Is It Too Late To Invest for the Future?

Summary

Ramsey Everyday Millionaires: Episode Summary
Title: Is It Too Late To Invest for the Future?
Release Date: March 3, 2025
Host/Author: Ramsey Network

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Introduction

In the March 3, 2025 episode of Ramsey Everyday Millionaires, hosted by the Ramsey Network, listeners are introduced to Andrea, a 60-year-old professional navigating the complexities of saving for retirement and homeownership amidst financial uncertainties. The episode delves into her financial situation, explores strategies to enhance her savings and investments, and offers actionable advice to ensure a secure financial future.

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Andrea’s Financial Situation

Andrea begins by outlining her current financial landscape:

• Age & Employment: 60 years old, employed with a monthly take-home income of $2,864.
• Living Arrangements: Resides with her son and his family, resulting in minimal household expenses; her primary outgoing bills include car insurance, gas, and incidentals.
• Savings & Investments: Holds $69,000 in a 401(k) retirement account and $45,000 in a savings account.
• Debt Status: Maintains no significant debt, only managing to pay off credit card balances monthly.
• Relocation Plans: Initially moved from Ohio to Arizona before the pandemic but is now considering relocating back to Ohio due to rising living costs in Arizona.
• Financial Goals: Aims to save for a down payment on a home and secure a comfortable retirement.

Andrea’s Quote:
"I want to know is it possible for me to continue or to own a home and still save for my retirement?"
— Andrea, 00:19

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Dave Ramsey’s Guidance

Dave Ramsey responds by assessing Andrea's situation through the lens of the Ramsey Network's financial principles:

1. Savings and Investment Strategy:

   • Emphasizes the importance of a sizable nest egg and a solid savings rate.
   • Notes that Andrea’s current savings rate is low, investing only about 1% of her income.
   • Advises increasing her retirement investments to 15% of her income to combat inflation and grow her wealth.

   Dave Ramsey’s Quote:
   "You can't save your way to wealth. We have to invest this money because right now you're not even beating the rate of inflation."
   — Dave Ramsey, 03:22

2. Investment Growth Potential:

   • Highlights the benefits of investing in the stock market by illustrating potential returns.
   • Suggests that investing $100,000 could grow to $124,000 with a 24% return in 2024, and anticipates a 10-12% annual growth over the next decade.

   Dave Ramsey’s Quote:
   "If you invested the stock market last year, Andrea, in 2024, return 24%. So you put $100,000 in that account. Now it has $124,000."
   — Dave Ramsey, 03:31

3. Retirement Planning:

   • Analyzes Andrea’s retirement readiness, indicating she may need to work into her 70s to achieve her financial goals.
   • Encourages realistic planning and adjusting expectations to align with current financial realities.

   Dave Ramsey’s Quote:
   "I don't know that we're going to have a dream retirement at this stage of the game. We might have to do what John Deloney says and choose our reality and grieve what could have been and create a new picture of what's next."
   — Dave Ramsey, 04:07

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John Deloney’s Insights

John Deloney contributes to the discussion by addressing Andrea's personal sentiments about moving and family dynamics:

1. Relocation and Family Considerations:

   • Questions Andrea’s reluctance to remain with her son’s family, suggesting flexibility in living arrangements could benefit her financial situation.
   • Explores the emotional aspects of relocating and the importance of supporting aging siblings back in Ohio.

   John Deloney’s Quote:
   "Is there a possibility you could move in with one of your brothers and sisters in a garage apartment or something?"
   — John Deloney, 05:03

2. Future Financial Support:

   • Advises Andrea to save diligently for the next 5 to 15 years to ensure she has the necessary funds for her future needs.
   • Emphasizes the balance between personal financial goals and familial responsibilities.

   John Deloney’s Quote:
   "You might be working into your 70s to make this dream happen. Are you okay with that?"
   — John Deloney, 05:48

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Actionable Steps and Recommendations

1. Increase Retirement Investments:

   • Andrea is encouraged to boost her retirement contributions from 1% to 15% of her income to ensure adequate growth and protection against inflation.

