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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[@alolansandshrew1756]

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.

[@rnt45t1]

Nuance isn't in Dave's limited vocabulary.

[@amireallythatgrumpy6508]

Or any other American's vocabulary @@rnt45t1

[@justinlanglais9825]

Absolutely correct.... retiring EARLY means you really gotta watch your withdrawal rate...

[@Simon-vo7gi]

George Kamel is the future of Ramsay's company. He definitely caters to someone like me who really likes to look at numbers. Dave Ramsay is losing it. It's time to step down Dave.

[@amireallythatgrumpy6508]

Nobody under the age of 80 should retire under any circumstances@@Simon-vo7gi

[@angryarkie1642]

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

[@Helibeaver]

Nothing wrong with listening to both and using your brains.

[@fray3dendsofsanity]

@@Helibeaver You have to turn off your brain to listen to Ramsey ramble about Joe Biden and Jesus...I like how Money Guy focuses on MONEY, not a bunch of personal belief/political BS. Ramsey loves to throw the christian right-wing nonsense in even when it's not relevant to the topic at hand. He's so overrated as a financial advisor because he talks with such authority about topics that aren't relevant to finance. Money Guy debunks the guy's investment practices constantly

[@fluffbabiesRcrazy]

I don't listen to Dave anymore. I recommend Dave for folks with debt issues, but beyond that the money guys are doing it right.

[@julieanehurley-hv4bv]

I cannot watch Ramsey and his Mini-Me(s) anymore...I tried. Full disclosure: Ramsey's Baby Steps helped guide me for years and I am thankful. I have $0 debt right now (Woo hoo - student loan and mortgage paid off)! I have read other comments and agree that our beloved Money Guys are a great resource for beginners trying to build their nest egg while getting or staying out of debt AND for progressing financial mutants ❤❤❤❤❤

[@AdamGamingClips]

Dave just doesn't really use analytics in his decision making, its all emotional decisions. It's hard to follow $$$ advice from someone who is either A. Ignorant or B. Not willing to adjust his opinion, when the blatantly obvious facts are right in front of him. @@Helibeaver

[@DJock93AF]

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

[@julieanehurley-hv4bv]

Well put! Succinct and mirrors my two cents.

[@jerrydixon3862]

Dave prompted me to get out of ~50k worth of debt. Paid off the credit cards and cars, and even paid off the low-interest student loan debt. After that, I discovered the money guy show and I'm so glad I did. I do enjoy being debt-free other than the mortgage, but the Money Guy show is far superior when it comes to long-term wealth strategies in my opinion.

[@JonathanRootD]

Why even go to Dave when you can go to others who get the whole picture right.

[@rebellb258]

Amen! Dave's big push on psychological & behavioral change is crucial. I strongly recommend baby steps 1-3 (sometimes 4). Beyond that - go your own way.

[@robertmillikan600]

Spot on!

[@yhckelly]

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

[@jayahkaisamba]

Yeah that was a bad look

[@moggekungen]

George will soon break away from Ramsey solutions

[@mmp495]

I agree. I love the show, Dave and his personalities. Dave needed to exercise tact in that situation. 😢

[@dforrest4503]

@@moggekungenthe problem is Dave has a stranglehold on those who work for him.

[@moggekungen]

@@dforrest4503he can always quit, so i think when he believes that he can go for his own he will break away, time will tell

[@mbaker8492]

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).

[@ADRE3ZY420]

And he won't. He won't give free marketing to certain funds and have the responsibility of people copying his funds. This is common sense. Dave is hoping people aren't stupid enough to take out 8% when the market is down bad. You can't literally think Dave thinks you should always take out 8%.

[@Adam_Hertz]

One of Dave's largest income streams is from financial advisors who pay him to get referrals from his community. That's why he won't tell you which funds he's using. If you know which funds, then you no longer need to hire a financial advisor, and he stops getting paid for referrals.

[@lyonk-tz8qf]

That is because there are no mutual funds that have returned 12% annual for that time period.

[@mbaker8492]

@@ADRE3ZY420 I don't know if Dave expects that or not, but he is typically very hard-lined about his rules.

[@kkplayrush]

I think that, legally, he can't. But don't quote me on that...

[@prestonwilliams6739]

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.

[@saulgoodman2018]

Once you go with the name calling. You have already lost the agrument.

[@sportagus3]

Deplatforming is also a solution

[@vulpixelful]

I'd say if people are basing their retirement on bad opinions, there's a bit more at stake than ideas

[@prestonwilliams6739]

@@sportagus3 I don’t think we need to resort to such authoritarian solutions.

[@prestonwilliams6739]

@@vulpixelful isn’t everything presented by KZbin finance personalities just discussing different ideas? It doesn’t become concrete until we put those ideas into practice in our own portfolios. The responsibility is on the individual to look at the balance of evidence and decide what works best for them.

[@MichaelSmith-fj7di]

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

[@cadon35]

You just described DR’s show/books in a nutshell.

[@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.

[@miketheyunggod2534]

11%? 😅.

