Nope, he let's facts speak for themselves. In the last 46 years, he would have been correct 45 times. That's almost a 98% chance for success. I can live with that.
I think Daves sort of right in that financial planners are wayyyyyy too conservative about what A. You need to retire B. How much to spend down. And sadly that causes people to just not save at all. Why? 1. Non-cynically, you could say they care about their clients and don’t want them to run out of money and then point a finger at them. Especially since they probably have a fiduciary duty to them 2. Cynically, they want more assets to manage as they usually make more money. That is…don’t spend it….let me manage it. My guess it’s a 80/20 split of the motive, that most care. Plus remember…Ramsey people do a lot of delayed gratification and you can assume their house is paid off and they are least decent budgeters. End point? I’d give the average Ramsey adherent a couple of extra percentage points…maybe not 8, but probably more than 4 since usually you splurge for 2-3 years when first retired and then you calm down and watch Judge Judy and visit grandkids.
Dave Ramsey is like the guy you hire when your company is small, does a great job, and then the company gets so big that the new job requirements exceed his abilities. When discussing debt reduction, saving, restrained spending, etc. he's excellent. On investing, he's horrifyingly bad and he's going to put a lot of people in the poorhouse with this 8% nonsense.
In a world full of extremists & people who are sure their way is the ONLY way, it is so nice to have a voice of reason to listen to. Someone who doesn't consider their own opinion as fact & who is willing to study the numbers & share the results. Thank you.
Doesn't matter with democrats new norm of inflation at 10 percent Noone can retire anymore except those who somehow snagged a government pension along the way 😅😅
Bill Bengen developed the 4% rule as a worst case scenario for safe withdrawals. For someone who retired in the late 1960s before a long bear market and high inflation. He never meant 4% to be universal. He's said the historical average safe withdrawal rate is closer to 7%, not 4%, and has been above 10% for some periods. Pretty close to Dave Ramsey's number.
I used to love listening to Dave (many years ago) and I stopped listening when a very nice respectful gentleman like yourself called in and actually presented the facts just like you did here. He was not arrogant and you can tell he was very well informed in this area. Dave treated this guy with such disrespect I could not believe what I was hearing. For some reason Dave dug in his heals on this one and won't admit he was wrong. Very arrogant! He also used very nasty comments when talking about the Bogleheads which I am one of them and that's when I knew he was talking out of his A___S. He is one of those people when he feels threatened, he attacks even when he is wrong. I love reading and listening to J.L. Collins, he is a real gentleman and understand the subject, unlike Dave
Agree. I used to find him entertaining. I stopped listening when it became clear that his Christian charity was more akin to white nationalism than anything Jesus ever taught us. Racist? Not sure. Elitist? Absolutely. Very sad .
Same, I used to find him entertaining, but when he insults people for paying off their highest interest debt first I want to pull my hair out. He treats his followers as if they are all emotionally manipulable and have no intellect to think for themselves or do simple calculations.
I stopped listening when he told a caller trying to return a mattress to bring a bunch of snot nosed kids into the show room with ice cream cones and have them lay on the demo mattresses until the shop relented and said yes to the refund. If I ran a mattress shop and someone tried to return an AS IS, Demo, or some type of bug infested mattress I'd say No refund too.
He turned me off with the relentless prosperity gospel and other jesus stuff. Once you get past his basic principles there is very little substance there. He also has a firehose of cash coming at him so he never needs to touch his IRA money and can't relate to us.
Dave Ramsey’s a great motivator for people that are in deep deep debt. No question about it. But Dave Ramsey doesn’t know anything about retirement planning, investing, or retirement draw downs. There are tons of forums that mock Dave’s severe investing ignorance.
"Motivator" is a really good choice of words, as opposed to "advisor" since the advice that Ramsey provides those in debt...and those who simply *fear* debt...leaves a lot to be desired. It's as if he's saying "prioritizing your feelings and whims over sound logic and analysis got you into this mess...but rather than fully embracing logic to get (and keep) you out of debt as quickly as possible and with the greatest savings, we're going to voluntarily give in to the power of those illogical feelings, making the process longer and more expensive."
I always say that if Dave really has returned 12% over his investment life, he would have quite a bit more money now. I think most of his wealth is from book sales and his website, not investing.
Dave's advice is actually brilliant - convince people to withdraw 8% of their retirement and then when they go broke and get into debt, they can call him for help and buy his books/classes.
@@michaelatkinson6730 It’ll take 12.5 years if you don’t adjust for inflation and get 0% interest. If you invest and the market goes to crap early on, you’ll really be in trouble.
Nice takedown Rob. Concise, to the point, and fact filled. I'm no economic savant, but other than Dave Ramsey I've never heard anyone else recommend let alone justify an 8% withdrawal rate.
I think you just made a profound observation. If you take out more to begin with (8%) you are more likely to have to reduce your withdrawals later to remain viable. But if you take out LESS to begin with (4%), you are more likely to be able to withdraw MORE later, and still remain viable. 11:45
I was thinking about this too as I was watching! Would be interesting to see a plan where you gradually ramp up withdrawals depending on how the initial few years perform
This guy didn't get rich as an investor. He got rich selling books and having a radio program. Also remember he went bankrupt trying to sell real estate.
Not to mention his budget app is priced on the high end (last I checked). Who cares what Dave Ramsey says? I sure don’t. I wish Rob stopped referencing him so much.
@@Francis0206 totally get your point. I dislike Ramsey greatly, so I just wish he would get less publicity. Even debunking him or arguing against his recommendations gives him publicity. That was more my point, but I do understand and respect yours!
Great video Rob. Straight to the point. Many times Ramsay does not make any sense and believing him could be dangerous to your forward planning if you believe his rubbish statements.
Solid analysis Rob. FYI, Dave Ramsey has given lots of poor advice out over the years and he's not the type of guy to offer updates, corrections or God forbid apologies.
Great video Rob! Well presented and thought out as always. As Forrest says, “Stupid is as stupid does”. Most sad is that he has millions of followers blindly following his advice. Super irresponsible.
Thanks Rob. You base your thoughts on facts and research. That is how retirement planning is supposed to work. In fact, facts and research could do wonders in a lot of areas these days. Please continue with helping to learn how to figure things out for ourselves.
Sequence of Returns Risk is one of the most discussed topics when discussing Retirement finances. The fact that Dave Ramsey has no idea about this shows us just how little he knows about investing and portfolio management. He has also yet to reveal his magic 12% mutual funds that he keeps talking about.
I keep thinking that surely by now someone is going to dig up a clip of Ramsey showing he knows about sequence of return risk in the abstract - I can just hear him pontificating about it to some caller showing how smart he is, and I assume he just is more aggressive than 4% (some people ARE, owing to more comfort with risk, less fear of longevity beyond the traditional 30 year timeline, or owing to spending habits changing as you age or advocating for enjoying your assets while able enough to do so and pulling back later) and that he just got triggered by the ubiquity of this 4% rule.... but so far, nobody has drudged it up to fight Ramsey with Ramsey... maybe he really is ignorant of the data, because he'll never have to personally worry about it? Surprising, either way.
Don't look to Dave Ramsey for investment advice. I can't stress this enough. In this area he's a common grifter selling expensive managed financial products. Even if 12 percent is a realized return his experts take a substantial cut for management fees.
@@moneycessity I disagree. Bad advice is bad advice. A "Complete Beginner" who follows bad advice will have those unnecessary fees compounding for years. They also run the risk of becoming discouraged, due to poor returns, and walking away from investing. I will somewhat agree that DR's advice for those deep in debt can help them right the ship, but his investment advice is bad for everyone.
@@moneycessity No, his advice is not good for anyone. He is NOT an investment guy. He was a failed real estate guy, who gambled and lost, then found a niche on the radio and made a fortune. He exploits stupid people through his products, and gives very very basic advice on how to get out of debt, but hey, his audience needs that advice. So if you struggle to pay bills on time, and somehow find yourself constantly accumulating new debt, Dave is your guy. For almost anything else, Dave is NOT your guy.
I’ve been retired for twenty years and 4% or 8% of whatever I had at the start is a meaningless number. You should review it every year based on the annual balance and a reasonable life expectancy. A percentage rule is only a guide to whether you can afford to retire. If you are of modest means and there isn’t much slack in your budget 4% would be wise. If you have a lot of discretionary spending and can cut back if times get hard then 8% is fine. If you have a fixed income, a work pension to fall back on then you can adjust upwards. But in any case review it every year. I’m now 78 and so in theory I could afford to go well above 8%.
