The Ramsey Show - App - How to Set Up a Trust for Special Needs Family Members (Hour 2)

Episode Date: October 30, 2018

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🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. You jump in, we'll talk about your life, your money. It is a free call at 888-825-5225. Brandon starts this hour in Phoenix, Arizona.

Hi, Brandon. How are you? I'm better than I deserve, but a little confused. Uh-oh. How can I help you? Well, my wife and I, we're debt-free except for our house. Uh-huh. And we've got a one-and-a-half-year-old little boy.

Yay! And we want to a one-and-a-half-year-old little boy. And we want to plan for his college, but before he goes to college, he is most likely, for our faith, going to serve a two-year mission. Right. And I know that probably doesn't apply to the college savings plan.

We've got a chunk of money right now, about $7,000 that we're willing to put somewhere, but we're trying to decide whether we should put it down on our mortgage, which one way or the other will be paid off before he goes by a couple of years. Good. Or should be invested in something to build up that future mission and college fund. Gotcha. Okay. And you are debt-free except your home.

Correct. fund gotcha okay and you are debt free except your home correct in addition to the seven thousand dollars do you have an emergency fund a rainy day fund of three to six months of expenses we do yes how much is in that about 15 good okay well you're at what we call baby step four five and six baby step one's a thousand saved two is debt free but the house Okay. Well, you're at what we call Baby Step 4, 5, and 6. Baby Step 1 is 1,000 saved. 2 is debt-free, but the house. 3 is a fully-funded emergency fund. Baby Step 4 is putting 15% of your household income into retirement, which you should just start doing that as a part of your savings, your investing plan right now. Baby Step five is kids college, and beyond that, six is pay extra on the house as you can, as fast as you can.

So what I would do with this money is I would earmark it for school and mission trip because you guys are obviously LDS, right? We are, yes. Okay, cool. So what I'm going to do is say out of the $7,000, I'm probably going to drop $5,000 of it into a $529 for my one-and-a-half-year-old into a good growth stock mutual fund. That's all for college.

It has to be used for college. Take the other $2,000 and just set it in a mutual fund in your name. No big deal, just a regular mutual fund in your name, and you just on the file when you drop the paperwork into a file, write mission trip on the file. But it's just earmarked for that. It's in your name. You're controlling the money.

And if everything goes as planned and he's going to do his two-year mission trip, then that $2,000 will grow into enough to help him do that. The other $5,000, you'll add to it periodically throughout his life so that there's enough in there for him to go to college when he comes back from mission trip. Awesome. That's a good plan. I had not thought about splitting it out like that. Yeah, just a little bit here and a little bit there. And then, you know, you just monitor it. Good point. I had not thought about splitting it out like that. Yeah, just a little bit here and a little bit there. And then, you know, you just monitor it.

You look up and he's 12 years old and you go, hey, this $2,000 is not grown to enough to take care of this, or it's got way too much in it. I may take some out of that and throw it into his college, or I may take some out of it and throw it at my house. Because, I don't know, let's say it went crazy and it was $50,000. Well, he doesn't need $50,000. Well, he doesn't need $50,000. No, he doesn't. And the money's in your name. Remember that.

We just wrote on the outside of the file, Mission Trip. It's your money. So we're just going to help him do whatever. But, hey, if there's more than enough in there, we'll just throw some at the house. You can monitor it as you go along and not let it get out of control. If it's a little short, you can add to it. If it's a a little over you can skim off of it throw it at the house throw it at the house throw it at the house but you're just earmarking it you're just giving it a name an intentional name and that way you don't have this vague mutual fund sitting over there and

you forgot what it is you just right across the top of it that that's what it's for. Alexander is with us in Philadelphia. Hi, Alexander. How are you? Hey, Dave. How are you? Better than I deserve. What's up? A question for you. So my wife and I have one child, and we're in the process. We're actively trying to have another in the next year. Wonderful. Yeah, thank you. So the plan would be once the baby is born, my wife would stay home for a year or two, not work, and then potentially go back to work after that. So in terms of the debt we have left, we just paid off our car yesterday. Great.

