The Ramsey Show - App - Should I Access My Retirement Fund Now or Wait? (Hour 3)

Episode Date: November 25, 2020

Retirement, Insurance, Debt Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/31ricKt  Tools to get you started:  Debt Calculator: https://bit.ly/2QIoSPV Insurance Coverage Checkup:��https://bit.ly/2BrqEuo Complete Guide to Budgeting: https://bit.ly/2QEyonc Check out more Ramsey Network podcasts: https://bit.ly/2JgzaQR

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where cash is king, debt is dumb, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. Happy Thanksgiving to you. We're glad you're here. Welcome, America. The phone number here if you want to talk about your life and your money is 888-825-5225. This is the eve of Thanksgiving, which is the eve of Black Friday, which was traditionally the day that Americans destroyed their budgets and went and bought a bunch of crap that they

couldn't afford with money that they didn't have to impress people that they don't even really like. I wonder how much 2020 has changed that. Now that the big bad wolf of pandemic has huffed and he's puffed and he blew some houses down. Actually, the pandemic didn't, but the freak out and shutdown of the whole freaking economy did. Wonder if anybody's thought about.

I think I'm going to learn my lesson this time. I think I'm going to build a brick house instead of a straw house. I'm going to be the third pig. Not the first two that get eaten by the wolf. I think when life happens, and we've had more than our share of life happen this year, but I think next time life happens, I'm going to be in the brick house when the big bad wolf, whatever his name is that year, whether he's 2008, 9-1-1, Black Monday in 1987, or the real estate bubble burst. I don't care.

Student loan epic failure program. I don't know. What is the name of the big bad wolf that blew your house down? And what's the name of the next one that's going to come along are you going to learn your lesson this year and go I'm going to get out of debt I'm going to have an emergency fund

I'm going to be on a plan I'm going to build some wealth so that I am much more insulated from the huffing and the puffing be the third pig be ready open phones at 888-825-5225

Steve is with us Steve is in Phoenix, Arizona Hi Steve, how are you? Hi Dave, thank you for taking my call it's an honor to speak with you sir you too sir, how can I help? well, I have a retirement account. I'm 57 and 57 and a half, and I have a retirement account that has approximately $155,000 into it. I have two options. I can either take out that money and invest it, or I can leave it into the fund,

and then when I turn 62, which would be four years and three months, I will, best calculation is get about $1,200 a month for the rest of my life. So this is a pinch. Well, it turns into an annuity because I didn't put my 20 years in. It turns into an annuity at 62. So there's no increases, no death benefit or anything like that. It's just whatever that happens to be, which is the best calculation, $1,200 a month. So I'm trying to figure out what my best option is. And it's also...

You're better off to roll it to a traditional IRA, put it in four types of mutual funds, growth, growth and income, aggressive growth, and international that have long track records. Here's why. If you do that, and if you're making, say, 10% on the money, as an example, the stock market has averaged over 11% since its inception. But let's just say you're only making 10. Your money would double every seven years. So when you're 64, it'd be 300. And when you're 70, it'll be $600,000. If you die the other way, your family gets nothing.

If you die this way, whatever's in the account, they get. So this is a $300,000 or a $600,000 swing in this discussion you and I are having. In addition to that, if you let the money grow and don't touch it and you live off of it, just the income that it's creating, well, in that case, you wouldn't be letting it grow. But when do you plan to quit working? Probably not for another five years. Okay. So certainly during that time the money

is going to grow right let's just call that seven years for the fun of it so that we can say the money's doubled and it's 300 okay if it's 300 and it makes 10 that's 30 000 a year that's 2500 a month not 1200 and what's your thoughts about taking that 150 000 or so and buying an investment property and living off or you know having some rental income pretty clear you can run the numbers on it uh typically if you buy a really good buy on a piece of rental property and you know how to manage it well and carefully and you know how to properly put tenants in and they don't screw you over, you can make more on it than you would make on mutual funds. But you're not going to get the $150,000 out in this case without paying taxes on it. And so the $150,000 is not $150,000.