You got it right. I been investing for about 35 years. I have seen people take 6-8 percent and yes they survive. The only problem is not controlling spending. 6-8 percent for 20 years will probably use up the retirement accounts, because of market down turns. A reasonable person can withdraw any amount depending on budget and market.
@@jjred233Absolutely agree that being flexible from year to year is the best option. That, and having cash on hand to help weather the down years so you're not eating away at your principal at the worst possible time.
She tried... and he just completely went off about George's video! I felt sorry for George at that moment... in my opinion, George, Rachel and Jade are the stars of the show now!
Dave is a master at getting people out of debt. He's built a great business around that. I long ago stopped listening to his retirement advice because, even while I didn't know a lot, know that lack of diversification and substantial risk is not a good long term play.
Is he though? I mean he's not exactly the authority or poster child of getting out of debt. His methods are simple enough that you really don't even need to know who he is, or what his "Baby Steps" are, in order to get out of debt. Common sense things like "You should be getting into $25,000 worth of credit card debt on a Burger King salary" don't take a mastermind to understand.
@@RossLemonThere’s a reason the saying, “common sense isn’t common” exists. Dave plays into that niche perfectly and speaks to people who don’t do the obvious things like saving for a rainy day, living on less than they make, etc.
So agree with you! I stopped listening to Dave years ago when he went off on his political rants…he appears to be so grumpy most of the time! I appreciate your videos!!
Rob, you're an inspiration. Thank you for doing what you do to help the average cat like me figure out this whole retirement thing! I can't thank you enough for your level-headed and informative analysis on a number of these type of topics! Keep it up my friend!
I have no idea how Twitter or any of these other social media platforms work, but somebody please tag him or somehow get his attention so he watches this. He's doing such a disservice to the millions of people who watch his content and may one day follow his withdrawal advice
Great video. I understand he wants to give hope, and I do like what George Kamel has to say (he's also pretty funny). I have to stick with Fidelity's 4% rule on this one. Love your statistics and research!
Excellent job, sir. I used the tried and true 4% rule for (bad word) and grins while I was working and saving for decades to see how I was doing against possible needs. Now that I am in retirement and have been taking monies out for expenses for 13 years and counting, I believe I am actually closer to 2-2.5% after SS. No debt, lots of travel, etc and still in great shape, but I have no need to accelerate that spending because my happiness quotient wouldn't rise much if I did. And if I wind up leaving a decent chunk to my daughter/SIL I am good with that as well. But not knowing what the future might bring, and not having the streams of income that Dave Ramsey has from all the products and services he is hawking on a daily basis, 8% is not something I would be comfortable with in the least.
@@Stopher2475 - yep, that is true, Stopher, the part about varying spend. But it seems to be somewhat consistent since I have a pretty balanced portfolio, heavily tilted to equities even at age 70, but with enough ballast in income producing assets as well. Best wishes to you in this journey to or through retirement, whichever side you find yourself on.
Hey Rob - when you inputted the stock parameters, you left the Expense Ratio at 0.04%, meaning you forgot to include the loads and Active Management fees that Dave is so fond of.
It just makes Dave’s advice that much worse. He’s not accounting for a 5.75% load and 1% expense ratio in the 12% returns he claims. Glad I ran like hell from Dave’s world after baby step 3.
He also didn't do 8% he just imputed 80k, so it doesn't matter his numbers don't follow daves percentage rule. If you are withdrawing 80k form 500k you're at 16% not 8%.
I'm so sad Dave spoke to someone this way. I turned my finances around thanks to him and even became a Ramsey coach for a while. But I noticed a few years back he started mistreating people (name calling, making fun of people for wearing masks during covid, firing people unwed people for having adult relations bullying staff and their spouses, and more) and he lost my respect. I will always be grateful for where I am financially thanks to him, but sadly I stopped following him because of how he's been acting.
Power corrupts, absolute power corrupts absolutely. Dave has been corrupted by his success. He also showed himself to be a first class POS when he fired a single woman for being pregnant and then boasting that he could do what he wanted since he's the boss and Tennessee is an employment-at-will state. To add insult to injury he then puts on airs about being a good Christian. Anyone with a mere superficial knowledge of scripture is not fooled, so the man upstairs definitely isn't either.
Thanks as always for the great discussion Rob. I don't know Dave and wouldn't click on any of his videos after listening to this. He can keep his goobers too.
The best part of the Dave Ramsey rant here is watching his daughter Rachel. She tried to get a word in...but he wasn't having it. Rachel is wicked smart and sometimes she sees Dave go off and tries to bring him back in. I don't watch the show regularly, but almost every time I've seen her on the show, she's doing something to bring him back on an issue. Don't get me wrong, Dave Ramsey is a very smart guy himself, but sometimes his vision gets clogged/cloudy or whatever. 8%? great! In the movie "Office Space"....you hear this line "It would be nice to have that kind of job security"....take out the job. Anyways. Hilarious....for me, I'd LOVE to take 8% out when I retire....on top of SS (at FRA) and my current income (if I decide to keep working or can keep working),but the reality is 4% is the better option. Leave that other money in there to work. Sometimes you have the dumbest smart guy....and for this issue, it's Dave.
Two things I see as a joke, regarding this whole 8% rule silliness. 1. Withdrawing 8% of a million dollar portfolio every single year regardless of performance is just- well, pretty dumb. Simple, yes, but definitely dumb. 2. Anyone who seriously thinks they can retire at 30 with a million bucks, taking 80k out every single year for the next 50-60 years must be on crack, so my prediction is they will definitely die broke in a crack house in which they do not own.
Dave Ramsey is the type of guy who will punch you if you use a credit card, if you choose low cost index fund. He needs to check the facts before making claims. We can’t assume 12% return on market based on past history. If he really wanted to help people he would disclose “12% Mutual Funds that he invests in”. Good job tackling this one Rob! Excellent explanation.
He cant tell people to buy this and that Mutual funds in Radio. Thats why he recommend find advisor from his site. You can look over Fidelity or Vanguard's mutual funds and study out yourself or ask their advisor.
Not true. He does recommend, and has said that he uses, index funds for some purposes. Anything you are not planning to leave in the market for 20-30 years, he recommends index funds.
Dave Ramsey makes some good points for people that have no idea how to manage their finances. With that being said, he is completely out to lunch when it comes to many investments and investment advice he gives. Everyone needs to do their own research, talk to a professional(s), and do what is right for their particular situation and comfort level as it relates to their personal financial goals.
Thanks for mentioning Fi Calc. I just tried it and was reassured when it provided me results very similar to Vanguard's monte carlo simulations. Feeling good here in the Southwest.....
Brilliantly expressed. Dave Ramsey runs on fear and shame! He is the guy who still blames the big bad wolf large bank that took over the small community bank that "ended the relationship" with a 26 year-old (himself) having multiple residential investment properties and thus he was forced into foreclosure and "had" to file for bankruptcy. Dave fails to be honest and simply state he completely over-leveraged all his investment properties and when the rates increased, the market dipped, he failed to make the increased mortgage payments and thus the bank foreclosed upon him (due to his own greed). But don't worry, he will always believe in investing in 12% rate of return, good-growth-stock, mutual funds! Love his ignorance and stupidity.
@@hockey1freakAgreed, he's likely in that 115-120 IQ range where the hundos think he's smart, the smart people know he's limited, but there are a lot more people who fall into the former than the latter. Guys like Bill Burr and Joe Rogan likely fall in this range. They sound really smart to dumb people yet aren't smart enough to ever sound arrogant or sound too nerdy and off-putting. People in this range likely suffer from Dunning-Krueger.
@@RH-jf9ty lmfao exactly. Dave wants to give some sob story about how the banks came after him when in reality he was just an idiot with his money. There's thousands of other people that have been able to successfully leverage debt with little to no issues at all.
Rob, You are correct, that averages look great, but using actual returns, etc. doesn't guarantee success in all scenarios. Thank you for your good insights and factual analyses!
The reality is that any informed retiree is not going to put 100% of their assets into equities . More likely they will invest somewhere between 25% (if they are aggressive) and 50% (if they are conservative) in something safer like bonds, cds, or annuities. So you can’t count on a total portfolio return of 8-12%. So when you do a quick calculation of say 8% against what you have invested in equities, your overall portfolio performance is much lower than 8-12%. So telling people to take such a high percentage from their portfolio, in my humble opinion, is reckless. But hey, what do I know…..
