My Husband Is Freaking Out Over Pausing Retirement Investing

Summary

Podcast Summary: The Ramsey Show Highlights – "My Husband Is Freaking Out Over Pausing Retirement Investing"

Release Date: March 20, 2025 | Host: Ramsey Network

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In this episode of The Ramsey Show Highlights, the Ramsey Network delves into the concerns of a couple nearing retirement who have temporarily paused their investment contributions to focus on eliminating debt and building an emergency fund. The conversation offers valuable insights into balancing debt repayment with retirement planning, ensuring financial stability, and achieving peace of mind during uncertain times.

Caller’s Situation: Balancing Debt Repayment and Retirement Investing

At the outset, a caller shares her predicament:

Caller [00:11]:
"My husband is concerned that we've paused our investments for too long. He's nearing the end of being able to, you know, wanting to retire. And we paused investing in, like, beginning of December to jump on the baby steps. We've since 2023 paid off about 42,000. All we have left is our house and get our emergency fund put together. The three to six months. How long is too long to pause investing?"

The caller and her husband, aged 53 and 55 respectively, decided to halt their investment activities in December to concentrate on paying off $42,000 in debt and establishing a 3–6 month emergency fund. Their investments included a $420,000 nest egg split between a 457 plan, a Roth IRA, and a pension fund totaling $170,000.

Expert Advice: Evaluating the Pause in Investing

A seasoned financial advisor responds to the caller's concerns:

Financial Advisor [00:42]:
"Three or four years. And you haven't. Three or four years and you haven't gone over that."

Clarifying the duration of the investment pause, the advisor notes that the couple has only paused their investments for a few months, not years, alleviating immediate fears.

Assessing Investment Growth and Future Projections

The conversation shifts to the potential growth of their investments:

Financial Advisor [01:55]:
"If an investment is earning 10%, the lump sum will double every seven years. So your mutual funds are earning in excess of that. So your 420, if you're 53 when you're 60, will be 840 when you're... If you don't add anything to it. Okay. If you stop investing and never started again, okay. When you're 67, the 820 will be 1.7 million. When you're 74, it'll be $3.4 million."

Using the rule of 72, the advisor illustrates how compound interest can significantly grow their investments even without additional contributions. This projection is intended to provide the caller and her husband with reassurance about the robustness of their investment strategy.

Strategizing the Comeback to Investing

The caller mentions their plan to resume investing after securing their emergency fund:

Caller [03:07]:
"After we get our emergency funds. Exactly the way we've been chunking away, we've been taking about five grand at the bill. We can have everything probably by July."

The advisor responds with an optimistic outlook:

Financial Advisor [03:19]:
"At the end of July, August, September, anywhere in there. And then you're going to start putting good money into your investing again and you're going to, you know, you're going to retire at 65 years old with close to $10 million."

This projection underscores the importance of resuming investment contributions to accelerate retirement savings.

Focus on Mortgage Payoff Before Maximizing Investments

A critical piece of advice centers on prioritizing mortgage repayment:

Financial Advisor [03:34]:
"And do you say when we start investing again? I know that you always preach 15%."

Caller [03:40]:
"Until your house is paid off. Until your house is paid off."

Understanding that their mortgage of approximately $340,000 is a significant financial commitment, the advisor emphasizes eliminating this debt to reduce fixed expenses in retirement.

Long-Term Financial Security and Peace of Mind

The advisor paints a vivid picture of their financial future:

Financial Advisor [04:14]:
"So you're going to be in your early 60s and you're going to have several million dollars and a paid for house. That's worth a lot of money too. Okay. And so you probably will never even touch the nest egg. You probably won't even use all of the growth off of the nest egg because you're used to living fairly frugal. And even if you went, quote unquote, hog wild by your standards, you're still not even going to spend all the money that your money is making."

By eliminating their mortgage and continuing to invest, the couple is positioned to retire comfortably with substantial financial reserves. The advisor assures them that their disciplined approach will yield significant returns, providing financial independence and security.

Generating Sustainable Income in Retirement

A crucial aspect discussed is the ability to generate income without depleting the nest egg:

Financial Advisor [05:12]:
"If you're 65, what do you all make a year?"

Caller [05:15]:
"Our taxes last year, about 196."