[@raiden031]

One of Dave's recent videos he said a 65 year old can double their 401k in the next 7 years. First off the market is pretty stagnant and hasn't even reached the level of 2 years ago. Second what 65 year old is investing in high risk funds so close to retirement?

[@debragiovine9797]

That’s Dave talking,,, show us the the math,,,😦

[@jarrod499]

⁠@@miketheyunggod2534 yeah “The S&P 500 was formally launched in 1957. Since then, the index has generated a compound annual growth rate (CAGR) of roughly 10.67%, including dividends. Adjusted for inflation, this number would be roughly 6.8%. “

[@GoKU-xx2vg]

​​@@raiden031at a 12% annual return, it would double in 7 years

[@kortyEdna825]

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

[@PatrickFitzgerald-cx6io]

i havent been playng. I’ve been diligently working, saving and contributing towards early retirement and financial freedom, but since covid outbreak, the economy so far has caused my portfolio to underperform, do you think I keep contributing to my 401k or look at alternative sectors to meet my goals?

[@brucemichelle5689.]

keep contributing! I'd suggest you consider financial advisory at this point in time, you cant do this alone, remember you are in for the long haul

[@KaurKhangura]

I've been looking to get one mate, but have been kind of relaxed about it. Could you recommend your advis0r? I'll be happy to use some help

[@brucemichelle5689.]

‘’Aileen Gertrude Tippy’’ is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.

[@KaurKhangura]

Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.

[@pauly5502]

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

[@jasonk446]

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

[@randypolk9856]

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.

[@BrianW211]

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.

[@jeffmiller5252]

Dave completely ignores data….over and over again

[@BrianW211]

@@jeffmiller5252 Exactly. When it's convenient, or doesn't support his narrative.

[@quietferocity]

But he interviewed a couple hundred boomers/greatest generationers!! 🥺

[@Dohair879]

My dad always said just when you think you have enough you probably don’t. Everyone’s enough is different.

[@missouri6014]

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

[@mmmd3429]

He has millions but not much common sense. Shows his disconnect from most people.

[@ADRE3ZY420]

Dave is hoping that people are stupid enough to take out 8% when the market is down 20%. He's implying when the market is good. You can't literally think Dave Ramsey means to always take our 8% even if the market is bad. That's just stupid.

[@jarrod499]

Yeah it’s got to be a especially difficult to advise listeners to Dave’s program, because if you start talking about sequence of return risk, the need to balance stocks with bonds and other uncorrelated investments. I expect you get a lot of pushback, given the advice that comes out on his program.

[@bizdrone]

But you can rebalance your portfolio, right? Why do people set it and forget it, and let their portfolio take on so much damage during a downturn?

[@missouri6014]

So help me understand your comments You said, why don’t people just rebalance them So my question is at one point when they re-balance After it went down 20% or more? And remember, if you are on this site, you were probably keeping track of this on a regular basis perhaps monthly and you were one of the 5% of the people who do in order to be commended but what about the 95% Just saying

[@checkthelogic]

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

[@mmp495]

The Money Guys gave good, solid advice on this matter. If this is the case hopefully the Ramsey team will take note and change their advice on this. DR is still great at motivating ppl to get out of debt following the plan and principles . It changed my life and I am truly grateful for his guidance. ❤

[@Dad-in-WA]

Dave Ramsey is great for people who are starting on their financial journey and need first step guidance. Safe withdrawal rate of 8%! WTF..I'm not doing 8% withdrawal..thanks for sharing.

[@oladeleayoola]

The way you guys responded to Dave was pure class. I’m fr tired of his “my way or highway” one-size-fits-all advice with zero nuance that he doubles down on if you’re just getting into personal finance and you can spell S&P500 you’re better off listening to literally anybody else for advice that works better in the long run and is actually realistic I’ll give Dave credit for inspiring me to use credit cards though, it was his videos where I learned how great they could be and next thing I know I’m flying first class on a flight paid for 100% with travel points without ever paying a dime in interest

[@danielaltherr1229]

Another great video, guys! Thank you! I followed Dave to get out of debt completely in 2019 (house, cars, ect.) Now, I wish I would have invested that money, as I am now. I would have been even better off (even though I have paid myself first since February of 2015). How Dave responded to George Kamel's video (seemingly half cocked and ill informed) should be embarrassing for him. George Kamel does videos with Dave's daughter, for the Ramsey company, and she even stuck up for George. Dave is great at debt free. God bless him for that. He changed my life! I watch y'all for my retirement goals!! Keep up the good work and Merry Christmas! :)

[@edhcb9359]

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

[@getinthespace7715]

Dave is NUTS for suggesting an 8% withdrawal rate. Unless your investments are firing on all cylinders you end up wiping out your account balances. ESPECIALLY if the market tanks or stagnates like after the inflation of the 80's.

[@this_epic_name]

11:43 Biggest takeaway for me here is the 100% stock allocation beats any diversified allocation in all cases. My whole life I've heard "you need to diversify to manage risk," and now I feel like I've been lied to, because "what risk?" Commentator says "you should get more conservative" as you move through retirement. Why?

[@bigstar66]

How would you feel if you retired on January 1, 2000 and had your entire portfolio in S&P index funds?

