Faced with a history of family members dying young, Sarah’s husband wants to spend $500,000 to retire early. She called The Ramsey Show to find out if fear is a good enough reason.
Sarah and her husband, 53, are in a strong financial position. Their house is paid off, they’ve saved millions for retirement and on paper, they’re set.
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But his family history looms large. With his mother dying at 59 and both of his brothers dying at 55, he’s starting to wonder if he should clock out of work early, just in case. That’s why he’s seriously considering spending the money to buy five years of his pension and retire early.
The Ramsey Show hosts pushed back on the idea of making a major financial decision based on fear.
“None of us is promised tomorrow,” said Ken Coleman.
Buying a pension to retire early?
At the heart of the matter is Sarah’s husband’s fear of dying young. While she called to ask if they should buy the pension, the Ramsey hosts cautioned against making an emotional decision.
“I would not sacrifice the future here on the altar of the immediate,” said Coleman. “We have to live in the moment, yes, but also not sacrifice our future based on some emotion that’s not rooted in facts.”
Jade Warshaw echoed his sentiment.
“I don’t like that idea,” she said. “Something about that doesn’t feel right.”
As the hosts dug deeper, it became clear the couple doesn’t need the extra money from the pension to retire early. They own their home outright and have millions saved for retirement. If they spent $500,000, they’d receive about $6,000 per month in retirement income. But given their other assets, they likely don’t need it to live comfortably.
“You don’t need the money, so I certainly wouldn’t buy it,” Warshaw said. “Now it’s up to you guys to decide: what is this $6,000 a month worth to us?”
If it’s not worth working for seven more years, he could retire now, without buying the pension.
Beyond the numbers, Warshaw encouraged the couple to consider using some of their money to assess and improve his health. Lifestyle changes and preventive care could help improve both his quality of life and longevity.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
When does it make sense to retire early?
Retiring early can be appealing for many reasons. Maybe, like Sarah’s husband, you’re worried about your health. Maybe you feel burned out or want more time to travel.
Whatever the reason, it’s important to consider the financial side. If you’ve spent your working years saving, paid off your house and built a solid nest egg, early retirement might be an option.
But if you’re still in debt or have minimal savings, this might be the time to buckle down on your financial goals instead.
In Sarah’s case, her family’s strong net worth and paid-off house make early retirement a real possibility. If they had called in with debt or little savings, the advice would’ve been different.
According to a recent Northwestern Mutual survey, Americans believe they’ll need $1.26 million to retire comfortably. Sarah and her husband are already in that ballpark, setting them apart from the average household.
And if full retirement doesn’t make sense just yet, a gradual approach might. Scaling back to part-time hours — say from 40 to 20 a week — can offer many of the same lifestyle benefits without jeopardizing your financial future.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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