Financial Advisor [05:15]:
"So 200 a year. Okay. So if you're 65 and you have three and a half million dollars, it will generate more than three and more than $350,000 a year in income without touching the nest egg."

This projection highlights that their investments can generate ample income to cover their expenses while allowing their savings to continue growing.

Encouraging a Balanced Approach to Financial Planning

The advisor concludes by reinforcing the effectiveness of their current strategy:

Financial Advisor [06:21]:
"You already have hundreds of thousands in that nest egg. And so compound growth finally has something to work with here. If you just let it ride for the next 10 years of your career, you're gonna be in good shape."

Financial Advisor [06:29]:
"And if you add to it, it's gonna go zing, zing, zing, zing, zing, zing, zing, zing, zing. It's gonna go crazy. Be amazing. Well done. You've changed your family tree. I'm proud of you."

These encouraging words aim to boost the caller’s confidence, emphasizing that their prudent financial decisions will yield substantial benefits in the long run.

Key Takeaways

• Short-Term Investment Pauses: Temporary halts in investing (a few months) do not significantly impede long-term financial goals.

• Compound Growth: Consistent investing, even after a pause, can lead to substantial growth, potentially reaching multimillion-dollar portfolios by retirement.

• Debt Prioritization: Eliminating major debts, such as a mortgage, before maximizing investment contributions can reduce financial burdens in retirement.

• Sustainable Retirement Income: A well-diversified and sizable investment portfolio can generate sufficient income to cover living expenses without depleting the principal.

• Peace of Mind Through Numbers: Understanding financial projections and compound growth can alleviate anxieties and reinforce confidence in financial planning strategies.

Notable Quotes

• Financial Advisor [01:55]:
  "If an investment is earning 10%, the lump sum will double every seven years."

• Financial Advisor [04:14]:
  "You probably will never even touch the nest egg. You probably won't even use all of the growth off of the nest egg because you're used to living fairly frugal."

• Financial Advisor [06:29]:
  "It's gonna go crazy. Be amazing. Well done. You've changed your family tree. I'm proud of you."

This episode serves as a testament to the importance of balanced financial planning—prioritizing debt repayment and emergency savings while maintaining a long-term investment strategy. By adhering to these principles, the caller and her husband are on a clear path to a secure and prosperous retirement.

Transcript

[Host]

Brought to you by chm, a biblically based alternative to health insurance. Learn [e-mail] budget I just got a question.

[Caller]

My husband is concerned that we've paused our investments for too long. He's nearing the end of being able to, you know, wanting to retire. And we paused investing in, like, beginning of December to jump on the baby steps. We've since 2023 paid off about 42,000. All we have left is our house and get our emergency fund put together. The three to six months. How long is too long to pause investing?

[Financial Advisor]

Three or four years. And you haven't. Three or four years and you haven't gone over that.

[Caller]

You say three or four years?

[Financial Advisor]

Yeah. You've only done it for what, a few months?

[Caller]

Correct.

[Co-Host]

Did you say you've paid off all of your consumer debt already since.

[Caller]

Yeah, 2023 is when we took out the first stupid loan. And when did you start?

[Financial Advisor]

When did you pause the investing?

[Caller]

December, like three months ago. Yeah, I really wanted to. We were, like, paying on it, but then as soon as we paused the investing, we were able to start really chunking stuff away.

[Financial Advisor]

Yeah.

[Caller]

And he invests probably about fifteen hundred dollars a paycheck between the 457 and the loss.

[Financial Advisor]

Yeah. Good, good. So you've got some money in there, right? How old are you guys?

[Caller]

53 and 55.

[Financial Advisor]

Oh, you're fine. How much money's in your nest egg?

[Caller]

About 420 total in. In the 457 in the Roth and then about another 170 in the fire employees pension fund.

[Financial Advisor]

Not counting the pension fund. Is the other stuff invested in good mutual funds?

[Caller]

It is.

[Financial Advisor]

Okay.

[Caller]

Yep. Very diversified and.

[Financial Advisor]

Let me help you with this. Okay, let's. Let's walk through. Let's walk through some math for a second.

[Caller]

Oh, my God. I'm so honored to talk to you. Thank you. Go ahead.