[@this_epic_name]

@@bigstar66 A number of years ago, I'd feel bad, but after running a whole bunch of monte carlo simulations with 50% crashes injected at different points in time (including right at retirement), I'm much, much less concerned.

[@bigstar66]

@ not just a 50% crash. A 50% crash where the market wouldn't even break even until 13 years later. You'd still rather draw off your decimated stock instead of some bonds?

[@Quantris]

I guess that's the kind of retirement advice one can expect from someone who is not retired.... also I can't believe he said "it's not hard to beat the S&P" with a straight face

[@DarkoFitCoach]

Few investor firms can beat the sp500. Most cant ofcourse. But few can. Lets not act there arent firms here and there that cant Majority cant. Some can. Just like everything in life. Wanna be ultra safe: index Wanna go for more then find the few who can

[@luisoncpp]

In theory with a horizon long enough you can beat it either by factor investing or by leverage. ...but beating it using the same US large cap stocks is indeed pretty difficult

[@Trplr4life]

The money guys are sharp. I love the scenarios and data they show for all the speculation.

[@dwaynerudkavitch5307]

Soooooo cool. Love the commentary and I wouldn't have been so nice about Dave's comments.

[@DavidsDefelices]

As a soon retiree, keeping my 401k on course is my top priority. I have been reading of investors making up to 250k ROI in this current crashing market, any recommendations to scale up my ROI before retirement will be highly appreciated.

[@RodericksCurrys]

The current market might give opportunities to maximize profit within the short term but to execute such a strategy, you must be a skilled practitioner or be working with one.

[@ThomasesLaceys]

@@RodericksCurrys I agree with you. As an early investor in NVDA, AVGO, ANSS, and LRCX, my financial advisor's advice was incredibly helpful. Over the past seven years, she has helped me find stocks that have performed 10x multiple times. With her help, I've grown my portfolio to over a million dollars.

[@DavidsDefelices]

@@ThomasesLaceys Who is the coach who guides you? I urgently require assistance; my stock portfolio is stagnating, and I need investment advice for retirement.

[@ThomasesLaceys]

@@DavidsDefelices The beauty of MARGARET MOLLI ALVEY approach is her dual focus: while aggressively pursuing profit opportunities, she's equally tenacious about shielding investors from potential pitfalls. It's a balance few can achieve.

[@DavidsDefelices]

@@ThomasesLaceys Thank you for the lead. I searched for her, and I have sent her an email. I hope she gets back to me soon.

[@emoney1231]

Could you imagine how scared you'd be if you retired 2 years ago using Dave's advice? Even if you timed the market and pulled out 2 years of income when the market was at an all time high, 8% + 8% and then inflation was 11% for those 2 years combined, so you're at 27%, and that's not even considering market losses. Using fidelity's index funds, small cap is down 25%, mid cap is down 14%, international is down 10%, and large cap is flat, so the portfolio would be down another 12%. So you have about 60% of your initial balance. Suddenly, your 8% withdrawal of your original balance is 13% of your current balance.

[@ryjoph89]

We need that NEW 8% video... you know the one lol

[@lkj0822g]

Good luck finding that one. Ramsey folks pulled that video post haste. Dave came off looking like a petulent child with his little "rant" and a lot of people took offense to Dave throwing his employee George Kamel under the bus.

[@thedopplereffect00]

​@@lkj0822gthe Internet never forgets. A couple dozen finance KZbinrs already reacted to it

[@amireallythatgrumpy6508]

Most people on the internet are Americans. Most Americans only have a memory that lasts a few days. @@thedopplereffect00

[@OShackHennessy]

Haha I know what you speak of. What a tool.

[@GabeGibitz]

Thank you!! I love Dave for getting out of debt. I don't love how he makes me feel stupid for listening to investing advice that makes sense.

[@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.

[@Dannyholt33]

This aligns perfectly with my desire to organize my finances prior to retirement. Could you provide me with access to your advisor?

[@Dannyholt33]

Thanks a lot for this recommendation. I just looked her up, and I have sent her an email. I hope she gets back to me soon.

[@SSJBartSimp]

🤡🤡🤡

[@patty109109]

@@Dannyholt33she won’t because she was arrested by the FBI for fraud.

[@zoraster3749]

1). Sequence of return risk. 2). Survivorship bias on mutual funds and looking at historical returns (the mutual funds that returned below the average didn’t survive). 3). Looking at US historical returns is rose colored because we lucked out on quite a few wars without our infrastructure being bombed out. Ben Felix covers this expertly and concludes a 2.7% withdrawal rate is closer to being “safe.”

[@fsmoura]

Dang it! Those darn goobers with calculators in their moms' basements and their sophisticated stochastic models again! ( oДo)

[@thedopplereffect00]

I disagree with Ben's rate because his argument is basically that the U.S. economy could devolve to the international average. Well, as long as we don't fall into full socialism like the rest of the world that shouldn't happen.

[@tomiasthexder7673]

That’s exactly the point…the US is moving toward socialism. Death by a thousand cuts.