Which is a great thing, yeah. So we're debt-free except our house and our student loans. We have $49,000 in student loans. And between the two of us right now, we're pulling in a pretty good income. We're at $176,000 annually. What does she make? She makes $105,000. Oh, okay.

So that's going to be a hit. You best get with it and get this. Can you live on your income if she comes home, if there was no student loan? Yes. Okay. Then let's get rid of the student loan and get ready for her to come home and live on your income if she comes home, if there was no student loan? Yes. Okay. Then let's get rid of the student loan and get ready for her to come home and live on your income. And should we hold back more of a reserve? No.

In terms of? No. Okay. Because we're going to live on your income. Just get it done and live on it. Yep. And, you know, first thing is get the student loan done. The next thing is stay with your baby steps.

Get your emergency fund done. Right. But if you can't live on your income and you're going to burn through savings as a result of her coming home, we've got to rethink how we're doing this. Right, right. I don't want to build up a savings that I plan to subsidize my lifestyle with. Right. I want to cut my lifestyle down to fit my game plan.

Understood. That makes sense. And see, the good news is once you start thinking about it that way, start living on your income now, and that frees up all of her income to accomplish a whole bunch of goals before baby comes. Right. Like knock that student loan debt out, finish the emergency fund,

that kind of stuff. And the math works beautifully here because she makes bank. So both of you are doing real well. So well done. Well done. Very cool. Thanks for joining us. Open phones at 888-825-5225.

You jump in. We'll talk about your life, your money. Paula follows me on Twitter, at Dave Ramsey. Is it smart for 20-somethings to buy a house? Sure. Smart for anybody to buy a house. If you're going to stay in the location for a while, two years or more, and if you're out of debt and you have your emergency fund in place

and you have a down payment. So if you're in your 20s and you're debt-free and you're going to stay in the location a while and you have your emergency fund in place plus a down payment. You're ready to buy a house. There's no thing that says you shouldn't buy a house in your 20s. What you shouldn't do is buy a house if you're a broke person. When broke people buy houses, it makes them broker.

That's why they call them mortgage brokers. Broker and broker and broker you buy something you can't afford that house is a curse it is not a blessing and so running off and buying a house when you're broke thinking that's going to make you rich is is the biggest stupid oxymoron that this culture has ever sold a bill of goods to people everybody needs to buy a house everybody needs to buy a house no they don't broke people shouldn't buy a house. Everybody needs to buy a house. No, they don't. Broke people shouldn't buy a house. It's not good for your finances. Now, here's the trick. I happen to believe everybody can choose over a period of time to no longer be broke people.

And so I'm saying, while you're broke people, don't buy a house. But stop being broke people. Do the stuff we talk about here. And then go get you a house. Whether you're in your 20s, 30s, 40s, 50s, 60s, I don't care. That's the thing, though. But no, you don't need to go buy a house when you have to buy an extra bedroom for Sally May because you haven't cleaned up your dadgum student loans.

No, you don't do that. This is the Dave Ramsey Show. Why in the world would you trust some random guy in a cube when getting your mortgage? Do you really think he cares about your long-term money goals? Well, he doesn't. Those companies care about getting you into whatever home loan program they're pushing that week. When it comes to ordering a cheeseburger, the meal deal works fine. But let's get real, people. We're talking about the largest investment you'll probably ever make, so don't be naive and trust an order taker who pressures you into a pre-packaged loan. My friends at Churchill Mortgage have been helping my listeners for over 25 years.

Call Churchill Mortgage and get custom solutions from an expert within 10 minutes. It's simple. They'll shoot straight with you and quickly show you the real way to save money. Call 888-LOAN-200. That's 888-LOAN-200 or visit churchillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender 761 Old Hickory Boulevard. Redwood, Tennessee 37027. Thanks for joining us, America. Rebecca is with us in Springfield, Missouri.

