The Money Guy Show Reacts to Dave Ramsey's 8% Withdrawal Rate
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- เผยแพร่เมื่อ 25 ก.ย. 2024
- 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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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
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?
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
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
‘’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.
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.
Everybody understands the 8% withdrawal rate is a little goofy, but watching him throw George under the bus was nuts.
Yeah that was a bad look
George will soon break away from Ramsey solutions
I agree. I love the show, Dave and his personalities. Dave needed to exercise tact in that situation. 😢
@@moggekungenthe problem is Dave has a stranglehold on those who work for him.
@@dforrest4503he can always quit, so i think when he believes that he can go for his own he will break away, time will tell
I know you guys are friends with him… but there is a reason why I watch/listen to your show and not his.
Nothing wrong with listening to both and using your brains.
@@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
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.
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 ❤❤❤❤❤
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
Dave is great for the mindset shift and strategy for getting out of a lot of debt. The rest? Not so much.
Well put! Succinct and mirrors my two cents.
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.
Why even go to Dave when you can go to others who get the whole picture right.
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.
Spot on!
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.
Nuance isn't in Dave's limited vocabulary.
Or any other American's vocabulary @@rnt45t1
Absolutely correct.... retiring EARLY means you really gotta watch your withdrawal rate...
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.
Nobody under the age of 80 should retire under any circumstances@@Simon-vo7gi
That’s dangerous advice and could cause someone to lose lots of money in retirement.
You just described DR’s show/books in a nutshell.
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).
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%.
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.
That is because there are no mutual funds that have returned 12% annual for that time period.
@@ADRE3ZY420 I don't know if Dave expects that or not, but he is typically very hard-lined about his rules.
I think that, legally, he can't. But don't quote me on that...
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.
11%? 😅.
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?
That’s Dave talking,,, show us the the math,,,😦
@@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%. “
@@raiden031at a 12% annual return, it would double in 7 years
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.
Once you go with the name calling. You have already lost the agrument.
Deplatforming is also a solution
I'd say if people are basing their retirement on bad opinions, there's a bit more at stake than ideas
@@sportagus3 I don’t think we need to resort to such authoritarian solutions.
@@vulpixelful isn’t everything presented by TH-cam 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.
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
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.
Dave completely ignores data….over and over again
@@jeffmiller5252 Exactly. When it's convenient, or doesn't support his narrative.
But he interviewed a couple hundred boomers/greatest generationers!! 🥺
Remember that guy who called in to Dave Ramsey’s show and called him stupid? He was right.
I'm 45 years old and diversified my portfolio exactly how Dave recommends. Now I'm kinda rethinking that decision.
OK “Let’s round down to 11%”. What could go wrong? 🤷🏻♂️
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This aligns perfectly with my desire to organize my finances prior to retirement. Could you provide me with access to your advisor?
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.
🤡🤡🤡
@@Dannyholt33she won’t because she was arrested by the FBI for fraud.
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?
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.
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
He has millions but not much common sense. Shows his disconnect from most people.
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.
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.
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?
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
My dad always said just when you think you have enough you probably don’t. Everyone’s enough is different.
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.
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.”
Dang it! Those darn goobers with calculators in their moms' basements and their sophisticated stochastic models again! ( oДo)
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.
That’s exactly the point…the US is moving toward socialism. Death by a thousand cuts.
@@thedopplereffect00 yeah I didn’t quite agree with Ben’s assessment but it’s all valuable to get you thinking g about scenarios
We need that NEW 8% video... you know the one lol
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.
@@lkj0822gthe Internet never forgets. A couple dozen finance TH-camrs already reacted to it
Most people on the internet are Americans. Most Americans only have a memory that lasts a few days. @@thedopplereffect00
Haha I know what you speak of. What a tool.
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
You guys do a good job of encouraging us to think dynamically and consider our individual circumstances!!!😊
The problem with the 4% rule is that you start 4% of the initial value of your retirement portfolio and then increase the dollar amount of your annual withdrawals every year to account for inflation. You can run out of money doing this because the actual percentage of your portfolio that you are withdrawing each year increases. If you just take 8% of your portfolio's value each year (i.e. higher dollar amounts when the market goes up and lower dollar amounts when the market goes down) then you will never run out of money. If you retire with no debts including a paid off house, then you will have the luxury of being able to take fluctuating withdrawal amounts and can probably take 8% with no problems.
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.
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. ❤
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.
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
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
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
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
Dave is very good for helping people get out of debt. He definitely has value. But his 12%/8% rules are a bit insane.
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 😅
@@mbaker8492
But when you're living expenses are under $1500 a month, the percentage is irrelevant
If you adjust the 8% "yearly" you will never technically run out of money. But you will end up withdrawing 8% of zip.
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.
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
Money Guy show is atleast 201 or 301, if it's 102, it's still level 100
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.
@dec1slh personally, I believe that 200 series includes a couple other techniques and 300 series involves not wning anything in personal names
@@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.
101 and 102 classes are supposed to be done concurrently...@@dec1slh
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! :)
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.
The money guys are sharp. I love the scenarios and data they show for all the speculation.
I wasn't financial free until my 40’s and I’m still in my 40’s, bought my third house already, earn on a monthly through passive income, and got 4 out of 5 goals, just hope it encourages someone's that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing in the financial market is a grand choice I made.
yeah investment is the key to sustaining your financial longevity but venturing into any legitimate Investment without a proper guidance of an expert can lead to a great loss too
I would highly recommend Professional Chrissy Barymoer his strategies are just great
Can anyone please assist with his contact details ?
Search him by His name "Chrissy Barymoer”
“ On F acebook “
Soooooo cool. Love the commentary and I wouldn't have been so nice about Dave's comments.