[@OShackHennessy]

@@thedopplereffect00 yeah I didn’t quite agree with Ben’s assessment but it’s all valuable to get you thinking g about scenarios

[@DavidSmith-lp5tz]

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

[@yvetterocksyeah]

Omg seriously 😂 Did this happen recently?

[@alexpietsch7997]

Tbh, since im in a low income low cost of living situation im following Dave's principles because they're in line with my ethics of aggressively reducing my family needs to jumpstart additional giving. I watch money guys for long term future motivation while im dealing with new babies and trying to do something right for them. Caleb Hammer motivates me to do the next smart choice every week. Dave gives me an achievable set of goals for my next decade. Making sure minimum payments don't eat my kid's grocery money. Money Guys give me the long term dream after securing my present. Working into my 70s and having the power of compound interest on my side

[@mbaker8492]

Dave is very good for helping people get out of debt. He definitely has value. But his 12%/8% rules are a bit insane.

[@vulpixelful]

You're very lucky to have found something you want to do until you're 70. I'd say the return optimization strategy of The Money Guy Show is for the rest of us 😅

[@alexpietsch7997]

@@mbaker8492 But when you're living expenses are under $1500 a month, the percentage is irrelevant

[@darioc.1196]

Great discovery this show. Cheers from Spain!

[@G.Farr4]

LOVE your reaction!

[@brentkillian]

I think one of my favorite pieces of advice I love is from Bo. Save a little bit of today for tomorrow

[@brassj67]

It also depends on what other types of income you have in retirement. I intend to draw down early by retiring earlier as myself and my partner have defined benefits pensions. I have two. Our tax free savings will be our buffer and will likely grow as we will probably still continue to invest rather than deplete those investments

[@HokieAlum08]

Others have raised this point well... Would love to see Dave's investments and allocation % across them because things like that are reasons why credibility gets called into question.

[@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?

[@joelashdod7712]

There is another problem. Some years the market will drop. When that happens you must continue the same withdrawal rate, you will have less money. If you take the same dollar value, the percentage withdrawal increases and, even when the market goes up, your capital base will not recover. How many people are prepared to drop their spending by 50% when the market dips?

[@6200julie]

You guys are the best!

[@Ricbender]

Excellent show guys.

[@MRAROCKERDUDE]

The Trinity study looks at initial withdrawals followed by inflation-adjustments. Dave is talking about a percent of portfolio method (so 8% per year). 8% is too high in this case too but technically speaking, a percent of portfolio strategy will never run out of money but you could see your withdrawals shrink dramatically over time as your portfolio drops in value.

[@Alan-jk1yi]

You're not technically wrong, but the idea isn't really to maintain a withdrawal rate, it's to maintain a lifestyle, of which the withdrawal rate is just an easy to estimate proxy. Maintaining a fixed withdrawal rate when your portfolio is down means cutting back on your lifestyle, possibly permanently if your portfolio never fully recovers.

[@MRAROCKERDUDE]

@@Alan-jk1yi There’s no rule that says I need to maintain the same withdrawals. Percent of Portfolio is an equally valid strategy and I think it more closely mirrors what most people do in retirement. (ie. When the market’s down, cut back a bit and when it’s up, spend a bit more). Percent of portfolio is an equally valid strategy and I think it’s made even better with some guardrails (E.g. 4% Per Year but don’t increase withdrawals by more than 5% compared to the previous year - like the Vanguard Dynamic Spending Rule). You can add guardrails on the negative end too but I’d make them a bit wider (E.g. Don’t cut your withdrawals by more than 10% even if the market’s down further). If you go on FICALC you can play around with the variables to see what suits you.

[@daveharness70]

Also keep in mind that a withdrawal rate isn't a permanent number. You don't have to enter a withdrawal rate into your accounts when you retire and bite your nails. You can adjust based on what the markets are doing if that is where you invest. There are so many other variables to consider...the withdrawal rate is just one piece of the game. 90% success rate to a ripe old age?....that is a bit conservative....if you are looking at the data. Again, depends on your desired result for your estate.

[@kennethwers]

If you adjust the 8% "yearly" you will never technically run out of money. But you will end up withdrawing 8% of zip.

[@Hawk3ye4077]

I actually think it makes sense to draw around 6% for the 10 years of retirement. Make sure you enjoy that money while you can. Draw back to 4% later on when your slowing down or less interested in travel.

[@kenaxford]

Seems like keeping your portfolio mostly if not all) invested in equities is the smart play since that showed the highest probability of success BUT the key being to vary withdraw rate. Average could probably come out to 8% but can’t pull a static 8% when market is down but could potentially pull more when market is up.

[@mbaker8492]

I like the strategy of keeping 3-5 years living expenses in low volatility vehicles (e.g., high-yield savings, CDs, etc.). When the market is high, you can reload as you go. When the market is low, you can let things ride for a while. Usually, the market recovers in about two years.

[@carlgarrett5142]

My financial planner reccomends keeping a portion in bonds in order to maximize gains when rebalancing.

[@jeffappel3223]

This is what I was trying to understand. Looking at some other similar resources, it seems the assumption is 8% of the original amount, not 8% of each year's balance.

