Why Dave Ramsey is Wrong...

John and Scott discuss Dave Ramsey and his thoughts on the correct withdrawal rate for retirement. This week's Get Ready for the Future show was packed with info just like this! If you want to see the full episode click the link below:

[awsomo]

Dave is great for people that have no idea what they are doing. He offers a valuable service to those who have no control.

[hopefilledfinancial]

Thank you for covering this call and a very important topic. I am hopeful that this call of mine leads to more productive conversations like this vs negative Dave bashing for bashing's sake. It is so important for us all to understand that unrealistic expectations with dangerous advice is not a way to understand or plan for our futures.

[lv]

I would kind of think there are a other variables that need to be known. How old is the person with the IRA? Are they in good health? Is there IRA the only savings they have? What is their total yearly expense compared to the IRA total? What is their life expectancy today?

[zonaken]

Not long ago, I watched a George Kamel video (one of Dave R. disciples) where he professed that using an 11% average annual return was OK for projections. I commented, "Is presuming an 11% annual return on investment over a 25-year period realistic or is that myth # 6???"
I was totally roasted in the replies to my comment!
From my observations, it seems that every 7-years or so, vast chunks of moneys evaporate due to "market corrections", dropping that "average annual return" well below the rates professed by many financial advisors' recommendations.
As a retiree, I am constantly amazed how the vast majority of investment professionals provide bad advice, or as you say, present "unrealistic expectations" for average investors.
And before all of you internet trolls roast me again, I will just say that I'm not an investment professional, merely an old fart ACTUALLY living off of his methodical yet realistically projected retirement income, and not some currently employed Investment Professional or YouTube professor, regurgitating unrealistic internet myths...
Thank you for stating the truth here. Zk

[McRedneck]

he did say "over the last 80 years"

[KungPowEnterFist]

I agree, 12% annualized returns is not realistic and you have to account for taxes and fees. Also, the stock market performance we have seen over the last 30+ years was mostly through artificially low interest rates and endless money printing. National debt was ~$3T in 1990, where now it sits at ~$34T. By the end of 2024, we will be looking at nearly a 12x increase over the last 35 years. In order for you to get that 7.5% annualized return from the S&P over the next 35 years, the national debt would need to increase by 12x or more from here to there. That would be the end of the USD, folks.

[tonyb]

Dave talks about averages. 12% is not a stretch in mutual funds. There are dozens averaging over 10%.

These guys are chopping up Dave’s words.

[jamesjanney]

Unfortunately these guys are spot on. Following Dave Ramsey's system changed my life and I would recommend it to anyone regardless, but the predictable, consistent 12% mutual funds he insist exist do not exist. I went to several ELPs and found one that claimed they found out exactly what mutual fund company Dave has (Capital Group - American Funds). Average returns (after fees - very important) across the board were around 8-9% across all mutual funds. Some where higher, some where lower, but it's all a guess. No one knows which one is going to be the best.

15% into retirement is still an optimal number to put into retirement. However, I would strategize with your FP and assume the 4% rule is a much safer measure of your retirement income if you want to ensure long-term stability of your nest egg and pass on a financial legacy to your children or institutions of choice.

[davidmmm]

Davey is a swell fella.

However he is wrong in that he only advocates with the US Stock Market. Its were his bread is buttered obviously.

However he never advocates for commodities. Could be his downfall unfortunately.

[SSgtBigSwole]

12% is not a stretch at all. Don’t blame dave because you cant do enough research to pick good funds. It’s not that hard. And no you’re not going to get 12% every year but the average over your career will be at 12%. You’re just using his name for clickbait to get more views.

[photoman]

I ONLY CAME ON HERE TO SAY THAT I THINK YOU ARE WRONG TO FIND FAULT IN RAMSEY !

[davidfolts]

Dave is attempting to light up the internet with claims he knows do not hold water.