What Should My Retirement Withdrawal Rate Be?

What Should My Retirement Withdrawal Rate Be?
Listen to how ordinary people built extraordinary wealth—and how you can too. You’ll learn how millionaires live on less than they make, avoid debt, invest, are disciplined and responsible! Featuring hosts from the Ramsey Network: Dave Ramsey, Ken Coleman, George Kamel, Rachel Cruze, and John Delony.

Products:

[Liamphotos]

I always thought a 4% withdrawal rate was the golden rule, but then I learned that depending on your portfolio and life expectancy, it might not be sustainable. It's all about balancing your needs with market conditions.

[IbrahimIsabella-]

I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.

[beaco]

“How much do it need” who’s making these thumbnails LOL

[mikederucki]

Sequence of returns is a big factor. If you retired in the year 2000 then you would have had a decade of tough years whereas if you had retired in 1990 you could have easily sustained 30 years of 10% withdrawal rates.

The answer should be: plan your life on 4-5% withdrawal rates and if you have a 20% return year then you can take a little more. If you have a -18% year try to take a little less.

[tomiasthexder]

I’m looking forward to my 12% return next year and the year after that…guaranteed apparently. It will never ever go down. Problem solved.

[NipItInTheBud]

This is why you don’t take financial advice from a radio entertainer! Dave isn’t even a licensed financial advisor! He should have to have a disclaimer stating that his videos are for entertainment purposes only because this advice is dangerous!

[cooleobrad]

Dave's response is crazy, and unbelievably arrogant to dismiss the 4% withdrawl rate as "the financial advisors just want more money." If you followed Dave's advice that he gives some people of "well the market earns 12%/yr so you can take out 10% a year and be just fine forever!" you'd almost certainly lose substantial money over the long term. The 4% rule is based on historical data and simulations of what would've happened to your lump sum in the past assuming you'd withdrawn x% each year. Commenter Freddy Telleria down below points out specific examples in history where Dave's advice would have failed spectacularly.

[kckuc]

This is why you don’t listen to Dave when drawing money out for retirement. He’s good at getting folks out of debt but no baby steps going into retirement or while in retirement. Everything is good when he market is up. Take 10 percent out with a three year market downturn of 20 percent and these folks will be hurtin bad

[tylermorrison]

He’s recommending that because 11-12% returns are long term averages and NOT adjusted for inflation. Understand the market returns negative occasionally. If you look at a graph on how important it is that the market returns good returns on your first few years of withdrawal you’ll see why 4% is so important. Warren buffet the greatest investor of all time has said not even he could predict the market in the next year, 5 years or 10 years. But that in the long term of 20-40 years he can. Withdrawing 5% (10% as Dave suggested) on a particularly poor performing year could be very taxing on your retirement fund. Also remember the 4% rule is designed to preserve capital. Not pass away and leave your kids $0.

[gsquared]

Everyone in the financial world except for Dave Ramsey is very familiar with the 4% rule. The market doesn’t always go up 12%, that is an average. If they want to live another 20 years and not outlive and out spend their investments, they should probably stick closer to 4% except in years when the market is up. It is not currently up

[helloify]

I can’t believe you don’t understand this. 4% is not because of bad investments minus inflation. It is based on an extensive mathematical analysis to protect against sequence of returns risk - i.e., what happens if you have several years of a bear market. This is based on an analysis of what would be safe in the downturns of 1929, and retiring in the mid 1960s. It is absolutely shocking that Dave does not understand this. Having said that, if the caller is in his 70s, he does not have the typical 30 years left of retirement, and so could pull out more than 4%. However for standard or early retirees, 4% is the safe withdrawal rate. This has been known for many, many years. I can’t believe the Dave Ramsey company does not understand this.

[thedopplereffect]

Yikes at Dave assuming someone at 72 should have 100% equities and that they will return 12%. That is way too much risk for someone that age.

[shannonrose]

Would somebody please update Dave that RMD's have been upped to age 72 as of January 1, 2020? This is the second time I have heard him say 70 1/2.

[andrewdutton]

1:11 I wish the guy had said "'sequence of returns' Dave." 4 percent DOES work about 95% of the time, but it you start the 4% sequence right at the top of the market, and then suffer ten years of "blah" returns (2000 to 2012), you're hosed. You will not outlive your money.

[rajvo]

1:20.... George's body language 😂😂😂

[richguest]

Someone needs to explain to Dave sequence of returns risk - and for those of you who don't know either, my suggestion is learn about it.

[ozarked]

Trust me on this one, you can run all sorts of calculations with assumptions until you're exhausted about how much to withdraw. The bottom line is no one knows what the next 20 years will bring. I'm 62 and I'm way more conservative on my investing at this age than I was 20 and 30 years ago. I'm setting up a 4 bucket strategy. Bucket #1 holds our 6 month emergency funds. Bucket #2 holds a 36 month CD ladder. Bucket #3 holds all of our IRA and 401K savings which I have been transitioning out of stocks. Bucket #4 holds our long term market invested savings.

[freddytelleria]

Question for Dave,
What would have happened if this couple retired on January 2000. The next 13 years the market suffered 2 large bear markets. 0% performance as measured by the S&P 500 for 13 years. The couple would have run out of money with 4% or 5% distribution rate.
Also, how do you know how much the financial advisor has in assets. You made a claim that the client had more than the financial advisor. Quite an assumption.
Finally, an 11 % return on a good growth fund mutual fund assumes no withdrawals. When you factor in withdrawal at any percentage rate, you run the risk of running out of money if you suffer market decline at the beginning of you retirement years. It makes a large difference is you retired in 1972 or 1974. Another example is 2000 or 2002. I encourage listeners to read about the effects of "sequence of returns"
When withdrawing during a 2-3 year bear market, the market will recover. However, the 72 year old retiree may run out of money. He would have compounded his losses. I respectfully submit that Dave's advice of 100% invested in good growth fund mutual funds works very well in a bull market. If everything goes well. If the market corrects or suffers a secular bear market ( a decline in stock values for many years. For example 18 years before 1982 or 13 years before 2013) The growth stock mutual funds run the risk of going to zero. I welcome a conversation with Dave a out this. Dave gives great financial guidance. However, today, his advice is not factoring the risk associated with the financial markets.

[bryantlong]

Dave Ramsey proves with almost every video why he should help people get out of debt and stop giving investing advice. Jesus H Christ dude, get real.

[genxx]

RMDs start at age 72 now. Someone else already corrected Dave on another video, but he continues to give incorrect information.