[@jordanmadden7388]

It’s funny that the same chart you used to disprove Dave’s 8% withdrawal rate also disproves your recommendation to make your portfolio more conservative in retirement. I only saw you use the chart to make one of those points though. 😉

[@investingwitha-aron8055]

The problem is Daves funds come with 5.25% load funds or 1% expense ratio funds. That data ddoesnt take that into account.

[@Penner-x6l]

They make a lot of good point. You could buy triples QQQ supplemented with a good buy write like QYLD for added income. This will lower beta but you could also then buy a handful of the mag 7 with the higher betas to juice those returns a bit. Dave has seemingly left a lot of $$$ on the table in buying into his buckets. The conversation is very different around large tech and the QQQ's....

[@darrintone7371]

Dave is not accounting for the sequence of return risk. Run 6 to 8% withdrawal rate between 1968 to 1997 - 30 year period it be broke in 10 years. The returns in the first 10 years of retirement is what matters most. If bad in the first 10 years, that's why financial advisors need to use a 4 to 5% annual withdrawal amounts to account for the sequence of return risk.

[@nosajkeram]

I think a lot of people don't take into account the role yhe emergency fund plays in your ability to withdraw higher amounts. When you're averaging 9% over a year, you can withdraw 8% no problem. When you're down, you don't withdraw at all, you live off the emergency fund, until the market rebounds. Which means you probably need 2-3 years of living expenses in your emergency fund.

[@Beth-Lasso]

Excellent point

[@DJHesterman]

I looked back to see how an 8% withdrawal would have worked if you retired in 2007 with everything in the S&P 500 and it turns out you would have run out of money by around 2020. I understand that about half the time it would work out, but don't understand why he doesn't acknowledge that about half the time it would not.

[@bigstar66]

Because he's evil.

[@ktravels1761]

I think everyone is missing his point. If you are making less, you withdraw less. If you are making 10% then only withdraw 6% and you have to keep watching it.

[@artsie8282]

I wholeheartedly agree with your investment advice. For stocks, I use ONLY index funds that imitate S&P and NASDAQ . As you know NASDAQ averages are much higher than S&P these days - but I trust S&P more so I put more there. I am retired. I drastically prefer 4% withdrawal rate over 8%. I will not pull from the market when it is down. I keep 3 years of cash available, to be used during a bear market and replenished during a bull market. I am hoping that helps me in the long run.

[@rudistorm3348]

Here is the thing guys you can always adjust your withdrawl amount year by year. So if the stock market is having a bad -20% year you only take out 4%. 2024 the market returs 20% than you can safely take out 8% for 2025. I think 4% is way too low. What if the market averages only 8% a year during your 25 year retirement and you are taking out 4% a year. Then you die with more money than you started retirement with? That does not sound very logical.

[@LasVegasCollectibles]

Dave is financial education 101. If you can grasp that information and even follow it for awhile, then you meet the prerequisites for 102, which is The Money Guy show

[@dec1slh]

Money Guy show is atleast 201 or 301, if it's 102, it's still level 100

[@lkj0822g]

You're being too generous. I would say Ramsey is the remedial class in personal finance for those folks who can't balance a checkbook and don't understand compound interest.

[@LasVegasCollectibles]

@dec1slh personally, I believe that 200 series includes a couple other techniques and 300 series involves not wning anything in personal names

[@dec1slh]

@@LasVegasCollectibles 101 and 102 are on the same level, you would typically choose a 101 or 102 course not both. Money Guy Show is definitely a level above Ramsey, in terms of who will grasp the concepts and use them. You lost me at 300 level being not owning anything in personal name..I kinda get where you are going but seems way off base.

[@amireallythatgrumpy6508]

101 and 102 classes are supposed to be done concurrently...@@dec1slh

[@thereasoner9454]

So I just went and did a sequence of returns using the 8% withdrawal figures that Dave presented starting in 2024 (to date) and working backwards to 2000. So staring off 2000, 2001, and 2002 with 3 negative years of approximately -6%, -7%, and -17%, with a total of 8 negative years, and 18 positive years. Then I pulled 8% off the balance each and every year without question. At the end of 25 years, so say from age 67 - 92, there was still 44% of the original balance. So when we look back at this section of our history, we had the 2000-2002 crash totaling -30%, and the giant crash of 2008 at -34%, 2018 at -5%, and 2022 at nearly -9%. It is fair to say we had ridiculous losses AND gains in this timeframe. The overall market average was approximately 5.88%. Therefore, even through 3 huge crashes in one retirement cycle, his 8% comment actually checks out. I figured it wouldn't come close. Therefore, using the 4% withdrawal numbers over the same timeframe leaves a portfolio balance of 122% of original. Kinda hard to argue that Dave was wrong after doing the actual math. And that is strictly off of investments only, not counting any SS income at all. No need for Dave to apologize unless we all plan on the world going through a lot worse than the DOT come, Housing Market, and Pandemic all in one retirement cycle.

[@mysticaltyger2009]

Who only wants to have 44% of their balance after 25 years? I consider that a failure.