But currently cds and even money market accounts are paying 5%. So should the 4 % be updated from times when fixed yields payed less than 1%. My plan has a higher withdraw rate early and if I run low later that's ok because honestly if I'm in my late 80s and 90s I most likely feel like traveling or golfing.
Yeah like everyone will live 30 years in retirement. More like 5% will make it, yet people keep projecting out 30 years for their money to last when they could be spending much more.
My aunt lived to 95. She was very happy to be able to buy groceries and pay for heat and light. I guess you could spend more and hope to die early, but that’s not my plan.
@Freshprankstv1 He certainly could disclose names of the mutual funds, along with their expense ratios. But that would expose, over the long term, that they do not perform as well as simple index funds.
The way I understood Dave is 4% as a fixed amount is unrealistic. For example, why didn’t you include soc sec in your calculations. If your cost of living is $80k and you take soc sec then you don’t need the full 8% every year. You can save the excess or take less a year or two. That will extend your “run out of money” point. Dave said in his rant that the 4% rule will make people think they need $2million saved to retire which will make some people just give up as they’ll never get there. So even though your analysis isn’t wrong, it’s overly conservative. The key is to reduce your cost of living and have no debt. $80k seems a bit high but even with that, including soc sec, you’ll need far less than 8% withdrawal on $1 mil portfolio. During good return years take out the 8%, during bad return years maybe take less or the bare minimum needed. But 4% is a very conservative number. Too conservative is the way I took Dave’s rant.
You can technically withdraw 8% forever ... BUT the amount you withdraw every year will vary. The key here is you won't get to withdraw 8% of the ORIGINAL balance each year. You'd have to withdraw 8% of the CURRENT year balance. Most people wouldn't feel comfortable with that as it wouldn't generate a steady annual income. So you are both right depending on operational definitions and goals 🙂
Thanks Rob. I do love watch yours and Dave show. I personally get to learned lot from both and some other advisors. Im glad i can continue to learn great things from great people out there. Thanks for teaching.
Wow, just wow. I've watched many retirement videos, listened to many different forms of advice, even a few things from Dave, but now, I've lost any modicum of respect I had in his opinions. Thanks for your rational, facts based approach.
I like how Dave says listen to people who have experience succeeding at something (ie him wrt debt and real estate) yet he calls these people dumb despite Dave never having been retired and having no idea.
Dave will occasionally spit out decent advice, but so does my drunk neighbor. On the other hand Rob… You always get into the nuances of finance, which is where the education begins. I really respect and appreciate your sound approach to investing… and without the insults 😊
Thanks Rob, for this. I LOVE Dave Ramsey, but I absolutely believe you are correct in this analysis. Thank you for the rational review and suggestions. .
Terrific video, thank you for sharing! Thank you for sharing! Dave’s advice is going to lead a lot more people to prosperity than to the poor house, but yours is a terrific alternate perspective! I think Dave’s problem is that he has to make things extraordinarily simple for the simple minds that truly need his help.
I draw about 2.4% of mine, and with social security, I'm pretty comfortable. Admittedly, I am still pretty mindful of spending, but having very little debt helps a lot. I have always been one to err on the side of caution with money, and this is only my retirement account I'm talking about, not my liquid savings. It's not what you make, it's what you spend.
Agree with you Rob. In my opinion, you are very realistic and honest in your advice. I think Ramsy is providing bad advice. Not sure why that is. He's clearly not stupid but certainly off track with suggesting an 8% withdraw rate. Few people achieve the performance he claims even with a personal advisor. Few people are 100% into stocks at retirement. That would be stupid. In fact many advisors say 3-3.5% is the safest withdraw rate. I believe 4% is a good target , however during down periods we back off that. number. I started using New Retirement software a year ago and retired in May. I highly reccommend it to folks nearing retirement,
For someone that consistently speaks about not seeing risk, I'm surprised Dave still has such a blind spot. My plan when I retire is live off of 1% of my retirement savings so that even if I'm extremely off, I might have to use 2 or 3%. If I made a plan to need (key word here, NEED) 8% to live then I have no buffer for risks to the market and risks cause by our wonderful government messing with inflation. Worse case is I die with a bunch you pass along to my family and loved ones... Oh no. Thank you for the detailed and clear explanation.
Rob, don’t even give Dave Ramsey air time, waste of oxygen. Your videos are so informative and have assisted me no end. I have used ficalc numerous times on his scenario and imputed things like a new car , increase medical expenses etc, I Cant get 8% to work at all, the guys a “ goober”
I really didn't expect Dave to blow up like that when I called. I will have a recap video going over the experience on the 21st if not sooner. I had layers to the question that I really wanted answered. Instead, his rant is getting a lot of negative attention on X. He also took the article down that I cited. Too bad, too. It was a good one.
I am 51 and glad I came across this video. I am on track to not have mortgage, car or credit card debt upon retirement. I will buy my last car (an EV) before retirement to get me through.
Lol, you must be planning a short retirement if you think one EV will get you through. I hope you have a long retirement and have enough to buy several replacements.
Dave Ramsey is similar to Robert Kiyosaki. Both have done well with the simplest of concepts, and each has done exceptionally well as a con man. They both are fabulously wealthy from taking hard earned money from the ignorant masses.
First Rob...thanks for making it crystal clear that one shouldn't blindly follow the advice of these so-called financial Gurus or these financial-RUclipsrs! As I always say...one of the most important benefits of going to college and that one learns how to do imperial research--to fact check for oneself. Thus, being able to unearth the truth or validity of the information being expounded so that one may source the information for his- or herself. Thereby being able to evaluate rather or not the information being expounded is true or not. Thus, one will avoid-in this case-a financial calamity! Moreover, one can avoid getting drawn into all this "Fake News" of financial non-sense! Once again Rob…Great Job... .
Thanks for sharing Dave Ramsey's video link as it's not titled the 4% rule. I agree that Ramsey doesn't take into account stock market fluctuations every year such as last year when the S&P dropped about 18%. If someone retired at the end of 1999 and withdrew more than 4% they'd run out of money in 10-15 years. From 2000-2002 stocks were in a 3 year bear market that most younger people haven't experienced.
The "below the waterline" debt reducers are well served. .. and that's good because the poor are underserved. However, this has little to do with investors.
Great video, Rob. I object to many of his teachings, but this is the most egregious one. And this doesn’t include the fact that he tells people not to care about expense ratios in mutual funds.
Firstly thanks for this video! It's very informative. Secondly, I really wish the investment brokers from where I live, actually gave this kind of really in depth information to us when they try to onboard us as clients. I did away with brokers/advisors because they certainly did not out the amount of effort into educating me like you did here about things. Instead, they approach you, or you get assigned an advisor by the investment firm, they sign you on, and you never hear from them again. In the meantime, they are taking annual management fees which, by the way, are exorbitant. Between them and the large firm they contract for, you're looking at up to 4% that is taken. I'm not sure how it is in the US. Like I said, I went on my own to by ETFs where the maximum charge is 1%. Thanks again for your indepth analysis and the calculators. They explain an awful lot!
This is not a financial advice and I never give financial advice: DONT LEAVE DURING THE BEAR. If you don’t want to invest…learn. If you don’t want to learn…build. If you don’t want to build observe. DO SOMETHING…other than leave. There is so much opportunity here. Take advantage!
That same reference from Vanguard, where it says 12.3% return, also shows that 25 years out of 96 produced a negative return. So this goes to your point, it matters what years you look at.
The problem is that you need twice the return for a loss just to get back to even. For a 50% loss, one needs 100% return to get back to even. And if you make a withdrawal during this loss, you need more than 100% return. Creates a death spiral if one has a series of negative returns.
So true Rob.,, even way worse in the last 3 years with inflation...vehicles food energy housing upkeep insurance etc..up at least 50% ..Great video with the detail / facts.👍
Dave has decent advice for people who are undisciplined financially and just starting to get their finances together. As far as long term financial planning and solid advice hes an amatuer whos opinions and style leave a lot to be desired. Hes basically a salesmen with a spiel and not very good at weighing an individuals financial needs. Everything with him is one size fits all. For many of his listeners hes the messiah.
