Most people have already retired by 73. But Robin, a caller from Phoenix, still hoped to get there by 76 — three years away. She didn't own a home, had no mutual funds, no 401(k), and just $1,000 saved. But somehow, she still thought there might be time to pull things together.
"My question is: should I buy or rent at that time?" she asked Dave Ramsey on a recent episode of "The Ramsey Show."
Ramsey didn't dance around the obvious. "How would you be able to buy if you don't have any money?" he asked.
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Robin replied with confidence: "Well, I've got time." But it quickly became clear that time was just about the only thing she had.
She makes $4,500 a month. Half of that goes to rent. The other half — another $2,000 — is swallowed by student loans. That leaves her with just $500 a month for everything else. When Ramsey asked how she still had student loans at age 73, Robin explained she'd been paying only the interest for years. "Since 2005, I guess," she said. "That's when I graduated." Her current balance is still $12,000.
Ramsey seemed baffled. "You graduated 18 years ago and you've been paying?" he asked. Robin confirmed it. "I paid the interest only for a long time."
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Her degree was in communications, but she now works as a quality inspector. It was one of many red flags for co-host George Kamel, who cut in with a sharp critique of the student loan system. "She is — and I don't throw this word around lightly — a victim of this cultural message that says if you get a degree, you're going to get a raise," he said. "Sometimes that's true. Many times, it's not."
He pointed out that Robin had followed the formula — get the degree, expect the job — and ended up working in an entirely unrelated field. "These degrees don't come with jobs," Kamel said. "You still have to go out and get them, and perform them."
She had other assets, but barely. A universal life policy with $9,000 in cash value. A long-term care rider. No investments. No safety net. When asked about future income, she estimated she'd have $2,500 in Social Security and $500 in pension — a total of $3,000 a month. No retirement savings. No paid-off home.
Ramsey was blunt. "I want you to cash the universal in and pay the student loan down. Let's be done with the student loan very quickly." Then he added, "You're going to live on beans and rice for the next three years while you throw as much money toward housing and as much money toward a nest egg as you can throw."
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He told her to buy a modest home — eventually — but not now. "I'm more concerned that you have basic shelter that is locked in on its monthly cost than I am you having a home that you are necessarily thrilled with." The goal wasn't comfort. It was survival.
"I want to stabilize your future," Ramsey said. "Your luxury or your comfort are secondary."
Kamel didn't let the bigger issue go. "Both sides of the political aisle are in the business of student loans. It's big business. People are getting filthy stinking rich off the backs of people like her."
Ramsey agreed. "I think that might be one of the oldest student loan debt callers I've had," he said. "It's mind-boggling."
Robin's optimism was unshaken. But optimism wasn't going to be enough. As Ramsey made clear, no one retires with $12,000 in student loans, no savings, and $500 left over each month — at least not on purpose.
The house could come later. For now, her job was simple: get out of debt, build a nest egg, and eat beans and rice like her life depends on it.
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