$40,000 of it would be taxed. Yeah, it would be $100,000 left. And so now you've got to make that money up to even break even with the scenario I'm laying out. I wouldn't do that. Okay. Because I don't think you – if you had $150 to invest in mutual funds or you had $150 to invest in real estate, the answer is you'll make more on real estate, but it's three or four times the hassle. Okay?

So you might want to do it if you've got a real estate bug. I've got a real estate bug. I own a bunch of real estate, but also got a bunch of mutual funds. Now, if you had that 150 and you have to compare that invested into mutual funds, which is what we're talking about with a direct transfer rollover into an IRA with no taxes coming out, or you've got a hundred to invest in real estate. Well, now the mutual funds will beat the real estate because you've got more invested because you didn got more invested. Because you didn't give up the tax money that way.

You follow me? Right. Yeah. So that's what I'm going to do. I would get with a SmartVestor Pro, click DaveRamsey.com and click SmartVestor Pro there. And that will give you a drop-down list of the people that we recommend for mutual fund investing in your area, and that's what I would do with this. If you want to do some real estate deals, let's do that over and above

with some of the other income you earn in the next few years as you head towards retirement, and that'd be my game plan. Hey, thanks for the call, man. We appreciate you. Open phones at 888-825-5225. Budgeting does not have to suck. You just need a budgeting tool that was made with you in mind. That's every dollar. The world-class budgeting tool inside Ramsey Plus.

It gives you custom budget reports on your income and spending so you can see how your habits line up with your goals. And with BankSync, your transactions stream right into the budget. No more missed expenses, no more overdraft fees. Listen, when your budgeting tool is this personalized and this easy, you're set up to win with budgeting. You get all of this with a free trial of Ramsey Plus. To do that, text the word BEGIN to 33789.

Text BEGIN to 33789. Text BEGIN to 33789. This is the Dave Ramsey Show. I get the privilege every day to talk to smart, creative entrepreneurs doing great things for our economy. GRIP6 is no exception. BJ and the great team at GRIP6 know how to truly create smart products that are unique and makes everyone's life a little easier. That's why I'm so excited to announce to you that GRIP6 is expanding their innovative product line. You heard me. Along with their no holes and no flap and no bulk belt buckles, they are adding an aluminum wallet engineered to be the quickest and most intuitive way to access your cards and everyday wear Merino wool socks. The socks come in ankles and crew with wool sourced right here in the USA.

And all of Grip6 products are guaranteed for life. Folks, Grip6 is rebuilding and modernizing American manufacturing with products sourced in the U.S. Give these products as gifts this season. To get the Dave Ramsey special, visit GRIP6.com. Thank you for joining us, America. Open phones at 888-825-5225. Rosie on Facebook says, I'm a 23-year-old living at home with my 45-year-old parents and five siblings. What would be the best way for us to get life insurance?

There isn't an us. You're 23. You don't buy life insurance for your parents or your siblings. Your parents need life insurance to take care of your five siblings if something happened to your parents. And they would do that at Zander Insurance and shop among a bazillion different companies and get the best price on some term insurance. We recommend 15- to 20-year level term insurance that's 10- to 12-times your income. But at 23 years old, these people are not your responsibility. The only responsibility you have is to get yourself on your feet and get out of the house and get on with your adult life. That's the only responsibility you've got.

But we don't buy life insurance in this situation. They do. Your parents. Again, open phones at 888-825-5225. Maureen is with us in Los Angeles. Hi, Maureen. Welcome to the Dave Ramsey Show. Happy Thanksgiving.

Hi, Dave. Thank you for taking my Show. Happy Thanksgiving. Hi, Dave. Thank you for taking my call. Happy Thanksgiving. Sure. What's up? So, Richard, my husband and I just want to know your thoughts on paying mortgage and pool or invest instead. Mm-hmm.

Okay. We teach a process called the baby steps. Have you ever heard of that hello yes you have heard of that okay yes and so once you're out of debt everything but the house and once you have your emergency fund in place that's when your question comes into play we call that baby step four and baby step four is you put 15% of your household income into investing in retirement. No more, no less. Anything above that that you can squeeze out of the budget goes to five and six, which is kids college and paying down the house.

