A debt-free retiree had steady income and no house payment, but friends pushing rentals left him torn between their advice and his wife’s warning.
Lee, calling from Omaha, Nebraska, told “The Ramsey Show” he had taken personal finance expert Dave Ramsey‘s advice years earlier when he was nearing retirement. He had wanted to set up an annuity inside his IRA to cover his house payment.
Ramsey instead told him to withdraw funds and pay off the house. Lee followed that advice against his friends’ views and was debt-free for five years.
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A Simple Answer That Overruled A Complicated Strategy
Those same friends later urged him to pull money from his IRA again, this time to buy rental properties as an inflation hedge. His wife saw the tradeoff differently, asking why he would want to become a landlord and deal with leaky toilets and late-night calls.
“Listen to your wife,” Ramsey said. He referenced a Bible verse about the value of a wise wife, saying, “Her worth is far above rubies,” while contrasting her wisdom with what he called “stupid friends.”
Co-host George Kamel questioned the friends’ advice, keeping the focus on Lee’s situation. “It’s not a wise move for everyone,” he said.
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What Counts As A Hedge — And What Doesn’t
Ramsey said a hedge worked like a blocker against rising prices by investing in things that moved with inflation. Real estate could serve that role because property values and rents often rose with broader costs. Stocks tied to sectors such as energy could also move the same way.
Lee said part of his IRA was already in Treasury Inflation-Protected Securities and Series I savings bonds, earning about 8% to 9% while he withdrew about 3%. That raised the question of whether he already had that protection.
“You’ve got to be participating as an owner, not a lender,” Ramsey said, telling Lee that TIPS and Series I bonds may adjust with inflation but remain debt instruments. They pay interest without giving Lee ownership in assets that may rise in value.
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When ‘Mailbox Money’ Beats Chasing More
Ramsey did not rule out real estate. He said Lee could pay cash for property, buy something smaller, such as commercial real estate, and hire someone to manage it.
Lee then put the decision in context. He said he was nearing 68, had a net worth of about $800,000 to $850,000 and did not like much risk in his investments. He also said he was doing OK with his passive income and IRA withdrawals.
Ramsey said if Lee had about $2 million, he might pull around $500,000 toward commercial real estate. At Lee’s level, Kamel advised against taking a huge chunk out to buy property.
Ramsey pointed to the certainty Lee already had. His current income was “mailbox money” he could count on, while …
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