‘Retiring With Zero Money And A Nice Paid-for House Is Not A Plan’ Dave Ramsey Tells 59-Year-Old With No Retirement Savings
Personal finance expert Dave Ramsey, known for his no-nonsense advice, recently shared a caller’s story on social media highlighting a financial challenge many Americans face as they approach retirement. At age 59, this caller had no retirement savings but had recently sold a $518,000 home. Once she paid off most of her debts, leaving only a car lease, she had $290,000 left and sought Ramsey’s advice on balancing investing and buying a new home.
“Instead of taking all of the money and putting it into a home I was thinking that maybe I should beef up an investment account,” the caller said. “But I know that your steps say that’s like borrowing money to invest.”
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The caller was considering a $300,000 home just north of Palm Beach, Florida, where she currently resides. She would use $200,000 for part of it and take out a mortgage on the rest. Ramsey’s response really honed in on the importance of achieving financial security before retirement.
He advised the caller to instead purchase a $200,000 home that she could buy outright instead of taking a mortgage. This would allow her to avoid monthly housing payments and allocate more of the remaining funds toward building a retirement nest egg.
“Retiring with zero money or close to zero money and a nice paid-for house is not a plan,” Ramsey said. He advised living in the $200,000 house for 3-5 years while the caller focuses on building her nest egg. Then later, if the market was right and she could afford to buy a nicer home, she could work up to that.
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Ramsey also recommended paying off the car lease early to eliminate all remaining debt. With no debt and reduced monthly expenses, he suggested aggressively saving the leftover $50,000 by investing in a Roth IRA and SEP IRA.
The caller’s story resonates with many Americans nearing retirement without sufficient savings. According to a recent AARP survey, 20% of adults over 50 have no retirement savings. Many are also burdened by debt, with nearly one-third carrying a credit card balance of $10,000 or more.
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