Bo felt that insult by Dave to his core lol
Does Dave her mention what specific mutual funds he owns?
No, because then anyone could pull the data and easily prove him wrong.
No but you can pay his "smartvestors" some ridiculous %(5% I think?) to win or lose...
...NEEVVVEEEEEEERRRRR...
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?
There is absolutely no freaking way Dave is pulling 12% per year with a quarter of his money in international funds.
What about a 5% withdrawal rate for a 50 year retirement
Nobody should have a 50 year retirement
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. 😉
For a church going man, dave sure has alot of pride
Needs to take a big ole slice of humble pie
Retired ten years ago with $300K and withdrawal 10-15% and still going strong.
Had it been say 1999, how would you have done?
I’d be shaking in my boots to be in your situation.
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.
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.
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.
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.
@@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.
Great discovery this show. Cheers from Spain!
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
Yeah retiring at thirty might be something they even looked at...if you live to 85 and retire at 35 that's 50 years
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.
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
LOVE your reaction!
The 8% is bullshit, I would never tell out listeners that. Just absolutely insane!
Great video!
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.
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.
My financial planner reccomends keeping a portion in bonds in order to maximize gains when rebalancing.
Love the shade at the end. :)
Bo with a parting shot. Nice!
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.
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.
Very professional way to cover this, especially after recently collabing with George. Dave owes him an apology for calling him a moron on air.
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
You guys are the best!
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....
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.
This episode is like a diss track to Dave. 😂 But I appreciate the Money Guy and the Ramsey shows.❤
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?
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.
Daves investing advice BLOWS.
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
My withdrawal rate is 3.5%, designed to last hopefully indefinitely
emphasis on _hopefully_
@@fsmoura I mean if it can’t last on 3.5% from an S & P 500 fund, we’re all screwed
@@fsmoura 😂😂😂
@@reaper-sz5tm10 years later we’ll be talking about 1.5 withdrawal rates 🤣
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
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.
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.
Dave is great at helping people get out of bad financial situations, reduce debt, etc. Beyond that he just seems to enjoy calling people stupid and ranting like PawPaw gone off his meds.
yea, he should stick in his lane. 8% withdrawal rates and 100% equity portfolios for retirees is a very dangerous proposition.
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.
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?
I think one of my favorite pieces of advice I love is from Bo. Save a little bit of today for tomorrow
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.
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.
8% a year is great if you have 8-15 million in the bank.
The dollar amount doesn't matter if you need to withdraw 8%, adjusted annually for inflation. You will likely run out of money within the 30 year time horizon.
You can see it in the charts… the reason 8% withdrawals are risky is not only inflation, but bad years of growth… you maybe going along getting 8 - 10 percent and there’s a year or two where you lose 5 - 10 percent if not more.
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
Dave and his averages....he's like the 6 ft tall guy who drowned in the river that was an a average of 5 ft deep.
Dave Ramsey claims he consistently gets 12% but he never names the funds with that alleged return. I wonder why?
@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 😃
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.
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.
Guys, you’re missing the point. If you go by ~4% rule, that will equal to a number that would be hard to achieve if you follow his baby steps (because you will be focusing on mortgage repayment). There won’t be enough time to make the number. So he doesn’t like to hear it as it goes against his brand…
Don’t forget he says you don’t need to invest more than 15% regardless of your age and you need to pay for a financial advisor so take another 1-2% off your gross.
You're missing the point. The idea with the baby steps is that you have the house paid off with 15 years and therefore it's all done and paid off before retirement (and therefore before you withdraw anything)
Hottest topic in the culture right now :)
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
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.
JMGPX started in 2016. How can you start your analyst at 2003?
The words always and never should set off alarm bells.
I need to tell my Retirement System Board to just follow Dave's advice and I'll never have to worry about my Retirement System's solvency 🤣
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.
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
You are forgiven 🙌🏻
Dave is bringing a knife to gunfight here. He uses the simplified assumptions and addition when this is a multiplication and compounding problem. There were nine years out of the last 20 that the S&P earned less than 11%. Now you might actually be safe to pull 8% as long as you are willing to only pull 8% of your portfolios value each year and not 8% plus inflation adjustment from your original balance. You need to be capable of reducing your expenses drastically on years the market corrects. A simplified way of explaining things is if your portfolio drops 50%, it needs to double to get back to even.
But here is a few years scenario with simple math in one of those unhappy years that we dropped 6% in 2018 assuming we decide we are withdrawing 8% of our original portfolio no matter what:
we start with $100
we take out $8 at the start of the year to spend
lose 6% = $5.52
end the year with $86.48
But no problem we'll make 11% the next year an average year
so we take out another $8.24 - inflation creeps on at that 3%
gain 11% = $8.63
end the year at $86.87
hmm so lets even things out on the returns -6% was the third best year in the last 20 so we'll take the third best year this time 27%
take out $8.89 - man inflation is a pain
gain 27% = $23.45
end the year at $101.43
we ended up 1.43% after 3 years and not the 3% annual rate we expected which is not good since we will need $9.16 this year due to inflation. so in the end it's the volatility of the market that amplifies the impact of withdrawals on our portfolio and leads to the %4 percent rule.
Im surprised Dave has a show at this point.
The dangerous thing about Dave is he can afford to be wrong. He’s got millions in cash flow from real estate and millions in assets so if he somehow runs his savings into the ground he’s still got more money than what he knows to do with. I didn’t even include his company.
Does anyone know the funds Dave invests in ? There`s only four to find.
Excellent show guys.
Average return works when you have 40 years of saving, not when you need to take a salary and its down 15% that particular year.