A recent episode of “The Ramsey Show” featured Lisa, a 53-year-old from Waco, Texas, seeking retirement advice for herself and her husband, 59. Their combined household income is $7,700, but they don’t have enough savings, especially with only a few years left until her husband’s desired retirement age.
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After consulting a retirement expert recently (Dave Ramsey said it was unnecessary), Lisa and her husband determined that with $50,000 in their TSP, if her husband retires at age 63, he will be able to receive a combined retirement and Social Security benefit of $2,068 per month.
“I started raising my kids a little bit last year,” Lisa says. “We have eight kids, and I was a stay-at-home mom from the time they were born. Then when my youngest turned 14, I went to work when my husband went to work.” After returning to work, Lisa was told she needed a college education, so she went to school full time while working and raising her kids.
Ramsay quickly responded, “He can’t retire next year. He doesn’t have the money.” Host George Kamel agreed, saying her husband also can’t retire in the next four years as he would like.
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Lisa and her husband have only a small amount of savings, but they do have some debt they’re working to pay off. They paid off $47,000 on 16 credit cards over 13 months, but still have $17,000 owed on their car, $21,000 on their house and $32,000 in student loans, she said.
Ramsay praised her efforts but stressed the urgency of paying off the remaining debt. “Baby step two is paying off your car and student loans as fast as possible,” he advised. “Then baby step four is putting 15% of your household income into retirement accounts and paying off the mortgage on your house. Once you pay off the mortgage, put everything away. You’ve got to get to work on this, guys. Now is the time to pay off your debt.”
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The conversation emphasized the critical importance of financial discipline and planning. Ramsay and Kamel addressed the misconception that you can rely solely on Social Security and a small pension to have a comfortable retirement. “Retirement isn’t an age, it’s a financial number,” Kamel said, warning against underestimating retirement expenses.
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Ramsay’s advice is clear: Prioritize debt payment and savings. “Clear your debt and go from there,” he urged. For Lisa and her husband, that meant paying off their $32,000 student loans, paying off their car loan, and paying off their mortgage. Only once they cleared those debts could they focus on saving for retirement.
For anyone approaching retirement age, this conversation is a reminder that financial preparation is important. Planning, disciplined savings, and seeking expert advice can help ensure a comfortable retirement. Talking to a financial advisor can provide you with an individualized strategy tailored to your unique situation to help you maximize your retirement savings and maintain long-term financial security.
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The article, “53-Year-Old Telephone Guidance Officer Asks Dave Ramsey ‘Should We Live on Beans and Rice in Our Old Age?’—Here’s What’s Going On” originally appeared on Benzinga.com.
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