Hey Rob, I just want to thank you for your programs. I also want to thank you for your professionalism! Sadly to say I can no longer watch Dave Ramsey or listen to his programming because for some reason in my opinion he has become quite arrogant and disrespectful. Even though I struggle to comprehend some of your information, I keep coming back and giving it my best, because I believe you are a very good teacher. Thanks again.
My parents retired very modestly, 25 years ago. They started at a 4% withdrawal and when things went well they got bolder. They were at 8% when the market took a dump and they quickly saw the money slip away. It was heartbreaking to watch them go through that. Don’t let a life’s worth of work go to waste. Live within your means and enjoy your golden years.
Ramsey's advice is pabulum for the masses who haven't saved enough for retirement and need to be reassured that their anemic nest egg will be sufficient. Thanks for your level-headed reality check.
Having a goal of a thirty-year retirement, while a sound idea, is probably not close to a reality for most of Ramsey’s listeners. And even for the ones that do outlive their savings, a large percentage are probably put in nursing homes by their families, and all of their assets will be taken anyway.
This is the difference between sound realistic financial advice and advice for the sake of showmanship and making money off of others. Well done Rob and I'm fairly sure Dave Ramsey will not be responding to your video.
Dave's reaction is that of someone who's not used to being challenged. It's why he's got the company being run by his kids and every forward facing personality he has knows nothing more than how to parrot a script he wrote.
In any case, if you're comfortable living off of 4%, it doesn't sound all that moronic to save the remaining 4%. That sounds sensible, in fact. His next book should be "Dave Ramsey: how I threaten the financial futures of my loyal listeners!"
I think Rob's critique is dead on, however, there are other factors. One of them is the smile curve. If you are doing a traditional retirement we know that your spending will trend downwards in your 70s. So you can probably get away with spending quite a bit more than 4% if you are retiring at a traditional retirement age or older. Even if you are retiring younger (I'm 53 and working part-time until 55), you can also get away with more than 4% if you are willing to develop some active income based upon conditions, or even just out of a basic desire to have something to fill your time. So to the extent that Dave is arguing that you shouldn't let the 4% rule to cause you to live in fear because life is a journey, I think he has a point. No well in HELL I'm following his advice and drawing out 8%, but he is not completely wrong. What I really don't like is his style. He doesn't need to call other people stupid or make up stupid theories about living in Mom's basement. If Rob is living in Mom's basement, I want to move there. And this is why I don't look at Dave's content anymore. I don't need his drama.
Spot on, planning out 30 yrs and thinking spending will stay same, both are incorrect for the most part so why leave so much on table for advisors to make money on unless want to leave to kids.
Great clip. Dave is a little crazy with 8% withdrawal rate. I would like to be in that meeting to hear what Dave said to George camel after George said on his show to do a 4% withdrawal rate! Thx for sharing.
Dave Rambunctious Ramsey is not someone i will take financial advice from; he’s very emotional when he speaks to guest. Thanks Mr. Rob Berger for your insight…I will never have 1 million dollars but I hope to have some money to buy food and for shelter when i retire or a nice cool nursing home…
Dave Ramsey Is right on the money for the first 4 steps!! Most investors now that have some money on their pockets forget how it was prior to become wealthy 😮
For several years in a row my university had someone come in to do retirement sessions and they gave us a worksheet that indicated we should withdraw 8%. I raised my hand and said I know where you got this number but it's way too much and will probably decimate people's retirement. He just laughed and moved on so I walked out. Emailed HR about how dangerous his advice was but they kept bringing him back.
@ganymededarling You should probably know what decimate means when trying to sound smart talking numbers. If my retirement egg was decimated I'd be extremely happy because it would mean I died with 90% balance remaining.
There are two definitions of decimate, thank you for opening my eyes to the one you are referencing! I do believe the person used it properly in one meaning of the word.
Are there withdrawal strategies that are more responsive, or algorithmic? For instance, you don't really need to make a decision on 4% and stick to it for 30 years, you obviously can adjust that rate as you go. The guidance then becomes you can plan to spend *between* 2%-5% a year, and maybe some guidance on how often it's likely to be 2%, 3%, etc.
Bill Bengen developed the 4% rule as a worst case scenario for safe withdrawals. For someone who retired in the late 1960s before a long bear market and high inflation. He never meant 4% to be universal. He's said the historical average safe withdrawal rate is closer to 7%, not 4%, and has been above 10% for some periods. Pretty close to Dave Ramsey's number.
Dave Ramsey doesn't let facts get in the way of opinions.
He's one of those people who think that they are always the smartest person in the room.
Money does that to stupid people
The reason Dave Ramsey thinks 8% will work is that he has a bazillion dollars on which to retire.
Nope, he let's facts speak for themselves. In the last 46 years, he would have been correct 45 times. That's almost a 98% chance for success. I can live with that.
@@jasonbroom7147 How do you figure?
Dave will never admit he is wrong about anything. He will just raise his voice because the person who speaks loudest must be right.
And when that fails he uses his mute button.
He has a reputation for it.
>He will just raise his voice because the person who speaks loudest must be right.
That's how I do it with my wife ( o.o)
I think Daves sort of right in that financial planners are wayyyyyy too conservative about what
A. You need to retire
B. How much to spend down.
And sadly that causes people to just not save at all.
Why?
1. Non-cynically, you could say they care about their clients and don’t want them to run out of money and then point a finger at them. Especially since they probably have a fiduciary duty to them
2. Cynically, they want more assets to manage as they usually make more money. That is…don’t spend it….let me manage it.
My guess it’s a 80/20 split of the motive, that most care.
Plus remember…Ramsey people do a lot of delayed gratification and you can assume their house is paid off and they are least decent budgeters.
End point? I’d give the average Ramsey adherent a couple of extra percentage points…maybe not 8, but probably more than 4 since usually you splurge for 2-3 years when first retired and then you calm down and watch Judge Judy and visit grandkids.
See Stephen A Smith for sports fans
Dave Ramsey is like the guy you hire when your company is small, does a great job, and then the company gets so big that the new job requirements exceed his abilities.
When discussing debt reduction, saving, restrained spending, etc. he's excellent.
On investing, he's horrifyingly bad and he's going to put a lot of people in the poorhouse with this 8% nonsense.
His debt paydown advice isnt even good though. The only thing dave gets right is term life insurance over whole life.
but it works because HIS mutual funds he makes money off of by putting you in always return 12% (sarcasm)
"Excellent" is an overstatement of Ramsey's debt reduction advice; I'd characterize it as "highly useful, but flawed".
@@FlyinRyan31310secret mutual funds. Bernie Madoff only promised 10%
@@sirrebral Tell this to the thousands he's help get out of debt I guess.
In a world full of extremists & people who are sure their way is the ONLY way, it is so nice to have a voice of reason to listen to. Someone who doesn't consider their own opinion as fact & who is willing to study the numbers & share the results. Thank you.
Thank you for this video. Your rational, factually-based analysis, absent of any name calling, will always be worthy of my time.
Doesn't matter with democrats new norm of inflation at 10 percent Noone can retire anymore except those who somehow snagged a government pension along the way 😅😅
Bill Bengen developed the 4% rule as a worst case scenario for safe withdrawals. For someone who retired in the late 1960s before a long bear market and high inflation. He never meant 4% to be universal.
He's said the historical average safe withdrawal rate is closer to 7%, not 4%, and has been above 10% for some periods.
Pretty close to Dave Ramsey's number.
@@harrisonwintergreen1147 I'm gonna use like 5 percent or 5.5
I used to love listening to Dave (many years ago) and I stopped listening when a very nice respectful gentleman like yourself called in and actually presented the facts just like you did here. He was not arrogant and you can tell he was very well informed in this area. Dave treated this guy with such disrespect I could not believe what I was hearing. For some reason Dave dug in his heals on this one and won't admit he was wrong. Very arrogant! He also used very nasty comments when talking about the Bogleheads which I am one of them and that's when I knew he was talking out of his A___S. He is one of those people when he feels threatened, he attacks even when he is wrong. I love reading and listening to J.L. Collins, he is a real gentleman and understand the subject, unlike Dave
Agree. I used to find him entertaining. I stopped listening when it became clear that his Christian charity was more akin to white nationalism than anything Jesus ever taught us. Racist? Not sure. Elitist? Absolutely. Very sad .
Same, I used to find him entertaining, but when he insults people for paying off their highest interest debt first I want to pull my hair out. He treats his followers as if they are all emotionally manipulable and have no intellect to think for themselves or do simple calculations.