The typical person following that plan over the years of us doing that is paying off the house in around seven or eight years while seriously investing at 15% of their income into retirement. I don't suggest putting 30% of your income into investments and not paying off the house. I want to get the house paid off, but I want you to get started with a good, healthy dose of retirement savings. Does that make sense? Yes, we did all that. We already have the 15% on the 401. Good. And we have the kids 5 to 9.

Then everything else goes on the mortgage. Mortgage. Everything else. And the reason for that is that what we teach is what we've determined from 30 years of doing this to be the shortest distance between where you are and being wealthy. Okay? And as we studied 10,000 millionaires, and the largest study on millionaires ever done, what we determined was the primary places that millionaires, the first

$1 to $5 million in net worth that people get. Now, beyond five, it's different. But the first one to five is a paid-for house and a healthy retirement savings. Both. It's not a paid-for house, and I wish I'd saved for retirement. It's not I put it all in retirement and didn't pay off my house. The vast majority of the millionaires, 80 plus percent of them, had a paid for house that was a substantial part of their net worth and usually

about a third of their net worth. A normal scenario might have been a 47-year-old with a paid for $500,000 house and about a million in their 401k. And that's a million and a half dollar net worth. and those kinds of ratios are what we found over and over and over again but getting that house paid off then accelerates the wealth building because that house payment's a monster and when you can get that dude knocked out meanwhile you've built a gotten a good start on a real healthy nest egg over here on the left, then that's the deal. So if you want to think about it, that's what I would do. If I woke up in your shoes, that's how I would do it.

And that's why we teach this stuff. It's not just like we made up a system one day in a closet and hoped it worked. This all comes from data and from 30 years of experience of saying, how do you get from where you are, first, to peace, and then secondly, to wealth, from a legacy standpoint to change your family tree, to change your life. Very good question. Chris is in Lafayette, Indiana. Hi, Chris.

Welcome to the Dave Ramsey Show. Is it Lafayette or Lafayette when it's Indiana? Lafayette. Okay. Lafayette it is. How can I it's Indiana? Lafayette. Okay. Lafayette it is. How can I help? Thank you for taking my call. Sure.

So my wife and I will be done with Baby Step 3 next month, and we're having a baby, our first child, next April. Yay! Yeah. Good timing. I'm trying to get the crash course on, I'm already thinking 529 plan and life insurance. So I just wanted to call and get your thoughts on what to do financially for the baby. Sounds like you're on your way, dude.

Yeah, go ahead and get in touch with Zander Insurance. Just make sure you've got good life insurance, 10 to 12 times your income in place. How old are you? 26. Are you healthy? Do you smoke? good life insurance, 10 to 12 times your income in place. How old are you? 26. Are you healthy? Do you smoke? Don't smoke. No, we're healthy.

Great. Then it's not going to be very expensive. Smokers are about double, and obesity is about double, okay, on life insurance, just to give you guys out there a clue. And so that's what you're looking at. And so both are expensive, in other words, not only in health cost, but also the life insurance part of it. So go ahead and get your 10 to 12 times the income. At your age, I'd probably go and get 12. You don't have that much.

I mean, it's very inexpensive at your age to buy this. So Zander Insurance for that. Make sure you get your wills in place. Jump on MamaBearLegalForms.com. Get that done. Get your wills in place. Jump on mamabearlegalforms.com. Get that done. Get your wills in place. Get your 529 ready to go. You cannot open a 529 for a child until you have a social security number on them, which you can get within a month or so. Well, you used to get it

within a month or so of their birth. Right now, nobody in the government's working much, so it's not easy to get stuff out of them. But like tax refunds and other things, right? Hard to get stuff out of the government. So anyway, that's the three things I'd jump on immediately to kind of give you that super dad badge before Junior gets here. Because if you've got life insurance, you've got a will, you've got a budget, you're out of debt, you have your emergency fund in place, you're ready to open up the 529. You've got your life insurance in place. I mean, you really are doing the right things here, man. You're being a big-time dad.