[@neuideas]

@@mysticaltyger2009 Indeed. In the clip, Dave stated outright that an 8% withdrawal rate can be sustained "in perpetuity." 44% of the original balance is not sustained, and it's definitely not perpetual.

[@jeffreyblanton9877]

@@mysticaltyger2009If retire at 60 and have 44% left at 85 then my kids will inherit a nice chunk of money. I would consider this a successful retirement. I can’t understand how this is bad advice unless you’re retiring extremely early. Most people don’t spend a lot of money in their 80s. My grandmother lived on $2500 a month into her 90s from mostly SS and a tiny pension. She was an extremely happy person when she gave up the 600am to 2:30pm grind at 62.

[@whiskeytango9769]

I am 61, I plan to retire is 2-3 years. My portfolio is now at $850k, a year ago, the threat of rising interest rates and equity devaluing prompted me to move out of equities and into fixed income. I now have everything in various fixed and guaranteed investments earning 5%. My income allows me to contribute about an extra $40-50k annually to my investments [in addition to the investment earnings]. My wife is retired and has a pension, I will also have a small pension when I retire that is separate from my investment income. My goal is to have $1.2M when I retire. Also...we have no debt, managed to pay that off a few years ago. I am playing it safe, and had planned to pull out the earnings [5%] from my portfolio, at least in the first few years until I figure out how much we need...which isn't much actually. Another point, I am Canadian, if that matters. I sleep very well at night.

[@meganwildeman7587]

Thank you for this reaction. I was a long time Ramsey follower but recently stepping away and have learned a lot from your videos. Dave taught us how to pay off debt but his investing advice just doesn’t seem accurate. That being said, he’s confidently stated that HE has returned 12%. Does that just mean he’s happened to pick better stocks than the average person? Or do you think he’s overlooking even his portfolio?

[@thedopplereffect00]

From other podcasts I've listen to, I don't think he even pays attention to his investment portfolio to know what's going on. He probably has an advisor do it all for him. He makes most of his money in real estate and the company.

[@lyonk-tz8qf]

Daves investing advice BLOWS.

[@b.m.4066]

There's a mutual fund that I personally own shares of that since it's inception in 1934 has averaged 11.95% a year for the past 90 years

[@chrisharris4223]

Even without considering sequence of return, 8% is way too high (and a really irresponsible thing for him to say). Double what is ‘safe and sustainable’ as studied. Let alone for early retirement which I believe George was discussing when he suggested 3%. I plan on retiring early and will absolutely factor in taking less than 4% for the first few years until things settle down a bit. Nice video as always and well explained thanks

[@TheDjcarter1966]

Yeah retiring at thirty might be something they even looked at...if you live to 85 and retire at 35 that's 50 years

[@luisluiscunha]

I humbly apologize for some comments I made here when I was starting my personal investment path. I have learned a lot since then, and I now understand the amount of value you bring to this space, and how hard it is to find people as qualified as you sharing your thoughts with the broad public. Happy 2024

[@hdub6527]

You are forgiven 🙌🏻

[@fredfinger7092]

Dave Ramsey claims he consistently gets 12% but he never names the funds with that alleged return. I wonder why?

[@investingwitha-aron8055]

That way noone can prove him wrong either

[@HelloWorld-hb7yt]

The average annual return of the S&P 500 index since 2000 has been approximately 6-8%, depending on the specific end date and adjustments for inflation or dividends.

[@kennydowning8206]

Is the Ramsey portfolio returns reflective of actively managed fund fees. In particular I like to see all his funds as American Funds as that is what he pushes. I did it for 7 years before becoming a Boglehead and learning about low cost index funds. Note, in the 7 years I was with American Funds with a very similar 4 fund portfolio that you showed for Ramsey I had an annualized return of 2.5% when when over the same time period the marker did north of 11% (2006-2013). Huge Dave fan, except his pushing of American Funds and/or actively managed funds. Low cost indexing seems as though it is a great way for everyday people to invest over time and win.

[@andrewdiamond2697]

Let's talk about what you can do...and do it the way Dave is suggesting...sort of: You can take out everything above inflationary growth and set it aside in an after tax account that earns basic interest. BUT THEN...In a down year you need to be ready to invest back in to cover your loss plus inflation. Most people lack the discipline or stomach to do this.

[@cameronjackson8140]

@moneyguyshow That closing comment from you Bo Hanson was pure Gold 🤣😂😅. I side with you having a CFP makes you more analytical & I am agreeing with you that a 4% is realistic & conservative. Guys please keep the fantastic work with backing up your views with analytical breakdown of the numbers and wonderful slides you show !!! Bo Hanson, thanks for a good laugh 😃

[@bryansmethers8936]

I think Dave's numbers will work OK for him, at 8 digit portfolio. and obviously he isnt actually drawing down any of it when he retires, he wont need to

[@tylersanders2388]

There is absolutely no freaking way Dave is pulling 12% per year with a quarter of his money in international funds.

[@JamesSmith-wy7zk]

Do you apply the 4% withdraw rate to any age in retirement? I would think the withdrawal rate could be increased based on someone’s age when starting retirement. Thx for another great show.