I stopped listening when he told a caller trying to return a mattress to bring a bunch of snot nosed kids into the show room with ice cream cones and have them lay on the demo mattresses until the shop relented and said yes to the refund. If I ran a mattress shop and someone tried to return an AS IS, Demo, or some type of bug infested mattress I'd say No refund too.
He turned me off with the relentless prosperity gospel and other jesus stuff. Once you get past his basic principles there is very little substance there. He also has a firehose of cash coming at him so he never needs to touch his IRA money and can't relate to us.
@@jimc9175 The Venn Diagram overlap of those folks and folks that are attracted to Evangelical Christian megachurches is significant.
Dave Ramsey’s a great motivator for people that are in deep deep debt. No question about it. But Dave Ramsey doesn’t know anything about retirement planning, investing, or retirement draw downs. There are tons of forums that mock Dave’s severe investing ignorance.
Exactly!!🎉
pre google mindset pulling things out of his..... out of thin air
"Motivator" is a really good choice of words, as opposed to "advisor" since the advice that Ramsey provides those in debt...and those who simply *fear* debt...leaves a lot to be desired.
It's as if he's saying "prioritizing your feelings and whims over sound logic and analysis got you into this mess...but rather than fully embracing logic to get (and keep) you out of debt as quickly as possible and with the greatest savings, we're going to voluntarily give in to the power of those illogical feelings, making the process longer and more expensive."
I always say that if Dave really has returned 12% over his investment life, he would have quite a bit more money now. I think most of his wealth is from book sales and his website, not investing.
he would get 12 to 13 percent there are a lot fo big fuds that got that and he been investing for like 30 plus years.
Dave's advice is actually brilliant - convince people to withdraw 8% of their retirement and then when they go broke and get into debt, they can call him for help and buy his books/classes.
my thought exactly... you have to go back to beans and rice at the age 80+ lol
This one got me! 😂 He is a genius.
If you have a nest egg of $1mil and draw 8% its going to take a long time to go broke. The whole argument of percentages here is really silly.
@@michaelatkinson6730 It’ll take 12.5 years if you don’t adjust for inflation and get 0% interest. If you invest and the market goes to crap early on, you’ll really be in trouble.
@@michaelatkinson6730 Good luck withdrawing $80k per year with that.
You are the most reasonable person I watch when it comes to retirement advice. I truly appreciate that. Thank you.
Nice takedown Rob. Concise, to the point, and fact filled. I'm no economic savant, but other than Dave Ramsey I've never heard anyone else recommend let alone justify an 8% withdrawal rate.
I think you just made a profound observation. If you take out more to begin with (8%) you are more likely to have to reduce your withdrawals later to remain viable. But if you take out LESS to begin with (4%), you are more likely to be able to withdraw MORE later, and still remain viable. 11:45
I was thinking about this too as I was watching! Would be interesting to see a plan where you gradually ramp up withdrawals depending on how the initial few years perform
That’s exactly right. The risk of going to 5%, 6%, or higher go down the closer you are to dying.
This guy didn't get rich as an investor. He got rich selling books and having a radio program. Also remember he went bankrupt trying to sell real estate.
Went bankrupt after the bank called his short term notes on his extremely levered real estate portfolio*
Not to mention his budget app is priced on the high end (last I checked). Who cares what Dave Ramsey says? I sure don’t. I wish Rob stopped referencing him so much.
@@Francis0206 totally get your point. I dislike Ramsey greatly, so I just wish he would get less publicity. Even debunking him or arguing against his recommendations gives him publicity. That was more my point, but I do understand and respect yours!
And prob royalty type deal with real estate agents and advisors he refers to on show. He’s a shrewd biz person for sure.
Ramsey pushes his religious views occasionally as well. Anyone who conflates faith with financial advice is no one to listen to in my book.
It would give his statements a lot more credibility if he just shared his investments that have earned 12% for years
Haha good point. He isn't living off his portfolio anyway. He continues to make money and support himself through work.
he has shared it here - 25% large cap, 25% mid cap, 25% small cap, 25% international
Because his growth stock mutual funds haven't even beat the S&P 500
S&p has made 12% what are you guys investing in?
He also invests a lot of money in real estate, I believe in the Nashville area which has been a hot market.
Great video Rob. Straight to the point. Many times Ramsay does not make any sense and believing him could be dangerous to your forward planning if you believe his rubbish statements.
Solid analysis Rob. FYI, Dave Ramsey has given lots of poor advice out over the years and he's not the type of guy to offer updates, corrections or God forbid apologies.
Great video Rob! Well presented and thought out as always. As Forrest says, “Stupid is as stupid does”. Most sad is that he has millions of followers blindly following his advice. Super irresponsible.
Thanks Rob. You base your thoughts on facts and research. That is how retirement planning is supposed to work. In fact, facts and research could do wonders in a lot of areas these days. Please continue with helping to learn how to figure things out for ourselves.
Sequence of Returns Risk is one of the most discussed topics when discussing Retirement finances. The fact that Dave Ramsey has no idea about this shows us just how little he knows about investing and portfolio management. He has also yet to reveal his magic 12% mutual funds that he keeps talking about.
I keep thinking that surely by now someone is going to dig up a clip of Ramsey showing he knows about sequence of return risk in the abstract - I can just hear him pontificating about it to some caller showing how smart he is, and I assume he just is more aggressive than 4% (some people ARE, owing to more comfort with risk, less fear of longevity beyond the traditional 30 year timeline, or owing to spending habits changing as you age or advocating for enjoying your assets while able enough to do so and pulling back later) and that he just got triggered by the ubiquity of this 4% rule.... but so far, nobody has drudged it up to fight Ramsey with Ramsey... maybe he really is ignorant of the data, because he'll never have to personally worry about it? Surprising, either way.
Don't look to Dave Ramsey for investment advice. I can't stress this enough. In this area he's a common grifter selling expensive managed financial products. Even if 12 percent is a realized return his experts take a substantial cut for management fees.
His advice is only good for people who are complete beginners and need a lot of help.
Susie Orman with a Y chromosome.
@@moneycessity I disagree. Bad advice is bad advice. A "Complete Beginner" who follows bad advice will have those unnecessary fees compounding for years. They also run the risk of becoming discouraged, due to poor returns, and walking away from investing.
I will somewhat agree that DR's advice for those deep in debt can help them right the ship, but his investment advice is bad for everyone.
@@moneycessity No, his advice is not good for anyone. He is NOT an investment guy. He was a failed real estate guy, who gambled and lost, then found a niche on the radio and made a fortune. He exploits stupid people through his products, and gives very very basic advice on how to get out of debt, but hey, his audience needs that advice. So if you struggle to pay bills on time, and somehow find yourself constantly accumulating new debt, Dave is your guy. For almost anything else, Dave is NOT your guy.
@@mplslawnguy3389 Paying off cheaper debt first is bad advice.
I’ve been retired for twenty years and 4% or 8% of whatever I had at the start is a meaningless number. You should review it every year based on the annual balance and a reasonable life expectancy.
A percentage rule is only a guide to whether you can afford to retire. If you are of modest means and there isn’t much slack in your budget 4% would be wise.
If you have a lot of discretionary spending and can cut back if times get hard then 8% is fine. If you have a fixed income, a work pension to fall back on then you can adjust upwards. But in any case review it every year.
I’m now 78 and so in theory I could afford to go well above 8%.
You got it right. I been investing for about 35 years. I have seen people take 6-8 percent and yes they survive. The only problem is not controlling spending. 6-8 percent for 20 years will probably use up the retirement accounts, because of market down turns. A reasonable person can withdraw any amount depending on budget and market.
@@jjred233Absolutely agree that being flexible from year to year is the best option. That, and having cash on hand to help weather the down years so you're not eating away at your principal at the worst possible time.
You sir are what I would call 1000000% CORRECT that is the best advice just review it every year and budget accordingly.
Yes! That makes the most sense.
Dave's plan is 8% of what you have, not what you started with. What you started with holds little matter what you currently have is important.
This is a very good analysis. You are direct and to the point and back it up with something that works: the facts.
Watched the Ramsey video, Looks like his daughter was trying to walk him back a bit. He was way off base saying that. Good job, Rob!
She tried... and he just completely went off about George's video! I felt sorry for George at that moment... in my opinion, George, Rachel and Jade are the stars of the show now!
