Atlanta single mom, 54, drained $85K from her retirement based on ex-boyfriend’s bad advice. What The Ramsey Show says

Atlanta single mom, 54, drained $85K from her retirement based on ex-boyfriend’s bad advice. What The Ramsey Show says
At 54, Sabrina thought she was making a smart move. Encouraged by her former partner, the mom from Atlanta, Ga., withdrew $85,000 from her retirement account to invest in what he described as a promising stock opportunity.
Instead, she says, the money vanished into a murky mix of failed ventures. The investment never materialized, and the relationship is over.
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Now, with a teenage son with special needs and just over a decade before traditional retirement age, Sabrina is rebuilding from scratch. She recently called into The Ramsey Show to ask what to do next.
“I’m basically starting from scratch,” she told co-hosts Ken Coleman and George Kamel. “I just want to make the right decisions going forward (1).”
The real cost of draining $85K in your 50s
When Sabrina withdrew money from her retirement account, she triggered more than just a loss.
Under IRS rules, withdrawals from most tax-advantaged retirement accounts before age 59.5 typically face a 10% early withdrawal penalty, plus whatever you take out is taxed as income. On $85,000, that could mean an immediate $8,500 penalty, not including federal — and possibly state — income taxes (2).
But the bigger loss may be invisible: compound growth.
If that $85,000 had remained invested and earned a 7% annual return, it could have grown to roughly $167,000 in 10 years, and about $191,000 in 12 years (3). That’s a lot to lose out on by cashing out early, especially in the final stretch before retirement.
For many Americans in their mid-50s, retirement savings are already fragile. According to the Federal Reserve Survey of Consumer Finances, only 57% of households headed by individuals aged 55-64 had retirement account balances.
Fidelity Investments suggests that by their mid-50s, workers should aim to have around seven times their annual salary saved. Sabrina now effectively has no retirement savings.
Read More: 5 essential money moves to make once you’ve saved $50,000
The next steps to recovery
In romantic partnerships, current and former, financial boundaries can blur.
Sabrina’s situation highlights two overlapping dangers:
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Making investment decisions based primarily on personal trust rather than independent research
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Withdrawing retirement funds well before retirement age