The Money Guy Show Reacts to Dave Ramsey's 8% Withdrawal Rate

When projecting how much you should be investing for retirement, your expected rate of return and withdrawal rate in retirement are two of the most important factors of the equation. Dave Ramsey believes it is reasonable to expect 12% returns and withdraw 8% every year in retirement. Is this a solid strategy?

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[kortyEdna]

Things arent getting any easier. The average social security check is $2000 a month. The worst part is 22% of Americans have less than $5k saved for retirement. Start investing now! Nobody is coming to save you. better start today

[angryarkie]

I know you guys are friends with him… but there is a reason why I watch/listen to your show and not his.

[alolansandshrew]

Dave is fantastic at getting people out of debt - particularly for people who need and are ready to hear and respond to the tough love that he gives them. However, to have publicly called out and an insulted an *employee* who is ultimately aligned with his vision is one of the most wildly unprofessional things he could have done. Worse, George Kamel was simply explaining that if you're going to retire EARLY, you need to pay special attention to your withdrawal rate. Love you guys! Keep up the great work.

[DJockAF]

Dave is great for the mindset shift and strategy for getting out of a lot of debt. The rest? Not so much.

[yhckelly]

Everybody understands the 8% withdrawal rate is a little goofy, but watching him throw George under the bus was nuts.

[tcgtpl]

Dave: 8% withdrawal rate in retirement is safe. Investments always grow at 11% or better.
Also Dave: You can’t invest more than 15% vs paying off a mortgage early because of the beta / risk of loss from investing so you’ll lose your house.

[MichaelSmith-fjdi]

That’s dangerous advice and could cause someone to lose lots of money in retirement.

[prestonwilliams]

This is a perfect example of the need for freedom of expression, and the open discussion of dissenting ideas. It’s okay to have differing opinions among friends. The only solution to bad speech and bad ideas is good speech promoting good ideas. Thank you Money Guys, you truly are a class act! You present your opinion in a convincing manner backed up by actual evidence.

[mbaker]

Dave's 12% return and 8% withdrawal rate is a bit insane.

I don't recall him ever revealing WHICH funds have returned him 12% over the last 30-40 years (net, after fees).

[pauly]

THANK YOU FOR CALLING OUT THAT BS! I’m so sick and tired of dave’s mythical numbers that you won’t realize are incorrect until it’s too late

[BrianW]

As much as Dave touts data, that's one of Dave's pieces of advice that can be proven wrong from actual data. The data is available for about 125-130 years.

[DavidSmith-lptz]

Remember that guy who called in to Dave Ramsey’s show and called him stupid? He was right.

[edhcb]

OK “Let’s round down to 11%”. What could go wrong? 🤷🏻‍♂️

[missouri]

Can you imagine the consequences on a retiree that has a nest egg of $250-$500, 000 if he were to follow Dave’s advice and there is a downturn of 20% like there was last year
Not so good

[Curbalnk]

The (TACRS) estimates that the average Baby Boomer has $202k saved up for retirement. According to the 4% Rule, this would result in a $8k annual retirement income. do I pull cash from my 401k and buy a house, or spread my money in stocks for better cashflow?

[checkthelogic]

You guys do a good job of encouraging us to think dynamically and consider our individual circumstances!!!😊

[randypolk]

Dave Ramsey's advice on getting out of debt, investing, and a safe withdrawal rate in retirement reminds me of what the Brits said about Winston Churchill.
When he was right (which was most of the time) he was very, very, very, very right.
When he was wrong, well, my God.

[gustavrodewald]

The problem with the 4% rule is that you start 4% of the initial value of your retirement portfolio and then increase the dollar amount of your annual withdrawals every year to account for inflation. You can run out of money doing this because the actual percentage of your portfolio that you are withdrawing each year increases. If you just take 8% of your portfolio's value each year (i.e. higher dollar amounts when the market goes up and lower dollar amounts when the market goes down) then you will never run out of money. If you retire with no debts including a paid off house, then you will have the luxury of being able to take fluctuating withdrawal amounts and can probably take 8% with no problems.

[jasonk]

I'm 45 years old and diversified my portfolio exactly how Dave recommends. Now I'm kinda rethinking that decision.

[tonysilke]

Becoming a millionaire through a Roth IRA or a 401(k) involves different strategies for maximizing profits. A Roth IRA offers tax-free withdrawals in retirement, which can be advantageous if you expect to be in a higher tax bracket later in life. On the other hand, a 401(k) provides tax-deferred growth and potential employer contributions, boosting your savings. The optimal choice depends on factors like your current and future tax situation, employer match, and investment options. Consulting a financial advisor can help tailor a strategy that aligns with your financial goals and circumstances.