Well done. You're playing this the way it's supposed to be played. I love that. So proud of you, man. Way to go. Open phones at 888-825-5225. Jacob is on Twitter. Is it possible to have a credit score of zero and be debt free?

That'd be the only way that you would have a credit score of zero. If you have debt and you're paying payments, you have a credit score. Your credit score is 100% based on your interaction with debt. How much debt you have, the type of debt you have, whether you paid it on time. These are the elements that enter into the FICO algorithm if you have zero debt and have no accounts open of any kind no outstanding bad debt of any kind about six months to nine months later your score is going to be indeterminable which is the equivalent of zero mine has been that way for 30 years I have not had a credit score in 30 years because i haven't borrowed any money i don't have any accounts open my name anywhere and the credit score is 100

based on debt it's not a i'm winning score with money so when some dude says i have an 800 credit score and i'm at a party i just go i'm sorry that's awful that cost you probably 100 grand in interest to get that because you've been playing footsie and kissy face with the bank a lot. And man, you got screwed. You worshiped at the wrong altar. The great FICO is my provider. He brings me all good things. Oh, FICO, we worship you. We bring you offerings of interest. And then that's how you get a FICO score. So, yeah.

Now, dude, the only way you get a credit score is to not have any debt. You can either start out with no debt and never get debt. So if you're one of these 19-year-old YouTubers and you don't borrow any money ever yet and you still don't borrow money, you never borrow money ever anyway in any kind, you will never have a credit score. That's how it works. If you never have any debt but a house, kind, you will never have a credit score. That's how it works. If you never have any debt but a house, now you're going to have a credit score because the house reports to the credit bureau. That's how this works. So when you have a credit score or when

you have debt, you will have a credit score. Good, bad, ugly of some kind. But we don't worship at the altar of the great FICO. It's the biggest scam put on the American public and a bunch of you people believed it. How many of us have believed lies about money that cost us lots of money? I can't even count the ways I have paid stupid tax. This is the Dave Ramsey Show. In the lobby of Ramsey Solutions on the debt-free stage, Kevin and Amy are with us, which can only mean one thing. They're debt-free. Welcome, guys.

Good to have you. Hi, Dave. Happy Thanksgiving Eve. Same to you. How much debt have you guys paid off? $138,000. $138,000. Where do you guys live?

Toledo, Ohio. Oh, fun. Cool. And how long did it take you to do this? Five and a half years. All right. Fun. And what was your range of income during that five and a half years?

95 to 110. Cool. What do you guys do for a living? I'm an operation technician at Hometown Foods. And Amy is? I'm a nurse at UTMC. Okay. Wonderful.

Very cool. Well, good to have you guys. What kind of debt was this $138,000? Everything. Card notes, student loans, medical bills, a personal loan, and of course, the kicker, Kirby vacuum cleaner. Of course. Of course.

You got to finance that. Yes, yes. Okay. And the house? The house? No. Not yet. You haven't got the mortgage yet?

No. Okay. So it's baby step two. Yes. Way to go. So you guys just never met a debt you didn't like. Pretty much. Just took it all on.

Yeah. Yes. The Kirby Vacuum Cleaner. Uh-huh. Man. Two days before Christmas. Oh! There you go.

All right. Good to get rid of that one. That's there you go. All right. Good to get rid of that one. That's like the shame bill, right? Every time you pay it, you feel ashamed. You know, you got to get rid of that one. I've had those, man. They're a pain in the butt. Way to go, guys.

I'm proud of you. Thank you. Great job. What got all this started five and a half years ago? Well, my wife brought to my attention through her cousin. I was off work at the time after having surgery. And she's like, well, this is something maybe we should look at. I said, okay, fine. So as I was off work, I started looking through the FPU online. And I started going through your DVDs. And then she would listen in from time to time, and then we just went from there. Cool.