Hey, Rebecca, how are you? Hey, Dave. An honor to talk to you. You too. What's up? My husband and I, we just finished SPU. We're on baby step two. And for the last five years, we have been building our home paycheck to paycheck. And it's not 100% completed yet. We had to borrow some

money on it to kind of get things rolling a little bit. But we got an offer to do a caretaking position. The guy pays us $400 a month to take care of his vacation home in the same town we live. Do we sell our home or do we keep it and continue making payments on it? It's not completed? Well, we're at the point it needs paint and flooring. And you're living in it? No, no. Well, we were living in a mobile home, but then we got this offer to live in this house basically for free,

and he pays us to live here and take care of the rest of the house. I got that part. Okay, so you've never lived in this other house? No. Okay. It's going to be a little tough to sell it in the condition it's in. Yeah. Like they can't get financing on it.

Right. So you're going to take a whipping. What will it take money-wise to finish it? Well, I've never had a professional answer on that, but probably about $8,000 to $10,000. Yeah. And what is your household income? Well, my husband, he works 40 hours a week. What's your household income? Well, my husband, he works 40 hours a week.

What's your household income? Probably $37,000 a year. Okay, so your husband's the only one working. Well, we have a business that I've been running. But it doesn't make money. His income is about $27,000, and the business makes about $15,000 yearly. Okay. And then doing this caretaking position, we'll be making about $4,800 cash, but we get housing for free.

Yeah, I got that part. Until he decides he doesn't want you to caretake anymore, and then you don't have housing for free anymore. That's right. So, I mean, he could walk in tomorrow and fire you. Pretty much. I changed my mind, and then you have a housing issue again. Right.

Okay. So you have any idea what the house you have sort of built would bring as it is? Well, we had an appraisal, and if it were completed, it would be about $160,000. It's not completed. So probably $150,000, $145,000? No, no. Not if it's not completed, it won't. No.

Because it's a further discount than the cost it takes to complete it. It's a lot further discount because basically the typical consumer cannot buy this house. Okay. Because they don't have any money and they're trying to get a mortgage and they can't get a mortgage on this house. And so that limits your selling pool to investors, and they're going to discount that a lot deeper than that. If you get $100,000 out of this, you'd be flying, I'm thinking. So how much have you borrowed against it so far?

The house itself, we owe $30,000, but there's some property attached to it. So altogether, it's $100,000. You owe $100,000 against the house and the property? Yes. Which would bring $160,000 if it were fixed, if you sold the property as well? Yes. Okay. Yeah, I would look at trying to pick up the other $10,000

in an additional loan and get this house finished and let's get it sold as soon as possible. And then just continue saving money until we... Yeah. Yeah, well, you'll have, you know, you should have some equity in your pocket at that point. I mean, not a ton, but you're going to get a little money out of it.

So, you know, this hasn't worked out for you. You realize that, right? Yeah. You've got way too many hours in this house and really didn't get much out of it when all the smoke clears here. You'll get a little bit, but it's not worked out very good. So, you know, you're going to have to reset that.

And then the second thing I'm going to tell you is you guys need to look at your incomes because your household income has you very, very low income. And so I want to think about careers careers what can we do to get our income up long term and i want to think about some part-time jobs in the meantime but um yeah i would get that house finished up um saving scratching clawing painting and you know if you borrow three thousand bucks or something that's fine but let's get let's turn around get it sold as fast as possible. Now, if the land is such that you can sell off a piece of the land without selling the house in order to have the money to finish the house, that's what I would do first.

Sell an acre off the corner, use that money to finish the house, then get the house sold. And that way there's no more debt involved. Olivia is with us in Lexington. Hi, Olivia. How are good dave how are you better than i deserve what's up um i just have a question um i have a significant amount of debt and um i'm wanting to pay that off very badly um but i'm also in recovery for um two addictions and part of that is going to therapy. So I use your regular income planning sheet to budget, and if I put therapy at the end, it's most likely not going to get paid. And so I'm kind of scared to quit that.