[@joecharrette9335]

Guys, I'm preparing to retire within the next two weeks. Last spring I reallocated my retirement funds (IRA's/Roth IRA) from 90% stocks to 60% stocks, which make up about 60% of my retirement funds. 30% is in 6 month CD's (where I take out the interest at maturity and transfer it to savings), and the remainder in savings. Keep in mind I'm 60 1/2 right now. If I followed Dave's advice and withdrew 8% per year, I would run out of money in 12 1/2 years. If I follow Bill Bengen's 4% withdrawal rate, my money will last 25 years. If I follow Ben Felix's 2.7% withdrawal rate, my money will last 37 years. If I choose a withdrawal rate at around the midpoint (say 3.4%), my money will last 29 years.

[@gaddylh]

Dave has helped a lot of people get their financial life in order, but as conservative as he is in his advice it seems crazy that he would advocate withdrawing 8% of your money. So if the market is in a down year and loses 12% and you withdraw 8% then 20% of your nest egg is GONE and pissed away. Would have to have a huge gain the next year to make up that sort of loss. Also whatever money I plan on using in the next 3 years would need to go into something much more conservative than the stock market. Anything beyond that I would keep in the stock market. Love the money guy show. Best out there!

[@lcroszell90]

The thing i havent liked about that "Dave Rant" is that he clearly didnt understand the caller and didnt try to listen for clarification and they both completely misinterpreted what George Kamel's video was about. And there has been no apology to the aundience for going off about something he wasnt fully understanding. I would enjoy someone breaking down the original video+the callers question+daves misinterpretation. And someone clarifying the whole issue. Maybe George will do it on his channel. I think its good to have clarification on the retirement withdrawl rate. And by the time i retire the answer may be completely different

[@MRM5J]

He's talking about leveraged funds which leaves out the other side and systematic risk of withdrawal

[@Mag7-q9y]

Seems to me, the best thing to do is to have enough liquid funds to cover 2 years of down markets. Use this money when market is down to avoid the sequence of returns risk that can take a chunk out of your portfolio. Otherwise, draw from your funds at a rate that works for your horizon. The short version is, only take money out when earnings are positive or not down too much.

[@emoney1231]

Love the shade at the end. :)

[@MisterBozo]

If the success rate is higher with 100% stocks, why do you recommend partly switching to bonds when you approach retirement? I don't get that part. I know it's the "traditional" recommendation but I just don't get it. This study says it's actually riskier to do so.

[@slowsteady1099]

So when I go back to 2003 through 2024 for the S&P 500 the return is over 10% average annually. I started in 2003 and withdrew 7.5% each year. I did it when the market returned in the high 20% range and when the market was down 20%. Now in 2024, I have more in my account than when I started. Yeah, when the market was down 20+% and I added to that with a 7.5% withdrawal, but during the many years when I saw 20+% gains I only withdrew 7.5% and let it grow. It works. I do not do bonds nor anything else. I am in the S&P index. So why do you guys think this is wrong????

[@mysticaltyger2009]

It worked in YOUR specific time frame. It doesn't work in every time frame. And it was over a 20 year time frame, not a 30 year time frame, which is what most people plan for.

[@bradstewart9205]

I’m not sure Dave adjusted for inflation like your model does. I’m my model I stop adjusting for inflation at 74 because of a declining need for income as you age as long as you have proper long term care coverage. 8 percent works without inflation adjustment.

[@JustAKnittleBit]

As far as I can tell, every financial advisor type (except maybe Ramsey) recommends moving higher and higher percentages of your portfolio into bonds or "conservative investments" as you get closer to and move into retirement. Bo recommends that exact thing in this video at 11:37 while simultaneously displaying a plot showing that shows the 100% stocks portfolio has the highest success rate even across all rates of withdrawal. Why does their advice consistently disagree with the data?

[@gthree0239]

I don’t know about these particular funds however, I know Dave Ramsey tells people to use front loaded funds. I put my rollover 401(k) into an IRA with a Ramsey advisor and I’m in a 3.5% frontload with similar results not keeping up with the S&P 500 your analysis is spot on except for the fact you forgot to include the millions of people who use frontloaded fees, the funds because that’s what Dave Ramsey told them to use so the numbers are actually worse than what you show

[@raiden031]

So i did some math on this and i suspect Dave might be talking about taking annual distributions of 8% based on the annual account balance, whereas the 4% rule is to take 4% of the first years balance and adjust for inflation each subsequent year. If I'm right, then sequence od returns risk doesnt matter, but then his 8% withdrawals from year to year can be wildly different as the market fluctuates.

[@bradcruise6291]

What are these mutual funds that always make over 12% that's what I want to know because he never tells anybody what they are

[@jacobawojtowicz]

Very professional way to cover this, especially after recently collabing with George. Dave owes him an apology for calling him a moron on air.

[@jeffappel3223]

Question for a relatively inexperienced investor. Why not just put aside a good chunk of cash for when the market is lean? Live off the cash for a while. And when the market is great, refill that cash to your risk tolerance. Could that be a good balance to having such an appresive portfolio?