Okay. So you decided, okay, I think we can do this. Yes. And you sat down and, what, did a budget or what? It took about a week or two to get the budget together. Sometimes it was a little hard to bring her to the table, but she came around, and then as things progressed, things got a lot smoother. Me switching from paper to an excel spreadsheet that really helped me a whole lot because on paper it was just driving me crazy

it's taking me like an hour to get things organized and then once i switched over to the spreadsheet took me all but five minutes yeah and now everybody's on every dollar and it takes a minute and a half yeah yes yeah very cool dude well done you. Well done, you guys. Well done. Okay, you did it. How's it feel? Wonderful. Was it worth it? Absolutely. Will you ever go back? No.

Nope. No way. Been free, now I'm free. Took five and a half freaking years, I'm not going back. Yes. Yeah. Wow, that's a long time to push through. What kept you going?

Once the debt started falling off. Especially like the school loans, because we had a total of 14 school loans. Good Lord. Yes. And then as they started falling off little by little, it just kept us motivated. Yeah. Having something you can draw lines through makes you feel good, right?

Yes. That one's gone. That one's gone. I'm going to get the other one. I'm going to get there. I'm going to get there. because if you can feel traction you can keep going absolutely it's when you don't feel like you're getting anywhere you feel like you're spinning out that everybody quits yeah well done guys very well done so who were your biggest cheerleaders outside the two of you uh some friends of mine uh my parent my mother, her cousin, of course. And some people were skeptical.

They didn't understand what we were doing. So as we were going through, I was letting them know, showing them our progress, and they started getting on board. Oh, wow. So you got some other people in. Yes. Good. Very good.

Well, well done, you guys. Well done. All right. If somebody asks, now that you've been showing some other people, and they say, how do you do that? What's the main keys to getting out of debt? Amy, what do you tell them? I tell them about the Financial Peace University.

Okay. And what did you learn there that you think is the main thing that got you out of debt? That snowball and how to do it. Most people that I've talked to have heard about about it but they just don't know how to get started and then the biggest thing that helped us was your envelope system and our weekly budget well well done you guys so proud of you we got a copy of chris hogan's book for you, Everyday Millionaires. We want that to be the next chapter in your story. Keep going.

Keep going. I want you to be on here on the Millionaire Theme Hour telling us how you did that, okay? Oh, absolutely. All right. That's where we go from here. That's the reason to get out of debt. We don't get out of debt just to get out of debt. We get out of debt so that we can have a better life.

Very well done. Very well done. All right. And you brought the kiddos with you? Yes. What are their names and ages? Kevin and All right. And you brought the kiddos with you? Yes. What are their names and ages? Kevin and Kira. And how old are they?

Kira's 13 and Kevin is 5. All right. Have they been practicing their debt-free screen? A little bit. A little bit. We'll see if they play or not. All right. Kevin and Amy, Kevin and Kira from Toledo, Ohio,

$138,000 paid off in five and a half years making 95 to 110 count it down let's hear a debt-free scream three two one we're debt-free well done you guys very well done that's fabulous congratulations i'm so proud of you guys very cool hiat is with us in san antonio hi hiat how are you i'm doing well dave thank you uh it's an honor to speak to you you too what's up okay so i'm looking for some guidance. Thanks to your teaching, my husband and I paid off our debt in the past 10 months. Good. We paid off the last $2,000 of debt in October. And finally, being debt-free, I was able to quit my job in retail after working there for four years on Saturday. I submitted my resignation.

Wow. Good for you. What are you going to do now? So that's what I was hoping to get a little bit of guidance from you. I'm 36. I started the job as a seasonal, so I was making a1,000, but mostly I was working to bring in low-cost benefits to my family for my husband, I, and our six-year-old. So now with that gone, we have a cost that's about $700 for my husband's insurance. Mm-hmm. And minus the $1, dollars that I was making. So that's not coming. That's not going to be coming in. And also my vehicle died on me on yesterday. So I just sold it. It was paid off. So that was okay. And we use our emergency fund

to pay for the towing and the inspection of the car. And so it finally died and I made $500 on that. Um, so luckily we're okay there. So I don't know, I'm thinking about taking a break to like restore, rejuvenate, but I really don't know which direction to go career wise. And also I'm looking on your guidance as I have $14,000 in my retirement 401K from my employer that I just left that I have no clue what to do with at this point. Okay. Always when you leave, you always take your 401K with you, and that's with a direct transfer rollover into an IRA.