I'm not really sure where to put it in the budget or how big of a priority to make it. How long have you been clean? 75 days good for you well done what is it um sex addiction and an eating disorder okay all right well no i'm not going to put therapy on hold right now this is something you need you need some a counselor to walk with you as you finish this life transformation and that that is essential to you having a life. Would you agree with that statement? Yes. Now, what I would do is this.

Number one, it's not a permanent situation. The therapy is not permanent. It's not going to be there the rest of your life. Fifty years from now, you're not going to still be going to that therapist, okay? I hope. And then otherwise, therapist is not very good but uh so at some point you'll you'll pull back from that and the second thing will happen is is that as you continue to address your income and your outgo you're going to find ways to make more

income and as you have more emotional healing you're going to feel more energized to make more income and so if this month you don't pay any extra on the debt but you pay your therapy good if next month the same thing happens okay but by this time next year we ought to be making some more money right let's do something let's kick our life in gear and let's start to clean up the debt mess, too. But for today, 75 whole days you've been clean. That's a great start. Right. But it's not like you told me you've been clean for two years.

By the time you're clean for two years, we ought to be having a different conversation about the money. Would that make sense to you? Yes. Okay. So let's get you healed, and then let's heal your money. Okay. And it's not going to be suddenly like a switch flips, and you go, okay, I'm okay. Now I've got to do the money. No, it's not like all or nothing.

It's going to be gradual. It'll be incremental. You'll feel better. You know, when you're 90 days or you're four months, you ought to feel different than you feel right now, and you ought to be able to do more and make more and save more and cut more, and you'll have more focus on the money because you'll be more healed and have to spend less of your emotional energy just coming through this. Right now, you're game on just getting through this. Is that right?

Yes. Okay. Well, I want you to finish turning the corner. You've turned the corner. I want you to finish turning the corner, and let's go on out. And then as you make incremental progress, move more and more of the money from your new income and your increased income to the debt side. But for today, we want to take care of Olivia. You need to be taken care of,

and you're doing a good job taking care of yourself. Proud of you. This is The Dave Ramsey Show. Did you know that if you combine the data breaches that have occurred in the past 12 months, almost every American has had their personal info compromised or hacked. Over 50% of our listeners and viewers tell us that they or someone in their family has been a victim. And 70% of those folks have had it happen more than once. See, this is unbelievable. Once thieves get your info, the risk never goes away, and they can use it whenever and however they choose. It truly has become an issue of not if, but when.

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That's Zander.com or 800-356-4282. In the lobby of Ramsey Solutions, Jeff from Washington, D.C. dropped by. Jeff, how are you? I'm doing great, Dave. How are you? Better than I deserve. How can I help you today, sir? So in the past few weeks, I've been thinking about my personal whys, my personal professional whys. And I'm also in the process of building a defense contractor and building up a business unit within that.

My question is, are those same personal professional wise able to be forklifted over to business wise? Is that a good way to make a foundation for business mission statement? Yes. Directly or indirectly, your business, your career mission statement is a subset of you. Right? Okay. And so you've got a personal reason for living.

A why. What is it? What's my nobility? What calls me to nobility, right? What am I doing this for? Ultimately, and we know it's not just a pile of money, okay? The reason we pile up money is what, you know, and what are we going to do with it? What is it we're trying to accomplish?

That's your personal thing. And then a subset of that is your why in the different areas of your life, the reason for your mission statement. So, yeah, you'd have a personal mission statement, so to speak, that attaches to who you are, and then your career, your marriage, your parenting, your physical activity, your intellectual growth, your spiritual growth are all subsets of that then. And so you create a holistic look at things but no they're not compartmentalized or departmentalized like you don't count at work thing you know no it definitely forklifts uh over uh in other words my personal drive is underneath of this one this organization's mission statement and why's and reasons for doing things you know um and so yeah it's a neat question i don't know never anybody asked that but that's that's my view on

it um and of course my opinion is always worth what you pay for it but uh it just seems to me if you had a business reason for being that was different than your personal reason for being or was not somehow connected it would be incongruent really does that make sense absolutely i mean it would be at cross purposes with each other if they weren't somehow running congruent or parallel or subset or something but in my the way i visualize it the easiest for me is subset does that make sense it does thank you very much thanks for stopping by brother good to meet you open phones at 888-825-5225 if you want to talk about career stuff and setting your passion and setting your why and that kind of thing the best guy on the

