Are We Able To Retire Early?

Summary

Summary of "Are We Able To Retire Early?" Episode of Ramsey Everyday Millionaires

Release Date: May 28, 2025
Host: Ramsey Network (Featuring Dave Ramsey, Rachel Cruze)

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Introduction

In the episode titled "Are We Able To Retire Early?" from the Ramsey Everyday Millionaires series, listeners gain insights into the financial strategies and considerations surrounding early retirement. The episode features hosts Dave Ramsey and Rachel Cruze as they discuss a listener's situation, offering expert advice on wealth management, investment strategies, and the psychological aspects of retirement planning.

Listener’s Situation: Julie’s Early Retirement Inquiry

The episode begins with Julie from Jackson, Mississippi, reaching out for guidance on retiring early. Julie and her husband, aged 55 and 56 respectively, are contemplating retirement amidst significant financial changes.

• Income and Inheritance: Julie mentions a substantial net worth of $4.5 million, comprising:
  • $1.5 million in stocks
  • $300,000 in treasuries
  • Approximately $500,000 in their home
  • An additional $100,000 in household assets and cash reserves
• Recent Financial Changes: Julie’s husband experienced a 75% pay cut after his company was bought out, reducing his income from $400,000 plus bonuses to $100,000. They are currently saving around $25,000 annually, with her husband contributing an additional 20% of his income.
• Concerns: Julie is unsure if they can sustain their wealth without outliving their savings, especially considering her husband’s diminishing job satisfaction and recent financial setbacks.

Notable Quote:
Julie (00:17): "I'm interested in your ideas about retiring early. I am 55. My husband's 56 this year, and he has had recent changes at his job. Like a 75% pay cut."

Hosts’ Analysis and Initial Recommendations

Dave Ramsey and Rachel Cruze delve into Julie’s financial landscape, assessing the viability of early retirement based on the information provided.

• Assessment of Net Worth vs. Liquid Assets: While a net worth of $4.5 million appears substantial, the distribution is a concern. Only half a million is allocated to retirement accounts, with significant portions tied up in non-liquid assets like real estate and collectibles.

• Investment Strategy Issues: The current investment structure lacks consolidation, limiting growth potential. Dave emphasizes the importance of having assets concentrated in retirement accounts to benefit from compounding returns.

Notable Quote:
Dave Ramsey (02:04): "I wouldn't start drawing from that 4 million. I think it's too early, especially because the way this is all distributed."

Financial Growth and Long-Term Planning

The discussion shifts to the potential for financial growth over the next decade. Both hosts advocate for strategic financial planning to maximize growth and ensure a comfortable retirement.

• Consolidation of Assets: Dave recommends consolidating investments into retirement accounts to leverage long-term growth.
• Engaging Professional Guidance: The importance of consulting with a dedicated investment professional is stressed, as opposed to relying solely on an accountant for financial advice.
• Retirement Timeline: Julie is considering a traditional retirement age of around 67, which aligns with sustainable financial planning.

Notable Quote:
Dave Ramsey (05:25): "You want to stay active. You want to be working in some form or fashion… If you do it our way."

Psychological and Emotional Considerations

Rachel Cruze highlights the emotional toll of her husband’s current job situation, emphasizing the need for a balanced approach to retirement that includes personal fulfillment.

• Happiness vs. Financial Security: While financial readiness is crucial, personal happiness and job satisfaction play significant roles in the decision to retire early.
• Maintaining Activity Post-Retirement: Both hosts advocate for staying engaged in productive activities post-retirement to maintain a sense of purpose and well-being.

Notable Quote:
Rachel Cruze (08:17): "Yeah, you guys have worked too hard and you've done too well to be in an unhappy situation."

Actionable Recommendations

Dave Ramsey provides concrete steps for Julie and her husband to reassess their retirement plans and optimize their financial strategy.

1. Consult a SmartVestor Pro: Engage with an investment professional through Ramsey’s SmartVestor service to receive personalized financial advice.

2. Reevaluate Investment Distribution: Move assets into retirement accounts to capitalize on growth potential and ensure diversified, sustainable investments.

3. Reassess Career Path: Encourage Julie’s husband to consider new job opportunities that better align with his financial and personal satisfaction goals.

4. Develop a Comprehensive Financial Plan: Implement the Ramsey Financial Plan to map out retirement savings, investment growth, and expenditure strategies.

Notable Quote:
Dave Ramsey (08:22): "Get on the phone with a few smartvestor pros and just find someone that you enjoy… let them just run out a scenario or two."

Conclusion

The episode concludes with Dave and Rachel reiterating the importance of strategic planning and professional guidance in achieving early retirement. They emphasize that while Julie and her husband have a solid financial foundation, optimizing their investment strategies and addressing emotional well-being are essential for a successful and fulfilling retirement.

Notable Quote:
Dave Ramsey (09:17): "If you could see what the future could be with a couple of nice moves, the way we teach, I think you could convince him, Julie."