So click SmartVestor at DaveRamsey.com. It'll give you a list of the SmartVestor pros in your area that we recommend for good mutual fund investing in your IRAs, and they'll help you do that rollover. That's a pretty easy thing to do. You won't touch the money. No taxes will be held out of it. It'll go straight into the IRA. Okay, that's what I mean by direct transfer. As far as your career goes, if you can do the budget and live on your husband's income for a little while while you rejuvenate, great. If not, then you're going to have to get with your career decisions here and get some income coming back in as soon as possible. Discovering what that is and what to do with that would be Ken Coleman's specialty. He does a show called The Ken Coleman Show. He's one of the Ramsey personalities,

has a best-selling book called The Proximity Principle that I will give you a copy of. And on his website at KenColeman.com, there's lots of tools on the path to your dream job, and they're free. Go to KenColeman.com and hold on, and Madison will pick up and we'll give you a copy of Ken's book, The Proximity Principle, and that'll help you with going that direction. Sounds like a new phase of your life is ready. Something to be thankful for. Happy Thanksgiving Eve, America.

This is the Dave Ramsey Show. psalm 95 2 let us come into his presence with thanksgiving let us make a joyful noise to him with songs of praise douglas wood said the heart that gives thanks is a happy one, for we cannot feel thankful and unhappy at the same time. That's true. The original Thanksgiving proclamation from President Abraham Lincoln, October 3rd of 1863, is very clear that the holiday of Thanksgiving in America, as proclaimed by the President of the United States at that time, was for us to stop and give thanks to God, not just generally be thankful, but thank you, Lord, for the blessings that you have poured on us that are mind-blowing. It's always good to stop and

say thank you, but I like having a milestone here in the year. We have a gratitude holiday. That's pretty cool. Grateful people are highly attractive people. Grateful people are very seldom depressed. Grateful people are never entitled. They're not angry as much. They're not afraid as much. And the interesting thing is, gratitude is a choice. It's a character quality that you can choose to adopt, like you can choose to adopt integrity. You can choose to adopt generosity. There are actions that come out of integrity,

the character quality. There are actions that come out of the generosity, character quality. There are actions that come out of the character quality of gratitude, gratefulness. And this is a real good time of the year to just stop and take stock, especially on a year like this where we have had so many cuts. We've been sliced and diced and cut up. So much loss. We've lost our, some people have lost their health. Some people have lost relationships because someone didn't wear a mask

or did wear a mask or whatever. Some people have been mean and angry because they were afraid. Some people have had tornadoes. We had a young man at our office telling a story this morning how his home was destroyed by one of the tornadoes in the spring before COVID hit. Some of you have lost everything due to a fire. Some of you have lost everything due to government shutting down the entire economy. Some of you have had a lot of loss.

It's very real. And the weird thing is, in the midst of that, we can all back up and go, hmm, hmm, I got stuff to be grateful for. Why? Because I have the character quality of gratefulness. I'm going to give thanks unto the Lord. I'm going to say, thank you, God. Thank you, God. Open phones at 888-825-5225. Riley is

with us in Odessa, Texas. Hi, Riley. Welcome to the Dave Ramsey Show. Thank you. Actually, I'm calling close to the city of Odessa. I'm calling from Alpine, Texas. Close enough. How can I help? Well, I found out a week ago on the 16th from my employers, I got called into the office, that I am now a victim of identity theft. Somebody used my name and my social to apply for unemployment. employment. So I'm wondering, you know, who's the best person that you know, or the best company that you would recommend for, you know, identity theft so I can get it get everything, you know, fixed. Identity theft protection, the company that we've recommended and by far the best is Zander Insurance. You can go to zanderinsurance.com and find their identity theft section

on their website pretty easily. And the reason they're the best is they assign a caseworker when you have a loss to your situation and that person does all the work to get everything straightened out. Now you have to help, you have to sign affidavits,

you have to provide facts, you'll be on the phone some. But the average person getting their identity stolen loses 600 hours of effort to get their identity cleaned up. It shouldn't cost you any real money, but it also takes a lot of time and hassle to dig into it because it really shouldn't technically affect you because they stole it. I mean, anything they do is a transaction of fraud, and so it can't be counted against you because you didn't do it. But they open up a credit card and run up the charges. You're not responsible. You didn't sign it.