planet doing that right now is a guy named ken coleman he's one of our Ramsey personalities, has his own show on Sirius XM every day. And you can call that show, talk to him, tune in. It's part of the Ramsey Solutions Network on Sirius XM radio. It's also a podcast, too. So look it up, The Ken Coleman Show. And you can learn a lot more about that kind of stuff. Open phones at 888-825-5225. Brian is with us in Pittsburgh. Hey, Brian, how are you? I'm doing great, Dave. Thanks so much for being there today. I appreciate it. Honored. How can I help, sir? Well, two years ago, my

family was there in your lobby, and we did a debt-free screen. And since then, I feel like we've really been blessed. You know, career paths have opened up for us. Our income has doubled since then. We've had a lot of really positive spiritual directions that have opened up to us. And those things that we really thought it was sort of, God was opening things up because we were starting to do things right. And really what I see now is that he was preparing us for what was about to come, which is that we have three boys. Our youngest is 10 months, and our youngest has Down syndrome.

And so right now, we're actually coordinating the Legacy Journey class at our church, and we're just getting to the part where we're working on our wills. Good. And so because we have the special needs issue, we involved our attorney in getting our wills together. Good. And through that conversation, we've been discussing a special needs trust and what role that has to play in planning for our baby's future. Yeah, you're sure. Sure.

Originally, it kind of had that chalked up in my mind is that that special needs stress kind of functions the same way that the other boys have a college fund in Baby Step 5. And that we would, you know, we'd be saving for all three of them, but the one would have some special conditions and special roles because, of course, you know, his future is far too early to know fully what his needs are. We've been blessed that he's healthy, he's developing well. You know, there's the sky's the limit for him, just like anyone. And we don't have to, you know, it's far too early to know if he will ever have any limitations.

But now as I'm getting into it, and we haven't signed anything quite yet, but as we're coming down to the wire, one of the things that I'm uncomfortable with is that, you know, if I start investing any money or funding the trust, I lose control of that to the trustee that we've named. And while I trust the trustee and I believe it to go with our wishes, it makes me uncomfortable. No, you don't need a special needs trust unless both of you die. Right. The special needs trust does not need to be funded prior to your death. Okay.

It's funded from your wealth or your life insurance until you've got wealth. Okay. And I wouldn't even have it formed except upon both deaths, both of you dying. Okay. As long as one of you is alive as long as one of you is alive to manage your assets one of the things you're going to do is care for this child absolutely out of those assets now the when the trust is needed is if both of you die it gives the trustee knee the the direction on how to handle the assets and disperse them to take care of this

child's needs and um and what that needs to be is a a big hairy term life insurance policy that draw that is the beneficiary of it is that special needs trust or a portion of the policy you know 30 or 20 of the policy in the beneficiary line goes to the special needs trust in the event that both of you die kind of a thing. The primary beneficiary is your wife, okay? But then past that, the secondary beneficiary is some portion would go, while you've got minor children, into a family trust to take care of the minor children, your oldest two, until they get them through college. The other portion would go into the special needs trust to perpetually care for this other child throughout life, not just through college. And so it's a larger amount needed to do that.

And then what happens is, let's say we fast forward 20 years, and this child is 20 years old, and you've got a million and a half dollars in mutual funds. Okay? Your other children are grown and gone or close 20 years from now, right? That's the dream. That's the dream. Yeah, we're kicking them out. So they're gone.

That's the legacy, baby. But side of that, then what we've got is we've got, you know, some portion of my million and a half dollars in my example is going to be parked in the special needs trust in the event both you and your wife were to pass. The rest of it would go to your more traditional heirs directly. Sure. But, you know, we put a million dollars in the youngest child's special needs trust at 20 years old because he's going to need care. And that's $80,000 a year it'll produce, and that'll take care of him. And maybe one of his brothers is the trustee by then, you know?