[Financial Advisor]

If you got a pencil handy, you may want to write this down. Or you can go back and watch. You can go back and watch it later. Okay, so here's a rule of thumb. If an investment is earning 10%, the lump sum will double every seven years. So your mutual funds are earning in excess of that. So your 420, if you're 53 when you're 60, will be 840 when you're. If you don't add anything to it. Okay. If you stop investing and never started again, okay. When you're 67, the 820 will be 1.7 million. When you're 74, it'll be $3.4 million. This is if you never add anything to it and never take anything out of it. Okay, that's wild. I'm saying those numbers because that gives your husband peace. He's okay. But on top of all that, we're going to have even more because we're going to restart investing in about September, aren't we?

[Caller]

After we get our emergency funds. Exactly the way we've been chonking away, we've been taking about five grand at the bill. We can have everything probably by July.

[Financial Advisor]

At the end of July, August, September, anywhere in there. And then you're going to start putting good money into your investing again and you're going to, you know, you're going to retire at 65 years old with close to $10 million.

[Caller]

And do you say when we start investing again? I know that you always preach 15%.

[Financial Advisor]

Until your house is paid off. Until your house is paid off.

[Caller]

Okay.

[Financial Advisor]

Your house. That your house shouldn't paid off, right?

[Caller]

No, no, I wish.

[Co-Host]

What's left on the mortgage?

[Financial Advisor]

How much do you owe on it?

[Caller]

About. About 340,000.

[Financial Advisor]

Okay. Yeah, you need to clear that up because when you get to 65, you want a paid for house and a pile of money in your retirement. And that sets you up to be multi millionaires and to retire with dignity and do anything you want. You've worked really hard and you've done a really good job.

[Caller]

Thank you.

[Financial Advisor]

Yeah, very good.

[Co-Host]

And here's the cool thing. You get that mortgage paid off, you don't need as much in retirement. You just got rid of your biggest fixed expense.

[Caller]

Yeah, no doubt. Yes, absolutely.

[Financial Advisor]

Here's what's going to happen in yourall's reality. If you continue on the path that you're on, if you start putting 15% away until you pay off your house, and you pay off your house in about six, seven years, which is what's going to happen here. Okay? So you're going to be in your early 60s and you're going to have several million dollars and a paid for house. That's worth a lot of money too. Okay. And so you probably will never even touch the nest egg. You probably won't even use all of the growth off of the nest egg because you're used to living fairly frugal. And even if you went, quote unquote, hog wild by your standards, you're still not even going to spend all the money that your money is making. That's how wonderful this is going to be. Because see, here's the deal. If you're 65 and you got three 30 years. Yeah. If you're 65, what do you all make a year?

[Caller]

Our taxes last year, about 196.

[Financial Advisor]

Okay, so 200 a year. Okay. So if you're 65 and you have three and a half million dollars, it will generate more than three and more than $350,000 a year in income without touching the nest egg.

[Caller]

Okay.

[Financial Advisor]

And if you lived off 200, it's still growing by more than you're putting in. Now. You guys are going to have to really struggle to screw this up. You've done such a good job.

[Caller]

That's good to know.

[Financial Advisor]

Okay, so tell husband to take a chill pill.

[Co-Host]

And if he want, if he's got anxiety, let that anxiety turn into action. And get this emergency fund funded so fast because he wants to get back to investing.

[Financial Advisor]

Yeah, that's the second part of this. Nothing wrong with using that as a driver. But sometimes it helps if you just look at the numbers and say, okay, we're talking about 840. We're talking about a million seven. You know, we're talking about 3.4 out there, 21, 28 years out. Okay. And so that just goes, oh, I'm gonna be okay. Oh, this is all gonna work. And you can kind of breathe again. Because if you run the math, sometimes it gives you peace or sometimes it lights you up, but in their case, it gives them peace.

[Co-Host]

You already have hundreds of thousands in that nest egg. And so compound growth finally has something to work with here. If you just let it ride for the next 10 years of your career, you're gonna be in good shape.

[Financial Advisor]

Yeah. And if you add to it, it's gonna go zing, zing, zing, zing, zing, zing, zing, zing, zing. It's gonna go crazy. Be amazing. Well done. You've changed your family tree. I'm proud of you.

[Host]

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