Aug 8, 2024
In a twist of fate that few could have predicted, Hicks from Buffalo, New York finds himself on the verge of a life-altering journey when he can least afford it.
As he explains to Dave Ramsey on a recent episode of his radio show, he’s in a pickle: his health isn’t great, he’s had to retire — and now, at 64, he found out his wife is pregnant.
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Unfortunately, Hicks isn’t financially ready for this family expansion. “I’m having some health issues so I’ve been thinking about moving,” he explains. “My wife has been helping me. Now, she’s pregnant she needs help.”
His situation highlights how unexpected turns can derail financial plans — but it’s never too late to resolve a bad situation.
Unexpected hurdles
Hicks says he was forced into retirement due to declining health. The sudden lack of income prolonged his plans to pay off the mortgage on the family home. “I owe $90,000 on a $240,000 house. It'll be paid off in seven years,” he told Ramsey.
As of 2022, only 34% of American homeowners over the age of 65 had a mortgage, according to analysis of the 2022 American Community Survey (ACS) done by NationSwell. However, seniors have been taking out home loans at an accelerated pace. Mortgage use among this age cohort rose 28.5% between 2000 and 2022.
Debt in retirement is increasingly common. However, so are medical issues, with 95% of adults over the age of 60 having at least one chronic medical condition, according to research by the National Council on Aging.
Carrying debt at an age when you’re at heightened risk of receiving medical bills is risky. Hicks’ risks expanded further when he discovered his younger wife’s pregnancy. As of 2015, middle-income family can expect to spend between $16,007 and $17,141 on child-related expenses each year, according to USAFacts.org.
Hicks and his wife have discussed multiple solutions to this predicament, but Ramsey believes the choice won’t be easy.
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No easy solution
Hicks told Ramsey he has considered moving with his wife to another state to be with her relatives and selling the house. Unfortunately, his wife’s relatives live in California, one of the most expensive regions in the country.
“Well, it's a wee bit different price market than Buffalo New York, brother,” Ramsey jokes. “It is just not cheap man and your mind’s going to be blown by what it’ll take to buy a house like you’ve got right now there.”
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As of June 2024, the average home price in California is $786,730, while the average home price in New York state is $478,973, according to Zillow. Ramsey strongly suggests staying in New York or moving to a cheaper state.
Meanwhile, Hicks’ wife is also considering going back to work shortly after giving birth to boost their household income. However, that would compel Hicks to seek assistance from relatives in New York as he deals with his medical condition.
“Man, I'm sorry. I wish I had a magic wand that could make all this go away and I don't,” Ramsey sighs. “There's not a good answer to that bad situation.”
Despite the lack of a magic wand, Hicks does have some options. He may consider tapping into his Social Security early as some benefits can be accessed after the age of 62, according to the Social Security Administration.
Hicks could also reach out to a financial planning expert to see if downsizing or renting could be a better option for his cash flow needs. It may be worth selling his home after all if he can find a smaller, more affordable place locally (or in a cheaper state).
A qualified financial planner could also help the couple explore if they have access to any tax credits or subsidies for child care, which would allow Hicks’ wife to work longer hours and stabilize the family’s finances.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
