]

Yes. But I'm thinking here, what were your debt payments when you started this process? What were your total debt payments per month?

[Jill]

Not much. So I think only like 100 bucks per month because most of it's student loans and I have a 0% payment or zero dollar payment right now.

[Dave Ramsey]

Okay. So what I would do is once you're debt free, you're going to start doing your budget. I would ratchet it up to 15% and then see what the deficit is, if there is one. I think the numbers are going to work here. I don't know what all the rest of your expenses are and what you can trim out of the budget. But there's two ways to find this margin. Either spend less or make more. So before you go, sign up for a side gig for the next decade, I'd rather see us work on spending less and reducing our bills so that you have the margin to do this. And by the way, there's still other baby steps. You know, like you said, you want to pay off the mortgage early. Do you have children?

[Jill]

No.

[Dave Ramsey]

Okay, so we can Skip baby step five and we're going to move on to six, which is any extra income beyond the 15% we can start throwing at the mortgage. But no, you don't have to treat that like a baby step two item. We move from intensity to intentionality when we move out of baby step three into four. So that could be a seven to ten year journey. You don't need to do this in three years. I think you need to enjoy life a little. Wouldn't it be cool to take summers.

[Jill]

Off as a teacher?

[Dave Ramsey]

Would you want to take a Summer off or do you enjoy doing it?

[Jill]

I just, Well, I do get bored if I have taken a summer off before and it does get boring. But I don't know, I just didn't see the numbers working out like I thought so.

[Dave Ramsey]

Well, the every dollar budget will tell you, but I want you to just make sure you're looking at the right numbers, gross versus net because that'll be deducted from each paycheck. So I don't want you to get spooked by saying, well, I don't have the money in the every dollar budget because that's just your take home pay.

[Jill]

Doesn't the Roth IRA though? Doesn't the net. It doesn't come out of your net though.

[Dave Ramsey]

Roth ira, you would invest on your own, so that wouldn't come directly out of your paycheck. That's not through your employer. Do you have a Roth 403B through your employer?

[Jill]

No, I don't.

[Dave Ramsey]

They don't offer a Roth option. Okay, so yeah, you do. Match beats Roth, beats traditional. So invest up to the match, that's 4%. Move on to your Roth options, which would be an IRA outside of your employer. And then if you still haven't hit 15%, you would move back. But it sounds like you will, you will hit that with your employer so you won't need to move back to it.

[Jill]

Okay.

[Ken Coleman]

You got this. Now do you believe Jill?

[Jill]

I don't know. I guess. I mean, maybe when I get there.

[Dave Ramsey]

It'Ll be different, but I think so. And you'll make more money over time, right?

[Jill]

Yeah, true. I mean, I'll move up to 61,000 next.

[Ken Coleman]

I want to see you, actually. I want you to look outside the teaching world. I really would like to see you try it. Just look at it. Just see where you can take your experience and skill set and make a sizable chunk more. And then I also think while you're looking at that, you ought to be looking at some good money earning opportunities in the summer. Let's see if we can keep that income going doing something else during the summer. You've got to look and Jill, I can hear it in your voice, you're one of those. You're the true doubting Thomas from the Bible. You know, you got to see the scars and, and, and George laid it out for you. So you're going to have to try this stuff so you can see what he's saying. Because even as he lays it out, you're having a hard time believing it's possible. But I've, I'VE sat with him long enough to know he's right.

[Jill]

And.

[Ken Coleman]

But you're going to have to try some of this stuff. So I'm really going to push you in two other areas. I really do want you to see what you can make in the summer. Let's see if we can max out the summer. Can we make $9,000 in the summer? Let's. Let's set a goal. Let's look. Could I transition from the traditional teaching world into a different role? Because I've counseled so many teachers, George, you know this on my old show, the Ken Coleman show, where they didn't think they could do anything but teach, but you can. Those skill sets. You are an instructor at heart, and you are an instructor by trade. That's really, really valuable. So if I were to just tell you to kick the tires on looking at corporate training, for instance, you know, I think you should be making somewhere between 75 to $100,000.

[Jill]

Wow.

[Ken Coleman]

But you won't see it if you don't look for it.

[Jill]

Well, I will say I don't. I do live in a smaller town. I'm not in Detroit, but I have. I just do, like, Department of Natural Resources summer gigs like that. That's what I've been doing.

[Ken Coleman]

I know, but that's. That's bottom of the barrel.

[Jill]

You're.

[Ken Coleman]

You're worth more than that. I'm trying to get you fired up a little bit. You know, I'm trying to be your cheerleader in the locker room, because if you head out on the field acting like you are right now, you're going to get beat by a hundred. You got to come out of that locker room like you're going to destroy the other team. And you need to come out of this thing going. I'm going to actually do what George told me to do, and that's just the beginning. And I'm going to absolutely win. And if I got to move, I'm going to move. But you need to happen to life, Jill. I think too much of life is happening to you.

[Jill]

I guess I just don't know what to do in the summer then, because that's.

[Ken Coleman]

I know you don't, because you have a look for it. You have a look for it. You got to get your head up. You got to start looking. You got to start talking to everybody. Hey, I'm a teacher. This is the skill set I've got, George. I've done this for this many years. I'm looking for this kind of work here. And you got to look for it. You cannot find it if you don't look for it. And looking for it means I believe if I look for it that I'll see it. Come on Jill, let's go happen to life a little bit. Coach Ken Man, I need to bang the locker room. Blow a whistle or something.

[Dave Ramsey]

Thanks for tuning in to Ramsey Everyday millionaires Need help with your investments? Connect with a smartvestor [e-mail] smartvestor or click the link in the show notes. Ramsey Solutions is a paid non client promoter of participating pros. Learn [e-mail] SmartVestor.