The credit card company has to eat that, but you've got to get with their fraud victim division and deal with it, or in your case, you're dealing with an unemployment thing. Now, once your identity has been stolen and there's active problems in the marketplace like this, it's a little bit like buying homeowner's insurance after the house burned. So, you know, you're not going to get coverage for a preexisting condition kind of thing in most cases. However, you are in luck, my friend, because I have been endorsing Zander's Identity Theft for many years, and occasionally they allow me to give them a case that is already opened. And so I'm going to do that for you,

and we're going to give you free identity theft protection from Zander's Identity Theft, and they'll take the case and they'll run it to ground for you, okay? Okay. If you hold on, Madison will pick up, and she'll get you in touch with zander insurance and take care of this special um uh category that i just put you in uh because normally if you you know if you have a car wreck you can't go buy car insurance on the wreck you just had uh you could you have to buy the car you have to buy their insurance before the car wreck happens. Identity theft is not unlike that.

So that's why everyone needs identity theft in this world, because it's nutty out there. People have lost their dadgum minds. Kevin is with us in St. Louis. Hi, Kevin. Welcome to the Dave Ramsey Show. Hi, Dave. It's a pleasure to speak with you.

Thank you for your service. I want to let you know that I've been listening since 2019 and my parents didn't really teach us about money. We only knew that we had to contribute every winter when my dad didn't work. So I've learned a lot just listening to your broadcast. Cool. My wife and I have been together, married for 20 years coming in May. We have a 15 year old son. We have $131,000 in combined income, $18,000 in debt. And in addition to that, we have the mortgage at $144,000. We pay tuition after my son's scholarship, we pay $7,300 in tuition. I have $171K in my 401K, and I've been with that employer for about eight years. Prior to that, I was in the electrical trade, so I was in the union, and I had a pension, which is at $61,000 right now. Should I roll that over, or should I go back to that program and change my allocations?

Do you have a recommendation for that? I would roll it. If they allow you to lump some of it out, do they? I'm not sure, actually. Here's the thing about a pension. A pension, by regulation, is not allowed to invest except in certain things and so the vast majority of the calculations done for actuarial basis on a pension the way they do all their calculations on what they pay out is based on a seven percent growth rate and you can do better

than that in good mutual funds if you watch what you're doing on top of that of course when you die the pension dies with you unless you've got a survivorship to your wife and then when she dies it's gone so it dies when you die versus if you take this 60 000 and over the years it just grows and doubles and grows and doubles and grows and doubles you end up with half a million dollars in there which is very very possible then in that case uh what you know you die that half million dollars goes to your heirs the you know your 401k you die it goes to your heirs it doesn't they don't keep it but with a pension they keep it and that's how their calculations are all done and so i always suggest you get a pin get rid of a pension and roll it to an ira with a direct transfer rollover if they allow a lump sum distribution some of them

don't allow you to. They need you trapped in there because that helps support the program and support the numbers of everything else that's going on. But if they allow it and you can get out due to the fact that you don't work there anymore, I would definitely do that. Get with a smart investor pro and talk to them about a direct transfer rollover. You can contact the pensioner. They can and see if that is a possibility with a lump sum distribution. Happy Thanksgiving to you, sir.

We appreciate you calling in. Thanks to James Childs, our producer. Madison filling in for Kelly today as the associate producer. I am Dave Ramsey, your host. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. This is James Childs, producer of The Dave Ramsey Show.

On your smart speaker, you can add our skill by saying, Alexa, open the Ramsey Network skill. From there, you can listen to all our shows. Ask Dave money questions like, how do I invest my money? Or what is the debt snowball? Find out more at DaveRamsey.com slash smart speaker.