Rachel’s cool. She’s not a hothead like her dad.
Dave is a master at getting people out of debt. He's built a great business around that. I long ago stopped listening to his retirement advice because, even while I didn't know a lot, know that lack of diversification and substantial risk is not a good long term play.
Is he though? I mean he's not exactly the authority or poster child of getting out of debt. His methods are simple enough that you really don't even need to know who he is, or what his "Baby Steps" are, in order to get out of debt. Common sense things like "You should be getting into $25,000 worth of credit card debt on a Burger King salary" don't take a mastermind to understand.
@@RossLemonThere’s a reason the saying, “common sense isn’t common” exists. Dave plays into that niche perfectly and speaks to people who don’t do the obvious things like saving for a rainy day, living on less than they make, etc.
All things that are still beyond the average American. You are seriously overestimating the intelligence of the average American. @@RossLemon
So agree with you! I stopped listening to Dave years ago when he went off on his political rants…he appears to be so grumpy most of the time!
I appreciate your videos!!
Being grumpy is the best thing about Dave.
Rob, you're an inspiration. Thank you for doing what you do to help the average cat like me figure out this whole retirement thing! I can't thank you enough for your level-headed and informative analysis on a number of these type of topics! Keep it up my friend!
I have no idea how Twitter or any of these other social media platforms work, but somebody please tag him or somehow get his attention so he watches this. He's doing such a disservice to the millions of people who watch his content and may one day follow his withdrawal advice
Great video. I understand he wants to give hope, and I do like what George Kamel has to say (he's also pretty funny). I have to stick with Fidelity's 4% rule on this one. Love your statistics and research!
I am a "Goober". Depending on the market at the time I would feel most comfortable with withdrawing anywhere from 3% to 5%.
I'm a goober as well. I haven't watched the Ramsey video yet, but I plan on around 6%. I'm not in the market, so there's no wild swings to factor in.
Nobody should withdraw more than 1%
@@bernlitzner2739 4% is already likely too high to be considered safe and based on flawed data. 6% is an extremely risky strategy.
Excellent job, sir. I used the tried and true 4% rule for (bad word) and grins while I was working and saving for decades to see how I was doing against possible needs. Now that I am in retirement and have been taking monies out for expenses for 13 years and counting, I believe I am actually closer to 2-2.5% after SS. No debt, lots of travel, etc and still in great shape, but I have no need to accelerate that spending because my happiness quotient wouldn't rise much if I did. And if I wind up leaving a decent chunk to my daughter/SIL I am good with that as well. But not knowing what the future might bring, and not having the streams of income that Dave Ramsey has from all the products and services he is hawking on a daily basis, 8% is not something I would be comfortable with in the least.
If you're spending 4% or less and not denying yourself anything there's no issue. I imagine some years I'll be higher and some years I'll be lower.
@@Stopher2475 - yep, that is true, Stopher, the part about varying spend. But it seems to be somewhat consistent since I have a pretty balanced portfolio, heavily tilted to equities even at age 70, but with enough ballast in income producing assets as well. Best wishes to you in this journey to or through retirement, whichever side you find yourself on.
Thank you for injecting some calm sanity into this discussion.
My "plan" has always been to underestimate returns and use lower withdrawal rates (eg. 8% returns and 3% withdrawal rate), and I'm still nervous!!
Hey Rob - when you inputted the stock parameters, you left the Expense Ratio at 0.04%, meaning you forgot to include the loads and Active Management fees that Dave is so fond of.
It just makes Dave’s advice that much worse. He’s not accounting for a 5.75% load and 1% expense ratio in the 12% returns he claims.
Glad I ran like hell from Dave’s world after baby step 3.
He also didn't do 8% he just imputed 80k, so it doesn't matter his numbers don't follow daves percentage rule. If you are withdrawing 80k form 500k you're at 16% not 8%.
I'm so sad Dave spoke to someone this way. I turned my finances around thanks to him and even became a Ramsey coach for a while. But I noticed a few years back he started mistreating people (name calling, making fun of people for wearing masks during covid, firing people unwed people for having adult relations bullying staff and their spouses, and more) and he lost my respect. I will always be grateful for where I am financially thanks to him, but sadly I stopped following him because of how he's been acting.
Power corrupts, absolute power corrupts absolutely. Dave has been corrupted by his success. He also showed himself to be a first class POS when he fired a single woman for being pregnant and then boasting that he could do what he wanted since he's the boss and Tennessee is an employment-at-will state. To add insult to injury he then puts on airs about being a good Christian. Anyone with a mere superficial knowledge of scripture is not fooled, so the man upstairs definitely isn't either.
Yea he's all of the above. You don't need him or me to tell you to stay away from poor financial decisions.
His advice is good for getting people with poor habits out of debt. Dont rely on him for wealth management. He’s inconsistent
Thanks as always for the great discussion Rob. I don't know Dave and wouldn't click on any of his videos after listening to this. He can keep his goobers too.
The best part of the Dave Ramsey rant here is watching his daughter Rachel. She tried to get a word in...but he wasn't having it. Rachel is wicked smart and sometimes she sees Dave go off and tries to bring him back in. I don't watch the show regularly, but almost every time I've seen her on the show, she's doing something to bring him back on an issue. Don't get me wrong, Dave Ramsey is a very smart guy himself, but sometimes his vision gets clogged/cloudy or whatever. 8%? great! In the movie "Office Space"....you hear this line "It would be nice to have that kind of job security"....take out the job. Anyways. Hilarious....for me, I'd LOVE to take 8% out when I retire....on top of SS (at FRA) and my current income (if I decide to keep working or can keep working),but the reality is 4% is the better option. Leave that other money in there to work. Sometimes you have the dumbest smart guy....and for this issue, it's Dave.
Two things I see as a joke, regarding this whole 8% rule silliness.
1. Withdrawing 8% of a million dollar portfolio every single year regardless of performance is just- well, pretty dumb. Simple, yes, but definitely dumb.
2. Anyone who seriously thinks they can retire at 30 with a million bucks, taking 80k out every single year for the next 50-60 years must be on crack, so my prediction is they will definitely die broke in a crack house in which they do not own.
Dave Ramsey is the type of guy who will punch you if you use a credit card, if you choose low cost index fund. He needs to check the facts before making claims. We can’t assume 12% return on market based on past history. If he really wanted to help people he would disclose “12% Mutual Funds that he invests in”.
Good job tackling this one Rob! Excellent explanation.
He cant tell people to buy this and that Mutual funds in Radio. Thats why he recommend find advisor from his site. You can look over Fidelity or Vanguard's mutual funds and study out yourself or ask their advisor.
Not true. He does recommend, and has said that he uses, index funds for some purposes. Anything you are not planning to leave in the market for 20-30 years, he recommends index funds.
Dave Ramsey makes some good points for people that have no idea how to manage their finances. With that being said, he is completely out to lunch when it comes to many investments and investment advice he gives. Everyone needs to do their own research, talk to a professional(s), and do what is right for their particular situation and comfort level as it relates to their personal financial goals.
Thanks for mentioning Fi Calc. I just tried it and was reassured when it provided me results very similar to Vanguard's monte carlo simulations. Feeling good here in the Southwest.....
Dave Ramsey is what dumb people think is a smart person. He is instantly relatable in a cranky old neighbor kind of way.
"Dave Ramsey is what dumb people think is a smart person" omg i cant imagine anything more apt than this. Well said.
Brilliantly expressed. Dave Ramsey runs on fear and shame!
He is the guy who still blames the big bad wolf large bank that took over the small community bank that "ended the relationship" with a 26 year-old (himself) having multiple residential investment properties and thus he was forced into foreclosure and "had" to file for bankruptcy. Dave fails to be honest and simply state he completely over-leveraged all his investment properties and when the rates increased, the market dipped, he failed to make the increased mortgage payments and thus the bank foreclosed upon him (due to his own greed).
But don't worry, he will always believe in investing in 12% rate of return, good-growth-stock, mutual funds! Love his ignorance and stupidity.
@@hockey1freakAgreed, he's likely in that 115-120 IQ range where the hundos think he's smart, the smart people know he's limited, but there are a lot more people who fall into the former than the latter. Guys like Bill Burr and Joe Rogan likely fall in this range. They sound really smart to dumb people yet aren't smart enough to ever sound arrogant or sound too nerdy and off-putting. People in this range likely suffer from Dunning-Krueger.