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Key Takeaways:

• Early Retirement Requires Strategic Planning: Merely having a high net worth is insufficient; asset distribution and investment growth are critical.

• Professional Financial Guidance is Essential: Engaging with investment professionals can provide tailored strategies to maximize financial health.

• Balance Financial Goals with Personal Fulfillment: Ensuring happiness and job satisfaction plays a vital role in making informed retirement decisions.

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This episode serves as a valuable resource for individuals contemplating early retirement, highlighting the necessity of comprehensive financial planning and the balance between financial security and personal well-being.

Transcript

[Dave Ramsey]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Julie's up in Jackson, Mississippi. Julie, how can we help?

[Julie]

Well, I'm interested in your ideas about retiring early. I am 55. My husband's 56 this year, and he has had recent changes at his job. Like a 75% pay cut.

[Dave Ramsey]

Whoa.

[Julie]

Yes.

[Rachel Cruze]

Why?

[Julie]

Because it was bought.

[Dave Ramsey]

Ah.

[Julie]

It was bought by another company, and he had been an officer in that company, and they demoted him, and so he had that kind of a pay cut. He's. He's pulling a hundred thousand and I'm pulling in 24,000 and. But we're sitting on four and a half million.

[Rachel Cruze]

Four and a half million? Well, yeah, dang.

[Julie]

We got a inheritance this year. His father passed away about three years ago.

[Rachel Cruze]

How much was the inheritance?

[Julie]

1.5.

[Rachel Cruze]

Okay.

[Julie]

And the 1.5 was when they bought the business because he was part owner. And then 1.1.5 we already had. That adds up to 4.5. Yeah. And so I'm looking at the idea of him retiring early because he's not happy with what he's doing and he's not happy with how they're treating him. And so I want to make sure, though, that we don't outrun our money. As far as outliving it.

[Rachel Cruze]

Sure.

[Dave Ramsey]

I think that's a legitimate concern. Yeah. Have you sat with your financial pro on this? Do you guys have a Smartvestor pro?

[Julie]

He is an accountant, so he knows all of it, if you get what I mean.

[Dave Ramsey]

No, I don't, because there's a difference between an accountant and an investment professional.

[Julie]

Right. But he doesn't see it that way.

[Rachel Cruze]

Who's he?

[Dave Ramsey]

Who's he?

[Julie]

My husband.

[Dave Ramsey]

Oh, no, I meant. Oh, I see. You're saying your husband's an accountant, so he doesn't need to sit with an investment professional because he gets it.

[Julie]

All right.

[Dave Ramsey]

Oh, okay.

[Rachel Cruze]

Is the money invested, Julie?

[Julie]

Some of it is. Some of it is in stocks. As far as retirement, that sort of thing, we've got probably half a million in that.

[Rachel Cruze]

Okay.

[Julie]

And then we've got 300,000 in treasuries.

[Rachel Cruze]

Okay.

[Julie]

And then trying to think half a million is our house, probably another hundred thousand is the sundries in the house. He has an extensive comic book collection. And then the rest of his cash pretty much.

[Dave Ramsey]

Okay, well, I'll just say high level real quick, Rachel, that at 55 and 56, with the. With the. With the average age of life expectancy and all this. I wouldn't start drawing from that 4 million. I think it's too early, especially because the fact this isn't the way this is all distributed. It's not like we'd like to see all of that, you know, or most of that net worth be in retirement accounts so that it continues to grow and double every seven years. And the way that this is. This is all laid out, he doesn't have it all together. And so for that reason, I don't think you're in a position to do that. I would not do that. And I. And unfortunately, I. If. And this is what I've done. This is what Rachel is. We have a smartvestor pro, a person who is an actual investment professional. They know what they're doing, and they are guiding and directing. And this is too soon. Based on what I'm hearing, Rachel, I think it's too soon for him to retire and then start pulling from this because it's not set up well.

[Rachel Cruze]

Yeah. And he doesn't have to be in this position, Julie, you know, do something. Okay, so I. Yeah, you threw out a lot of numbers. So the 4.5 million, that's not what you guys have invested. That is your net worth, correct?

[Julie]

Right. Net worth.

[Rachel Cruze]

Net worth. Okay. And 1.5 million is in stocks. Is that what you said?

[Julie]

I believe so.

[Rachel Cruze]

Okay.

[Julie]

And then take a hundred thousand either way.

[Rachel Cruze]

Sure, sure, sure, sure. And then anything else in. Just in. In traditional retirement, like any 401ks or Roth IRAs.

[Julie]

Roth IRAs, yes.

[Rachel Cruze]

And that's the 1.5 million, though. You're including that?

[Julie]

All of it. Roth is probably separate from that.

[Rachel Cruze]

Okay.

[Julie]

Roth is probably under 200,000.