2. Enhance Income Streams:

   • Exploring higher-paying roles within her field, such as leveraging her medical coding certification, could elevate her income to $60,000 or $70,000, significantly impacting her ability to save and invest.

3. Optimize Living Arrangements:

   • Considering moving back to Ohio and potentially living with family could reduce expenses, allowing for greater savings and investment opportunities.

4. Long-Term Planning:

   • Setting realistic retirement and homeownership goals, understanding that achieving these objectives may extend her working years.

   Dave Ramsey’s Quote:
   "You put money away for a down payment. ... get yourself, you know, a reasonable mortgage."
   — Dave Ramsey, 06:24

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Conclusion and Key Takeaways

The episode concludes with a comprehensive analysis of Andrea’s financial position and actionable advice to enhance her savings and investment strategies. Key takeaways include:

• Prioritize Retirement Investments: Allocating at least 15% of income towards retirement accounts is crucial for long-term financial security.
• Invest Wisely: Avoid letting savings languish in low-interest accounts; instead, invest in mutual funds or other growth-oriented vehicles to outpace inflation.
• Flexible Living Arrangements: Exploring cost-effective living solutions, such as relocating closer to family, can provide financial relief and support future goals.
• Continuous Financial Education: Utilizing tools like the Every Dollar app and seeking guidance from financial experts can empower individuals to make informed decisions.

Final Thought:
"You have the power to shape your financial future by making strategic decisions today."
— Dave Ramsey, 06:24

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This episode of Ramsey Everyday Millionaires underscores the importance of proactive financial planning, strategic investing, and the willingness to adapt one’s living situation to achieve long-term wealth and retirement objectives. Andrea's journey serves as a relatable blueprint for listeners facing similar financial crossroads.

Transcript

[Dave Ramsey]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Andrea's in Phoenix. Up next, what's going on? Andrea?

[Andrea]

Hi. And thank you for taking my call.

[Dave Ramsey]

Absolutely.

[Andrea]

My name is Andrea and I am 60 years old and I am employed. I make about. I bring home about 24 $2,864 a month. I live with my son and his family. The only outgoing bills I have is my car insurance, and I pay for gas and any other incidentals. I want to know is it possible for me to continue or to own a home and still save for my retirement? I have 69,000 in a 401k. And I'll tell you a little bit. I was in Ohio and I relocated to Arizona before the pandemic. And since I've been here, everything has gotten so inflated. So my decision now is to go back to Ohio. But while I'm here in this kind of situation to save and not have to pay any bills, I have some time before I get go back to Ohio. So ask me anything.

[Dave Ramsey]

All right. So you told me your stated goal was I want to be able to own a home and. And retire one day.

[Andrea]

Yes.

[Dave Ramsey]

Okay. That's going to take a sizable nest egg and a pretty solid savings rate. So how much are you able to save right now? You're saying you get. You got almost no bills. So out of that 2864, how much is left over?

[Andrea]

It'll be 2154, like $2154 minus the car insurance and the gas. But I plan on getting a job in my where I work at to work from home, which that will save on the gas. And I do have like 45,000 saved up. Okay.

[Dave Ramsey]

That's in a savings account and no debt whatsoever.

[Andrea]

Well, no, not if I have that. I just pay it off every month if I use a credit card. But I did get the Every Dollar app. I recently did that. I'm still working with that. And I've just only been listening to you guys for like, three weeks. Three or four weeks.

[Dave Ramsey]

Awesome. Welcome to the party. Well, we. We have a pretty controversial stance around here, and that is debt robs you from your future, even if it's temporary, even if I'm paying it off tomorrow. And so John and I do not own a single credit card. We just use our debit cards. We use our own money. And what you're facing here, Andrea, is an income problem. We've got to get your income up because that's going to create more margin for you to save for that home. And so you've, you're in what we would call baby steps four, five and six. If you're debt free with an emergency fund, which you just told me you have 45,000 liquid.

[Andrea]

Yes.

[Dave Ramsey]

Great. And so we'll call that your emergency fund plus some down payment fund because you don't need 45,000, I imagine, to cover your expenses for three to six months.

[Andrea]

No.