@@RH-jf9ty lmfao exactly. Dave wants to give some sob story about how the banks came after him when in reality he was just an idiot with his money. There's thousands of other people that have been able to successfully leverage debt with little to no issues at all.
Ha exactly! Even liking term insurance (= renting a home) over whole life or IUL (= owning a home and building legacy for the kids and family).
Rob,
You are correct, that averages look great, but using actual returns, etc. doesn't guarantee success in all scenarios. Thank you for your good insights and factual analyses!
The reality is that any informed retiree is not going to put 100% of their assets into equities . More likely they will invest somewhere between 25% (if they are aggressive) and 50% (if they are conservative) in something safer like bonds, cds, or annuities. So you can’t count on a total portfolio return of 8-12%. So when you do a quick calculation of say 8% against what you have invested in equities, your overall portfolio performance is much lower than 8-12%. So telling people to take such a high percentage from their portfolio, in my humble opinion, is reckless. But hey, what do I know…..
But currently cds and even money market accounts are paying 5%. So should the 4 % be updated from times when fixed yields payed less than 1%. My plan has a higher withdraw rate early and if I run low later that's ok because honestly if I'm in my late 80s and 90s I most likely feel like traveling or golfing.
Thanks Rob,you make a whole lot of sense, your analysis is much factual than fictional. Keep up the good work sir. Thanks.
of course Ramsey says that because everyone can "make 12% per year in the market..." 🙄
Yeah he says that certain funds all but guarantee that. He won't tell you which, but you are free to hire one of his financial advisors to tell you.
Yeah like everyone will live 30 years in retirement. More like 5% will make it, yet people keep projecting out 30 years for their money to last when they could be spending much more.
My aunt lived to 95. She was very happy to be able to buy groceries and pay for heat and light.
I guess you could spend more and hope to die early, but that’s not my plan.
@@travis1240it wouldn’t make sense to tell millions of ppl each specific stocks he has lol
@Freshprankstv1 He certainly could disclose names of the mutual funds, along with their expense ratios. But that would expose, over the long term, that they do not perform as well as simple index funds.
The way I understood Dave is 4% as a fixed amount is unrealistic. For example, why didn’t you include soc sec in your calculations. If your cost of living is $80k and you take soc sec then you don’t need the full 8% every year. You can save the excess or take less a year or two. That will extend your “run out of money” point. Dave said in his rant that the 4% rule will make people think they need $2million saved to retire which will make some people just give up as they’ll never get there. So even though your analysis isn’t wrong, it’s overly conservative. The key is to reduce your cost of living and have no debt. $80k seems a bit high but even with that, including soc sec, you’ll need far less than 8% withdrawal on $1 mil portfolio. During good return years take out the 8%, during bad return years maybe take less or the bare minimum needed. But 4% is a very conservative number. Too conservative is the way I took Dave’s rant.
Ramsey is good for rallying people to get out of debt, but literally EVERY SINGLE OTHER TAKE HE HAS is nose-honking levels of clownery.
100% accurate.
Thank you Rob. As always you are a wise, respectful and reasonable presenter of factual information.
You can technically withdraw 8% forever ... BUT the amount you withdraw every year will vary.
The key here is you won't get to withdraw 8% of the ORIGINAL balance each year. You'd have to withdraw 8% of the CURRENT year balance.
Most people wouldn't feel comfortable with that as it wouldn't generate a steady annual income.
So you are both right depending on operational definitions and goals 🙂
Exactly right
Thanks Rob. I do love watch yours and Dave show. I personally get to learned lot from both and some other advisors. Im glad i can continue to learn great things from great people out there. Thanks for teaching.
Wow, just wow. I've watched many retirement videos, listened to many different forms of advice, even a few things from Dave, but now, I've lost any modicum of respect I had in his opinions. Thanks for your rational, facts based approach.
Excellent job of walking through the numbers. I wish you had the reach of Dave Ramsey. He's got so many people that follow his misguided advice.
I like how Dave says listen to people who have experience succeeding at something (ie him wrt debt and real estate) yet he calls these people dumb despite Dave never having been retired and having no idea.
Dave will occasionally spit out decent advice, but so does my drunk neighbor. On the other hand Rob… You always get into the nuances of finance, which is where the education begins. I really respect and appreciate your sound approach to investing… and without the insults 😊
Thanks Rob, for this. I LOVE Dave Ramsey, but I absolutely believe you are correct in this analysis. Thank you for the rational review and suggestions.
.
Terrific video, thank you for sharing! Thank you for sharing!
Dave’s advice is going to lead a lot more people to prosperity than to the poor house, but yours is a terrific alternate perspective!
I think Dave’s problem is that he has to make things extraordinarily simple for the simple minds that truly need his help.
I subscribed because of your ROM comic in the background
I draw about 2.4% of mine, and with social security, I'm pretty comfortable. Admittedly, I am still pretty mindful of spending, but having very little debt helps a lot. I have always been one to err on the side of caution with money, and this is only my retirement account I'm talking about, not my liquid savings. It's not what you make, it's what you spend.
Agree with you Rob. In my opinion, you are very realistic and honest in your advice. I think Ramsy is providing bad advice. Not sure why that is. He's clearly not stupid but certainly off track with suggesting an 8% withdraw rate. Few people achieve the performance he claims even with a personal advisor. Few people are 100% into stocks at retirement. That would be stupid. In fact many advisors say 3-3.5% is the safest withdraw rate. I believe 4% is a good target , however during down periods we back off that. number. I started using New Retirement software a year ago and retired in May. I highly reccommend it to folks nearing retirement,
Withdrawing more than 1% is crazy.
Excellent - one of the best clarifications on the subject I've seen. Thank you 🙏
For someone that consistently speaks about not seeing risk, I'm surprised Dave still has such a blind spot. My plan when I retire is live off of 1% of my retirement savings so that even if I'm extremely off, I might have to use 2 or 3%. If I made a plan to need (key word here, NEED) 8% to live then I have no buffer for risks to the market and risks cause by our wonderful government messing with inflation. Worse case is I die with a bunch you pass along to my family and loved ones... Oh no.
Thank you for the detailed and clear explanation.
Rob, don’t even give Dave Ramsey air time, waste of oxygen. Your videos are so informative and have assisted me no end. I have used ficalc numerous times on his scenario and imputed things like a new car , increase medical expenses etc, I Cant get 8% to work at all, the guys a “ goober”
I really didn't expect Dave to blow up like that when I called. I will have a recap video going over the experience on the 21st if not sooner. I had layers to the question that I really wanted answered. Instead, his rant is getting a lot of negative attention on X. He also took the article down that I cited. Too bad, too. It was a good one.
This would have been a great discussion with Rob, glad he did this video. Feel free to join the live chat's every other Monday evening.
I am 51 and glad I came across this video. I am on track to not have mortgage, car or credit card debt upon retirement. I will buy my last car (an EV) before retirement to get me through.
Lol, you must be planning a short retirement if you think one EV will get you through. I hope you have a long retirement and have enough to buy several replacements.
Dave Ramsey is similar to Robert Kiyosaki. Both have done well with the simplest of concepts, and each has done exceptionally well as a con man. They both are fabulously wealthy from taking hard earned money from the ignorant masses.
Thank you for putting this out there. Much appreciated
Yeah, I heard this live and it made me so mad. It's such a simple, and easily back-tested issue.
A very thoughtful discussion, thanks!
First Rob...thanks for making it crystal clear that one shouldn't blindly follow the advice of these so-called financial Gurus or these financial-RUclipsrs! As I always say...one of the most important benefits of going to college and that one learns how to do imperial research--to fact check for oneself. Thus, being able to unearth the truth or validity of the information being expounded so that one may source the information for his- or herself. Thereby being able to evaluate rather or not the information being expounded is true or not. Thus, one will avoid-in this case-a financial calamity! Moreover, one can avoid getting drawn into all this "Fake News" of financial non-sense! Once again Rob…Great Job... .
Thanks for sharing Dave Ramsey's video link as it's not titled the 4% rule. I agree that Ramsey doesn't take into account stock market fluctuations every year such as last year when the S&P dropped about 18%. If someone retired at the end of 1999 and withdrew more than 4% they'd run out of money in 10-15 years. From 2000-2002 stocks were in a 3 year bear market that most younger people haven't experienced.