Would you go ahead, like we're doing right now, would you form the trust as a legal entity now and then leave it unfunded, or would you basically make it a clause in the will? No, I would just make it a clause in the will to be formed upon both of your deaths. Okay. Because you don't need it now. You don't need to be filing tax returns for the next 25 years on this thing. You don't need to screw with it all the time. You don't need to go to all the legal expense to form the trust.

So let me give you another example, okay? Special needs trust is a special conditional version of just taking care of minor children right and the difference is it may be perpetual okay but you know my children grew up and moved out and are on their own so my need for a trust to cover my minor children in uh in uh the event of both of our deaths expired. Had I formed the trust for my minor children at that time, the need for that expired, and I would have done it for nothing. Now, in this case, it's not going to be for nothing.

You're going to need a trust upon both your deaths, but I wouldn't be doing it until both of you die. I wouldn't mess with it. Just have it formed upon death in the will. That's what I would do. You can do whatever you want, but that's how we view it. both of you die. I wouldn't mess with it. Just have it formed upon death in the will. That's what I would do. You can do whatever you want, but that's how we view it. Thanks for joining us, America. This is the Dave Ramsey Show.

We're glad you're here. Open phones at 888-825-5225. Mike is in Denver. Hey, Mike, how are you? Good. How are you, Dave? Better than I deserve. What's up?

Awesome. So I'm in a real tricky situation. Well, it's tricky to me. So I'm 37. My wife's 35. She's a professional. I'm self-employed. I have two daughters, one on the way, and we live in a 1,900-square-foot home that has about, I believe, $320,000 in equity. We were considering buying a new home, big enough for all five of us. The market here in Colorado is outrageous.

Pricing is really sky high. So what I'm considering doing is pulling equity out of the home and putting on a addition. As I am a project, you know, I do projects that are to this extent, so I would be saving quite a bit on contractor fees. So I guess my question is, I'm not sure if you've dealt with anything like this before, I'm sure, or what you recommend as far as putting a family through this type of a project, ending up with a 6,000-square-foot home, owing only $420,000 at the end, and also the value of the home at that time would be somewhere in the upper $900 to $1 million.

What is the typical home sell for within a two- or three three block area of your house? About the typical homes, and there's not really a typical home in our area. It's all over the place because it's horse property. There's, you know, 1,500 square foot homes, and then there's also $3 million homes across the street. So a comp for my home is about $410, $420. Yeah, but that wasn't what I was asking. I was trying to determine if you're trying to overbuild the neighborhood. It doesn't sound like it.

No. Because it's an area that's got this wide, diverse price range. Very diverse. Because I don't want you to build a $900,000 home on a $600,000 street. Right. Because you couldn't get out of it. We do have a $.3 million dollar home just right around the corner yeah and then there's an 870 caddy corner to where i am at

yeah when's the baby um baby is doing at end of january okay well i sure wouldn't start it before then no no we're um have you got i'm playing have you got some plans drawn yet? Yeah, I've been working on that with an architect. We're, you know, buttoning down what we want to do, but we're just, you know, I've never spoken with any expert about this, and I'm not sure if this is probably the way to go. Well, the big thing, you know, there's two or three factors. One is you don't want to overbuild the neighborhood. We've addressed that.

Two is you want to see can your family handle, you know, construction noise for whatever time it takes you to put this thing up. It shouldn't be a 90-day project maybe. So two or three months, can they put up with that? Well, they ought to be able to if everybody just says that's what we're going to do because moving is more disruptive than that right and this project that we're considering doing just because of the the industry that i'm in we're thinking of you know it's more like a six-month project so i mean we're considering adding almost 4 000 square feet to the home oh wow like you're

just almost rebuilding another home yeah two basically tripling the size of the home. Oh, wow. You're just almost rebuilding another home. Yeah, to basically tripling the size of the home now. So you're going to end up with a new mortgage when you're done then? A bigger mortgage of maybe, I think we're going to end up somewhere in the $420,000, $430,000.