[Dave Ramsey]

Okay, so your, your A1 goal, if it is buying a home, is to put money away for a down payment. But before we do that, we should be investing 15% of our income into retirement. So how much are you investing right now?

[Andrea]

So right now I'm not investing that much. I think I'm at 1% and I can probably put that up to where I should be.

[Dave Ramsey]

Why is it at 1%?

[Andrea]

Because in my mind of thinking before I listened to you guys, I was going to get more in my check to save more, but that hasn't worked out as well as I wanted it to.

[Dave Ramsey]

Well, you can't save your way to wealth. We have to invest this money because right now you're not even beating the rate of inflation. If that money is just sitting in a checking account.

[Andrea]

Yes.

[Dave Ramsey]

If you invested the stock market, the U.S. stock market last year, Andrea, in 2024, return 24%. So you put $100,000 in that account. Now it has $124,000. Do you see the difference? Invested in the stock market. And we're not saying a single stock. You're going to do mutual funds within that retirement account that will grow at a steady pace, probably 10 to 12% over the next 10 years, and that will at least help give you some cushion. I don't know that we're going to have a dream retirement at this stage of the game. We might have to do what John Deloney says and choose our reality and grieve what could have been and create a new picture of what's next.

[John Deloney]

Why don't you want to live with your son?

[Andrea]

I just, I don't. I just don't. I don't. I don't want. I think I just don't want to be.

[John Deloney]

You get to do whatever you want. Going all the way back to Ohio. That's a long way. It feels like an intentional move away from family.

[Andrea]

Well, it'll be away from the. Yes, it'll be away from this family. But then my sisters and brothers are all back east and they're all getting older. And they're all, like, sickly.

[John Deloney]

Okay.

[Andrea]

And I guess I wanted to be closer to them. Not that I don't want to be closer here, but it's easier for me to get here right now. It's not easy for me to get there.

[John Deloney]

Gotcha.

[Andrea]

And be there as a help.

[John Deloney]

Is there a possibility you could move in with one of your brothers and sisters in a garage apartment or something? I'm just trying to, like, reimagine buying a house right now versus if you're going to be in a caretaker role, moving in with somebody.

[Andrea]

I could. That is a possibility. I'm not going to lie and say it's not. It's a possibility.

[John Deloney]

I know it might not be ideal, but, man, I love the idea of you saving some money over the next five or 10 or 15 years until somebody can help you. Right. Because you'll need that. You'll need somebody to love and care on you also.

[Andrea]

Yeah.

[John Deloney]

If you move to Ohio, is your job going to go with you?

[Andrea]

Yes. If I get the job from home, my job comes with me.

[John Deloney]

Okay, great.

[Dave Ramsey]

What does that job pay?

[Andrea]

About 40,000 a year.

[Dave Ramsey]

Okay. What. What job is.

[John Deloney]

What kind of role?

[Andrea]

I work in the medical records department.

[Dave Ramsey]

What would it look like to make 60 or 70,000 at your age with your experience in that field? What does the latter look like?

[Andrea]

I do have a certification for medical coding, but it's been just difficult to get a job because I don't have any experience in that particular job.

[Dave Ramsey]

Would an entry medical coder make 40,000?

[Andrea]

They could start off at 40,000. Yeah.

[Dave Ramsey]

So that's what I would be doing. If the trajectory is higher with your certification, even if it's not the exact role you want, I would just try to get on a ladders. And the truth is, Andre, you might be working into your 70s to make this dream happen.

[Andrea]

Yeah.

[Dave Ramsey]

Are you okay with that?

[Andrea]

I realized that.

[Dave Ramsey]

Okay.

[Andrea]

I am.

[Dave Ramsey]

I just crunched the numbers for you. You know, you got 69 grand in that retirement account. You keep investing, let's say a thousand bucks a month. If you can do that to 72, you'll have over half a million in that nest egg. And on the way, get yourself, you know, a reasonable mortgage. And that way you're not stuck paying whatever market rent is for the next 12 years.

[John Deloney]

Or. Yeah, you take the last two bedrooms in one of your brothers or sister's house when you're caretaking and you're helping out. And maybe you let that dream go of I have to buy my own three or four bedroom house, but with a great place to live. And you get to care and serve like you like to.