The fact that Ramsey doesn't understand this concept leads me to really question why anyone would rely on him for financial advice.
^^ This!
The "below the waterline" debt reducers are well served. .. and that's good because the poor are underserved. However, this has little to do with investors.
Great video, Rob. I object to many of his teachings, but this is the most egregious one. And this doesn’t include the fact that he tells people not to care about expense ratios in mutual funds.
So, to average a 12% return in retirement, is Dave recommending a 100% stock portfolio? Very few people could stomach that.
Yes, way too risky. 12% is not going to happen with a balanced portfolio.
Firstly thanks for this video! It's very informative. Secondly, I really wish the investment brokers from where I live, actually gave this kind of really in depth information to us when they try to onboard us as clients. I did away with brokers/advisors because they certainly did not out the amount of effort into educating me like you did here about things. Instead, they approach you, or you get assigned an advisor by the investment firm, they sign you on, and you never hear from them again. In the meantime, they are taking annual management fees which, by the way, are exorbitant. Between them and the large firm they contract for, you're looking at up to 4% that is taken. I'm not sure how it is in the US. Like I said, I went on my own to by ETFs where the maximum charge is 1%.
Thanks again for your indepth analysis and the calculators. They explain an awful lot!
This is not a financial advice and I never give financial advice: DONT LEAVE DURING THE BEAR. If you don’t want to invest…learn. If you don’t want to learn…build. If you don’t want to build observe. DO SOMETHING…other than leave. There is so much opportunity here. Take advantage!
That same reference from Vanguard, where it says 12.3% return, also shows that 25 years out of 96 produced a negative return. So this goes to your point, it matters what years you look at.
The problem is that you need twice the return for a loss just to get back to even. For a 50% loss, one needs 100% return to get back to even. And if you make a withdrawal during this loss, you need more than 100% return. Creates a death spiral if one has a series of negative returns.
So true Rob.,, even way worse in the last 3 years with inflation...vehicles food energy housing upkeep insurance etc..up at least 50% ..Great video with the detail / facts.👍
It's surprising that Dave would be so conservative in the saving and accumulation phase and careless in the retirement phase.
Dave has decent advice for people who are undisciplined financially and just starting to get their finances together. As far as long term financial planning and solid advice hes an amatuer whos opinions and style leave a lot to be desired. Hes basically a salesmen with a spiel and not very good at weighing an individuals financial needs. Everything with him is one size fits all. For many of his listeners hes the messiah.
Hey Rob, I just want to thank you for your programs. I also want to thank you for your professionalism! Sadly to say I can no longer watch Dave Ramsey or listen to his programming because for some reason in my opinion he has become quite arrogant and disrespectful.
Even though I struggle to comprehend some of your information, I keep coming back and giving it my best, because I believe you are a very good teacher. Thanks again.
Thank you! And please let me know how I can help. If you have questions, leave them here. It helps me better refine the topics.
Dave Ramsey just gives typical "old man" advice. He is not an analytical person at all.
8 percent withdrawal use to work until democrats took control and made inflation 10 percent 😂
My parents retired very modestly, 25 years ago. They started at a 4% withdrawal and when things went well they got bolder. They were at 8% when the market took a dump and they quickly saw the money slip away. It was heartbreaking to watch them go through that. Don’t let a life’s worth of work go to waste. Live within your means and enjoy your golden years.
Ramsey's advice is pabulum for the masses who haven't saved enough for retirement and need to be reassured that their anemic nest egg will be sufficient. Thanks for your level-headed reality check.
Exactly, fast food financial advice. No nuance, no thought.
Having a goal of a thirty-year retirement, while a sound idea, is probably not close to a reality for most of Ramsey’s listeners. And even for the ones that do outlive their savings, a large percentage are probably put in nursing homes by their families, and all of their assets will be taken anyway.
Excellent explanation, unfortunately I suspect the Venn diagram intersection of "Dave Ramsey viewers" and "Rob Berger viewers" is the null set.
This is the difference between sound realistic financial advice and advice for the sake of showmanship and making money off of others. Well done Rob and I'm fairly sure Dave Ramsey will not be responding to your video.
8% is ridiculous he should be ashamed of himself - am guessing he isn’t a qualified financial advisor
In Dave's defense... Oh wait... There is no defense for his nonsensical math. None. Whatsoever.
Makes perfect sense. Thanks for the video, and for showing the ficalc tool which didn't know before.
Dave's reaction is that of someone who's not used to being challenged. It's why he's got the company being run by his kids and every forward facing personality he has knows nothing more than how to parrot a script he wrote.
Loved your tone in this video and the crunching of the numbers and the tools you referenced. I'll have to check those out.
In any case, if you're comfortable living off of 4%, it doesn't sound all that moronic to save the remaining 4%. That sounds sensible, in fact. His next book should be "Dave Ramsey: how I threaten the financial futures of my loyal listeners!"
Indeed. I'm amazed at the dangerous financial advice he doles out.
Great video! I'm reaching for the popcorn.
I think Rob's critique is dead on, however, there are other factors. One of them is the smile curve. If you are doing a traditional retirement we know that your spending will trend downwards in your 70s. So you can probably get away with spending quite a bit more than 4% if you are retiring at a traditional retirement age or older. Even if you are retiring younger (I'm 53 and working part-time until 55), you can also get away with more than 4% if you are willing to develop some active income based upon conditions, or even just out of a basic desire to have something to fill your time. So to the extent that Dave is arguing that you shouldn't let the 4% rule to cause you to live in fear because life is a journey, I think he has a point. No well in HELL I'm following his advice and drawing out 8%, but he is not completely wrong. What I really don't like is his style. He doesn't need to call other people stupid or make up stupid theories about living in Mom's basement. If Rob is living in Mom's basement, I want to move there. And this is why I don't look at Dave's content anymore. I don't need his drama.
Spot on, planning out 30 yrs and thinking spending will stay same, both are incorrect for the most part so why leave so much on table for advisors to make money on unless want to leave to kids.
Great clip. Dave is a little crazy with 8% withdrawal rate. I would like to be in that meeting to hear what Dave said to George camel after George said on his show to do a 4% withdrawal rate! Thx for sharing.
Dave Rambunctious Ramsey is not someone i will take financial advice from; he’s very emotional when he speaks to guest. Thanks Mr. Rob Berger for your insight…I will never have 1 million dollars but I hope to have some money to buy food and for shelter when i retire or a nice cool nursing home…
"Dave Rambunctious Ramsey" 😂😂😂
Dave Ramsey Is right on the money for the first 4 steps!! Most investors now that have some money on their pockets forget how it was prior to become wealthy 😮
Hold up! Let me get a cup of tea and pull up a chair for ringside seats to this one!!
love your comment Susan
Portfolio visualizer also has a mode for modeling withdrawals. Not stochastically, but it's still useful as it helps show the impact of down years
I'm still shocked Dave even recommended 7-8% withdrawal rate.
For several years in a row my university had someone come in to do retirement sessions and they gave us a worksheet that indicated we should withdraw 8%. I raised my hand and said I know where you got this number but it's way too much and will probably decimate people's retirement. He just laughed and moved on so I walked out. Emailed HR about how dangerous his advice was but they kept bringing him back.
I Add 3%..😁😁😁😁😁
@@ganymededarlingTo be fair, most public pensions are built around an 8% growth model.
@ganymededarling You should probably know what decimate means when trying to sound smart talking numbers. If my retirement egg was decimated I'd be extremely happy because it would mean I died with 90% balance remaining.
There are two definitions of decimate, thank you for opening my eyes to the one you are referencing! I do believe the person used it properly in one meaning of the word.
Are there withdrawal strategies that are more responsive, or algorithmic? For instance, you don't really need to make a decision on 4% and stick to it for 30 years, you obviously can adjust that rate as you go. The guidance then becomes you can plan to spend *between* 2%-5% a year, and maybe some guidance on how often it's likely to be 2%, 3%, etc.
Agree completely. One of my favorite withdrawal strategies is the Spend Safely In Retirement strategy. ruclips.net/video/aZJCHkvwvAU/видео.html
Bill Bengen developed the 4% rule as a worst case scenario for safe withdrawals. For someone who retired in the late 1960s before a long bear market and high inflation. He never meant 4% to be universal.
He's said the historical average safe withdrawal rate is closer to 7%, not 4%, and has been above 10% for some periods.
Pretty close to Dave Ramsey's number.