[@freedomring3022]

Listen to Dave up for paying off debt. Once you are debt free Stay as far away from Dave Ramsey as possible. His investment advice will leave you short changed.

[@wengers111]

Very nice video, I appreciate the commentary. 1. So looking at the updated Trinity study chart you provided it does seem like Dave is correct that being in all stocks gives you the best chance of success for both withdrawal rates. Do you have data that shows that you have a higher chance of success with a diversified asset portfolio (say a portfolio that includes cash, bonds, real estate or other assets)? It seems that the higher rates of return on equity justify being in equities and that the added diversification from being in other assets isn't as helpful. 2. Is it really reasonable to assume a fixed withdrawal rate? I realize this is done for ease of math but if a retiree is willing to adapt to the times couldn't they sustain a higher withdrawal rate during good years and then reduce their withdrawal rate during down times? Are there studies done without a constant withdrawal rate? 3. It seems the danger of saving too much is that you don't get to enjoy your money while you're alive. Are there ways we can balance enjoying retirement without the danger of running out of money?

[@gary5945]

I have listened to hundreds of Ramsey KZbin videos and Podcasts and I have never heard Dave specify that one should increase your percentage spending by inflation as is stipulated with the Trinity and Bengen study. Dave advocates being 100% invested in "good growth stock mutual funds". He has also recommended the S&P index fund on several occasions. For simplicity if one withdraws 8% of each year end balance starting with $1M (or whatever) invested totally in the S&P it is impossible to run out of money and Monte Carlo projections show that 75% of the time one would still have over $1M (nominal) 30 years later. I think the difference with Ramsey and Bengen is in the inflation increase that is factored in vs just taking a fixed percentage of the year end balance. Up years one takes a higher dollar amount but also adjusts for down years. One could argue that few if any will start with a 4% withdrawal rate and constantly increase with inflation each year with no regard to market conditions. A fixed percentage of year end balance is much more likely to occur.

[@Rspsand07]

There's no one glove fits all answer because there's no reason to have as high of an income as the 4% projects in retirement either. With my planned retirement spending's, my planned nest-egg gets me to 30 years alone with 0% return. But planning to retire early, way earlier than 30 years of life left.

[@themusic6808]

Given Ramsey’s mantra of “don’t invest more than 15% of your income, pay off your mortgage in 15 years or less, and only invest in mutual funds”, someone following his advice isn’t going to have near enough invested capital to withdraw 8% in retirement. Especially if you’re re-allocating more of a portfolio to fixed income and bonds in retirement to offset volatility that may not even get you a 8% return. I get it, he continues to make millions on his pay off all your debt tirade, but one would likely be better off getting investing advice elsewhere.

[@ssaini74]

Does Dave her mention what specific mutual funds he owns?

[@BrianW211]

No, because then anyone could pull the data and easily prove him wrong.

[@terpsurfer7221]

No but you can pay his "smartvestors" some ridiculous %(5% I think?) to win or lose...

[@DericAnslum]

...NEEVVVEEEEEEERRRRR...

[@johnlittle8267]

new word perpetuation. All you need is two down years of 10% in years 1 and 2 with an 8% withdrawal rate and you'll already down 33% after two years That's the sequence of returns risk with taking that much out. Now you should have a really good return of the next few years after that, which would bring you back, but that is how you get the 25-40% chance of success over 30 years, is that type of start. Would be interesting to take different periods within the last 30 years to start and try this with that allocation.

[@jerrylabat550]

Using the S&P 500 total return, taking 8% adjusted for inflation at the beginning of the year, all years between 1995 and 2007 have failed or will fail by 2025. Interestingly enough the same scenario of 100% equity has the 4% rule failing soon for someone retiring 12/31/1999. If they were 60/40 equity/bonds they would still be even - bond funds performed pretty well during 2000's down markets offsetting much of those loses.

[@chucknorris5141]

I don't listen to Dave. His 8% withdraw rate is just one reason why. My son does listen to Dave, and that makes me worry for him. The rant he went on last week during his podcast about the 8% was stupid crazy.

[@richardfeir935]

I remember Dave talking about the low performance of his international fund. He said his advisor ran his investments including it and not including it. Despite its overall lower performance, the simulation including had a higher return. If weights are constant from inception, it couldn't improve performance. But, it could if it has an interesting relationship with weighting. Please recalculate by adjusting weighting each year back to 25% per fund. I'm assuming you weighted at the start and ran the figures through total change. If you did reweight annually, let me know.

[@ssimulacron-DeportFrail2025]

JMGPX started in 2016. How can you start your analyst at 2003?

[@Motoseaner]

Could you do a video of small business owners that want to start another business and the pros and cons of using leverage. I.e. my wife and I want to start an automated car wash business and still have our current jobs. We would have to leverage some equity to do so.

[@williamperez9827]

Bo with a parting shot. Nice!

[@metrorealty7631]

I listen to both, Ramsey and you guys. It’s up to the individual to gather his/her own data.

[@johnjeremih]

You guys are missing the point. He is saying that if you get 11% in the year then you can take 8 and leave 3%. Now if it is down to 6% for the year, then probably you shouldn't take 8%.