What's your household income? Household income, my wife makes about $55,000 to $6,000 a month, and I'm self-employed, so it varies. It can go from $5,000 to $10,000. What did you make last year? Last year, I was somewhere in the $220,000 area. Okay.

Well, you can afford a mortgage on a 15-year fixed when you're done, but basically what you're going to be doing here is getting a construction loan, and then you're going to reset the construction loan in a permanent mortgage because it's almost like you're building a house. Correct. And when you're done, you need a regular 15-year fixed-rate mortgage where the payment is no more than a fourth of your take-home pay. And if that's where you're going to end up and you've got a process to get there,

then yes, I would do that. I don't see any problem with it. It's just a massive project, and you're living next door to it. Yeah, that probably is going to take six months. Most of the time when I think of an addition, I don't think of a 4,000-square-foot addition to a 1,900-square-foot house. Ginger is with us in Texarkana. Hi, Ginger.

How are you? I'm doing great. Good. How can I help? How are you? What I want to know is my husband and I, we have worked constantly for quite a while, and we have finally paid off our mortgages, all of our cars. Everything we own is paid for.

Great. We have so much. We're still working, but we have been drawing our social security. Now for he, a year, and me, almost a full year, come next month. And up until now, we have been putting, well, no, last month, we have been putting all of that into savings. The last three months, two months, I guess you'd say, we have been putting our income that we work at in savings and living off our Social Security. Okay. My question to you is, with our retirement 401s, our savings that we have,

and what our total expenses would be for a whole year with our income on Social Security. What would you think of us retiring at the end of next year? How old are you? Huh? How old are you? I'm 66 and he is 67. Okay. And how much do you have in your 401Ks and your nest eggs?

Okay. In the 401, we jointly have $120,000. In our next eggs, we have right at another $100,000. Mm-hmm. Okay. That's $220,000. Yes, sir. And just round numbers, I mean, if you made 10% on it, that would be $22,000 a year.

Okay. I had never figured that out you know and so if you invest if you invested and it did that if you invested and it did that and then you add your social security to that um i mean you're not going to be living lavishly uh i mean you you have a few thousand dollars a month to live on but i, I mean, you've got $1,500, $1,800 a month coming off this money is what we're talking about here, plus your Social Security. And if you can live on those numbers, then you can retire if you want to. But that's not going to be an easy – I mean, it's not going to be retiring in luxury,

but you should have fairly low expenses because everything's paid off. So that's good. I'd love for you to have another $100,000 in there anyway, but if you can work a little bit more and knock that out, that might not be a bad thing. But if you guys are just, you know, you're done and you want to live on that, that's fine. But I would not set up a thing where I'm draining down that 220 systematically just to retire now because there's an end to that game called hunger, and I don't want to get there. You don't want to destroy this goose, so you just live off the golden eggs only.

So whatever, you know, you sit down with your investment professional. If you don't have one, sit down with one of our SmartVestor pros and talk about investing this $220,000 in a way that creates an income that you can live off of that plus your Social Security. And if you can do that, then you're in a position to do it. But again, it's not going to be a luxurious retirement. You're not traveling the world and that kind of stuff on this income. a luxurious retirement. You're not traveling the world and that kind of stuff on this income. But I think you can do it. It's just a matter of are you willing to live that frugally and put your budget together and say,

these are the numbers and I'm going to live on less than this and that's the only way we can retire. And then, again, sit down with a SmartVestor Pro. Click SmartVestor atdaveramzi.com. It'll list the people in your area we recommend. And one of them will help you try to dial this in. But that's how I would look at it. Good question.

Thank you for joining us. That puts this hour of the Dave Ramsey Show on the books. Our thanks to James Childs, our producer. Blake Thompson, our senior executive producer. And Kelly Daniel, our associate producer and phone screener. I am Dave Ramsey, your host. And we'll be back. producer, Blake Thompson, our senior executive producer, and Kelly Daniel, our associate producer and phone screener. I am Dave Ramsey, your host, and we'll be back. Hey, guys, this is James Childs, producer of The Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country.

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