[Rachel Cruze]

Okay. So about 200k there. Okay. And you said the house was. What? Sorry, I know you just said million. Half a million there. Okay. Yeah. You know, and with all the treasury stuff, I. I would. Julie, I would just tell your husband and just say, hey, will you just entertain me for a bit and go sit down and you interview Julie. Get on the phone with a few smartvestor pros and just find someone that you enjoy. That's like, okay, yes, this sounds like a guy that. Or a woman that I can trust and go meet with them and let them just run out a scenario or two. Because sometimes it's just helpful to have a third party that's not emotionally so attached to these numbers like you guys are, to really paint you a picture, to say, hey, here's what this looks like. But I would. I would direct you guys to that. And also, y' all are young. And Ken, you always talk about, you know, not retiring too early because there's. There's a quality of life aspect that goes down very quickly with people that. That stop everything.

[Dave Ramsey]

That's right. You want to stay active. You want to be working in some form or fashion. That doesn't necessarily mean working for a paycheck, but doing something that is productive. So you get to choose what that is. But again, I'm going to reemphasize. Julie, in this situation, I would never recommend that he just traditionally retire, walk away and begin drawing off of this. I don't think you guys have got this money consolidated anywhere near where it needs to be. Now, here's the thing. With a couple of moves, one good meeting, and you find a good pro, and you start moving this money around and get it consolidated, it's going to start really working for you guys. Because you're young, 55 and 56. I mean, let's be honest. You're looking at a legitimate 20 years. You know, that. That this is going to grow. And now we can be productive.

[Julie]

Yeah, super. I was thinking 10 years. 10, let's say probably 12 would be when we would traditionally retire. 67.

[Dave Ramsey]

Yeah.

[Julie]

And what we bank my money. We don't spend any of it. So that's 25 grand a year we're saving, plus his savings, which I think comes to 20% of his income.

[Dave Ramsey]

Yeah, you guys can make huge gains. And I'm. But I mean, I'm thinking. First thing I would do is, again, I'm gonna say this again. I would get that. The Ramsey plan, the financial plan. What we would do is we're going to get that in. And she walked through the retirement layout, the formula. I would get that stuff in those funds. You've got a lot of money to work with, and that's going to begin to build for you guys. You got 20 years of growth at least, which could be phenomenal with just modest returns in the stock market. Okay. And so that'd be the first step. The second thing is, I'm with Rachel. I think he needs to get out of this situation. Just on the psychology side of things, when you're at a company and you're an executive and then your company gets bought, they bring in their own executive team. So what happened to him is. May not feel great, but it's pretty normal in an acquisition. And so, you know what he needs to move on. He's still got. I mean, he's a young man, and his earning Potential still high. What was he making prior to the purchase?

[Julie]

400,000.

[Dave Ramsey]

Oh, my gosh. Yeah.

[Julie]

Plus bonuses.

[Dave Ramsey]

Yeah. So if I'm him, I'm going. All right. Because by the way, this is a healthy narrative. He didn't get fired.

[Julie]

Right.

[Dave Ramsey]

He got bought. And he's like, new management team. They didn't need me. It's time for a new start. Everybody understands that narrative. He's got a lot of value still left in the marketplace. So if I'm him, I'm leaving. I'm going to go replace that 400,000. I'm going to get all my retirement accounts with a pro, and we're going to have a long term strategy, and you guys are going to retire very wealthy at 70. Very wealthy.

[Julie]

That's. That's what he's thinking.

[Dave Ramsey]

Well, he's thinking wrong. I'm saying if you do it our way.

[Julie]

Unhappy. He's just so unhappy.

[Rachel Cruze]

Yeah, yeah, yeah. And you guys have worked too hard and you've done too well to be in an unhappy situation.

[Dave Ramsey]

Yeah. And by the way, I understand why he's unhappy, but I would really see if he would be willing to sit down. Go to ramseysolutions.com, tell him you called the show. I assume you're going to tell him that anyway, right? Tell him we said to go to ramseysolutions.com and click on SmartVestor Pro. Find two or three different people in your area. Five people, we don't care. Go interview them all. He doesn't have to commit to them. And he's the accountant. We get how smart he is, but he sits with them. And you guys present your numbers to them just like you did to us. Have them tell you what they think that you should do. Do you understand it? And then do you like any of them? Let him ask all the hard questions. Ask him if he'll commit to doing that.

[Julie]

Okay.

[Dave Ramsey]

And then if he goes, all right, it's not as bad as I thought. These people are as smart as me. A little smarter. Showed me a few things. I get it. And now, you guys, I'm telling you, if he could see what the future could be with a couple of nice moves, the way we teach, I think you could convince him, Julie. So that's what I would do if I were you.

[Julie]

Okay. All right. Appreciate it.

[Dave Ramsey]

Yeah. Little twist of the arm. Little.

[Rachel Cruze]

Pretty please. I know. You know, just make his favorite dessert just for fun. Entertain me.

[Dave Ramsey]

There you go.

[Rachel Cruze]

No promises.

[Dave Ramsey]

No promises. No commitments.