05/06/2025
"I'm 65 years old, and I'm wondering if I'll be okay to retire in seven years," Rick said, initiating a conversation that rapidly evolved into a financial intervention.
He informed Ramsey that he had $110,000 in his 401(k) and only $5,000 in his emergency fund. On the debt side, things were heavier: He still owed $136,000 on his house, $30,000 on his truck, and a surprise $22,000 on solar panels he thought he bought "outright." Ramsey clarified the final detail, stating it was a solar loan. Additionally, to provide further context, Rick was paying $10,000 annually in alimony, though this obligation will be concluding shortly. His income? A solid $100,000 a year.
"You don't have any money," Ramsey told him. "You're $500,000 or $600,000 behind. "What I would do if I were in your shoes is I would get those two debts paid off immediately," Ramsey said. "It's an emergency," Ramsey told him to temporarily cease contributions to his 401(k) and concentrate fully on repaying the truck and solar loan within 12 months, while adhering to a strict budget. "Beans and rice, rice and beans," Ramsey said. "You have no life until you get that done." He even suggested Rick ditch the truck altogether if necessary. "That is job one, or sell the stupid truck.
After being debt-free, Ramsey outlined the next phase: continue living frugally, pay off the house within three years, and then resume investing. He suggested allocating 15% of income to retirement accounts and investing in high-quality mutual funds. By the age of 72, if Rick adhered to the plan, Ramsey estimated he would have accumulated $400,000 to $500,000 in savings and fully paid off his home. It was not enough for a yacht, it is an improvement from the path he was on had he remained inactive.
Procrastination comes at a cost. However, with seven years, a six-figure income, and disciplined financial management, it remains an achievable goal. Do not wait until the age of 65 to start considering it, unless you wish to subsist on "beans and," as Ramsey might suggest.